Charging a transaction fee, what's the right number?


0

My partner and I are developing a marketplace website that connects retailers with product makers, allows them to communicate with each-other and hosts wholesale transactions-we are looking for advice on how much to charge for our website.

What we know : the standard fee for retail brokers, has a range of 5-15% off of wholesale transactions. For the website to make money as an active whole-selling community, we decided a transaction fee on each purchase would be the most realistic and fair method (as we can't justify charging a subscription fee at this point). The number we came to was a 7% fee- 5% to the person selling the goods-and 2% to the buyer of the goods.

We feel somewhat comfortable with this number as our rough calculations indicate it will help with operations costs. However, we were hoping to gain some insight from the OnStartups community:

  • Does 7% (fee to sellers & buyers) seem like a reasonable transaction
    fee for an online marketplace of this nature?
  • Does it make sense to charge the buyers as well?
  • Are there typical ways startups decide on transaction fees or is it
    more or less trivial at the beginning?

Any help and advice would be greatly appreciated.

Thanks!

Charging Website Users Fees Marketplace

asked Aug 9 '12 at 04:30
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Doug
1 point

1 Answer


1

The best thing I can suggest is to tell/ask your (potential) customers how much they are willing to pay. You know what your monthly infrastructure costs are, what bank transaction fees will be, and what marketing can cost, so make sure to factor that in so you can accommodate for profit. From there you can get a good baseline for what you'll be able to charge.

From personal experience (a hard/rookie lesson learned), I built an SaaS app that we had quite a few people interested in, but we didn't ask them if they'd pay and how much. We spent a bunch of time try to guesstimate what pricing should be, only once we launched, we found out that hard way that everyone wanted it but no one wanted to pay for it.

Any don't short change yourself. While we all have a tendency to want to offer the lowest price so the barrier of entry is lower for customers, there is something to be said for offering a fair/solid price.

Here are some links that may be of help.

http://blog.spark59.com/2012/dont-ask-customers-what-theyll-pay-tell-them/ http://visualstudiomagazine.com/articles/2012/04/02/the-business-of-pricing-your-product.aspx
http://venturehacks.com/articles/pricing-experiments Best of luck.

answered Aug 9 '12 at 07:35
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User464180
159 points

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