Financial Model for Marketplace Startup: 3 Revenue Models

A marketplace business model connects two distinct user groups — buyers and sellers— through a platform that facilitates transactions or interactions. Unlike traditional retail businesses that manage inventory or production, marketplaces act as intermediaries, creating a seamless environment for exchanging goods, services, or information. Their value lies in building trust, providing convenience, creating a high quality of user experience and enabling scale by leveraging network effects.
Examples of marketplace business models span across industries and demonstrate incredible versatility:

• E-commerce: Platforms like Amazon, Mercado Libro or Aliexpres bring together millions of buyers and sellers for products ranging from books to electronics.
• Services: Marketplaces such as Uber and Airbnb enable service providers (drivers, hosts) to connect directly with consumers.
• B2B: Platforms like Alibaba facilitate bulk transactions between businesses, streamlining global supply chains.
• Specialized Niches: Marketplaces like Etsy cater to specific audiences, such as handmade goods enthusiasts or creative entrepreneurs.

Marketplace is one of the most popular model for IT startups together with SaaS business model and mobile apps. But to have a mobile app is a standard for almost all the digital products and especially marketplaces. If you want to go deeper into the details of mobile app financial model, check out my article Financial Model for Mobile App: 3 Monetization Models.

A huge marketplace can monetize its audience in a bunch of different ways. But the core revenue model for marketplaces is transactional fees. Then a marketplace can combine commission with other popular revenue models depending on the industry, the target audience, and the value proposition of the platform.

The most common revenue streams of marketplaces include:

• Transactional Fees: Common for e-commerce and service marketplaces, this model takes a percentage or flat fee from each completed transaction. This commission can be taken from buyers, from sellers or even from both sides.
• Subscription Plans: Platforms targeting professionals or niche service providers, often rely on recurring payments for premium access or features.
• Advertising Revenue: Marketplaces with high traffic often monetize by offering ad placements to sellers or third parties.
• Hybrid Models: Many platforms combine these approaches—charging sellers transactional fees while offering subscription options and advertising opportunities.

Selecting the right revenue model requires a deep understanding of your audience and product-market fit. Using our financial model template for marketplace startups you can compare different combinations and pricing. Let's dive into the details of a financial modelling and forecasting for such a startup on the examples of calculations from this template.

The fundamental financial model we construct for any new business is the “3-Statements Model,” which involves forecasting movements in three main financial statements: Profit and Loss (P&L), Cash Flow, and the Balance Sheet.

Our first step is to calculate the profit and loss, commencing with revenue projections. The way of revenue generation is a key differentiator among various business models. In this article, we will delve into calculating sellers and buyers acquisition, its growth and revenue dynamics for different marketplace monetization models. The overall model structure and forecasting method, based on the project’s roadmap, are described in detail in the article "How to Create a Flexible Financial Model Based on the Roadmap".

Attracting and retaining sellers is the cornerstone of any marketplace’s success. Without a steady influx of sellers, the platform risks losing its value to buyers and failing to achieve critical mass. That’s why a financial model must include detailed projections for seller acquisition, associated costs, and the seller life cycle. These inputs allow you to estimate customer acquisition costs (CAC), allocate budgets effectively, and plan for scalable growth.

To attract sellers, a marketplace can leverage various channels. Established players often benefit from organic traffic, as their brand is already well-known. Startups, however, typically need to rely on alternative strategies. While a founder’s personal network may help attract initial sellers, a systematic approach — such as deploying a business development team — is critical for long-term growth. Direct marketing campaigns are also an effective tool for seller acquisition. Depending on the marketplace’s specific needs, these campaigns may or may not involve inbound managers. Keep in mind that seller acquisition requires targeted communication and ads, distinct from those aimed at buyers.

From a financial modeling perspective, seller acquisition through direct marketing channels is directly influenced by the advertising budget and CPL (Cost Per Lead). In this case, there is a clear correlation between marketing expenses and the number of new sellers acquired. A similar logic applies to sellers attracted by the business development team, where the number of managers and their KPIs directly affect acquisition. It’s important to set KPIs that are both reasonable and achievable to ensure team efficiency.

Organic growth, on the other hand, is less directly tied to specific expenses, but it is far from cost-free. Investments in SEO, social media management, branding campaigns, and content creation are all essential to drive organic traffic and attract sellers. While most marketplace websites primarily target buyers, a platform with a large buyer base naturally attracts seller interest. However, creating content specifically for sellers can amplify results, helping to build trust and engage them more effectively.

Organic Channels

Moving on to the financial model table, let’s start filling in the initial data. We do this on a separate tab where all the quantitative assumptions for the new business project are consolidated.

We begin with the parameters for forecasting organic traffic. Set the launch date, which can be determined based on the roadmap event, and the estimated traffic in the first month of operation. For this, you can rely on your existing audience, competitor experience, and benchmarks for your industry. Following this, establish the monthly growth rate.

This is a basic algorithm suitable for rough estimates of growth in the first few years. To refine your forecast, consider adding a maximum limit at which growth stops or a point at which it slows down. If your product is subject to seasonality, it’s better to base growth on a year-to-year basis and segment months into high, average, and low seasons.

Returning to the seller acquisition calculation, we set a percentage of visitors who convert into sellers without paid advertising. For new startups, I strongly recommend being conservative when projecting this metric. If you’re creating a financial model for a new marketplace, focus primarily on more predictable paid channels. If you already have retrospective data from your platform, you can use it to make more accurate projections and even plan for some growth. However, this should only be done if you have clear, actionable strategies in place that can realistically lead to an increase in the conversion rate for seller acquisition.

Paid Marketing

Paid marketing is often essential for jumpstarting seller acquisition, particularly during the early stages of a marketplace. These metrics help you estimate how much you’ll need to spend to acquire new sellers and evaluate the efficiency of your paid campaigns. In the financial model projections, we include the monthly budget for paid campaigns, the projected cost per lead (CPL), the lead-to-seller conversion rate, as well as target KPIs for inbound managers and their salaries.

Business Development Team

For marketplaces targeting niche or high-value sellers, direct outreach by a dedicated business development team can be highly effective. In the financial model, we include the number of managers in the team and their KPIs for seller acquisition. Incorporating this data ensures that you account for the costs of hiring and scaling the team while accurately projecting its contribution to seller acquisition.

Onboarding and Retention

Onboarding ensures that sellers are set up for success on your platform. This input helps you calculate the resources needed to integrate new sellers and avoid bottlenecks in the onboarding process, which could negatively impact seller satisfaction and retention. Therefore, we include the number of new sellers an onboarding manager can handle each month, along with the salaries of onboarding managers.

Retention is just as important as acquisition. High churn rates can hinder growth and increase acquisition costs. Including this metric allows you to estimate how many sellers need to be replaced each month to maintain or grow your base. In the projections, we set the percentage of sellers expected to leave the platform each month.

Buyers are the driving force of any marketplace, creating the demand that attracts sellers and fuels platform growth. Similar to seller acquisition, buyer acquisition relies on a mix of organic traffic, paid marketing, and strategies to manage churn. However, acquiring buyers often requires a different approach, as they typically make decisions faster and are influenced by distinct marketing channels compared to sellers.

Organic traffic plays a key role in cost-effective buyer acquisition, with investments in SEO, social media, and content marketing helping to bring in new users. Paid marketing is equally important, especially for startups looking to scale quickly. By allocating a marketing budget and tracking metrics like cost per click (CPC) and conversion rates, you can directly influence the number of buyers acquired. While this logic mirrors seller acquisition, the messaging and targeting differ significantly, focusing on buyers’ needs and preferences.

Retention, measured through churn rates, is another critical factor. High buyer churn can inflate acquisition costs, making it essential to focus on strategies that keep buyers engaged and returning. By modeling these inputs — organic growth, paid campaigns, and churn — you can create a balanced and realistic financial plan to grow and sustain the buyer base, ensuring a healthy marketplace ecosystem.

Our goal is to create a dynamic model that allows for easy calculations for various scenarios in the early stages of a project. Therefore, we create a monthly forecast on a separate tab, where we set all the indicators using formulas.

To determine the month from which the traffic and the number of sellers and buyers appears in the model, we use an IF function (in Excel or Google Sheets).

If the date value for the column is greater than or equal to the marketplace launch date or the start date of direct marketing campaigns, we begin calculating the indicator using a formula. Otherwise, the cell value is set to “0”.

In a general sense, this formula in Excel or Google Sheets looks like this:
=IF(E2(month in forecast) >= Projections!$E$13 (start date in input data), formula, 0).

Depending on the specific metric this formula can be expanded. We can include growth calculation, set the maximum or minimum value etc.

In our store you can download the ready-to-use Marketplace Startup Financial Model template with all the formulas.

Transactional fees are one of the most straightforward and scalable revenue streams for marketplaces. This model involves taking a percentage of the value of each transaction completed on the platform, typically from sellers, buyers, or both. In most cases, marketplaces charge sellers for the value they derive from accessing a buyer base and completing sales. For example, platforms like Etsy or eBay charge fees only to sellers, making it easy to manage in a financial model by tying revenue directly to seller activity.

However, some marketplaces take fees exclusively from buyers. For instance, ticketing platforms like Eventbrite often charge buyers a service fee on top of the ticket price, justifying it as a convenience fee for using the platform. This approach works well when buyers perceive a premium value in the transaction.

Then there are marketplaces that charge fees on both sides. Take Airbnb, for example — it charges a percentage of the booking value from both hosts (sellers) and guests (buyers). This dual-fee structure increases total revenue per transaction but requires careful balancing to ensure that neither side feels overcharged.

In our financial model, transactional fees from sellers are particularly straightforward to manage. By setting the commission as a percentage of the average order value (AOV), you can project revenue with ease. This approach works especially well for startups, as it simplifies calculations and focuses on scaling seller activity. With clear input metrics such as AOV and the number of orders per buyer, you can build an accurate and dynamic forecast of revenue growth.

Membership subscriptions are another powerful revenue stream for marketplaces, offering predictable, recurring income while deepening seller engagement. This model involves charging sellers a monthly fee to access premium features, tools, or visibility on the platform. Unlike transactional fees, which scale with the number and value of transactions, subscriptions create a steady revenue base that is less reliant on marketplace activity.

Many successful marketplaces utilize subscription models tailored to their audience. For example, LinkedIn offers premium subscriptions to job seekers and recruiters, while platforms like Etsy and Amazon provide subscription plans for sellers seeking enhanced visibility or tools to optimize their sales. Subscriptions incentivize sellers to commit to the platform while delivering ongoing value.

In the financial model, we consider several key inputs to project subscription revenue accurately:

Conversion Rate of New Sellers: The share of new sellers who convert to paid subscriptions is a critical metric. Startups often begin with a modest conversion rate, with room to grow as the platform develops its value proposition and improves seller onboarding.

Monthly Growth: Over time, improvements in platform features, marketing, and reputation can drive an increase in subscription adoption. By modeling monthly growth in conversion rates, you can capture this potential.

Churn Rate: Seller retention is equally important. A high churn rate can erode subscription revenue quickly, making it essential to project this metric realistically and consider strategies to reduce churn through better engagement and support.

Subscription Price: The monthly fee charged to sellers forms the basis for calculating total subscription revenue. Setting the right price involves balancing affordability for sellers with the value provided by the platform.

Including these metrics in your financial model helps project how subscription revenue evolves over time, reflecting the dynamic nature of seller behavior and platform improvements. For early-stage marketplaces, subscriptions can provide a stable revenue stream to complement transactional fees, ensuring a diversified and sustainable business model.

Advertising is a lucrative revenue stream for many marketplaces, enabling sellers to pay for increased visibility or placement within the platform. This model works particularly well for marketplaces with a large and competitive seller base, where enhanced exposure can drive significant value for participating sellers. For the marketplace, advertising revenue offers a scalable income source that grows alongside seller activity.

Examples of this model are seen in platforms like Amazon, where sellers pay for sponsored product placement, or Etsy, which offers promotional tools to boost listings. Advertising revenue complements other income streams like transactional fees or subscriptions, further diversifying the business model.

In the financial model, we capture advertising revenue using key metrics:

Seller Participation: The share of active sellers buying advertising is a primary driver. Early projections might assume a small percentage of sellers opt for advertising, with growth over time as the platform demonstrates the effectiveness of its ad tools.

Advertising Budget per Seller: This reflects how much each participating seller spends on advertising monthly. The budget may start small but grow as sellers see positive returns on their investment. Setting a cap for maximum spend per seller ensures realistic projections.

Monthly Growth Rates: Both the share of sellers buying ads and their average spend are expected to grow over time as the platform scales and sellers experience increased competition.

By including these metrics, the financial model provides a clear roadmap for building and scaling advertising revenue. Early-stage marketplaces can use these inputs to experiment with ad offerings and refine pricing strategies, ensuring sellers perceive value while maximizing revenue potential. With the right balance, advertising can become a powerful revenue driver for your marketplace, complementing transactional fees and subscriptions.

With these three revenue streams— transactional fees, membership subscriptions, and advertising for sellers — integrated into the financial model, we can now calculate a dynamic monthly revenue forecast. By adjusting the input data in the projections tab, it's easy to test different scenarios and evaluate their impact on overall revenue. For example, you could explore how increasing the commission rate for transactional fees affects total revenue, simulate higher subscription adoption rates with improved onboarding, or project growth in advertising revenue by increasing the share of sellers using promotional tools.

Additionally, the marketplace financial model allows you to connect the launch of monetization strategies to your roadmap. This feature lets you analyze scenarios where certain revenue streams, such as advertising or subscriptions, are introduced later — when the platform is more mature and ready to maximize revenue from these additional streams. This flexibility provides valuable insights for strategic planning and ensures that your marketplace grows sustainably.

In this article, we explored the core elements of revenue forecasting for a marketplace startup. We provided a detailed overview of three primary revenue streams — transactional fees, membership subscriptions, and advertising for sellers — and explained how these can be modeled dynamically to project monthly revenue. We also discussed how different scenarios, such as adjusting input metrics or launching revenue streams at different times, can influence your projections. To fully understand the impact of these changes, it’s helpful to visualize the data on charts, which highlight key points and differences across scenarios.

While we’ve focused on revenue forecasting and the logic behind the marketplace model, a complete financial picture requires expense projections and forecasts as well. To plan effectively, you’ll need to consider factors like break-even analysis, investment needs, and unit economics. For a comprehensive financial model that includes all these elements—along with a detailed revenue forecast — check out our Marketplace Financial Model Template. This ready-to-use template will help you build a robust financial strategy for your marketplace startup, save time, and make informed, data-driven decisions.