How Much Does it Cost to Build a Marketplace Website This Year

Marketplaces have disrupted almost every industry. It’s a trillion-worth sector that produces hundreds of new businesses each year. But how much does it cost to build a marketplace website, and is this idea worth spending money on?

Today, only 6% of customers search for products on Google or visit retail websites to buy what they need. Others use a marketplace.

What’s more, about 75% of B2B spending is expected to happen through online marketplaces in the next 5 years.

Why did marketplaces become so popular? 

They provide incredible value for both sides: customers and suppliers.

On the one hand, customers don’t need to check dozens of sites to find what they want. Suppliers, on the other hand, get access to a much wider audience. 

In return, the platform gets to charge fees and be the facilitator between 2 parties.

For startup businesses, money affects everything. So what factors influence the cost of marketplace development? In this article, we will touch upon all of them.

How Much Does it Cost to Build an Online Marketplace

Marketplace website development costs may vary depending on lots of different factors. However, the most significant factor is the amount and complexity of the features.

 Anyway, while budgeting, you should take into account the following costs:

• back-end hosting cost
• user interface and user experience design cost
• development: front-end and back-end programming
• quality assurance: automation tests and manual testing
• marketing costs
• further tech support.

The total cost fluctuates over a wide range and depends on the following:

• resources the business dedicates to promoting;
• readiness to add potential new features to improve the product;
• investment in support and maintenance.

What Factors Influence Marketplace Development Cost

It is clear that many different factors affect marketplace development cost. However, the most obvious ones are engineers’ hourly fees, feature set, and the type of platform architecture you want. Sure, these factors don’t exist separately and impact each other. Let’s consider them in more detail. 

Developers’ Hourly Rate

Software developers’ fees vary broadly across the world.

In addition, the team usually includes more members than just engineers. For example, good projects require supporting staff, marketers for launching successful promoting campaigns, business analysts to write functional and non-functional requirements, and designers to provide an effective interface and good UX. 

Also, the cost depends on the collaboration model and hiring options, namely:

Hourly Rate

The time and materials model (T&M) is one of the dominant options startuppers choose. When selecting the latter, the payment is based on the amount of work and hours developers spent to complete the project. 

T&M allows businesses to keep up with constantly changing requirements while staying within the budget.

Fixed-Rate

This option, also referred to as a fixed-price model, is used when there is no room for changes during the development. In this case, the total cost is calculated and agreed upon prior to the project’s start. 

This model doesn’t work well for large and complex projects. There’s a risk of failure happening when developers put too much emphasis on sticking to the schedule and release a poor-quality product in the end.

Dedicated Team

This is a collaboration model when a company partners with the software development vendor that assigns a dedicated development team to the project and pays the developer’s salary during the service. Working with vendors can significantly shorten development time and increase capacity.

Here is the table with the average hourly rate for specialists usually involved in the marketplace building, based on the data taken from Time Analytics:

Developers’ hourly rates also differ by region. Eastern Europe and South America are the most popular locations with a good talent pool for software development.

Feature Set

The set of features, the complexity of the marketplace website architecture, and functionality also influence the cost to develop a marketplace.

Besides that, innovative technologies like artificial intelligence (AI) and automation become increasingly popular so you might consider adding them to your workflow.

The Webinterpret statistics show that 80% of eCommerce companies are going to implement AI-powered automation by 2027, while 51% of players have already adopted automation.

Depending on a business focus, the functionality set may be slightly different. Let’s examine the features you need to create an online marketplace.

Our Experience in Marketplace Development

We are a progressive team with years in online marketplace development that has successfully completed over 100 projects for customers from the USA, Canada, Germany, the United Kingdom, Japan, and others. 

Salita

Salita is a marketplace for interpreters that enables them to cooperate with customers anywhere they want using various devices  (using video and phone conferences, webchats, Skype, and mobile apps). 

Salita Home Page

This project is not just a platform for booking the services of translators but also a great help for businesses that require solutions to communication problems.

For this project, our team has built a minimum viable product (MVP) with many essential features, including:

• a new assignment with the ability to choose languages, date, start and finish time of the planned assignment;
• home page with sections to mark favorite interpreters, to view statistics and assignment calendar;
• quick search with a variety of filters like name, qualifications, gender, languages, schedule, and price range;
• admin dashboard with basic information on the customer, a list of jobs, and more;
• settings for enterprise users, namely management of roles, dealing with multiple departments, invoice settings, and extra assignments options.

We implemented the video call function with the help of VideoNor to handle calls between several participants. Our engineers used a matching algorithm to provide the user with a list of available interpreters and sort them by relevance.

As of now, Salita has 1,247 monthly web visitors from 72 countries. The online translation marketplace has raised more than $1M in two seed funding rounds. Furthermore, Techfugees Summit included the platform in the list of the most innovative new tech-related projects to help refugees and NGOs.

Foody

Foody is a recipe marketplace for global chefs and culinary creators. The platform has become a digital helper for home cooks and a revenue driver for culinary influencers.

Foody Home Page

This project is a custom web app with unique visual and text content built from scratch. For this platform, our team developed new features such as:

• a registration system with two types of accounts: for foodies (home cooks) and creators (chefs and influencers);
• signing up manually, with Google, or Facebook;
• home page with thirteen blocks, including featured recipes, featured creators and collections, creator spotlight (creator info), thematic recipe collections;
• recipe creation feature with the ability to add pictures and videos;
• rate and review function when users can write their comments under recipes and collections;
• admin panel with analytics, editing, and management tools;
• integration with Stripe for instant payments;
• autoscaling.

Sloboda Studio engaged a performance testing specialist to make scripts for load testing in the shortest time.

Since the official launch, Foody has increased its functionality by 1.5 times. In November 2021, the recipe marketplace raised $1.5M in the pre-seed round.

6 Main Features of an Online Marketplace

At the stage of the marketplace MVP creation, you should think about the main functionality that your product would offer and develop your marketplace accordingly. Also, do not forget that the first impression matters. Below, we present core features that are indispensable for the marketplace.

Personal User Accounts

It is essential to make personal accounts and profiles as detailed as possible and to add functionalities specific to the needs of each party.

Buyers, for instance, will appreciate a simple registration process, thoughtful navigation, and the ability to see detailed information about the providers.

Sellers, in turn, need to manage their public information, create new tasks, and group items.

Instant Messaging

While looking for the necessary service or product, users often have questions. Therefore, the instant messaging option and the ability to communicate with providers are critical.

Real-time Booking

This feature will give users the opportunity to book a service or product they are interested in and subsequently return to buy it. Thus, it is worth adding booking capabilities. Additionally, this option will allow users to book a product that is temporarily out of stock.

Flexible Payment System

First of all, both users and providers must be convinced that the payment process is safe. For convenience, you should provide a transparent payment system. This system will calculate the total amount of services and standard fees automatically. Users expect to see transaction history and easily manage payment methods as well.

Listings

Providers need to publish and manage items they offer, users — search, filter, manage and search for a listing.

Reviews & Feedback

Online shopping differs significantly from offline retail by the fact that customers can review a product only by its description or photo. Therefore, it is important for buyers to be able to receive detailed information about goods and sellers.

In this respect, feedback is a trusted source of data. The functionality for ratings and reviews helps build trust between users and providers. Customers need to see a product’s reviews, write reviews themselves, and rate listings. Providers should have the ability to view users’ reviews and moderate them.

Additional Features to Develop in Future Versions

After introducing the basic version of the product to the market and receiving customer feedback, you can start thinking about improving your platform and adding more features. The leading criteria here should be convenience, novelty, and user-friendliness.

Push Notifications

Notifications from the marketplace help users to stay informed when new products appear or when the booked product becomes available again. They also will encourage users to visit the platform more often. Users should be able to view notifications and change their notification settings.

Product Comparison

This feature will help website visitors choose the best product or service by comparing its features, prices, and ratings. It will save the time and effort of the buyer.

Sharing to Social Networks

Given the popularity of social media nowadays, this functionality will be useful to both buyers and sellers as well as the platform owner. Social media sharing creates additional advertising for your market and promotes your brand.

Wishlist

This feature can increase the chances that the buyers will make a purchase using your marketplace. And, as noted above, sharing such a wishlist on social networks will attract a new audience to your website.

With that said, you may think that building an online marketplace is too long, complicated, and expensive. Well, that’s not entirely true. For example, it took Etsy about two and a half months to build and release the first version. But today the company is one of the online marketplace heavyweights, reaching 81.9 million active buyers, and this number is expected to grow.

Ready-Made vs Custom-Built Solution

Most startuppers planning to enter the marketplace usually choose from two options:

• using one of the already existing platforms
• building the custom one from scratch.

Each variant has its benefits so the final decision mainly depends on the business goals.

If you have the idea of an entirely new service, which will break into the market, then you should order the custom development.

If you want to create an online marketplace faster, bring vendors, and receive interest for sales, then you can base an online marketplace platform over a ready-made solution.

Ready-made platforms allow:

• starting the system quickly
• reducing the implementation time through the usage of ready resources
• increasing the efficiency of operations
• reducing the maintenance costs, and purchasing new equipment
• simplifying the future integration of the trading platform with partners.

However, there are also a number of disadvantages of ready-made solutions.

Existing templates can not perfectly meet your business requirements and your customers’ needs. Also, you will not be able to receive behavioral data about the users and update your platform quickly according to this information.

In the following comparison matrix, we’ll compare phases of the marketplace development process for each option.

Kinds of Marketplaces

In order to calculate the marketplace development cost, you should know the type of marketplace you are planning to build. There is a range of aspects by which online platforms are differentiated. For example, by offered products, business models, and types of participants.

Depending on the type of marketplace you decide to choose, the cost of web marketplace development will change.

Online Marketplaces by Offered Products

Before creating a marketplace, you need to define the type of your thematic offer which can be as follows:

• Goods and Products

Examples: eBay, Amazon, Etsy, AliExpress.

• Services

Examples: Uber, Airbnb, Booking, Couchsurfing

• Media

Examples: TravMedia IMM, Matpra Media Marketplace, MediaMath.

• Investment and Crowdfunding 

Examples: Kickstarter, Indiegogo, CircleUp.

• Other Types Like Social Networking, Entertainment, Advertising Marketplaces, etc.

Online Marketplaces by Business Model

There are three business models, namely vertical, horizontal, and global. The following table describes them in more detail.

Online Marketplaces by Participants

Marketplaces can be divided into categories by customer relationships. They include B2C (Business to Customer), B2B (Business to Business), and C2C (Customer to Customer) platforms.

How Much Does it Cost to Build a Marketplace Website: Sum It Up

In order to know the cost of building a web marketplace, there are a few things you should decide on:

• Kind of marketplace
• Software developers’ rates
• Marketplace features and functionality
• Approaches to marketplace development

If you want to find out more about YOUR online marketplace development cost, the best tip would be to validate your idea and get a quote from marketplace development experts.

We have been building marketplaces for over 10 years now. Our team has worked with clients across such industries as real estate, health care, education, home services, human resources, media, PR, transportation, and more. Contact our team today, and we will provide you with a free estimate.