Charging a fixed percentage of each transaction is the most common commission strategy for marketplaces. But as your business grows, you may come across situations that would call for a totally different fee structure. The latest Sharetribe Flex gives you the tools to create your ideal commission strategy.
Adapt your commission to transaction size
It’s not uncommon for a marketplace to have a lot of variation in transaction sizes. In these situations, having more fine-grained tools than a fixed commission percentage is useful.
If you process a transaction worth $3, for instance, your 10% commission would be $0.30. That’s not enough to even cover the payment processing fees.
Meanwhile, your marketplace might also get transactions worth thousands, or even tens of thousands. If your commission for a transaction worth $5k is still 10%, your users might be tempted to circumvent your payment system to avoid your $500 commission.
The latest Flex feature will help you solve this issue. You can now set a minimum and a maximum commission. For instance, you could state your commission is 10%, but no less than $1 and no more than $100.
If you find that a percentage-based commission strategy doesn’t work for you at all, you can also decide to have a fully fixed commission. It can simplify your communication to your users and help manage their expectations if you can say that you're always charging $5 per transaction, for example.
Use fixed or percentage commissions for customers, providers or both
As you might remember, Flex allows you to set different commissions to your customers and to your providers. This allows you to build an Airbnb-style commission structure, where a part of the fee is charged from the guests and another part from the hosts.
With the new functionality, this feature becomes even more powerful. As an example, you could only charge a fixed $1 fee from your providers and a percentage fee from your customers. You can also decide to only charge your fees from the customers, or only from the providers.
It’s also possible to combine fixed and percentage-based commission strategies. This way, your fees can model payment processing fees: payment processors like Stripe typically charge both a percentage and a fixed amount for each transaction.
Learn more about how to adjust your commission and try out different options using the Flex CLI. If you have any questions about customizing your commission strategy, we’re here to help!