How Much Does it Cost to Create a Multi-Vendor Software Marketplace?
It’s not just the likes of Etsy and AirBnB that generate great revenues from marketplaces. When done right, a software marketplace can be a very profitable business, especially in an era when cloud services are more in demand than ever.
Naturally, every entrepreneur in the tech industry has at least considered launching a multi-vendor software marketplace. At a glance, business acumen is all you need for a successful cloud marketplace. Knowing what and when to bundle, as well as how to cross-sell and upsell to existing customers are the cornerstones of surviving and thriving in this business.
However, the first question that pops to mind is, understandably, how much does it cost to create a multi-vendor software marketplace.
Unfortunately, there is no one single answer to this.
Depending on the features and the type of business you want to launch, the numbers can vary by as much as two or three zeros. The same goes for the timeframe: to launch a sturdy solution, it can take years to develop everything from scratch, in-house.
Let’s take a look at some of the approximate costs entrepreneurs who want to launch software marketplaces incur in the first year.
The Costs Associated to Launching a Multi-Vendor Software Marketplace
The costs of a multi-vendor software marketplace vary not only according to the size and services you plan to integrate in your platform, but also according to the providers you choose to support you.
1. Getting Started
The first things you need for your multi-vendor software marketplace are a domain name and good hosting. This is not the place to make savings – you need a reliable hosting service with no downtime and great security. It could be hosted, on your private cloud, or on a public cloud of your choice. Only remember that you will be processing payments, so you can’t wing it.
Cost of domain, hosting: $500+/month
2. Building Your Multi-Vendor Software Marketplace
Granted, you could always outsource this to cheap platforms like Fiverr or Upwork. But you need to make sure you choose a vetted team or a vetted freelancer to take care of developing your marketplace.
However, this can quickly turn into a fiasco. keep in mind that you should also have a reliable team that knows the meaning of NDAs, SLAs, reliable services and seamless UX working on your marketplace.
The UX is crucial for the success of a multi-vendor software marketplace. The customers who bypass the vendors and choose you instead do it because the services they use are easier to manage this way. A lagging, slow, buggy and unfriendly UX will definitely deter them from your marketplace. And the absence of a single Sign On dashboard for a smoother customer experience will definitely cause you to lose upselling opportunities.
Thus, be sure to invest in quality web development, whether you choose a freelancer or a specialized agency for it. Also, invest some time in testing your marketplace before the actual launch.
Cost of front and backend development and testing: $50.000+
3. Integration with Legacy Systems
Any established company already has quite a few systems in place: ERP, CRM, marketing automation platforms and more. It goes without saying that your new marketplace should seamlessly integrate with these.
You need a smooth integration for both your backed operations and for the end user experience. Depending on the number of systems you need to integrate, the cost can vary greatly.
Cost of integration with legacy systems: starting at $10.000
4. Marketing and Advertising
There is no minimum or maximum amount to invest in getting the word out. For instance, if you already have a good relation with influencers in your field, you can significantly cut down on your PR costs. Similarly, if you already have established social channels with a lot of fans or followers, it will be cheaper to gain brand awareness.
The starting place should always be inbound-based. Finding the right traction and the right selling points for the right buyer personas is the first step to any marketplace’s success. The same goes for product and market fit, as well as timely go-to-market.
The costs above do not include market research, setting up payment gateways, on-boarding vendors and many others. Adding those would definitely add at least another zero to the final sum.
Yes, building a multi-vendor software marketplace from scratch is extremely expensive, as well as time consuming. Luckily, there are alternatives! Cloudesire’s white label marketplace solution enables you to launch your own marketplace quickly and at a fraction of the costs incurred by building it in-house.