When working on a double-sided marketplace how do you work out cost of customer acquisition?

The best way to solve chicken and egg problems for marketplaces is to prove market need on each side independently first with a low-cost MVP-type test. Once you've proven the market on both sides with metrics it is much easier to leg in supply and demand with a strategic or enough funding to match a market on a local or niche level to ensure liquidity. For a deeper analysis, here is a post on medium that I wrote... http://bit.ly/1k2vYbY Also, feel free to schedule a call with me if you'd like to dig deeper.

At WP Engine, everything in marketing and sales is included in CAC. Salaries, commissions, coupons, direct advert spend (which you're saying you don't yet have), fees, travel and other costs associated with conferences, etc.. My advice is to err on the side of putting too much in CAC, because that helps you honestly understand the costs. Ignoring some costs just because they don't scale with company size or marginal new customers doesn't make sense to me, it simply means that certain components of your CAC you expect to get more efficient over time. Indeed, they had better! So measure it, instead of ignoring it. You also might find that some of those direct-spend channels are not as inefficient as they seem compared to things like SEO efforts. Or the reverse! All good things to explore of course. I'll also note that at $19/mo in the crowded space of CMS offerings you will find that very few channels will be efficient compared to the revenue you're generating. It sounds like you know that, and are dealing with it with "scalable" efforts like content marketing, however again you should be ruthless in understanding how those costs are really translating into orders and whether that's a financially sensible total strategy.

Check out https://www.balancedpayments.com/ They are made for marketplaces. Airbnb CEO among others invested in them and they have some of the best pricing/payout fees. Also some good info on http://www.collaborativeconsumption.com/2013/10/08/online-marketplaces-are-hard/ One of Balanced Payments co-founders is writing this blog series on marketplaces.

I think you're looking at this the wrong way. Your customer acquisition cost is not something you should benchmark against other businesses. Without knowing more, like your short and long-term goals, it's impossible to answer. Two companies with similar business models may have different answers to this question. A venture-backed startup trying to keep up with aggressive revenue goals may be able to stomach an astronomical CAC. A bootstrapped startup that is not seeking venture money may aim for slower growth and much lower CAC. I suggest setting up a call with a marketing or finance expert to determine what CAC is appropriate for your company and how to get there.

I always suggest going "uncomfortably narrow" initially so that you can really dial in the user experience and build liquidity first. Going broad will be tougher as there's too much noise to signal. Also, it's best to fake the supply side initially of you can to improve the buyers side first, then figure out supply & quality afterwards if customers are buying and you've proven out a demand strategy that will work.