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MenuWhat's the average CAC value or range for a Marketplace client?
We are building a crowdsourcing marketplace, where we will have clients on one side and freelancers on the other side. Let's say we have the freelancers side under control and we don't need to acquire freelancers at the moment. What would be a regular CAC value in order to acquire clients in our platform?
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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.
The acquisition cost depends on the channel you will use to reach out your clients and your ability to target them.
At first, you will probably spend quite a lot in order to find the right mix for targeting and you will hopefully improve that.
What I would do is to put a small budget and test (a lot) what are the best acquisition channel and targets.
In my case, I had the opportunity to build a platform of 200 000 users just by using the right channel and targeting the right people in 9 months with no users at all at all in the beginning. We have decreased our acquisition cost by more than 50% since the launch.
But if I can add a remark, I was not focused on the cost to acquire a user, but simply to be able to acquire some. The first objective is to understand how a client is interested by your plateform (the value of your freelancers) and how much you would get out of a client and then try to optimize its acquisition process.
I'd happy to share more with you if you want.
Alexandre
I believe that the CAC (customer acquisition cost) is not a relevant measure for a marketplace. It is relevant for a recurring-payment SaaS product.
I suggest finding a more meaningful measure for a marketplace, e.g. Cost per Sale in Marketplace (CSM?).
Then you can measure the average sale price in the marketplace, the average commission your business takes, and go from there estimating the required cost per sale in the marketplace to make it worthwhile.
For example, if your sales transaction price in the marketplace averages to $100, and you take $5, you need to make sure that the cost of making that happen is not more than $5 (and preferably much less).
I've successfully helped over 150 entrepreneurs, startups, and businesses, and I would be happy to help you. Please send me more information before scheduling a call - so I can give you maximum value for your money. Take a look at the great reviews I’ve received: https://clarity.fm/ripul.chhabra
The average CAC value or range for a Marketplace client is industry dependent:
1. Paid Search - Average CAC by Industry (2018):
Across All Industries: $49.86
a. Advocacy: $96.55
b. Auto: $33.52
c. B2B: $116.13
d. Consumer Services: $90.70
e. Dating & Personals: $76.76
f. e-Commerce: $45.27
g. Education: $72.70
h. Employment Services: $48.04
i. Finance & Insurance: $81.93
j. Health & Medical: $78.09
k. Home Goods: $87.13
l. Industrial Services: $79.28
m. Legal: $86.02
n. Real Estate: $116.61
o. Technology: $133.52
p. Travel & Hospitality: $44.73
2. Display Advertising – Average CAC by Industry (2018):
Across All Industries: $75.51
a. Advocacy: $70.69
b. Auto: $23.68
c. B2B: $130.36
d. Consumer Services: $60.48
e. Dating & Personals: $60.23
f. e-Commerce: $65.80
g. Education: $143.36
h. Employment Services: $59.47
i. Finance & Insurance: $56.76
j. Health & Medical: $72.58
k. Home Goods: $116.17
l. Industrial Services: $51.58
m. Legal: $39.52
n. Real Estate: $74.79
o. Technology: $103.60
p. Travel & Hospitality: $99.13
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
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What is the best pricing (business model) to apply to a marketplace?
I like to separate your question into 2 sub-questions: #1 How do we determine which side to charge? #2 How much is the right amount to charge? On #1, my answer is that you can charge the side(s) for whom you add the most value. In your examples, Uber really solves a big problem for drivers, it's that they sit idle for a good part of the day, so are willing to pay a lot for new leads. (their alternative is no work) Consumers are charged more for the convenience of a private car but they are probably not so much willing to pay more for a taxi, even if they can hail one from their phones. For AirBnB, it's a mix, it's a way for landlords to monetize idle capacity which they are willing to pay for, but it's also a way for a renter to pay less than they would normally pay for a hotel. On #2 (how much), I like to triangulate a number of factors: - What's the maximum amount I can charge one side, while still being a good deal for them. - How much do I need to charge so that I can become profitable? (the economics are quite different if you charge 3% vs. 12%) - What are comparable services charging for substitutes/competitive offerings? I will just add that there is no formulaic way to determine pricing strategies (curated vs. open), and it's a lot more about what's the comparable and what the value delivered is. That's how I approached the question while deciding the business model at ProBueno.com (my startup)MR
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