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On Demand Businesses 101

Here is the total cost of building an online marketplace

Many entrepreneurs face difficulty estimating the cost of building an online marketplace while chalking out the business plan. In many cases, incorrect estimation of the cost causes a delay in launching the business and sometimes to the rejection of the idea.

The cost estimate for building an online marketplace can be accurately calculated after defining the scope of the project. Let’s assume you are not going to compete for head-on with Uber or Airbnb. Your business idea is to bring local sellers in your geography and provide them with online visibility through your marketplace and help the customers find all the stores at one place making it easier to compare products. This being the scope of the project lets start the estimate for your marketplace business.

The investment is broadly broken into two parts, the cost of building an online marketplace and getting the word out (marketing).

Part 1: Building your Online Marketplace.

You can do this in two ways:

1. Code it yourself

2. Using a SaaS platform

Let us consider, building an online marketplace from scratch. The MVP for the marketplace requires basic functionalities for supporting a successful online business.

The Marketplace stakeholders:

1. The Customer

2. The Publisher

3. The Marketplace owner

Each of these stakeholders has user stories.

For the customer, e.g. the customer signs up, sets his user profile, add products to his cart and then checkout. In this flow, there are user stories like Authorisation for sign up, the User profile for the customer and the payment gateway integration for checkout. There are about 90 user stories in total including those of the publisher and the admin.

Let’s assume each user story needs 12hrs developer effort. According to Clutch.co the data for the hourly wage rates for the developers in different regions is listed below.

building an online marketplace

Based on this data the cost for building the MVP for the marketplace in different regions are as follows:

building an online marketplace

So it costs about $170,820 if you build your marketplace from scratch.

Even if you are good with programming, and you love to code, to build the entire online marketplace platform with all the functionalities is going to take ages. The first step should be to validate your marketplace idea. The best way is to go for an already built SaaS platform. The SaaS platform helps you create your online presence without needing your server to host.

First-year costing for your Marketplace:

1. 1-year subscription for Yelo – $1,788

2. Custom domain for your website – $10

3. Security certificates – Inclusive with Yelo’s annual plan.

4. Logo – The logo design can range from $50 to $300

5. Images – Free

Total – $1,828

With $1,828 you can run your marketplace business for a year and validate your idea.

Part-2 Getting the word out.

There are many organic ways to market for your marketplace business. You can start by promoting your business pages on social media. Invite users to like your page and then start posting content. Blogging is a great way to drive traffic to your site. Start by commenting on popular blogs revolving around your business idea. You can use MailChimp for setting up your email campaigns; it is free up to 2,000 users.

For paid marketing, you can start running Google Ads and Facebook Ads with a target audience. You could also limit your ads to a particular geographic region.

After the First year:

One year is a good time to validate your business idea. In the first year of your business, the growth in transactions and the number of loyal customers who come back and purchase should help your marketplace run on its own.

If not achieved, then the idea should be revisited. “What is the problem that you’re solving?”, “Is the problem big enough.”

After reaching liquidity, it is time to take it to the next level. If you are a sole proprietor, it is better to have a partner onboard. In the long term, running the business alone can be quite exhausting; outside investments can be helpful – private investment or crowdfunding.

At Yelo, the primary objective is to help business owners take their business online affordably and quickly. If you’re reading this then you can also start your entrepreneurship journey with Yelo. Most companies fail not because they have limited resources, but it fails as the entrepreneur’s loose faith.

Hope this blog gives you a good overview on how to kick start your business and use your resources wisely.


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