Different Ways to Make Money With Multi-Party Products
Multi party products are those that are made up of numerous individuals, organisations and audiences whose actions affect one another, creating an ecosystem or network. They offer many levers to pull in terms of pricing strategy and so have many opportunities to try out different approaches. Here are a few lessons that Anna’s learned.
Not all jobs are created equal.
upWork is the largest freelancer marketplace in the world. The demand is created by the companies looking for services and the supply is created by individuals. upWork wanted to encourage their freelancer community to take up a particular type of job, posted by premium customers. As such, they decreased the commission that they took on each of those pieces of work, which led a higher take up.
You can promote particular behaviours with particular pricing models
upWork also wanted to encourage repeat work between freelancers and clients as they know this will increase the quality of the end result, meaning happier customers which leads to increased revenues. As such, they introduced a tiered pricing structure where for the 1st job they take a 20% cut, the 2nd 15%, the 3rd 10% etc. The changes had an immediate impact.
Bringing people together can create enough value to charge for
Spacehive is a community crowdfunding platform. People suggest projects that they would like to see funded and then promote them to have investment from people in their area. Local Authorities spend a lot of time and resource trying to find these exact type of projects that the community wants in order to fund. With Spacehive they are able to do that easily and even have individuals help with the funding of them — showing commitment and helping to reduce pressure on budgets. As such, they are now charging local authorities a membership fee, that will allow them to use the service in an enhanced way to find these projects and make them happen.
Sometimes you need to ignore the pricing conversation altogether and focus on value
JustGiving charge a 5% commission on donations that individuals make to charities. They have traditionally focussed on ‘making fundraising easy’ for organisations and their supporters. In 2009 a number of competitors started to emerge — who were willing and able to charge a lower % or nothing at all to the charities. As such, JG had to decide how to respond to this undercutting. They have done so by illustrating how much more money charities will make from their ‘Social Giving Platform’. They are no longer about making fundraising easy, they position themselves as a partner that can help charities ‘raise more money and reach more people.’