Last Updated Date 30th May, 2025
On-demand service marketplaces are gaining quick popularity around the globe because of the convenience they provide to customers and the various job opportunities that they open for home service professionals. As per statistics, the on-demand service industry is estimated to be at $5.95 billion in 2025 and almost double itself in the next 4 years, marking an impressive compound annual growth rate of 15%.
Furthermore, the rise of remote work culture, home improvement trends, renovation trends, sharing economy, and cost-effectiveness are likely to accelerate growth in the home services industry. However, many entrepreneurs taking inspiration from the on-demand service marketplaces are interested in launching their own marketplace.
Building a service marketplace today is quite challenging. Along with the technology, you require a clear vision and innovation to stand out from the competition and gain traction in the market. In this blog, we have explained the various business aspects of an on-demand service marketplace so that you can make better decisions and launch your business with full confidence. From the business model and revenue model to industrial insights and development approaches, we will shed light on them all.
Figuring out the business model of your on-demand service platform remains a primary challenge. There are multiple business models in the industry and each of them has different benefits.
Under this business model, customers can directly view service provider availability through a booking calendar and hire them. Post-hiring, they can discuss job requirements with their hired service providers. The direct hiring model ensures a faster booking experience but might fail to fulfill the requirements of complex jobs where service providers cannot easily confirm their eligibility for the job. Thus, the direct hiring model is preferred for simple jobs, such as fixing leaks and assembling furniture.
Instead of customers reviewing service provider profiles, they upload various job requests. Service providers review those jobs and place their bids. A major benefit of the job posting model is that customers get price flexibility. They can compare bids and select a service provider that best matches their requirements. Additionally, job posting is suitable for complex jobs. Service providers only place bids after ensuring their job eligibility. On the other side, the wait time for bids means extended service delivery.
Service providers create multiple service packages, stating the cost of each service and warranty over work. Customers browse these packages and buy them. This helps ensure better price transparency and customers are already aware of the package inclusions. Service packages are suitable for long jobs and tedious jobs that may take anywhere from days to weeks.
An on-demand service marketplace that is the combination of all the above-mentioned business models. On this marketplace, you can conduct direct hiring operations, job posting, and also sell service packages. Due to its complexity, developing a service marketplace on this model might be more time-consuming and costly
There are several revenue streams of an on-demand service marketplace model. However, zeroing in on a couple of them that are sustainable and help businesses scale is essential. Some of the possible revenue streams are explained below:
The on-demand services industry is further divided into various niches. On a marketplace platform, you can aggregate services from each of these niches. Alternatively, depending on the market demand in your targeted geographic region, you can launch a dedicated on-demand service platform for a particular niche as well.
Electricians can increase their sales by listing their services on an on-demand electrical services platform and delivering their services to customer homes and business locations. As per statistics, the electrical services market is valued at $138.5 billion in 2025
To save clients the hassle of finding a plumber in their neighborhood, an on-demand plumbing services platform helps them find and book a plumber in minutes. Furthermore, the overall size of the plumbing services market is also impressive at $134.96 billion.
As with other on-demand services, an HVAC services platform connects HVAC service providers to customers looking for them. Customers can find as well as book a visit from HVAC service providers.
Many homeowners take regular pesticide control as pests pose real threats to health and damage property. An on-demand pest control services platform acts as a one-stop destination for homeowners to find all sorts of pest control services. Within a few clicks on the marketplace, they can book pest control experts and eliminate serious health hazards
On-demand cleaning services for the ones who struggle hard to keep their house clean and hire maids or housekeepers for the same. Additionally, commercial cleaning is frequently required after house events and parties. The estimated market size of the cleaning industry in 2014 was $415.93 billion and the industry is growing at a CAGR of 6.9% in the projection period 2025-2030.
Customers prefer booking and delivery of services at their doorstep which has brought a lot of popularity to on-demand appliance repair services. These appliances can range from electronic appliances, such as TVs, fridges, and ACs to power tools and other electronic equipment.
Keeping the yard, lawn, and landscaping maintained has never been so easy with the fleet of local and professional on-demand landscaping services. Furthermore, landscaping requirements are equally required at hotels, schools, colleges, and other public infrastructures. Due to the increasing demand, landscaping services today are worth $330.58 million.
On-demand professional locksmith services are in great demand due to residential locks, commercial locks, key duplication, automotive key programming, and locks for security surveillance. It can be difficult to find a professional and experienced locksmith in case of emergency, which is why onboarding locksmith experts on your on-demand service platform makes sense.
On-demand roofing services are gaining popularity because of increasing construction projects and renovation projects. Roofs can be of various types and built from different materials, including asphalt, wood, metal, clay tiles, etc., fixing which requires expert assistance. Additionally, with the increasing preference for green roofs, solar roofs, and smart roofs, the need for roofing services is gaining more pace.
To figure out the business model and workflow of your on-demand service platform, you can take reference from the following leading players.
While the glaring success of the on-demand service marketplaces is evident, every startup requires strategic planning and timely execution. Below are a few factors to consider while preparing your launch strategy.
On-demand service platforms today refrain from expanding their market reach and end up being limited to a pool of loyal customers. The problem arises as soon as a new competitor with huge capital enters the market and starts expanding. The chances of them getting out of the business increase with the increasing number of competitors.
It is extremely unwise to be dependent on funding to launch and sustain your on-demand business. No matter how well-propositioned your business model is, there is no guarantee of finding an investor. It is better if the entrepreneurs look into alternative financing options like partner financing, invoice advances, marketplace lending, revenue-based financing, etc., and not remain limited to venture capital.
As many successful on-demand businesses have set the benchmark high, modern customers’ expectations have also risen. Some key traits are:
Take a look at these points and identify which of these relate to your business. These points can highlight where your business can improve the customer experience by focusing on the needs of your customers.
Here is a look at trends that are being formed and which also lay the foundation for the future of the on-demand services industry.
As people are getting used to on-demand service platforms, they are also looking to take advantage of more on-demand services in diverse industries. As a result, the on-demand economy is going to see an increase in its workforce in the coming years. From electricians and plumbers to remote freelancers and elderly care professionals, people will be able to hire any professional on an on demand service marketplace.
So far, most of the on-demand services like cleaning, ride-hailing, food delivery, etc. did not require a special skill set or expertise, However, the growing number of service providers and niches will require skilled and qualified service providers with relevant experience to join the workforce. Some of the examples are medicine and healthcare services which are becoming popular and require service providers to be skilled and experienced.
As the number of businesses and service providers is increasing in numbers and competition is rising every day, service providers need to offer quality services at reasonable prices. The hike in the number of service providers has forced them to offer premium services at customers’ convenience or lose a potential customer. This is why many service marketplace platforms have also started offering tiered service packages with different offerings.
As the penetration of on-demand services increases, there is an increased demand for running background checks. For safety purposes, customers are hesitant to use the services if there are no background checks for the service providers. On-demand business owners should consider this to build and maintain the trust of the customers.
As the competition in the on-demand services industry is roaring high, businesses will not be able to thrive without data mining and business analytics. These can give valuable insights into the services which are in demand. Business intelligence and analytics will help to find out the demographics of the users, whether the marketing strategies are performing well or not, and what can be done in order to streamline the business.
Launching an on-demand service marketplace platform is an opportunity to tap into this growing industry, however, rushing to launch a platform as fast as possible with a vague idea about the target market and business model can sink your business before it is even established. A well-thought-out business strategy is a solid foundation, not only for the business but for the technical aspect as well.
Here is what you need to do when building an on-demand services marketplace.
The untapped potential of your business can go far beyond expectations with the aforementioned business models. To provide the best experience, start with job posting and online bidding both. This will keep multiple options open for your business and help you gain traction. Furthermore, you would be flexible to cater to the business requirements of diverse professions.
While exploring the market, find out answers to a couple of questions:
Build a user persona that can greatly help you define your potential customer’s needs and enable you to fulfill them.
Prepare a list of your competitors, irrespective of the fact whether they work in a similar niche or have a slightly different market. Take a closer look at their business, and try to find out insights into their business, like:
Analyzing all these factors, you will be able to detect the elements their business is missing. You can then use this missing element to strengthen your business and make it one of a kind. You can also use Porter’s Five Forces methods for doing competitive analysis.
In this article, we mentioned five feasible revenue streams for an on demand marketplace. You can integrate any of them to develop a strong revenue generation channel. Apart from these, you need to select a percentage commission that would be profitable for the business but not too restrictive for service professionals. High commission charges can also turn away service professionals.
An on-demand marketplace needs to have different features for all the different users – admin, service provider, and customer. Have a thorough research of your market and audience and then select the features.
For reference purposes, we have given a complete list of features below:
Studies and reports portray that the on-demand services market is expanding and there is an unconfined inclination towards this economy. However, not many businesses make it big in the market and their efforts go in vain. The primary reason is the lack of proper marketing.
Let’s discuss how on-demand businesses can attract more customers and increase their revenue.
Building an on-demand platform is not all; businesses need to have a properly strategized marketing funnel to create demand and entice customers. A lot of research is required keeping in mind the target audience and the services being offered before actually launching an on-demand services marketplace.
Building a better bond with the audience is always recommended in a business. Sponsoring events, interacting with service providers through different mediums, and sharing skill-developing videos can help businesses gain trust and build the authority of their on-demand business.
Proper knowledge of the market is vital in any business, and on-demand businesses need it more than any other. It is essential to know the difficulties faced by potential customers, their requirements, and how your services can help them solve their problems. On-demand businesses need to carry out these surveys to be on the right track, or else the competitors can grab their potential customers.
Every new customer has this psyche of being doubtful towards a new company. However, if they see another customer sharing positive feedback, they are easily convinced of the services. On-demand businesses need to make sure they allow their customers to share their experience (video, picture, written), which will serve as a testimony of their quality and attract new customers.
Another effective strategy to gain more customers is to provide enticing offers and discounts that can attract existing as well as new customers. The only thing to consider while offering discounts is that these offers should be realistic and not cost much, or else they can backfire.
Yo!Gigs is a full-fledged service marketplace software with comprehensive support to build all types of service marketplaces. With its attention to detail and daily business use cases, Yo!Gigs is the unrivaled solution in the entire industry. Its state-of-the-art design ensures maximum user-friendliness and is also fully customizable. Be it an on-demand marketplace for plumbers, HVAC experts, garage mechanics, electricians, or babysitters, all of them can be developed with the help of Yo!Gigs.
Ans: For on-demand marketplace operations, Yo!Gigs is a highly recommended solution. It comes with a wide range of essential features to simplify all types of on-demand service operations. Furthermore, it also supports direct hiring, job posting, and bidding to provide customers with diverse hiring options.
To ensure quality services and establish trust in consumers, the marketplace owner gets the background checklist and verification badge features. For managing service providers, Yo!Gigs has modules such as user management, commission management, withdrawal settings, eWallet, advance deposit, etc.
To view Yo!Gigs in action, schedule a free personalized one-on-one demo session here.
Ans: The cost of developing an on-demand service marketplace varies on the development method. Via the custom development method, you would be paying between $25-100 per hour to develop your marketplace platform. If it takes 1000 hours to develop the marketplace, then your overall custom development cost will be somewhere between $25,000 – $100,000. On the other hand, by using a readymade solution, you can reduce the overall cost to $1000-$5000. This is possible as the solution has been already developed by the software provider and you are only purchasing a license for the software.
All innovation starts with an idea to solve real-world problems. At FATbit Technologies we are passionate about driving digital transformation to prepare businesses for a digital-first tomorrow. Let’s discuss your BIG idea NOW.
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