Creating a Service Marketplace Platform in 2025 – The Entrepreneurs Guide

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What is an Online Services Marketplace?

Also referred to by various terms – such as a handyman marketplace, gigs marketplace, and freelancer marketplace on the internet, an online services marketplace is a platform that allows multiple service providers to register themselves and sell their services online. These services can range from blue-collar jobs, such as plumbing, carpentry, electrician, and gardening to white-collar jobs such as digital marketing, graphic designing, branding, and content writing.

Key perks of joining an online services marketplace platform for service providers include access to a wider audience, increased online presence, payment security, and flexibility in terms of deciding their own rates and schedules. Some service marketplaces have a reverse search option where customers upload a task and service providers place their bids for getting the job. These marketplaces add the benefit of autonomy for service providers who get more freedom in job selection.

Difference between online service marketplaces and product marketplaces:

Service Marketplaces	Service Marketplaces
Vendors (freelancers and service providers) register to sell their services	Vendors (manufacturers, distributors, wholesalers, and retailers) register to sell their products
Vendors aren’t required to own any inventory	Vendors need to own and maintain their inventory regularly
Shipping and delivery costs are not involved	Shipping and delivery costs are involved
Easy to onboard vendors	Difficult to onboard vendors
Easy to expand business to multiple regions	Comparatively difficult to expand business to multiple regions
Examples: UpWork, Fiverr, TaskRabbit, Thumbtack	Examples: Amazon, Aliexpress, eBay, Walmart

Key Growth Drivers in the Online Services Industry

While the growth rate for the handyman and freelancing industries is vividly astonishing, a wider aspect is required to understand the business potential in the overall online services industry. For instance, let’s take an overview of the primary growth factors behind the industry:

1. Convenience

Hiring a service provider on a service marketplace platform is highly convenient for customers. They can browse different platforms, see service provider profiles, and compare rates, ratings, and portfolios to make a more informed decision. Some online service marketplaces also provide discounts to make services more affordable.

2. Digital Growth in the B2B Sector

The surging demand for digital services such as programming, digital marketing, branding, content writing, and graphic designing is the key driver behind the growth of freelancing platforms and marketplaces.

3. Commercial and Residential Renovation Projects

Metropolitan cities, urban cities, suburban areas, and even rural areas have many structures aged 20 to 100 years. These structures require timely renovation and repair work to fix any plumbing, sewage, HVAC, and electricity problems.

4. Regular Servicing and Maintenance of Appliances

Electric appliances, automobiles, heavy equipment, and power tools require regular servicing and maintenance to ensure efficiency. With online service marketplaces, consumers can hire engineers and mechanics directly through the Internet.

5. Technological Advancements

Installation of new technologies, such as electrical systems, security systems, house automation appliances, solar panels, etc. requires handymen and certified service professionals.

Types of Service Marketplaces

Online service marketplaces can be categorized into various types based on the types of jobs they offer, their business models, operating areas, and more.

Primary Types:

1. Freelance Marketplaces

These more commonly refer to service marketplace platforms that offer white-collar freelancing services such as programming, designing, digital marketing, financing, accounting, sales, customer support, data entry, translation, and more. Due to their nature, freelance marketplaces can be easily used to deliver cross-border or digital services that do not require on-site visitation. Some examples of freelance marketplaces are UpWork, Fiverr, Guru, and Freelancer.

2. Handyman Marketplaces

In contrast to freelance marketplaces, handyman marketplaces majorly help blue-collar professionals find local jobs and big-budget jobs. These can range from house cleaning, moving, electrician, plumbing, engineering, HVAC, carpentering, roofing, lawn mowing, house help, car mechanic, babysitting, home tutoring, and more. Handyman marketplaces provide services that include on-site visitation. Some examples of handyman marketplace platforms are Angi, Thumbtack, TaskRabbit, and Bark.

Secondary Types:

Freelance and handyman marketplaces can be further classified into more types. Some of these types are suitable for multiple categories and can overlap each other.

1. Niche Specific Marketplaces

These marketplaces are dedicated to specific niches and help their professionals find more work. Niche-specific marketplaces can belong to both freelance and handyman professions. A key benefit of building a niche-specific service marketplace is that it is easy to position your brand image into a particular niche and establish a quick presence. Meanwhile, the downside is you may be limiting your target audience to a particular niche. Some examples of niche-specific marketplaces are Behance and Dribbble (for designers), SitterCity and Care.com (for babysitters), CareReve (for medical services), and Broomees (for Maid Services).

2. Bidding-Based Service Marketplace

Online bidding is a popular workflow on service marketplace platforms. Under this workflow, service seekers upload their various job requirements. Service providers review these jobs and send detailed proposals along with placing their bids. Service seekers review their proposals and select a winning bid based on their job requirements. Upwork and Freelancer are popular bidding-based service marketplaces. You can create a bidding-based service marketplace for handyman professionals as well.

3. Service Packages Marketplaces

Another popular business model in service marketplaces is that of service packages. These marketplaces allow service providers to create multi-tiered packages with different services and deliverables. Customers browse these packages and purchase a package as per their requirements. They can also buy multiple service packages from different professionals. Respective professionals deliver the work as stated in the purchased packages. For upselling purposes and bundling multiple packages, freelancers find service package marketplaces the best. Example: Fiverr.

4. Subscription Based Marketplaces

Subscription-based marketplaces can be of various types. On these marketplaces, service providers can sell monthly recurring subscriptions to customers, marketplace owners can also provide subscriptions to service providers. Marketplace subscriptions can include various benefits such as extra bids, featured listings, and customer support assistance. Many service marketplaces, such as UpWork provide subscription plans to businesses registered on the platform.

5. Talent Matching Marketplaces

Finding relevant freelancers for your work can be a tedious process, especially when the work involves a big project, such as complex software development, design requirements, or business accounting. Thus, to help businesses find the top talent for their requirements, many marketplaces use a talent-matching algorithm. This algorithm uses AI to connect service seekers with professionals who have the required skills and talent for their described jobs. Few examples of talent-matching marketplaces are Toptal and CloudPeeps.

6. Microjob Marketplaces

Microjobs can refer to several types of jobs, be it fixing a leaking tap, installing a new lighting system or babysitting children for a day. These jobs are usually short-term and mostly fall under the home services category. However, we can also count short-term gigs as micro jobs as well. By creating a micro-job marketplace, you can help service seekers find quick solutions for their one-time problems. Some examples of microjob marketplaces are Fiverr, Zeerk and Gigbucks.

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Leading Players in the Online Services Industry

The service marketplace business idea is not new and has been tried by many players. However, some were able to compete better in the market and provided more opportunities to service providers. Today, as those marketplaces are heavily saturated, making it difficult for new professionals to find a job, the demand for new marketplaces is at an all-time high. To build your service marketplace platform, you can take a reference from these leading players:

Marketplace	Estimated Revenue	Founding Year	Services Provided
Upwork	$566.6 million	1999	Freelance jobs across various categories
Fiverr	$190 million	2010	Freelance services in design, writing, programming, etc.
Airtasker	$100 million	2012	Task-based services including cleaning, gardening, and handyman tasks
Handy	$1.5 billion	2012	Cleaning, plumbing, electrical, furniture assembly
TaskRabbit	$1 billion	2008	Small household services, grocery delivery, furniture assembly, dog walking
Helpling	€200 million (~$220 million)	2014	Cleaning
StyleSeat	$500 million	2007	Beauty services
Vagaro	$300 million	2007	Beauty services
Treatwell	£100 million (~$130 million)	2015	Beauty services

How Does Service Marketplace Platform Work?

Service marketplaces connect service providers and customers with different workflows. Two marketplaces can also have different workflows and the way they operate and interact with users can differ. To summarize all popular service marketplace business models, we have prepared some exemplary workflow.

Workflow 1: Direct Hiring

Service providers sign up on the online services marketplace and create profiles
Customers browse service provider profiles and review their ratings, reviews, and portfolio
With the help of a scheduling calendar, customers view provider availability and book an appointment
Service providers coordinate with customers to complete the job
Post-completion, customers rate the service providers

Workflow 2: Online Bidding

Customers register on the marketplace and upload detailed jobs
Service providers explore these jobs and place a bid. They can also send a proposal stating their offerings and why they are the best for the job.
Customers review all bids and select a winning bid
Service providers coordinate with customers to complete the job

Workflow 3: Service Packages

Service providers sign up on the marketplace and create their profiles
They also create multiple service packages with each package having different offerings and deliverables
Customers review different packages and select a package that best matches their requirements
Service providers complete the work within the stated deadlines

Workflow 4: Hybrid

The hybrid workflow includes a combination of the aforementioned workflows. A single marketplace can have a direct booking system, a bidding system, and service packages as well.

How to Build a Next-Gen Service Marketplace

There are many approaches to developing a marketplace. However, every startup requires strategic planning and effort. Without proper strategy, entrepreneurs may be able to develop the technological base for their marketplace but still may fail in the implementation. Additionally, you will require an onboarding strategy that can help you attract service providers on the marketplace. From research and development to deployment and onboarding, we have mentioned all the steps below:

1. Understanding the Market

The freelance market is huge and diversified. It includes professionals belonging to different backgrounds and professions. Even if you plan to launch a niche-specific service marketplace for a certain type of professionals, it would still be important to understand consumer behavior, trends, market dynamics, etc. You can also make market size estimations from online data available, comparing both offline market size and online market size. Moreover, the growth factors in every region may differ.

To give a direction to your research, you can map your research data into the following optional frameworks:

Market Size

Market size might be available online for your target regions. You can either purchase the data from research companies or conduct your own research. For on-field research, try to figure out how much amount a customer is willing to pay for the various services you will be listing on the platform and multiply it by the estimated number of customers in that particular region.

Porter’s 5 Forces (Competitive Analysis)

This framework is highly helpful in figuring out the competitive landscape. Porter’s 5 Forces include competitive rivalry (number of competitors), supplier power, buyer power, the threat of substitute entry, and the threat of new entry.

PESTLE Analysis

While Porter’s 5 forces help in competitive analysis, the PESTLE analysis framework helps in identifying which external factors favor your business and which factors require you to maintain precaution. The PESTLE analysis framework refers to Political, Economic, Social, Technological, Legal and Environmental factors

SWOT Analysis

The SWOT analysis focuses more on identifying internal factors, such as Strengths, Weaknesses, Opportunities, and Threats. It can help you strengthen your business and overcome major impediments.

Business Model Canvas

The business model canvas will help you map out all the essentials of your marketplace business and will also help you understand your business better. Based on the business model canvas, you can make important decisions related to management, marketing, onboarding, technology, and more. The business model canvas includes key partners, key activities, key resources, value propositions, cost structure, revenue model, customer relationships, channels, and customer segments.

2. Selecting the Feature Set

To ensure support for end-to-end service marketplace operations, you will need certain important features. Below, we have listed the features required for all aforementioned business models. You can modify the feature set depending on your selected model.

Detailed profile creation: Let service providers create detailed profiles and add a bio, skills, soft skills, languages spoken, portfolio, experience, and more.
Service Packages: Let service providers create multiple service packages with different offerings and sell them on the platform directly.
Job Posting: First-time visitors and existing customers should get the option to create detailed job postings, including the required skills, job description, budget, and images.
Job Search: Service providers should get the option to search posted jobs on the entire marketplace platform with the help of various filters, such as task category, job budget, delivery timeline, and more.
Job Invitation: The option to let service seekers send direct job invitations to their preferred service providers.
Online Bidding: In the case of online bidding, service providers cannot directly apply for a job. They need to send a work proposal along with the bidding amount. The service seeker browses the proposals and selects the winning bid.
Booking Calendar: Let service providers manage their availability through a booking calendar. Customers can also use this booking calendar to view service provider availability and place a booking accordingly.
Internal Messaging: The internal messaging feature is to ensure smooth communication between the service provider and service seeker. It will help you keep all communication official on the platform marketplace and provide better support to customers.
Conflict Resolution: On service marketplaces, conflicts can arise for several reasons such as unsatisfactory quality of work, delay in work, and payment issues. The conflict resolution feature will allow users to request your help for mediation purposes.
Custom Registration Form: A custom registration form is required to collect the required information from freelancers belonging to different service categories. It can be used for identity, qualifications, experience, and license verification purposes.
Custom Task Categories: Your service marketplace platform should allow you to mention different task categories on the platform to attract service providers and help customers in job postings.
Job Cancellation Window: The job cancellation period is to prevent service providers and seekers from entering into an off-marketplace deal that avoids marketplace commission. It can be set by the marketplace admin from the backend dashboard.
Job Cancellation Charges: Likewise, job cancellation charges will also discourage unjustified job cancellations and off-marketplace deals. Additionally, they will help you provide appropriate compensation to those service providers who already started the work.
User Management: The user management features will let you monitor all new users, existing users, service provider profiles, customer profiles, etc. You should be able to access the order history and job completion history of all users and send them internal notifications.
Split Payment: The split payment method directly distributes the admin commission and service fee between service provider and marketplace admin.
eWallet: The eWallet system also helps in managing earnings and payments. The admin can set a minimum withdrawal amount and interval period after which service providers can withdraw their earnings.
Reports and Analytics: The reports and analytics feature will provide you with in-depth insights on top-performing service providers, service categories, revenue generation, top customers, and more. You can make data-driven business decisions based on these insights.

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3. Revenue Streams to Consider

To generate revenue from the service marketplace platform, you will need to integrate some revenue generation channels. Diversification in these channels will help you ensure a stable and steady income.

Some of the revenue generation streams that you should add are:

Service Commission: Charge a percentage commission on every transaction that takes place on the marketplace.
Subscription Packages: Create and sell subscription packages to service providers, including different offerings such as featured listing spaces, special mentions, and extra bids.
Featured Listings: Show service provider profiles and packages in the most highlighted sections of the website and charge them for the same.
Display Ads: Display third-party advertisements on the marketplace through ad networks and earn via PPC.
Paid Bids: Charge service providers extra for additional bids

4. Choosing the Right Technology

During the early stages of your service marketplace startup, think of the entire marketplace as an MVP that will help you test out your business idea and get market validation. Based on market feedback, you can improve the platform later. To develop such software, you may not need to invest heavily in custom development. Let us do a side-by-side comparison of both our available methods, including custom development and selecting a readymade or low-code software tech.

–	Custom Development	Readymade Software
Cost	$High cost of development because of hourly development rates	More cost-effective with one-time fixed cost
Development Time	Very long: It can take anywhere between 6 months – 2 years	Quick launch: You can get business ready within 1 week
Choice of Tech Stack	Available: You can select any tech stack of your choice. The hourly development rates will also depend on the chosen tech stack	Not Available: You have to proceed with the tech stack the software is built on
Tried and Tested for Market	No: You will need to go through multiple rounds of iterative development to ensure the product is market fit.	Yes: Readymade software are already tried and tested by the software provider for daily business use cases
Startup Friendly	No: Only opt for the custom development approach if you have the required budget or funds	Yes: Highly preferred for small to medium-scale startups
Additional Costs	Hiring business analysts, project managers, and market research	No need to hire business analysts and project managers. Research costs are also minimum
Customizability & Scalability	Fully customizable and scalable	Only a few readymade software provide customizability options

5. Launch and Market

After developing the marketplace, it is finally time to launch your business. To ensure a strategic and well-timed launch, it is advised to draft a Go-to-Market strategy that will include all launch details, such as promotional channels, pre-launch marketing campaigns, incentives, and more. The following considerations will help you prepare a strong Go-to-Market plan

Key Considerations for your Go-to-Market Strategy

1. Understand your Target Audience

Refine your target audience and understand their behavior and trends. Be aware that your target audience includes both service providers and service seekers. Try to understand better why service seekers would be particularly interested in online service market platforms and what motivates them. Also, analyze the various use cases and instances for which service seekers would like to hire which service providers on your marketplace.

2. Define your Unique Sales Proposition (USP)

Identify the key differentiators of your service marketplace platform. This includes what challenges you are addressing and how you are addressing them better than your competitors. Strong USPs will help you stand out from the rest of the competition and are highly important in any competitive market. Through your marketing campaigns, you should properly convey your USPs to your target audience.

3. Identify your Key Marketing Channels

Depending on the type of service marketplace that you develop, figure out the right marketing channels and platforms for promoting your marketing and other pre-launch campaigns. These can include niche-specific discussion communities and social media groups. Additionally, you can focus on key blogging platforms and email marketing strategies for promotions. Consider figuring out some reliable press release networks as well that can spread word of mouth about your marketplace launch.

4. Set SMART Goals

SMART goals refer to specific, measurable, attainable, relevant, and time-bound goals. By setting SMART goals, you will be able to get an appropriate measure of your performance and align your marketing strategy in the right direction toward strong and sustainable goals. However, this does not mean eliminating marketing stunts and growth hacking that can provide you with quick results. SMART goals on the other hand are better advised to keep for measuring what’s feasible and achievable instead of exhausting your efforts on unachievable goals.

Onboarding Plan to Attract Service Providers

To start your business operations, you will need to onboard some service providers first on your marketplace. Your pre-launch marketing campaign can take care of that. Here are some ways you should look forward to onboarding service providers on your marketplace.

Incentivize Service Professionals: Introduce various types of incentives for early signups. These can include low to no commission rates, featured listing spaces, unlimited bids, priority customer support, and more.

Run Social Media Campaigns: Social media campaigns can help you reach service professionals on a deeper level. You can find social media groups and share informational content to onboard service professionals from various niches.

Search Engine Optimization (SEO): Likewise, many service providers and freelancers are looking for new service marketplace platforms on the internet. Use search engine optimization to rank on relevant keywords and make yourself more discoverable.

Cold Emailing: Building an email database can be a long and tedious process. However, you can purchase a filtered database and do cold emailing to onboard existing service providers and small companies.

Use Print Ads: Print ads help attract users even today. You can select niche-specific magazines for your print ads and clearly convey the USPs.

Discussion Communities: You can ask people to review your marketplace on discussion communities like Quora and Reddit. These platforms have relevant spaces where you can share and indirectly promote your platform.

How Much Does it Cost to Make a Service Marketplace Platform?

The development cost is highly subjective to the method of development. In the custom development approach, you are paying for hourly development rates that can vary from $15-$100 per hour depending on the country and team of developers. Selecting readymade software is more effective.

Development Approach	Cost Estimation (USD)	Analysis
Custom Development	$60,000-$200,000	Custom development includes hundreds of features, the wireframe, and the design to be developed from scratch. It also requires hundreds of hours of research. This bloats the cost of development, especially when you are charged on an hourly development basis for the number of developers and consultants hired.
Readymade Software	$2000-$150,000	Readymade software solutions are more cost-effective than custom development as they come with all essential features right out of the box. They also include either monthly recurring payments or one-time fixed payments. The ones that are available at a one-time payment are even more cost-effective, especially for long-term and scalable operations.

How to Start a Service Marketplace with Yo!Gigs?

Yo!Gigs is the most advanced service marketplace software available in the industry. It comes with state-of-the-art design and support for both blue-collar and white-collar niches. To streamline operations, Yo!Gigs has separate admin, service provider, and service seeker dashboards. With its business-ready features, Yo!Gigs helps service marketplace owners deal with daily use cases, such as simplifying bookings, managing commission charges, preventing off-marketplace deals, and ensuring a superior user experience.

Here are some key reasons to select Yo!Gigs to build your service marketplace platform:

Fully Feature Loaded: Yo!Gigs provides the maximum features for service marketplace operations. From booking calendar, bidding module, and service packages to direct invitation, multiple job types, and conflict resolution, Yo!Gigs covers them all.
Fully Customizable Solution: To help meet any additional business requirements, Yo!Gigs is fully customizable. You can discuss any of your customization needs with Yo!Gigs’ business consultants.
Unlimited Access: In Yo!Gigs, there’s no limit on the number of features you can use. It also comes with an unlimited number of transactions, job postings, and user profiles.
One-Cost Time: Yo!Gigs is a self-hosted solution that is available at a one-time cost. There are no recurring charges involved
Multinationalization: For expanding your marketplace operations in multiple regions, Yo!Gigs comes with multilingual support, multi-currency support and also has multiple payment gateways for trust-building purposes
12-Months Free Technical Support: Yo!Gigs also comes with 12-months of free technical support to ensure you complete peace of mind during business operations.

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How to Get Started with Yo!Gigs?

There are four simple steps to launch a service marketplace platform with Yo!Gigs:

Step 1: Get your Yo!Gigs license

Step 2: Yo!Gigs team will install the solution on your selected hosting server

Step 3: Set up and configure your marketplace

Step 4: Launch and manage. Use Yo!Gigs’ in-built features to promote your store

Conclusion

Any business idea only reaps results when adequate efforts are put in the right direction. While a service marketplace platform is an asset-light business idea, it will still require efforts on two important fronts, which are technology and management. While powerful technology will help you simplify operations for both customers and service providers, appropriate management will drive you toward your overarching goals. In the initial stages, you may also need to invest profit and time in marketing but once you onboard service providers, it’d be easier to grow your services marketplace business. You can develop your in-house team of marketers for onboarding purposes or look for third-party services.

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Posted in On-demand Services Business Ideas by Abhishek Kataria.

Author: Abhishek Kataria

Abhishek Kataria is a business consultant at FATbit Technologies. He assists entrepreneurs and business owners in developing viable digital touchpoints and marketplaces. Abhishek is curious about exploring and analyzing new business trends and has a keen eye for the latest developments in the eCommerce sector. Apart from consulting, you can find him practicing French and exploring his creativity in Photoshop.