How Much Does it Cost to Build an Online Marketplace?

The sharing economy has been growing rapidly, leading many people to consider starting their own online marketplace. Web-based marketplaces can help people share goods, services, accommodations, and relevant information.

If you want to develop your own online website marketplace, you first need to know roughly how much it will cost.

Cost to develop a marketplace depends on the option you choose. There are essentially two options for developing such a project. You can develop on a platform, such as Sharetribe (built with the Ruby on Rails framework) that offers certain ready features. Using Sharetribe or a similar platform is the fastest and cheapest way to develop such a website.

The second option is to build a marketplace from scratch. Although this option demands more time and money, a bespoke marketplace can be customized to meet your specific needs better than a platform such as Sharetribe.

We can help you decide which option is right for you during the requirements elicitation stage.

From the technical point of view, creating such a project is easy for us for a few reasons:

• We have experience building marketplaces
• We have our own libraries
• We use Sharetribe, which is a great open source solution that speeds up marketplace development

We’re going to provide you with two estimates: the cost of building a web marketplace from scratch and the cost of building it using Sharetribe.

Technology Stack for Building a Website Marketplace

The technology stack we use to create a marketplace website varies depending on a marketplace’s specifications. But we typically use the technologies listed below:

• Sharetribe
• HAML
• Sass
• CoffeeScript
• Ruby
• Ruby on Rails
• RSpec
• Capybara
• PostgreSQL

Keep in mind that we listed only core frameworks and preprocessors, and the stack usually includes more technologies. The technology stack may also change should we consider other frontend frameworks.

How We Estimate a Marketplace Project

According to Agile principles, we estimate development tasks in story points rather than in hours (you can read more about reasons to estimate with story points). But for the purposes of this article we’ll provide you with a story points estimation converted into an hourly rate estimation.

Implementing a marketplace, regardless of whether the marketplace is based on Sharetribe or made from scratch, is similar to implementing any other web application. Here’s the work we’ll do, in a general sense:

• User Interface and User Experience design (the look & feel and behavior of the marketplace)
• Responsive HTML and CSS (so your marketplace works great on any device)
• Front-end programming (user interactions in the browser)
• Back-end programming (server-side business logic)
• Automation tests to remove bugs
• Acceptance tests (manual testing)

After the initial launch of a marketplace we collect feedback from users, and after that we’ll need to develop your marketplace further. In the next section, we’ll provide you with our estimates for marketplace development, both made with Sharetribe and built from scratch.

How Much Does It Cost to Build a Marketplace Website

Building a marketplace Minimum Viable Product (MVP) with common features is a practical first step, as you’ll be able to launch your marketplace as soon as possible. The faster your product is released, the faster we can figure out what to improve.

In the article you’ll find a detailed explanation, expressed in user stories, of the functionality that will be included in the application. We’ll also provide an estimate in story points for each feature.

According to our estimation, a marketplace MVP requires 87 Story Points. 87 Story Points translate to around 750 hours of development time if the application is built on Sharetribe, and around 1050 hours if we develop your project without Sharetribe.

We analyzed data provided by Clutch.co to show an average hourly rate for web development teams in several countries. Here’s what the hourly rates looks like:

Now take a look at the table below to see the approximate cost of web marketplace development:

Keep in mind that we can provide a more precise estimate for your marketplace only after the requirements elicitation stage.

What Features Do We Estimate for a Marketplace MVP?

Your marketplace project (even if it’s built on Sharetribe) will require:

• User Experience & User Interface design. Our designers describe UX scenarios, choose a color scheme, create a style guide, and design a logo.

Estimate: 4 story points (34 hours).

• Database, web application design and deployment scripts. Our web developers configure backend and frontend tools, design a database, and write scripts for deployment.

Estimate: 3 story points (25.5 hours).

Once we complete the first two steps listed above, we can then implement the actual functionality. Each feature in your project will be associated with a specific type of user:

• Site visitor
• Authorized user (a visitor who’s logged in)
• Customer (an authorized user who buys an item)
• Publisher (an authorized user who sells something, i.e. a seller)

When developing functionality, we'll create wireframes similar to the ones shown below.

In the next section we’ll describe user-related features that we implement when building a marketplace MVP.

Authorization and Security

In order to fully use a web marketplace, a user must sign up and provide personal details such as their name, gender, birth date, email, language, and phone number. We implement all necessary features for creating user accounts and saving user data securely.

Managing account data is also important. Authorized users should be able to easily change notification and privacy settings, e.g. opt not to share their activity on Facebook.

We also need to let users sign up via their preferred social network, as this offers a simple way of registering on a new website.

Therefore, site visitors will be able to:

• Sign up using an email and password or via a social network such as Facebook, Twitter, or Google+
• Sign in to the marketplace with an email and a password or via a social network
• Reset their passwords

Authorized users will be able to:

• Update their personal details
• Manage their account data and listings
• Hide their private data from other users

Estimate: 8 story points.

User Profiles

Since the main goal is to help users buy and sell goods, seller information should be clearly presented to buyers and easily managed by publishers. We must let publishers change settings for their public information.

Site visitors will be able to:

• See detailed information about customers and publishers

Customers and publishers will be able to:

• Manage their public data (e.g. personal descriptions or work emails)

Estimate: 5 story points (42.5 hours).

Functionality to Let Users Become Publishers

We’ll add an option for users to become publishers so they can sell and share their items. Publishers will have access to the most functionality on your online marketplace, meaning they will be able to indicate the minimal or fixed price for their item, for example.

• Authorized users will be able to become publishers

Estimate: 4 story points (34 hours).

Managing Listings

Products or services on a web marketplace are called listings. Sellers need to publish and manage items they sell, which is another chunk of functionality we need to implement.

Site visitors will be able to:

• Filter listings added by publishers
• Search for a listing
• View detailed information about a listing

Publishers will be able to:

• Add new listings
• View their listings
• Manage their listings (i.e. remove, revise, or end early a listing)
• Publish or unpublish a listing

Estimate: 19 story points (161.5 hours).

Booking Process

We need to add booking functionality to ensure users can reserve goods or services. Publishers will also need to collect delivery information so they can ship items.

Customers will be able to:

• Book a listing and add booking details (date, time, etc.)
• Add shipment details
• Communicate with publishers during the booking process
• Send requests to publishers related to a booked listing
• Accept a new publisher’s offer for a booked listing
• Decline a new publisher’s offer for a booked listing

Publishers will be able to:

• Accept booking requests
• Submit new offers for their booked listing to customers
• Decline customers’ booking requests

Estimate: 8 story points (68 hours).

Payment

Your online marketplace requires advanced payment functionality. But should you let users pay with credit cards or PayPal? Or with some other payment system? Or even with cash? A marketplace MVP must provide at least one payment method, but may include multiple.

We usually create a special tab for payment information and let customers manage their payment data in this tab.

Therefore, customers will be able to:

• View their payment details (e.g. transaction history)
• Manage payment methods (add, remove, and update payment methods)

Estimate: 5 story points (42.5 hours).

Payout

Your marketplace must let publishers retrieve their money from the system, and this functionality also demands additional code.

Publishers will be able to:

• View payout details
• Manage payout methods (add, remove, and change any relevant payout details at any time)

Estimates: 5 story points (42.5 hours).

Bookings

If a customer wants to purchase a desired item, they need to know when the item will arrive. Sellers need to know for how long their item was rented, for example. We’ll let buyers and sellers access all booked listings to view each listing details.

Therefore, customers will be able to:

• View their booked listings
• View detailed information about each booking

Publishers will be able to:

• View an index of their listings that have been booked by customers
• View detailed information about each booking

Estimate: 5 story points (42.5 hours).

Reviews & Ratings

To build trust between customers and sellers, we must implement functionality for ratings and reviews.

Therefore, marketplace users will be able to:

• See a listing’s reviews

Customers will be able to:

• Write reviews and rate listings
• Update reviews and ratings

Publishers will be able to:

• Send requests for reviews to customers
• Accept reviews from customers
• Decline reviews from customers
• View customers reviews

Estimate: 8 story points (68 hours).

Notifications

Notifications are a great way to help users stay informed when, for example, a seller ships a product or when the product arrives.

Authorized users will be able to:

• Change notification settings
• View notifications based on their notification settings

Estimate: 3 story points (25.5 hours).

Browsing Сontent

Adding complex functionality to your marketplace is pointless if users can’t find what they’re looking for. We work to make navigation smooth across all parts of your product.

Authorized users and site visitors will be able to:

• See the main page of the website and its content with a brief description of the website’s purpose and services
• Perform a quick search from the main page of the website
• Visit standard pages (Contact Us, About Us, Terms of Use, etc.)

Estimate: 10 story points (85 hours).

Marketplace Website Development Cost

Here is a summary table with all features your marketplace project will have.

Developing an MVP from scratch for such project will cost you around 30-35 percent more time and money than if you opt to build with Sharetribe.