What is 'revenue' in a marketplace business model?
What’s revenue in a marketplace?
I own a marketplace were I charge 10% on each transaction
Last month my $559k passed through my Stripe account. But because my app transferred $508k to creators stripe account and only took 10%, the Stripe Gross Volume isn't even close to my revenue. The Stripe Gross Volume is really my gross market volume, not revenue. So what is my revenue?
From the Stripe Dashboard I see
Gross volume $559.5K
Net volume from sales $30,027.40
And in my balance report:
Balance change from activity $26,699.31
Which one is considered my revenue? Or is it something else entirely?
I like to build in public on twitter but I've only shared my gross market volume and profit because I don't know what my revenue is!
Hey @dashbarkhuss
Those are some amazing numbers! It all depends on who you report to.
Gross Volume / GMV = $559.5k
Gross Revenue (e.g. for investors, Twitter) = $559k - $508k = $51k
Net Revenue (excl. fees/processing, for taxes) = $30,027.40
I reckon "Balance change from activity" also includes refunds? Which tends to only matter for tax reporting.
Thanks! Gross revenue still seems so inflated. There's still 20k of stripe cc fees happening there.
"Balance change from activity" is all the net you made through stripe during a time period. So that means gross volume minus Stripes fees for cc processing, transfers, connect fees, payout fees, radar fees, refunds, disputes, etc.
Congrats @dashbarkhuss, that is solid growth.
Marketplace Volume: 559k
Your revenue would be 559k * 10% => $55.9k.
Of course, your 10% is more like 7% because you're paying stripe CC fees on the entire amount. But for the purpose of revenue, you should use 10% because you could find ways to reduce the 2.9% cost, like ACH or BTC, not that you would. :)
Revenue is a little bit inflated in your case, maybe share income (revenue - CC fees) but before expenses.
Also, watch out for fraud/chargebacks! As you grow this will become a problem and could quite easily eat into your profits.
DM me if you wanna discuss any of this.
Thanks! Actually the 10% when calculated this way is actually 9.09% ($10 out of $100+$10) but I get the point!
But yea it's still inflated compared to our profit so maybe income is better. But what is consider cc fees? Since I use stripe the credit card fees are hidden within their pricing.
We pretty much have fraud chargebacks reeled in but yea it used to be a huge problem!
Yeah, when I say CC fees, I mean everything stripe charges you. 2.9% + $0.3 is around what most payment processors charge.