Freelance Marketplace Business

How Profitable Is A Freelance Marketplace Business? (Updated for 2024)

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Updated: September 4th, 2024

How Profitable Is A Freelance Marketplace Business? (Updated for 2024)

So you want to start a freelance marketplace business?

And the first question that came to your mind was, “well, are freelance marketplace businesses actually profitable?”

With a market size of $3.44T - there’s plenty of business to go around.

Especially considering:

You could start a freelance marketplace business with as low as $100
Based on our data, freelance marketplace businesses generate an average of $1.49M per year
You could see gross margins as high as 30% with freelance marketplace businesses

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a freelance marketplace business.

Let’s dive in!

Is a freelance marketplace business profitable?

Yes, a freelance marketplace business is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $1.49M per year with an estimated gross margin of 65%, you could expect to recover your investment within 7 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your freelance marketplace business.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your freelance marketplace business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a freelance marketplace business worth it?

If you’re wondering if a freelance marketplace business is worth it, the answer is a big YES. With freelance marketplace businesses, you have the potential to earn $1.49M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $3.44T, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a freelance marketplace business to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful freelance marketplace businesses case studies.

Examples Of Profitable Freelance Marketplace Businesses

Here are a few examples of profitable freelance marketplace businesses, and a few more details about them:

1. Refrens ($120K/year)

Naman came up with the idea for Refrens after struggling to find and engage with freelancers for his previous startups. Recognizing the challenges freelancers faced in payment collection, he saw an opportunity to address these issues.

In 2018, he launched Refrens.com, focusing initially on streamlining invoicing to reduce delays and inefficiencies. The platform expanded beyond invoicing to include features like quotations, expense tracking, and tax reporting, aiming to support freelancers comprehensively.

I met a lot of good freelancers during my course of growing multiple startups but finding them and interacting with them was tough. It looked like a good market to solve problems for. — Naman (Source)

Is it profitable? Yes
How much money it makes: $120K/year

How Naman Sarawagi Built Refrens to $120K ARR

Discover how Refrens, a billing platform that facilitates seamless payments and client acquisition for B2B service providers, grew from a basic tool to generating $120K annually through targeted SEO, email marketing, and user-centric design improvements.

Read this case study

Read by 223 founders

2. Distro ($1.68M/year)

Chad Ingram, the founder and CEO of Distro, came up with the idea for his business after facing challenges with hiring and retaining software developers in his previous ventures. Seeing the need for a better alternative in the competitive labor market, Chad created Distro as a marketplace for companies to find, hire, and pay remote development teams. Within 8 months of launching, Distro has already surpassed $2 million in annual recurring revenue and is focused on scaling its marketing and product implementation.

Is it profitable? Yes
How much money it makes: $1.68M/year
How much did it cost to start: $250K

Distro: From MVP To $2M ARR In 8 Months

Distro, a marketplace for companies to find and hire software developers, has reached $2 million in ARR in just 8 months, and is profitable, giving founders hope to grow through capital efficiency focussing on product and sales by aggressively targeting a $3.5 million ARR by December 2022 alongside building a scalable marketing system and product implementation.

Read this case study

Read by 3,134 founders

3. ThirstySprout ($3.6M/year)

David Stepania, the Founder of ThirstySprout, came up with the idea for his business while taking a break on a Hawaiian beach. With a background in startups and a realization that building an extraordinary startup required an extraordinary technical team, David decided to solve the problem of connecting startups with top technical talent they could trust. ThirstySprout was born out of this desire for growth and success, and it has since grown to a team of over 40 people with $2.5 million in gross revenue last year.

Is it profitable? Yes
What's the gross margin? 30%
How much money it makes: $3.6M/year
How much did it cost to start: $500

Starting A $2.5M/Year Top-Tier Technical Talent Marketplace From Scratch

ThirstySprout, a talent acquisition platform, connects remote technical talent with high-growth startups and enterprises, boasting a team of 40-60 remote contractors and $2.5 million in gross revenue last year, with plans to double that in the next year or two.

Read this case study

Read by 3,245 founders

Learn more about starting a freelance marketplace business:

Where to start?

-> How much does it cost to start a freelance marketplace business?
-> Pros and cons of a freelance marketplace business

Need inspiration?

-> Other freelance marketplace business success stories
-> Marketing ideas for a freelance marketplace business

Other resources

How much can you make with a freelance marketplace business?

With a freelance marketplace business, you can make an average of $1.49M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $100. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 7 months.

How much does a freelance marketplace business make a week?

Based on our data, average weekly revenue for a freelance marketplace business ranges around $31K. As such, you could see monthly revenues of $124K.

To know if your freelance marketplace business achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your freelance marketplace business.

How much do freelance marketplace businesses owners make?

The income of a freelance marketplace business owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established freelance marketplace business is about $31K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a freelance marketplace business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Freelance Marketplace Business Profit Margins

Generally speaking, a freelance marketplace business can expect profit margin of around 65%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a freelance marketplace business, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, freelance marketplace business owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, freelance marketplace business owners can ensure long-term sustainability and profitability for their business.

Freelance marketplace business owner salary

The salary of a freelance marketplace business owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established freelance marketplace business, in a prime position, might see an average weekly salary around the ballpark of $20.2K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a freelance marketplace business may be a promising business to start - but the success of your freelance marketplace business mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable freelance marketplace business.

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Starting A Freelance Marketplace Business: Everything You Need To Know

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