How can Fiverr balance maintaining low fees for buyers to encourage transactions versus ensuring fair compensation for sellers on the platform?

Introduction

Balancing low fees for buyers with fair compensation for sellers is a critical trade-off for Fiverr's platform success. This scenario involves managing the delicate ecosystem of a two-sided marketplace, where attracting and retaining both buyers and sellers is essential. I'll analyze this trade-off by examining its impact on user behavior, platform economics, and long-term sustainability.

Step 1

Clarifying Questions (3 minutes)

• Based on Fiverr's business model, I'm thinking transaction fees are a primary revenue source. Could you confirm the current fee structure for buyers and sellers?

Why it matters: Helps quantify the impact of fee changes on revenue Expected answer: Buyers pay a service fee of 5-10%, sellers pay 20% commission Impact on approach: Would influence the range of fee adjustments we consider

• Considering user segments, I assume there's a wide range of service categories and price points. Can you provide insights into which segments are most active or profitable?

Why it matters: Allows us to focus on high-impact areas first Expected answer: Design and digital marketing are top categories, with mid-range prices ($50-$100) being most common Impact on approach: Would prioritize solutions for these segments initially

• From a technical perspective, I'm curious about the flexibility of our pricing system. How easily can we implement variable fee structures based on factors like service category or seller rating?

Why it matters: Determines the feasibility of more nuanced fee adjustments Expected answer: Current system allows for category-based fees, but not dynamic pricing based on real-time factors Impact on approach: Would limit initial solutions to category-level changes

• Regarding timeline, is there a specific urgency driving this discussion, such as competitive pressure or upcoming financial targets?

Why it matters: Helps prioritize short-term vs. long-term solutions Expected answer: Moderate urgency due to increasing competition, aiming for implementation within 6 months Impact on approach: Would balance quick wins with sustainable long-term strategies