As a professional looking to grow your business, you understand the importance of discovering new ways to connect with potential clients and generate revenue.
While traditional methods of lead generation and advertising still have their place, the rise of the gig economy and freelance work has opened up new opportunities.
Platforms that specialize in matching professionals with customers who need their services have become popular, but how exactly do they operate and make money?
Thumbtack is one of the largest marketplaces that connects professionals with new clients.
Whether you're an electrician, dog walker, math tutor or wedding photographer, Thumbtack allows you to create a profile, list your services, and receive requests from customers in your area.
For many freelancers and small business owners, Thumbtack has become an invaluable source of new leads and projects.
But with all the services they offer to pros for free, how does Thumbtack actually make money and turn a profit? The answer lies in their business model and how they've innovated on traditional classifieds.
What Is Thumbtack and How Does It Work?
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| How Does Thumbtack Make Money? |
Thumbtack is an online marketplace that connects customers with professionals to help them complete various tasks and projects.
Professionals sign up to offer their services in categories like home improvement, events, lessons, and more.
Customers submit requests for quotes from pros and receive personalized bids within 24 hours.
How Thumbtack Works
Customers start by entering details about their specific project or task into Thumbtack’s website or mobile app.
They provide information like the location, timeline, and budget to help match them with qualified professionals.
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Pros receive the customer’s request and details about the job. Interested pros submit a custom quote with their availability, experience, and price for the work.
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The customer reviews the quotes and profiles of pros who bid on the job. They can then message pros to ask follow up questions or schedule calls to discuss the project in more detail.
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Once the customer selects and hires a pro, Thumbtack charges that professional a small fee for the successful match. The pro and customer then work together directly to complete the task.
Thumbtack makes money by charging pros a small percentage on the total cost of jobs they win through the platform.
Pros only pay when they secure work from a customer.
By facilitating the connection between customers and qualified professionals, Thumbtack provides an opportunity for pros to find new clients and build their business.
For customers, Thumbtack offers a simple way to find experienced pros for their home services needs while saving time and money.
By streamlining the hiring process, customers can have confidence they’ll end up with a pro that fits their needs and budget.
Thumbtack's Business Model Explained
Thumbtack makes money primarily through service professional subscriptions and fees.
Professionals pay a monthly subscription to be listed on Thumbtack and connect with new clients.
Thumbtack also charges professionals a small fee for each lead or quote request they receive.
Service Professional Subscriptions
Professionals pay a monthly or annual subscription fee to create a profile and get connected to new clients on Thumbtack.
Subscription levels range from $12.50 to $50 per month, depending on the number of leads and other features.
Higher subscription tiers provide professionals more quote requests and access to additional tools to help convert leads into customers.
Over 200,000 service professionals from various industries like home improvement, wellness, and creative services currently pay for subscriptions on Thumbtack.
Fees for Lead Responses
In addition to subscriptions, Thumbtack charges professionals a small fee, typically between $3 to $10, for each lead or quote request they choose to respond to.
Professionals are not obligated to respond to every lead but must pay the fee if they want to submit a custom quote to a potential new customer.
Thumbtack uses these per-lead fees, in combination with subscription revenue, to generate profits.
Thumbtack’s business model capitalizes on the huge volume of customers looking for local professionals and the large number of professionals eager to find new clients.
By charging both sides of their marketplace platform, Thumbtack has built a sustainable way to connect service providers to quality job leads.
Professionals get access to an expanded pool of potential new customers, and customers are matched to pre-screened, reputable professionals in their local area.
Charging Customers for Requests and Quotes
Thumbtack makes money primarily through charging service professionals and customers fees for connecting them.
As an online marketplace, Thumbtack provides a platform for customers to submit requests for services and receive quotes from professionals.
Charging Service Professionals for Quotes
Service professionals on Thumbtack pay a fee for each quote they submit to a customer.
The fees range from $3 to $35 per quote, depending on the type of service requested.
Thumbtack uses a bidding system where professionals set a max price they're willing to pay for quotes in their category.
The professionals who bid the highest rates get top placement in search results and listings.
This model is beneficial for Thumbtack because they earn revenue from service professionals whether or not the quotes actually lead to jobs.
At the same time, the model incentivizes professionals to only submit quotes they believe have a good chance of turning into paying work.
Professionals can also pay higher rates to increase their visibility and likelihood of being matched with new clients.
Charging Customers a Percentage of the Total Job Cost
For jobs that are booked through the Thumbtack platform, Thumbtack charges the customer a percentage of the total cost of the job.
The fees range from 5-12% of the project cost.
This means that in addition to earning money from the professionals submitting quotes, Thumbtack also earns a commission when those quotes convert into actual work.
The percentage charged depends on the type of service.
For example, Thumbtack may charge:
- 5% for home cleaning or moving jobs
- 8% for handyman tasks like painting or carpentry
- 12% for larger home renovation projects
Thumbtack’s two-sided business model of charging both professionals and customers has proven to be very effective.
According to Thumbtack’s CEO, over 650,000 paying professionals and millions of customers use the platform to connect each year.
Taking a Cut From Completed Jobs
Thumbtack makes money by taking a percentage of the total cost of jobs that are completed through their platform.
For each job posted by a customer, professionals in the requested category can submit quotes for the work.
Once the customer chooses a pro and the job is finished, Thumbtack charges the professional a fee that is a percentage of the total job cost.
When a professional submits a quote for a job and is selected by the customer, Thumbtack facilitates the entire transaction between the two parties.
They provide the messaging platform for the customer and pro to communicate, as well as the payment processing for the customer to pay the pro.
For offering this convenient service, Thumbtack takes a certain percentage of the total cost of the completed job as their fee.
The exact percentage Thumbtack takes varies in each category and market, but industry experts estimate it ranges from about 5-15% on average.
The percentage charged depends on the demand and competition in each geographic area and service category.
More popular, in-demand services typically have higher fees.
Some categories like home cleaning, handymen, and tutors tend to fall on the higher end of the range.
While the fees may seem steep to some professionals, many find that the additional jobs and revenue they gain from being on the Thumbtack platform offset the costs.
Thumbtack essentially acts as a lead generation service, providing professionals with customers they may not have reached on their own.
For many pros, the additional business and exposure they get makes the Thumbtack fees a worthwhile investment.
Generating Revenue Through Advertising
Thumbtack generates revenue through several advertising methods on their platform.
As a two-sided marketplace, Thumbtack is able to connect professionals and customers, then charge professionals for enhanced visibility and lead generation.
Advertising Packages
Thumbtack offers paid advertising packages for professionals to promote their business.
Packages include enhanced profiles, featured listings, and targeted ads to increase visibility.
Professionals can pay a monthly subscription fee for an advertising package at different tier levels depending on their needs.
The more a professional pays, the higher priority their profile and listings will have in search results and the more leads they will receive.
Lead Generation
In addition to advertising packages, Thumbtack charges professionals on a cost-per-lead basis.
For each customer lead or request for a quote that a professional receives through the Thumbtack platform, the professional is charged a lead fee.
Lead fees vary based on the professional’s industry and location.
The more leads a professional generates, the more money Thumbtack makes.
Banner Ads
Thumbtack sells banner ad space on their website and mobile app to third-party advertisers.
Banner ads provide another revenue stream through a traditional advertising model.
Advertisers, ranging from major brands to local businesses, can promote products and services to Thumbtack’s large audience of professionals and customers.
Additional Services
Thumbtack may eventually roll out additional paid services for professionals such as custom website design, social media management, and search engine optimization to drive more traffic.
By bundling these digital marketing services, Thumbtack can tap into more of professionals' advertising budgets.
Offering Paid Memberships and Upgrades
Thumbtack makes money through several revenue streams, including paid membership plans and service upgrades for professionals.
Paid Memberships
Thumbtack offers paid membership plans for professionals to gain increased visibility and access additional features.
The Basic plan is free, while the Pro and Premier plans provide upgraded benefits for monthly fees.
The Pro plan, starting at $20 per month, provides pros with priority listing in search results, the ability to offer instant bookings, and additional profile features to help land more leads.
The Premier plan, starting at $40 per month, includes all the Pro plan features plus access to exclusive leads, custom pricing for services, and the highest visibility in search results.
These paid plans provide a steady revenue stream for Thumbtack from professionals looking to grow their business.
Service Upgrades
Professionals can also purchase upgrades to promote their services, gain more exposure, and win new jobs.
Options include featured listings to appear at the top of search results, spotlight listings to be prominently displayed on the homepage, and boosted posts to increase visibility on the Thumbtack blog and social media.
Prices for these upgrades range from $20 to $200 per month.
Thumbtack has found a successful model in offering valuable paid memberships and impactful service upgrades.
By providing pros with useful resources and opportunities to improve visibility, Thumbtack is able to generate revenue while supporting small business growth.
The affordable pricing and tiered membership plans appeal to professionals at every stage.
As pros find increasing success and value from the platform, Thumbtack is well-positioned to benefit from their long-term loyalty and repeat business.
Leveraging Data and Analytics
Thumbtack leverages the data and analytics from their platform to drive key business decisions and uncover new opportunities.
By analyzing the millions of service requests and professional profiles on their marketplace, Thumbtack gains valuable insights into customer needs, service provider offerings, and market trends.
Identifying High-Demand Services
Thumbtack monitors which types of services are most in-demand in each geographic market.
They can then target advertising and recruitment efforts towards attracting more professionals in those high-demand, high-opportunity areas.
For example, if Thumbtack notices a shortage of landscapers in Phoenix, Arizona, they may run a campaign to recruit more landscaping professionals in that city.
Optimizing the User Experience
Thumbtack leverages data to improve the experience for both customers and service providers on their platform.
They analyze things like search queries, browsing behaviors, and conversion rates to determine how they can make it easier for users to find what they need.
They also look at how long it takes for customers to receive quotes from professionals and use that information to speed up response times.
Continually enhancing the user experience helps to drive more transactions and retention.
Pricing and Monetization
Thumbtack uses data and analytics to determine optimal pricing strategies.
By analyzing how professionals and customers respond to different price points and fee structures, Thumbtack can find the sweet spot that maximizes profits while still keeping their platform affordable and useful.
They may run A/B tests with different pricing tiers or transaction fees to determine what works best for their business model.
New Feature Development
Data plays an important role in Thumbtack’s product roadmap and new feature development.
They analyze how existing tools and services are being used to determine what’s working well and what could be improved.
They also monitor customer feedback and requests to identify new features that would add value.
Thumbtack can then prioritize building features that they know will resonate with their customers and have the biggest impact on key metrics like user satisfaction, retention, and revenue.
Leveraging data and analytics has been key to Thumbtack’s success.
By gaining data-driven insights into their business and customers, they are able to make smart strategic decisions, optimize operations, and build a platform that provides real value.
Data allows Thumbtack to stay ahead of trends and continuously improve their offering.
Expanding Into New Business Lines
To diversify its business and open up new revenue streams, Thumbtack has begun expanding into complementary service lines beyond its traditional home improvement and repair categories.
Events and Entertainment
In recent years, Thumbtack has ventured into the events and entertainment space, allowing customers to hire professionals for weddings, parties, music, photography, and more.
This expansion taps into Thumbtack’s existing network of freelancers and small business owners while capturing a new audience and additional marketing opportunities.
According to Thumbtack, over 650,000 customers used their platform to plan weddings and events in 2018.
Wellness and Self-Care
Thumbtack now provides access to a wide range of wellness and self-care services like personal training, life coaching, massage therapy, and nutrition consulting.
The wellness industry has experienced substantial growth in recent years as people prioritize health and well-being.
Thumbtack’s platform is well-suited to connect customers with vetted local wellness professionals.
Pet Care
In 2019, Thumbtack launched pet care as a new category, allowing pet owners to find walkers, boarders, groomers, trainers, and sitters.
The pet industry is a large, recession-proof market, so adding pet care serves to further diversify Thumbtack’s business.
Pet care professionals benefit from increased visibility and new client leads through Thumbtack’s marketplace.
By expanding into events, wellness, pet care, and other service areas, Thumbtack creates new income streams, reduces reliance on any single category, and taps into growing markets with a built-in customer base.
While home services remain the foundation of Thumbtack’s business, a multi-category strategy helps ensure continued growth and stability going forward.
Thumbtack’s future may include additional expansions into education, childcare, senior care, and other local services.
The Future of Thumbtack's Revenue Streams
Thumbtack has several promising avenues for future revenue growth to explore.
As Thumbtack continues improving its recommendation engine and refining its matching algorithms, the company can optimize pricing for different service professionals and the jobs they are completing.
Thumbtack may implement variable pricing for pro listings and job posting fees based on factors like pro category, location, and demand.
Expanding Into New Verticals
Thumbtack can broaden its scope beyond home services and local professionals to new verticals like medical, legal, and financial services.
The company has already started testing some of these new categories.
Expanding into more lucrative and recession-proof sectors could open up substantial new revenue streams for Thumbtack over the long run.
Premium Pro Listings and Job Postings
Thumbtack can generate more income by offering premium pro listing and job posting options.
For an additional fee, pro listings and job postings would gain additional exposure and prominence on the platform.
Premium listings may appear higher in search results and recommendations.
This could appeal to busier pros and those wanting maximum visibility.
Thumbtack is already testing a concierge service for job posters as another potential premium offering.
B2B Services
Thumbtack may choose to pivot into providing services for businesses in addition to consumers.
The company could offer HR and recruiting tools tailored to small businesses hiring for pro categories on Thumbtack’s platform.
Thumbtack could also provide marketing and advertising services for service professionals to help promote their businesses.
Either of these B2B transitions could represent an significant new income stream for Thumbtack.
Increasing Ads
Thumbtack currently runs very few ads on its platform,
but advertising is a proven business model that could drive substantial revenue.
As Thumbtack’s web traffic and user base grow over time, the company will have more opportunities to incorporate advertising in a tasteful way without compromising the user experience.
Targeted local ads, especially for competing home service providers, seem a natural fit for Thumbtack’s model.
In summary, Thumbtack has multiple promising paths to continue diversifying and increasing its revenue well into the future.
By expanding into new verticals, offering premium services, pivoting to B2B, and incorporating more advertising, Thumbtack can build on its success helping homeowners find trusted pros for any job.
The company is well poised for future growth and prosperity.
Conclusion
As you have seen, Thumbtack has developed an innovative business model that benefits both professionals and customers.
By charging professionals a small fee to submit quotes and build their online profiles, Thumbtack generates revenue to fund its operations.
At the same time, customers receive multiple bids from qualified professionals for free.
This win-win model has fueled Thumbtack's growth and success.
If you run a local services business, joining the Thumbtack marketplace could help you find new clients and grow your company.
And if you need to hire a pro, Thumbtack gives you an easy way to find and compare options so you can choose the right expert for your needs.
Thumbtack's continued progress shows how technology and human expertise can be combined to benefit communities in powerful ways.
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