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Business Operations Business Models

How Does Fiverr Make Money (Business and Revenue Model)

The Fiverr business model

How Does Fiverr Make Money?
Here’s what you should know:
  • What is Fiverr, and how does Fiverr work?
  • How does Fiverr make money?
  • Transaction Fees
  • Service Fees
  • Seller Plus (Subscription)
  • Advertising (Promoted Gigs)
  • Fiverr Business (Subscription)
  • Fiverr’s Subsidiaries, Acquisitions, and Exits
  • Fiverr’s profit and revenue
  • What is the Fiverr business and revenue model?
  • Fiverr’s funding and market cap

How does Fiverr make money if it’s so cheap? Here is a full, in-depth, breakdown of their five (5) revenue streams and the different products and services they offer, as well as the Fiverr business model, their year-over-year revenue, and how Fiverr works.

What is Fiverr, and how does Fiverr work?

Fiverr is a marketplace of freelancers in more than 300+ categories offering their services to clients.

Founded in 2010 by Micha Kaufman and Shai Wininger, Fiverr began trading on the New York Stock Exchange (NYSE) on June 13, 2019, under the ticker symbol “FVRR”.

Since its founding, Fiverr has since become one of the largest online marketplaces with over 50 million transactions facilitated between more than 5.5 million buyers and 830,000 sellers through the marketplace.

How Fiverr works is: All users must create a Fiverr account before buying or selling “gigs” on the marketplace. Once signed up, buyers can browse from over 300+ categories offered by sellers. Before purchasing a gig, sellers can reach out to buyers to discuss the project and receive custom offers. Once a gig begins, funds are then placed in escrow and are not released until the seller approves the work of the gig is complete.

Some of Fiverr’s competitors include TaskRabbit, Upwork, Angie’s List, and other gig economy marketplaces.

Fiverr App in Apple App Store | Fiverr Business Model | How Does Fiverr Make Money?
Source: Apple App Store | Fiverr

How does Fiverr make money?

According to section 37 of Fiverr’s 2020 Form 20-F, Fiverr handled $699.3 million of Gross Merchandise Value or “GMV” from 3.4 million active buyers in 2020. So how does Fiverr make money off of all those buyers and transactional volume?

Below is a breakdown of how much money Fiverr makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 5 ways of how Fiverr makes money (in 2021):

Fiverr has a revenue model that makes money in five (5) ways – multiple fees, multiple subscription services, and advertising.

#1. Transaction Fees

Fiverr makes the majority of its money from charging sellers a transaction fee on every transaction made on its platform. In fact, $138.3 million or 73% of Fiverr’s total revenue was derived from transaction fees in 2020.

As noted above, Fiverr handled $699.3 million of Gross Merchandise Value (“GMV”) in 2020. Of which, Fiverr takes a percentage from each of those transactions.

Fiverr Transaction Fee Cost:

  • 20% of order total

Note: 73% of Fiverr’s total revenue was derived from transaction fees in 2020.

#2. Service Fees

On top of charging sellers a fee on every transaction made on the platform, Fiverr also charges the buyers a fee on every purchase as well.

According to section 60 of Fiverr’s 2020 Form 20-F, 27% of Fiverr’s total revenue came from service fees in 2020.

Fiverr Service Fees:

  • 5% of the total for orders more than $20, or $1 for purchases $20 or less

Note: On every transaction, Fiverr makes money from both the seller and the buyer. Taking a 20% from the seller and charging 5% to the buyer, totaling 25% of every transaction.

#3. Seller Plus (Subscription)

In addition to Fiverr’s fees charged on every transaction, Fiverr also makes money from its subscription service, Seller Plus.

Fiverr introduced this new subscription on February 17, 2021, for the top sellers on the platform. Seller Plus offers perks like priority access to buyer requests, a dedicated success manager, the ability to offer coupons to buyers, and more.

Fiverr Seller Plus Cost:

  • $29 per month
Fiverr Seller Plus | Fiverr Business Model | How Does Fiverr Make Money?
Source: Fiverr

Another service Fiverr offers to its sellers is an advertising tool called Promoted Gigs for promoting their listings.

Fiverr’s promoted gigs work off of a cost-per-click (CPC) advertising model. Meaning, sellers only get charged when the advertised listing is clicked on.

Fiverr Promoted Gigs | Fiverr Business Model | How Does Fiverr Make Money?
Source: Fiverr

#5. Fiverr Business (Subscription)

Fiverr has another subscription service which is for their larger clients on the platform called Fiverr Business.

Some of the perks for this subscription include things like having up to 50 users on the account, a personal business success manager, and more.

Fiverr Business Cost:

  • $149 per year

Note: Fiverr offers subscription services for both sellers and buyers.

Fiverr’s Subsidiaries, Acquisitions, and Exits

To date, Fiverr International Ltd. has made a total of 4 acquisitions.

Acquisitions
Source: Crunchbase

Fiverr’s profit and revenue

In 2020, Fiverr reported $189.5 million in revenue.

Note: Because Fiverr International Ltd. is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Fiverr’s publicly released financial reports, including annual reports, through Fiverr’s investor section on their website.

What is the Fiverr business and revenue model?

Fiverr makes money through a few revenue models that they combine within their company, they are:

  • Commission based business model
  • Fee-for-service (FFS) business model
  • Subscription based business model
  • Advertising based revenue model
  • B2B2C (partnerships) business model
  • Mergers & acquisitions (M&A) business model

Fiverr’s funding and market cap

According to Fiverr’s Crunchbase profile, Fiverr has raised $111 million over 6 rounds and has a market cap of $6.39 billion as of August 2021.