Business Operations Business Models

How Does OfferUp Make Money (Business and Revenue Model)

The OfferUp business model

OfferUp logo
Here’s what you should know:
  • What is OfferUp, and how does OfferUp work?
  • How does OfferUp make money?
  • Seller Fees
  • Promoted Listings
  • Verified Dealer Program
  • Third-Party Advertisments
  • Acquisition of Letgo
  • What is the OfferUp business and revenue model?
  • OfferUp’s profit and revenue
  • OfferUp’s funding and valuation

How does OfferUp make money? Here is a full, in depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the OfferUp business and revenue model, how much OfferUp makes per year, their acquisition of Letgo, and how OfferUp works.

What is OfferUp, and how does OfferUp work?

OfferUp is an online marketplace for buying and selling used items.

Founded in 2011 by Nick Huzar and Arean Van Veelen, OfferUp is now one of the largest app marketplaces in the U.S with more than 20 million monthly active users and over 90 million app downloads to date.

How OfferUp works is: Sellers create an OfferUp account and list their items. When items sell, the seller connects with the buyer in-person or ships it and OfferUp collects a commission on the sale.

Some of OfferUp’s alternatives include¬†Poshmark, Etsy, Facebook Marketplace,¬†Vinted, Depop, eBay, Mercari, Craigslist, Nextdoor, and other marketplace apps.

Apple App Store
Source: Apple App Store | OfferUp

How does OfferUp make money?

With more than 20 million monthly active users and over 90 million app downloads to date, how does OfferUp make money?

Below is a breakdown of how much money OfferUp makes and its revenue model. Including all revenue streams and how much they make off each service they offer.

Here are the 4 ways of how OfferUp makes money in 2022

OfferUp has a revenue model that makes money in four (4) ways; seller fees, promoted listings, their verified dealer program, and third-party ads.

#1. Seller Fees

OfferUp makes the bulk of its money through commissions on sold items from 3rd party sellers on the platform.

Listing items are free, but when and if the item sells – the seller pays OfferUp a minimum commission fee of $1.99 or 12.9% of the sale price – whichever is greater.

OfferUp Seller Fees:

  • minimum of $1.99 or 12.9% of the sale price

OfferUp also makes money through its promoted listings. They sell sellers on the option of more listing exposure saying promoted listings “get an average of 14x more views each day.”

How it works is: Once an item is listed for sale, sellers can choose to buy a promotion to promote their listings for a set duration of time, like 1 or 3 days. If the seller would like to promote it for longer, they can upgrade their promotion to Promote Plus.

OfferUp Promoted Listings Cost:

  • Individual, limited-time promotions: up to $20 (1 listing)
  • Promote Plus: $19.99 per month (up to 5 listings)
OfferUp Promote Plus | OfferUp Business Model | How Does OfferUp Make Money?
Source: OfferUp

Note: OfferUp uses a subscription business model for their Promote Plus service.

#3. Verified Dealer Program

OfferUp also has a Dealership Program that easily allows dealers to list and sell cars directly to buyers through the app.

Selling cars has become so popular on the marketplace that OfferUp created its own “Autos Section” in the app for car and truck listings. “Nearly 10 percent of all U.S. used car sales” happen on their platform, says OfferUp.

OfferUp Dealer Fee:

  • $50 monthly service fee plus $100 for each vehicle sold through Verified Dealer Program
OfferUp Auto | OfferUp Business Model | How Does OfferUp Make Money?
Source: OfferUp

Note: Roughly 40 million used vehicles are sold each year in the U.S. This means that, if OfferUp’s 10% sales claim is true, they faciliate nearly 4 million used car sales per year on their marketplace app.

#4. Third-Party Advertisments

Another revenue model for OfferUp is their advertising.

Aside from OfferUp selling promoted listings to sellers to advertise their listings, they also run advertisements on their website and app from third party ad networks.

Although there is no way to know for certain how much money OfferUp makes from this. Based on the estimated amount of traffic they get, worthofweb estimates they could be making an extra $14 million per year in ad revenue.

Acquisition of Letgo

OfferUp acquired one of its competitors, Letgo, for an undisclosed amount on March 26, 2020.

OfferUp and Letgo
Source: Google Play

What is the OfferUp business and revenue model?

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

  • Commission based business model
  • Subscription business model
  • Advertising based business model
  • Mergers & acquisitions (M&A) business model

OfferUp’s profit and revenue

At this time, OfferUp has not disclosed any official numbers on their financial earnings.

OfferUp’s funding and valuation

According to OfferUp’s Crunchbase profile, OfferUp raised $381 million over 9 rounds putting a valuation of $1.4 billion after their August 9, 2018 round of funding. Since then, OfferUp has declined to comment on its current valuation.