Ask HN: Change revenue model for big customer?

#1

Post by pb96 » Wed, Dec 08, 2010, 8:59 PM UTC

We're creating a marketplace type offering (i.e. two sided market) where suppliers of services will generally pay us a percentage of revenue for making a sale on their behalf. The model is similar to Amazon (i.e. Amazon keeps a transaction fee for items sold on its platform by vendors). Our policy all along has been that 'we make money only when you (supplier) make money'.

Recently, however, we've garnered a lot of interest from a large supplier that is interested in using our platform as a marketing vehicle but is not interested in paying us any revenue share. They would instead want to pay on a CPM basis (cost per impression). Gaining this supplier of services would be a big win for us but I wondered if we should deviate from our traditional revenue model and add more complexity to our business just for this large supplier? Any advice is appreciated..thanks.

Re: Ask HN: Change revenue model for big customer?

#2

Post by kondro » Wed, Dec 08, 2010, 10:27 PM UTC

I suppose the question to ask yourself is, "does our current model work?"

If you're managing to grow your business consistently and at a rate you are happy with using your existing model and the new pricing model may result in you losing access to this profitability because your new customer will be effectively competing with you at a lower rate, don't do it.

If, on the other hand, this new customer will give you significant distribution and you are still profitable with this model, I say go for it.

Re: Ask HN: Change revenue model for big customer?

#3

Post by cullenking » Wed, Dec 08, 2010, 11:09 PM UTC

It depends on how many large suppliers want one vs another. If you can bring in enough revenue to justify the man-power to make the platform change, and you have a feeling it's not a one-off job, then do it.

I am currently facing the same dilemma, in that we normally license our software as a javascript client side library to add functionality to an existing site or one being developed. However, someone wants a "replica" of our site, but branded and translated to a different language, including our profit model. It's only worth pursuing this revenue if they pay us enough to offset the work required. If/when it is done, I can rinse/repeat MUCH easier, and I have another avenue for monetization aside from our existing two.

So, very situational and only can be answered by you...