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My proposal to reduce meksells polluting the platform


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So, I've seen plenty of people advocating for a fixed fee to use the platform as a seller. This would indeed drive many people away, but if everything else remained the same, the sellers that stayed would be paying more than they are now (via commission). 

So my proposal is pretty simple: implement a monthly fixed payment to be a seller, but deduct that price from the commission Fiverr takes.

Example:

$50 a month to use the website as a seller. No commission on orders until you hit $250 in sales for the month.

Fiverr would make the same exact money with you if you hit the $250 in sales in a month as they are making right now (0 in commission, but the commission on $250 would be the $50 you've already paid).

And Fiverr would make more money on all sellers paying $50 and not hitting the $250 in sales (since they would make less than $50 on the 20% commission). 
 

This would do several things:

1- Drive away people who make no sales at all, cleaning the platform.

2- Make Fiverr more money on the stubborn sellers who refuse to quit even though their performance is atrocious. All sellers with 0 sales are now making Fiverr $0 a month, and would start making Fiverr $50 a month instead. If they decided to give up, Fiverr would lose nothing, since they aren't making any money now anyway.

3- Not make any difference to serious sellers that are bringing in the real bucks - they would make exactly the same amount they are making now.

4- Disincentivize new sellers to join with no skills just because it's free, only serious people that are confident they could make the $250 a month would join. 

5- Not disincentivize new sellers who are confident they can make it, unlike an extra fixed, non refundable fee certainly would.

6- Be marginally better for Fiverr in terms of cashflow and opportunity costs. Since it would be paid upfront, Fiverr would retain the $50 longer than if it's via commission, allowing them to invest that money for longer and get better returns on the cash. It's better to get $50 in the first day of the month than only getting there by the 31st, since you lose an entire month of investment potential, and time in the market beats timing the market.


Your thoughts?

Edited by visualstudios
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Gotta put my usual feedback; something like this would purge and block the vast majority of sellers I use, thereby purging and blocking me as well. A decent chunk of the sellers I've used had been on the platform for months and had no reviews showing when I first contacted them. I would likely have a harder time finding available sellers within my budget, possibly to the point where I abandon fiverr too, and use whatever site those sellers migrate to, or rely on non-gig sites which happen to have a lot of people offering gigs (the ones people used before Fiverr).

The seller I've used the most (by total dollar value) started in Oct 2019, and their oldest review is '1 year ago'. I can't tell the gap between their join and first order.
The next highest seller started in Nov 2020, and their oldest review is 5 months ago. They would have had a 3~5 month gap of spending money for nothing. It would be hard to keep confidence in that scenario.
My 3rd most used seller started in Oct 2020. Her first eight reviews are me, not starting until April or May 2021. She would have been at least six months in the hole before I showed up, and may never have gotten traction without that work.
My 4th most used seller joined in Mar 2021, and his first nine reviews are me, not starting until May or June 2021. But, he does have a new client with mass orders in the past month, so he may have taken off eventually without me. But in either case, he's down a couple hundred before gaining revenue as well.
The 5th most joined in July 2020, and his oldest review is 5 months ago. That's more like 8 or 9 months of loss.

Those sellers are from Lithuania, the USA, Indonesia, Turkey, and the USA respectively. Two could likely handle the price. Three could possibly not.

It is possible though, in a membership scenario, that maybe they get orders earlier due to a smaller seller base, and the number of months spent waiting will be smaller, so losses will be smaller.

If I reverse engineer some of the revenue reports from the shareholder letter, about 20% of Fiverr's fees comes from the $5 level. The membership subscriptions would likely need to compensate for a significant loss of transactions at that level and not just break even (both from less total value of transactions due to the loss of priced-out buyers, and from increased demand on sellers pushing quotes higher to where fees are a lower share of the budget being transacted). Fiverr would somehow need to do more business with fewer sellers (and possibly fewer buyers) to cover the drop in fee collection through the month.

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Posted (edited)
12 minutes ago, moikchap said:

about 20% of Fiverr's fees comes from the $5 level.

Yes, from people who sell a ton of $5 gigs, so they wouldn't be affected. People selling 1 gig a month for $5 are irrelevant for Fiverr's bottomline. This has nothing to do with gig pricing. If you sell at $5, you need to sell more than if you sell at $50, that's obvious. If you sell at $5 and don't sell a lot, you're not doing anything here. Fiverr doesn't need to make more business, they need to make the same exact amount of business. The "drop in fee collection" would be more than compensated by a fixed monthly payment.


In any case, it's in Fiverr's interest to continually up the average selling price. They will be less and less interested on having people buying and selling stuff for $5 as time goes on. That worked when Fiverr was a "make some beer money" website. Fiverr wants to become more professional, and attract buyers with bigger budgets, and get rid of the "cheapo market" reputation. It's what makes sense. If you buy 100 $5 dollar gigs, Fiverr will make $100 in commission from you. But they will send money on server costs, customer support, etc. for 100 orders. Whereas they can make the same $100 in commission in a single $500 order, while spending a fraction on server costs, cancelations, etc. It's a no brainer. A single $500 client is more valuable than 100 $5 dollar clients.

 

Edited by visualstudios
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Do you happen to have the numbers on what share of the $5 orders are from individuals selling tons of them? Like, not just "here's a guy with 400 ratings who has a $5 tier", but a way to quantify the actual impact?

The shareholder letter says the average buyer spends $226 in a year. That doesn't sound like big spenders to me. I've spent $2100 in 9 months, but it's across 81 sellers who did 220 orders between them.

It's so rare to see other pure buyers on the forum. I don't know who else to ping for more data points. I just doubt that the typical buyer is this idealized corporate brand that spends big and spends often.

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Posted (edited)

It's a trend. The average spend by buyer keeps going up. The average spend per order keeps going up. Fiverr is transitioning from being a bottom of the barrel marketplace to something more in line with industry prices. As it should. And sure, most buyers may not spend a lot, but this is like the free game with in app purchases business. Most spend very little, it's the whales that carry them. The stats on that are something like 5% of users generating 90% of the revenue. Fiverr just needs a couple big spenders to overcome thousands of $5 buyers.

Edited by visualstudios
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There's a lot of competition for those big spenders. LinkedIn's upcoming site is supposed to be specializing in serving them too.

The whale curve/pareto principle is typically 80/20 rather than 90/5. My day job is in mobile game QA, and that matches what I typically hear around the office. In games at least, you use the large community to attract the interest of the whales since the social dynamic of status is what matters. I suspect that to attract a whale to here though, it might be something like they would be saying "I can get whatever I want at whatever price I want." That might be what's attractive to a whale.

Debatably, at 10x the spend of the average, I might be classified as a whale, and I spend at the $5 tier.

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Posted (edited)

Then there are mega whales, because I have buyers that spend on one order with me the amount you've spent in 9 months on 220 orders. And that order takes less than a week to deliver, so Fiverr is making the same amount of money in a week instead of 9 months, which is obviously much better.

Edited by visualstudios
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This is why I was saying I wish more buyers were on here. Right now we're just two data points debating what should happen to 6 million other data points.

Do your clients only use top-end services? Do they go high on some things, low on others? For myself, D&D writing is technical, I have to go higher on that. Landscapes have more room for 'close enough', so I can go low cost on those.

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Posted (edited)

Yes, it will always depend on the field of work, some fields have much higher price elasticity than others. But for Fiverr, in general, it's better business to sell higher priced gigs. Less overhead, same money coming in. Of course you need to factor in what the market will support, but if Fiverr had the choice between having an average gig price of $10 or $1000 while maintaining the same overall revenue, it's obvious what they would pick. It boils down to an optimisation problem, really. Prices will keep going up until an inflection point where further increases will mean less revenue. Since Fiverr is relatively recent and started at such low prices, personally I don't think we're quite there yet.

Edited by visualstudios
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I don't disagree with the idea. I would like to see Fiverr separating the wheat from the chaff, sooner rather than later. 

I don't think it would drive many buyers away. Maybe the lower end buyers who are spending 5 here and 5 there. 

Personally, I don't care if I have to spend 50 bucks more to be on Fiverr. It's small potatoes. 

I get that sellers want to keep more of their money (who wouldn't?! I sure would!) but what I would like even more is for Fiverr to earn lots and lots of money. Right now, it's not going too well. They are getting by, but I would like to see the financials pointing up over time, and not because of temporary situations like the pandemic. A stronger Fiverr is a better Fiverr, for all of us. 

1 hour ago, moikchap said:

Gotta put my usual feedback; something like this would purge and block the vast majority of sellers I use.

Ok. So you're saying there are no successfull sellers on the platform that you're willing to use instead? 

 

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2 minutes ago, smashradio said:

I get that sellers want to keep more of their money (who wouldn't?! I sure would!) but what I would like even more is for Fiverr to earn lots and lots of money.

But I do think this would, in the mid-long term, make Fiverr more money. Even if it made them the same, less sellers with few sales on the platform (let's say, under $250 a month) would mean less costs in CS, servers, etc. so it would be a net positive. Not to mention the platform's credibility - right now a lot of big spenders look at Fiverr like an undesirable, low quality marketplace, and what I propose would at least alleviate that, bringing more revenue in the long run.

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5 minutes ago, smashradio said:

Ok. So you're saying there are no successfull sellers on the platform that you're willing to use instead? 

Depends on your definition of 'successful seller'. I've seen other debates about how certain 'successful sellers' should be required to increase their prices as their levels increase. If 'successful' means 'higher priced', as a Boolean, then not really no. My budget doesn't give me that option at this time. I'm spending money on unknowns to see if they can do the work because the price is right. If the price is right I don't care about their track record. Membership fees have a high chance of affecting the price.

In general, back on the suggestion; maybe Fiverr could 'boil the frog' instead. A lot of the proposed prices give me 'sticker shock'. The waves of the ripple effect would be exaggerated and potentially hard for a chunk of the userbase to manage.
Adding just a $1 fee would close a lot of 'defunct' accounts which don't even respond to offers, cleaning up the search results which would be good for everyone. Maybe some real sellers disappear, maybe they don't. Maybe there's a cobra effect and prices actually drop as sellers have even more of an incentive to acquire repeat buyers.
Then, fiverr can check 'what is the community health; how long does it take for buyers to find a seller and recieve a delivery, what is the buyer turnover as those sellers increase prices', etc.
If the problems which existed before $1 persist afterward, increase it to $2. Rinse and repeat.

Edited by moikchap
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8 minutes ago, moikchap said:

  

Depends on your definition of 'successful seller'. I've seen other debates about how certain 'successful sellers' should be required to increase their prices as their levels increase. If 'successful' means 'higher priced', as a Boolean, then not really no. My budget doesn't give me that option at this time. I'm spending money on unknowns to see if they can do the work because the price is right. If the price is right I don't care about their track record. Membership fees have a high chance of affecting the price.

In general, back on the suggestion; maybe Fiverr could 'boil the frog' instead. A lot of the proposed prices give me 'sticker shock'. The waves of the ripple effect would be exaggerated and potentially hard for a chunk of the userbase to manage.
Adding just a $1 fee would close a lot of 'defunct' accounts which don't even respond to offers, cleaning up the search results which would be good for everyone. Maybe some real sellers disappear, maybe they don't. Maybe there's a cobra effect and prices actually drop as sellers have even more of an incentive to acquire repeat buyers.
Then, fiverr can check 'what is the community health; how long does it take for buyers to find a seller and recieve a delivery, what is the buyer turnover as those sellers increase prices', etc.
If the problems which existed before $1 persist afterward, increase it to $2. Rinse and repeat.

I'm not going to go into the debate about requiring sellers to set certain prices, because that's anti-competitive and not even worth talking about, in my opinion. 

By successful I mean sellers who bring in a total amount that's above a certain threshold. Where that threshold is can be debated, naturally, but I'd say if you bring in less than a 500 per month you're not a successfull seller. But again, this is difficult to say, because 500 bucks can pay your rent in certain countries, and get you next to nothing in other countries. 

If a buyer sells tons of 5-dollar-gigs, making 1000 bucks per month, that's a successfull seller, even though his gig prices are low. 

My point is that we need to get rid of the sellers who hardly make any sales (or none at all), and @visualstudios suggestion (which is an alternate version to the one put forth by @newsmike before) will do just that. 

Wouldn't need a 1 dollar fee, even. Could just delete all accounts that haven't made a sale in the past 365 days (or at least, auto-pause). 

I think charging 50 bucks per month is more than fair. It would separate the wheat from the chaff, clear up the search results, and raise the bar for signing up, meaning all the untalented people who are flocking to the platform will stop signing up. There will be less spam, less bullsh*t. 

 

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If this theoretical successful seller is still managing to provide the same price, quality, and timelines the actual sellers currently do, I have no reason to avoid them. My concern is that those sellers are likely to cease to exist as the buyer pool is funneled down to a decimated seller pool. I expect that one of those three pillars will fall under the increased burden. Other proposals in this vein have seemed to have intent at their heart, and were targeting the price pillar. This one seems to be soft about it, but I still suspect that impact would result.

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2 minutes ago, moikchap said:

If this theoretical successful seller is still managing to provide the same price, quality, and timelines the actual sellers currently do, I have no reason to avoid them

Of course not, but this is about Fiverr's point of view. If they can have a seller doing the work for $100, they'd rather have that than a seller doing the same work for $10, because that will make them much more money.

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If.

My assertion is that there may be a noticable tier of buyers whose total budgets are mostly inflexible. If the quantity of open tasks cannot be filled on fiverr due to unexpectedly increased prices, then the project moves elsewhere. Buyers with blank cheques who can say "at any price" are likely too few and far between to support an ecosystem that lets fiverr survive.

If I have 300 tasks to be completed, I can't pivot my budget from $3,000 to $30,000 dollars. I just don't have it in the bank.
I'm so far finding it plausible to pivot from 300/$3000 to 330/$3300 to compensate for poor deliveries resulting from bad 'auditions' I choose to pay for.

I'm not claiming to have a 'right' to doing business here. I'm saying that if the privilege changes, I need to adapt, and that might be to migrate elsewhere.

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21 minutes ago, moikchap said:

If this theoretical successful seller is still managing to provide the same price, quality, and timelines the actual sellers currently do, I have no reason to avoid them. My concern is that those sellers are likely to cease to exist as the buyer pool is funneled down to a decimated seller pool. I expect that one of those three pillars will fall under the increased burden. Other proposals in this vein have seemed to have intent at their heart, and were targeting the price pillar. This one seems to be soft about it, but I still suspect that impact would result.

Having sellers who bring little to the platform dissapear would lead to a more focused buyer experience in my mind. It would still be fully open for a price based competition. If you're looking for a web designer, and you see 30.000 search results, with 28.000 of them being sellers who at best got a couple of small sales in the past year (or not even that), you are more likely to find a seller that offers the right deal among the 2000 that's left. 

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Web Designer is pretty broad.

As another use case, we could look at D&D Writing. If I search "dungeons" in Creative Writing, I get 77 results. A lot of it is help making characters. I'm making adventures though. So, if I search "dungeons adventure", it collapses to 16 sellers between all categories at any price point. There are three Level 2 sellers. Five with 10 or more reviews. Three have orders in queue. The top guy with 77 reviews has been at it since 2017.

I'm not sure this category exists with a significant monthly fee. It makes me wonder how many other categories disappear entirely.

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1 hour ago, smashradio said:

I think charging 50 bucks per month is more than fair. It would separate the wheat from the chaff, clear up the search results, and raise the bar for signing up, meaning all the untalented people who are flocking to the platform will stop signing up. There will be less spam, less bullsh*t. 

Bingo! If you are not making enough to invest $50 a month in your business, then you need to take your business out back and put it out of its misery. At that point it is a hobby we are talking about. And, please spare me the "in my country, that feeds an entire village for a year" argument. That's what the UN is for. This is a business.  

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Nobody is disputing that $50 is not much, but my point is that we shouldn't have to pay that on top of the commission. I was looking for some more comments on my proposal of deducting the price from the commissions, I think that's a pretty fair compromise that solves the problem.

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57 minutes ago, moikchap said:

Web Designer is pretty broad.

As another use case, we could look at D&D Writing. If I search "dungeons" in Creative Writing, I get 77 results. A lot of it is help making characters. I'm making adventures though. So, if I search "dungeons adventure", it collapses to 16 sellers between all categories at any price point. There are three Level 2 sellers. Five with 10 or more reviews. Three have orders in queue. The top guy with 77 reviews has been at it since 2017.

I'm not sure this category exists with a significant monthly fee. It makes me wonder how many other categories disappear entirely.

Just an example. 

You make a good point. Some categories might dissapear. But then again, are they important to Fiverr as a community? Are these buyers offering only that single service? Maybe they should broaden their horizons a bit, if that's the case? 

If I open up a store on Main St. offering only Kopi luwak coffee, that might attract two or three people, sure. But since that is a specialty product with a very low demand, it doesn't attract many new shoppers to the street as a whole, and the store would likely fail. 

So, yes, a few categories might go away, and their buyers might dissapear too, but for Fiverr as a viable business, it wouldn't be that bad. You might have to go somewhere else for your Dungeon and Dragons adventure writers, or those writers would have to offer something more than just D&D Creative Writing. 

If one of those things happen, it would still improve the buying experience for a majority of buyers, and give the talented buyers who take their business seriously a better platform to work on. 

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7 minutes ago, newsmike said:

And, please spare me the "in my country, that feeds an entire village for a year" argument. That's what the UN is for. This is a business.  

^ this right here is the post of the year. 

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2 minutes ago, visualstudios said:

Nobody is disputing that $50 is not much, but my point is that we shouldn't have to pay that on top of the commission. I was looking for some more comments on my proposal of deducting the price from the commissions, I think that's a pretty fair compromise that solves the problem.

Yes, I have thought that a flat $50 a month, and once you earn at certain tiers, the comission changes. 

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Just now, newsmike said:

Yes, I have thought that a flat $50 a month, and once you earn at certain tiers, the comission changes. 

If that's what it takes to get something like this off the ground, I'd happily go for it. But I don't really care if the commission goes down or stays the same. The most important part is that we get a big strong doorman named Benjamin to the door. That's really all I care about at this point. 

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