how-does-thumbtack-make-money-thumbtack-business-model

How Does Thumbtack Make Money? Thumbtack Business Model

Thumbtack is an online platform connecting customers with local professionals such as plumbers, electricians, house cleaners, landscapers, and yoga instructors. Founded in 2008, the platform wanted to make the process of hiring contractors simpler. The company makes money by charging a fee for every lead contractors receive. It also offers Thumbtack Promote, an added service enabling contractors to push their profile higher up in the list of search results. 

Origin Story

Thumbtack is an online platform connecting customers with local professionals such as plumbers, electricians, house cleaners, landscapers, and yoga instructors.

The company was founded in San Francisco in 2008 by Jeremy Tunnell, Jonathan Swanson, Sander Daniels, and current CEO Marco Zappacosta. Each wanted to make the process of hiring contractors more simple. They noted that customers would typically spend hours researching, comparing, and then calling various contractors to book an appointment. 

That same year, work began on the platform in earnest with $500,000 in angel funding. Working from Zappacosta’s home, the website was coded and services onboarded. In 2009, Thumbtack was officially launched with 10,000 contractors offering their services. Each contractor was personally vetted by Thumbtack to ensure a safe and secure interaction with the customer.

Thumbtack secured millions more in funding during the following years, but competition from Google, Facebook, and Amazon increased. To better differentiate itself, Thumbtack focused on helping service providers write effective sales copy and allowing customers to contribute to their benefits schemes.

Order volume dropped by over 50% because of the pandemic but has since rebounded strongly. Thumbtack acquired home improvement video platform Setter for an undisclosed amount in late 2020. Today, the company is valued at approximately $1.6 billion.

Thumbtack revenue generation

For every lead they receive, service providers must pay Thumbtack a fee. Note that a lead is defined as a customer contacting a contractor about a job that needs to be done. For the company to earn money, there is no requirement for the customer to follow through with hiring a contractor.

The exact fee is dependent upon several factors, including:

  • Geographic location or region.
  • Industry.
  • Job size or type. Thumbtack predicts the dollar amount of each job in advance and charges accordingly. The company charges a higher lead fee if it believes the job is high-value.
  • Competition, or the number of similar available professionals for the job. Note that the lead charge is waived if there is zero competition.

Leads are funded by Thumbtack credits and can be purchased in three ways:

  1. 12 credits are available for $17.99, or $1.50 per credit.
  2. 24 credits are available for $34.99, or $1.47 per credit.
  3. 60 credits are available for $84.99, or $1.42 per credit.

Thumbtack Promote

Thumbtack Promote is an added service enabling contractors to push their profile higher up in the list of search results. 

This increases the number of leads a contractor receives and usually results in Thumbtack collecting more lead revenue. Having said that, contractors who sign up for Thumbtack Promote receive 20% off the purchase of lead credits.

Key takeaways:

  • Thumbtack is a North American online services platform connecting customers with service provides from a plethora of industries. It was founded out of a need to make the process of hiring a contractor more simple for consumers.
  • Thumbtack makes money by charging contractors for every lead they receive on the platform. Leads are funded by credits which can be bought in bulk to save money.
  • Thumbtack Promote gives contractors higher visibility in search results. This is a win-win for the contractor and the company. The contractor receives more leads and potentially more work, while Thumbtack enhances lead revenue generation.

Read Also: How Does Yelp Make Money, How Does Fiverr Work And Make Money, How Does Yahoo Make Money, How Does Craigslist Make Money, How Does Upwork Make Money.

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