Launching a startup can be a process fraught with financial potholes. Factor in creating a seamless website and perfecting graphic design, and a fledgling business’ profits can disappear into thin air.
But now, thanks to the gig economy, young businesses can more readily begin to gain financial security. With its lure of cheaper competition for pricey creative services, the gig economy is gaining popularity among smaller companies. According to the latest research from PYMNTS, it has grown into a nearly $700 billion industry with more than 55 million American gig workers.
Fiverr, the largest online freelancing marketplace, is one platform looking to make these services more affordable.
PYMNTS recently caught up with David Manela, Fiverr’s chief revenue officer, to discuss the logistics of offering competitive price points to entrepreneurs and businesses, big and small.
Freelancing for the people
When founders Shai Wininger and Micha Kaufman launched Fiverr, the company had a pretty simple business model: Freelancers looking to earn a few extra bucks could list their services on the Fiverr platform, and entrepreneurs who needed creative services — a logo designed, ad copy written or nearly any other creative item — could hire them for a flat fee of $5.
“The idea behind Fiverr was to democratize freelance services,” Manela explained. “We wanted to give access to people and to entrepreneurs who, in the past, would not have had access to these kinds of services.”
Originally, Fiverr facilitated gigs with finished products easily rendered and digitally delivered — things like digital graphic design, video production and editing, music and audio recording, web development and computer direction.
With more than 1.3 million gigs completed through its platform, the company quickly gained steam among small startups and entrepreneurs — and within just two years of launching, Manela said.
Manela credits the company’s successful run to its focus on removing the complications that accompany finding freelancers.
“We tried to remove all the frictions that come with these services,” Manela said. “For example, we removed the friction of having to shop around for these services and, at least initially, the friction of pricing.”
But for Fiverr, removing friction meant more than just maintaining a flat pricing structure.
From $5 to $500
After supporting over a million successful gigs in less than 24 months, Manela said, the Fiverr team was challenged with finding new ways to facilitate freelance services. The company wanted to provide services that would attract more than just bargain shoppers and cheap labor providers.
“We wanted to offer options and pricing that would fit budgets of not only cash-strapped startups, but also successful, established companies,” Manela said.
In 2015, the company gave freelancers the ability to price their own services based on the quality of their work. Fiverr then began offering “packages” that included a more standardized experienced on the platform.
Fiverr worked behind the scenes to find what most companies working with freelancers were hoping to get out of the experience, then compared that with what projects cost on the open market, Manela said. “We advised freelancers to create a three-tiered pricing structure, offering ‘basic,’ ‘standard’ and ‘premium’ packages, with an escalating selection of services and matching price points.”
But establishing a new pricing model meant reworking the process to provide a friction-free freelance experience that also ensured both quality and timely production.
The company worked to eliminate conflict and complications over many elements of the freelancing process — including project timelines and the vision of the finished project — by requiring freelancers and those hiring them to agree to many of these elements before completing the initial transaction, Manela said.
“We really kept in our DNA this idea that we wanted to remove as much friction as possible,” he said. “So even as we expanded, we always [kept] looking at our own growth or innovation with that standard in mind.”
Fiverr hasn’t stopped with packages. The company rolled out its newest pricing model, called Fiverr Pro, late last month. The newest tier of service allows select freelancers to offer professional-level services to companies willing to spend more money on those needs — and hoping to get more out of freelancers in return.
The service is designed to blend the efficiency and simplicity on which Fiverr has built its name with hand-picked, professional talent to meet the needs of more entrepreneurs and small businesses. The idea, Manela said, is to provide improved professional services, which should bring in more clients for both Fiverr and its freelancers.
No matter what comes after Fiverr Pro, Manela said the company will continue to work to grow its customer base while still providing the simplest freelancing experience possible.
“Sometimes, a small business needs a professional to do a specific task, and sometimes you want a non-professional who can complete that task at a less expensive rate and proposal,” Manela said. “We want to give all those options to our buyers. We are really focused on becoming that ‘go-to’ marketplace for freelance hiring, and expanding the assortment of services we have on the platform so we can serve all kinds of needs with all kinds of talents.”
To download the July edition of the PYMNTS Payments Powering Platforms Tracker™, powered by WePay, click the button below.
About the Tracker
The PYMNTS Payments Powering Platforms Tracker™, powered by WePay, serves as a monthly framework for the space, providing coverage of the most recent news and trends, along with a provider directory highlighting the key players contributing across the segments that comprise the payments-integrated platform ecosystem.