The gig economy is developing fast and offers great alternatives for people who don’t want to work nine to six every weekday, and that is where thumbtack has focused on. It also opens up opportunities for businesses, and new service marketplaces appear nearly every day.

If you want to build your own on-demand task marketplace like Thumbtack or TaskRabbit but still have some concerns, this article will show you the right way to go and where ha helped thumbtack to be succesful.. 

• What is Thumbtack?
• What is the Thumbtack Business Model?
• Why did Thumbtack Succeed?
• How Much Money does Thumbtack Make?
• How much is Thumbtack Worth?
• Are Thumbtack Reviews Real?
• Is Thumbtack Worth Paying for?
• Should You Use It To Grow Your Business?
• How much does Thumbtack Cost?
• How do Pros get Paid on Thumbtack?
• Is Thumbtack good for Contractors?
• Should you Choose Between Thumbtack vs Angie’s List?
• Which is Better Thumbtack or TaskRabbit?

What is Thumbtack?

Thumbtack is the largest on-demand task marketplace in the USA that matches customers with service providers. No matter what Thumbtack users need to get done ‒ clean the house or organize a wedding ‒ they’ll find the best professionals in the area.

CEO Marco Zappacosta and his business partner had the idea for Thumbtack in 2008 when they noticed the difficulty of finding a good specialist in their local area.

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However, the platform didn’t become successful right away. Thumbtack management struggled to get investments and had to reconsider their initial approaches to leading the business several times. 

Nowadays, Thumbtack offers customers more than 1000 services and allows skilled professionals to make money via the platform in all 50 US states.

What is the Thumbtack Business Model?

Thumbtack uses a different monetization approach from the ones we’re used to on similar platforms. In the beginning, professionals had to subscribe to search for job offers, but the company soon decided this approach didn’t suit their platform.

Nowadays, Thumbtack uses a pay-per-lead scheme, which means professionals are charged when they start chatting with potential customers. The amount of this fee depends on numerous factors such as the price for the service, the size of the project, and even the competition in a particular sphere.

Although this monetization approach has worked for years, not all service providers are happy with it. Leads don’t always turn into customers, so professionals sometimes have to pay without making money.

Why did Thumbtack Succeed?

Thumbtack focuses on helping customers find local professionals. This is how the founder and CEO, Marco Zappacosta, explains how they got started on the company’s blog:

– When we launched, we wanted to be the most helpful to the most people. So to do that, we offered every type of local service in every region of the U.S.

They did the exact opposite of what many marketplace experts recommend. Why did this strategy work out for them? To understand that, we need to examine their story more closely.

When Thumbtack was founded in 2009, the competitive landscape was quite different. No mainstream marketplaces provided a solid end-to-end booking experience in any professional services categories.

Thumbtack was mostly competing against directory sites like Angie’s list and Yelp. There was no need to worry about providing excellent CRM (customer relationship management) tools for their providers—being a better lead magnet than their competitors was enough.

Since they were targeting professionals who already had an online presence with contact details, they were able to scrape the information of all US providers with a web crawler and contact them en masse.

They found a clever way to build supply by creating a single-player mode that worked for every service industry: a tool that allowed the providers to easily post a good-looking listing to Craigslist. Airbnb used the same exact strategy to boost their early growth.

As Zappacosta explains, Thumbtack knew they would not be able to use the most lucrative marketplace business model—the commission model—as there was no way for them to control the transaction process in every single category. Explained in terms of the booking flow matrix, it was not possible for them to build an offering with packaged pricing.

Instead, they opted for a simpler subscription model. This was a great start because it provided them with cash from the very beginning: they were quickly able to find 10,000 providers who were willing to pay to get more online visibility and access to the Craigslist integration.

However, the problem with this model was that the fee did not correlate with how much revenue they were bringing in for each provider. Thumbtack switched to a lead fee model, which turned out to be an ideal fit for them.

In many ways, Thumbtack is an exception that proves the rule. The lesson we can learn by examining their success is that starting from one city and focusing on a single vertical remains the right strategy for almost all new service marketplace businesses.

How Much Money does Thumbtack Make?

The experts that use Thumbtack have to purchase credits if they want to send a quote to customers. So essentially you’re paying to contact customers. The company calls this compensation for each quoted framework. Each lead that experts get costs a certain amount of credits. The number of credits is determined based on what service the expert is offering. The credits are sold individually and in various bundles.

Once a potential customer has stated what service they’re needing, Thumbtack will give them a list of experts that fit into that category. On the other side, the experts will be given a list of potential customers to filter through. If the customer picks you as the expert, and you also pick that customer, then you get a certain percentage of credits off of your lead. But it has to be a direct match, almost like it was a connection written in the stars.

This hasn’t always been Thumbtack’s revenue model though. The company used to work similarly to Angie’s List of Craigslist. New customers would come to the site with a specific job in mind. They would have to fill out a job request through a series of questions they answered. The completed requests would be sent to the experts and they would filter through potential customers.

The experts would pick the jobs that seemed to fit their expertise best and send a quote to the customers. They would then be charged if a customer viewed their quote. Now, the experts have Thumbtack on their side up until they’ve connected with the customer. You don’t have to pay until you’ve already connected, but after that, it’s up to you to sell your business. There are no refunds for connections that don’t work out.

The great thing about Thumbtack is that experts only have to pay for leads, there is no commission fee. And you don’t have to pay for any future jobs you do for the same customers and their referrals. But now the cost of credits, or leads, does differ quite a bit. Single credits cost $1.50, but bundles can cost anywhere from $17.99 to $84.99.

How much is Thumbtack Worth?

The company took on $30 million from Sequoia Capital and Tiger Global in late May and that $100 million from Google in August. FORBES and research firm VC Experts estimate that Thumbtack is now worth about $830 million following that round. “I’ve been looking at the local providers’ space for a long time,” says Google Capital’s David Lawee. “This is really the first company that I found that cracked it.”

Zappacosta, 29, and Swanson, 31, would be the first to admit that Thumbtack wasn’t a result of some personal epiphany after searching in vain for a television repairman. The two have been scheming about starting some kind of big business almost from the moment they met as college policy wonks. (Zappacosta comes with entrepreneurial genes: His father cofounded Logitech.) They first united to start a political advocacy group to push Social Security reform.

They both took leaves of absence from school–Zappacosta from Columbia and Swanson from Yale–to move to Washington, D.C. and further their nonprofit. The two eventually landed gigs as West Wing aides to George W. Bush’s economic advisors but spent their nights dreaming up ideas that could be compelling enough to enable them to quit their day jobs. One idea for a personal-finance management tool attracted potential investors, but the September 2007 debut of Mint.com sunk their plans.

Are Thumbtack Reviews Real?

Here’s what they do really well for homeowners:

• Their website is top notch – This is a huge trust builder for homeowners, and while you’re browsing their site you get the feeling that you are being well taken care of.
• There are lots of pros to choose from (at least in my city) – Within seconds of entering a job I had 3 different options of handymen to choose from and more came over the following days.
• Pricing is transparent – I knew how much the handymen charged right away.
• It’s easy to communicate with pros – You can message pros directly through the website to get your questions answered. From a customer stand point, this is a great way to get a feel for how well the pro communicates and their style before having to get on a phone call.
• Reviews are mostly from verified customers – Just like any online directory, they have reviews, most of which have to be from verified customers – although they do allow pros to ask non-Thumbtack customers for up to 10 reviews.

Thumbtack makes it really easy to find independent contractors. The hole process for the customer is streamlined, professional, and easy to use.

And, as time passes, the platform will continue to improve, more service providers will sign up, and Thumbtack will get even better for homeowners. That’s nice, but the cost of that convenience is that they will have more control over the industry.

Is Thumbtack Worth Paying for?

Thumbtack can be a fast and easy way to get customers and grow your business, but should you use this lead generation service? So who should you trust, and most importantly, should you use it to generate leads for your business? Let us first look at some factors from the platform.

Issue #1 – A recent jump in lead prices

In September of 2017, Thumbtack announced a new feature called “Instant Match.” As this new feature rolled out, Thumbtack changed how they charge for leads and the cost of leads has increased significantly as a result.

In one review on ConsumerAffairs.com, a Thumbtack pro said, “I sent a message to 2 different customers that would have normally been $8-$15 each only to discover (once my card had been charged) that those two bids now cost me $65.”

Another reviewer mentioned that leads that used to cost $3-$15 now cost $55. Assuming those reviews are accurate, that’s over a 700% increase in the cost of leads!

But wait just a second.

When we dug deeper we found out that most leads don’t cost anywhere near $50 or $60. In fact, most small handyman jobs cost about $8.25 per lead. Those higher priced leads are most likely for large contracting jobs like kitchen remodels and home additions where honestly, $50 for a lead is reasonable.

Did Thumbtack raise the price of leads? Yes, they did. But leads are still a bargain, especially when compared to Home Advisor.

Additionally, when Thumbtack boosted the cost of leads, they also changed how they charge for a lead. So instead of charging you just to submit a bid, they only charge you when a customer actually responds to your bid or hires you. So while lead prices have gone up, the amount of leads you will actually pay for has gone down because you won’t have to pay for low quality or fake leads.

Issue #2 – Too much competition

Another complaint is that too many pros are competing for each lead. According to some reviews online, there used to be a maximum of three to five pros submitting bids on a job, and now there could be as many as fifteen bidders for a single job.

It’s difficult to verify this, however. Nowhere on Thumbtack’s website tells you how many pros can bid on a job. Definitely not ideal, but not a deal breaker either.

Issue #3 – Reviews and Accounts Being Deleted

If you read the fine print in Thumbtack’s Terms of Service you’ll learn that Thumbtack can delete your profile without warning and without explanation.

So let’s say you’ve been on the platform for 2 years, built up a solid profile with dozens of five-star reviews. If Thumbtack doesn’t like something about your profile they can straight up delete it without even providing a warning. Or they can just delete your reviews if they think they are fake.

Now, they probably won’t delete your profile as long as you follow good business practices. But it’s still risky putting the well-being of your company in the hands of another business who doesn’t necessarily have your best interests in mind.

But Is Thumbtack Effective?

Look, if Thumbtack didn’t work for handymen, contractors, house cleaners, and dozens of other service providers, it would quickly disappear. But it hasn’t. Instead, it’s now known as a unicorn (a privately held company worth over a billion dollars). In 2015 Thumbtack was valued at a whopping $1.3 Billion and it has continued to grow since.

Anytime you read online reviews on sites like BBB and all you see are bad reviews, understand that happy customers aren’t leaving reviews. Only the pissed off people who feel like they were screwed have enough motivation to take time out of their day and leave a review.

There could be a hundred extremely happy pros for every negative review you find online. But do you really think that pros who’ve struck lead generation gold are going to tell everybody about it? No, they’re going to milk it for as long as they can.

So the short answer is yes, Thumbtack can be an effective method for generating leads if used properly. 

Should You Use It To Grow Your Business?

Honestly, it depends, we do recommend Thumbtack to many of my readers and clients who are just getting started because it’s a great temporary solution. Buying leads is good for the short-term while you work on longer-term marketing strategies like building an online presence.

So if you’re just starting your business or you need some customers fast to fill your schedule, give it a try. Test it. Learn how to use it properly, give it a fair shake, and if it doesn’t work for you, stop using it.

Simple.

Don’t be like many people I’ve seen that are so scared of being scammed that they won’t try anything and end up leaving money on the table as a result.

However, we do have a word of warning with regards to lead generation services in general, whether that is Thumbtack, Home Advisor, on one of the other hundred that popped up in the last year.

How much does Thumbtack Cost?

Unfortunately, Thumbtack’s pricing isn’t exactly “one size fits all,” nor is it public. How much you end up putting into it will vary based on a variety of factors, such as your membership level, the number of leads who contact you, and your location.

Pricing is where Thumbtack gets a little complicated. We couldn’t find any pricing rates online. But, at a basic level, contractors pay Thumbtack for each lead that chooses to contact them, whether or not that actually turns into a contract.

So, contractors are charged as soon as a lead requests a quote or messages them. This can mean that contractors end up paying for leads that never actually turn into jobs as some leads may be flakey or contact several contractors at once.

On top of that, the fee per lead varies depending on the amount of the quote and the location you are providing services in. You can set a limit for how much you want to spend on leads each week, however, when you hit your limit your profile will no longer show up to clients.

Both of these factors make it hard to determine just how much you will have to spend before getting a contract. Thumbtack has changed its pricing model a couple of times over the years to try to improve the contractor experience.

Keep in mind that Thumbtack does not facilitate invoicing, payments, or offer any other client management resources.

How do Pros get Paid on Thumbtack?

When you hire a pro, you work directly with them to pay for the project. At this time, there’s no way to send payments through Thumbtack.

Check a pro’s profile to see how they accept payment. This is often listed below the pro’s introduction.

As you plan your project and payment, keep these tips in mind:

• Put it in writing. Talk to the pro about writing out a contract before they start the work. This is especially helpful for large or expensive projects. A contract sets expectations and keeps you and the pro on the same page.
• Keep track of each payment. If you paid a deposit, or if you’re making several payments, keep your receipts in case you need them later.
• Communicate with the pro regularly. Check in with the pro at different stages of the job so you know about any updates or changes to the cost.
• Contact us if there are problems. For example, if a pro asks you to overpay so they can give you a cash refund, that’s usually a red flag.

Is Thumbtack good for Contractors?

Overall, Thumbtack seems to be able to work for the right contractors and it’s worth exploring. If you have the time to put in to make a profile, respond to leads, and review competitor information, you may be able to succeed on Thumbtack.

However, if you’re hoping to simply put up a profile and let it do the work for you, it’s probably best to look into other options.

If you’re still on the fence, try looking into some alternatives and find the best fit for you.

Different lead generation services offer different levels of administrative assistance, pricing models, and support. Find the one that makes the most sense for your business and go from there.

Should you Choose Between Thumbtack vs Angie’s List?

Choosing between Thumbtack and Angie’s List are a tough call because both services are targeted towards home service providers who offer one-off jobs for residential clients. Your best bet is to try both options and see what works for your business model.

The biggest differentiators between the two are the following:

1. Audience

Angie’s list is a lead generation tool exclusively for home services, whereas Thumbtack is a lead generation tool for home services and beyond.

As a result, the two websites appeal to different audiences and are created for different types of consumers. This could result in more contact with leads or more diverse clientele if you use Thumbtack.

However, it might result is lower quality leads. In contrast, Angie’s list clientele might be more serious about home improvement projects, which could result in higher quality leads.

All in all, Angie’s List was developed with home service professionals in mind, while Thumbtack took a more general small business approach to create their website.

2. Price

The advantage you get with Thumbtack pricing is that is customized to your usage.

You pay for a membership, the amount of contact you get with consumers, how much you quote for a project, and your city. Naturally, higher volume businesses inevitably pay more, and lower volume businesses will pay less.

Angie’s List in contrast offers membership plans that range from $0-$99 a month. You have to pay extra to advertise your listing, and you are charged for clicks to your website.

So, in addition, you can expect to pay anywhere from roughly $25-$100 a month.

3. Visibility

One advantage you get with Angie’s List is that your business won’t be delisted if you receive a higher volume of contacts, like you would experience with Thumbtack.

Once you reach the lead contact volume you pay for, Thumbtack delists your business.

Rank and visibility depend largely on the number of positive reviews you get from customers on Angie’s List. Plus, you can pay extra to advertise for your industry and city.

Which is Better Thumbtack or TaskRabbit?

First, let us explain what Thumbtack Business Model is and what TaskRabbit Business Model is in layman terms so that the general audience could get a good grip on the basics.

Thumbtack

Thumbtack is one of the pioneers who made a fantastic administration for an online marketplace stage that helped individuals to procure nearby experts in a nimble way. Thumbtack was the following huge advancement in the development of administration based business that was bound to the announcement sheets, telephone directories, and online registries.

The primary income age for thumbtack is accomplished by charging the experts when they purchase the credits. Thumbtack calls it compensation for each quoted framework (10% at the most). These credits fluctuate starting with one expert then onto the next and furthermore shifts starting with one occupation then onto the next.

They come in various bundle bargains. The experts utilize these credits to cite for the activity asked for by the buyers. Such is the framework of a thumbtack business model.

Basically, in Thumbtack the client on the other side needs to fill up details about the project he wants professionals on Thumbtack to complete for him. According to the details, this task will call numerous experts to take care of your given assignment. Thumbtack cuts off a certain percentage of money from the one posting the job and then as the two (i.e. client and expert) connect the workflow is similar to that of any other business model.

TaskRabbit

TaskRabbit is a transaction-based business model that has been introduced with a vision to take a cut of each transaction spawned through the platform.

TaskRabbit is another fruitful commercial center that brings together all the customers who can outsource little occupations and assignments with a system of pre-endorsed and approved talented people who can boost the recorded undertaking in a given time span.

The fundamental income age of a TaskRabbit business model originates from taking a cut of each exchange occurring over the application for the tasks completed. They call it the administration charge.

Some of the perks of creating a TaskRabbit clone or a TaskRabbit business model are that the suppliers and clients just pay an expense if and when they sell or purchase something. By taking ceaselessly the quoted expenses of posting and the danger of not making a deal, this model urges more providers to join the stage, along these lines expanding the supply of the service marketplace.

Basically, on TaskRabbit, the one on the client’s side cannot post any assignment like that of Thumbtack. Rather, he himself has to look for professionals who dwell nearby and also according to the job assigned.

The search results return authentic profiles of professionals who have a price quoted below their display picture similar to the product listings on any eCommerce website. A “hire” button is displayed just below the quoted price which when clicked by the customer will redirect him to the rest of the flowchart. TaskRabbit, however, relishes a cut-off of 20%.

However, the Thumbtack business model is a Lead-based model. In a lead-based model, experts or providers pay to send quotes to clients. The stage makes presentations amongst clients and providers in light of the particular needs of a venture. Experts who affirm they are looking forward and accessible make offer for clients to browse the proper service they have been looking for.

The genuine cost of this pay-per-cite framework relies upon the kind of administration the client is searching for.

For instance, the Thumbtack business model has discovered accomplishment with such a model. It used to take a shot at a money exchange-based model, yet it was unsuccessful on the grounds that the level of possession was low for the administrations it gave and they thought that it was difficult to stay tuned in when a task was finished.

Platform Owners: As you are not asking your client base for any cash, it is anything but difficult to get a bigger client base quick. In the wake of getting them on the platform, you can undoubtedly inspire providers to partake in the commercial center with a straightforward up-sell.

Providers: A lead-based model gives a low-responsibility method for getting on the stage to providers — their own particular existence on the web.

Clients: This model of having providers pay to offer on a task brings about more qualified choices and is a less demanding route for clients to locate the correct provider.

On the Thumbtack business model, when a client posts a venture, a request will be made to him to fill in many insights about the task. The venture will then be sent to a specific number of specialist co-ops, in view of the coordination between the undertaking subtle elements and the suppliers’ profiles.

Every supplier needs to pay Thumbtack a specific sum which is something around $10 before he can contact the client. When they connect, the rest of the work process is the same as the cases in which the supplier and the client locate each other through the business index. Thumbtack doesn’t get a cut from what the client pays the supplier.

Thumbtack, however, is endeavoring to overturn the conventional way by which individuals and experts associate with each other. As opposed to having the client inquiry through postings, they rather disclose to Thumbtack what they require. The organization at that point takes that data to the experts, who choose if the activity is ideal for them.

The way the organization profits is by having experts pay to contact clients through Thumbtack credits, which are utilized by professionals to send quotes to clients. They just pay to quote, and Thumbtack does not charge a commission on employments they finish or future occupations that they book with a similar client and their referrals.

Read Also: How College Students Can Make Money Online

A solitary credit on a Thumbtack business model is usually priced at $1.50; however, that goes down as low as $1.42 if an expert purchases a mass pack of credits. For instance, they can enlist a pack of 12 credits for $17.99, a pack of 24 credits for $34.99 or a pack of 60 credits for $84.99.

When it comes to the TaskRabbit business model they generate their revenue by taking a share from each and every deal that goes over the internet. Taskrabbit finds its customers from oral endorsements, online marketing, complimentary first time delivery and an archive of different other offers.