Yesterday I ordered a gig off Fiverr only to notice my checkout now included a sneaky $0.50 add-on as a processing fee.
As I understand, Fiverr already takes a 20% cut of all gig sales. So if someone buys a gig for $5, Fiverr gets $1 and the seller gets $4. Fiverr takes on the Paypal fees from it’s cut.
Pretty nice margins for Fiverr.
I don’t know how much their Paypal fees are but they’re probably between 1.5-2.5% with the volume discount.
Anyways, Fiverr makes its money.
But now Fiverr wants more money and they’re breaking their original $5 code. That’s their whole thing, right? Order any gig and all you pay is $5.
Not anymore. That $0.50 processing fee sticks out like a dirt bike in the living room. Now the cheapest gig is $5.50.
Count me in on the disappointment. It sucks to have an order of expected business where everyone is reasonably satisfied (maybe not the sellers getting 80%) and then have the platform unilaterally decide to change the cost structure.
The allure of money was there for the taking and Fiverr went for it. I bet they wish they started out as Sevenrr.
But they didn’t and now they’ve pissed off buyers who have to pay more to get the same product.
We all know processing fees and admin fees are complete hot air designed to fleece people after they have agreed to the basics of an exchange.
The question becomes will Fiverr pay for this mistake?
They very well might. Bad sentiment can carry far on the Internet and nobody likes a shakedown.
The one thing I’ve always been impressed with on Fiverr is buyers and sellers haven’t found or really looked a work around; they haven’t moved their respective lemonade stands to another workable, make-shift platform and cut out the middle-man fees.
This price hike has small potential be the tipping point.
A 10% price hike on 5’s most popular order and the coming wave of ill will might be all it takes to turn a brilliant brainstorming session into a PR nigthmare like when Netflix decided it would bump its prices just a little.
If the marketplace offers a viable alternative, look out.
Never a good idea to piss off customers – especially when you’re fragile to them leaving your sandlot.
I think Fiverr is still in the safe zone but they’ve likely kicked up enough dust to cause some loyal customers to look at the competition. A Google search reveals several alternatives.
Fiverr made a very risky move. I think it was a mistake. Even if it pans out, I think they took a disproportionately huge risk. However, maybe their numbers are such that 10% increase on $5 orders is worth breathing life into the micro-task competition.