An UberEats clone app allows restaurants to offer food delivery directly to customers through a online platform. Customers can browse menus, place food orders digitally and have meals delivered to their location. The platform acts as an intermediary, connecting buyers and sellers.
A key factor in the success of any food delivery marketplace is attracting both restaurants and users to the platform. An optimally designed pricing and commission model is important to achieve this balance. The model must allow the business to generate sufficient revenues while also incentivizing restaurants and encouraging higher order volumes.
This article will examine 11 different commission structures commonly used by food delivery marketplaces and analyze their pros and cons. The objective is to provide a comprehensive guide for choosing the most suitable pricing approach for an UberEats clone app business. Let’s begin exploring the options.
1. Fixed Commission Model
In a fixed commission model, restaurants pay the same percentage commission on each order, regardless of order size. For example, the platform may charge 25% commission on every order.
Pros:
- Simple and easy for restaurants to understand
- Provides predictable income stream for the platform
Cons:
- May discourage larger orders and higher basket sizes
- Could be perceived as unfair by restaurants with many small orders
- Lacks flexibility to incentive high-volume restaurants
Overall, while simple to implement, a fixed rate commission may not optimally balance the incentives of restaurants and the platform. It favors restaurants with fewer but larger orders on average.
2. Sliding Commission Model
A sliding or tiered commission model reduces the percentage charged as order volumes or account spending increases. For example:
- Orders 1-50 per month: 25% commission
- Orders 51-100 per month: 20% commission
- Orders 101+ per month: 15% commission
Pros:
- Encourages higher order volumes from restaurants
- Rewards loyal, high spending accounts
- More aligned incentives compared to fixed rate
Cons:
- Slightly more complex for restaurants to calculate
- Platform loses some revenue from top-tier restaurants
The sliding scale encourages continual increases in order volumes by lowering costs for restaurants. It proves effective in retaining high-value customers long-term.
3. Revenue Share Model
In a revenue share model, the platform takes a percentage of the restaurant’s total sales processed through the marketplace. For instance:
- 15% of monthly gross order sales
Pros:
- Aligns incentives of platform and restaurants towards sales growth
- Encourages upselling and higher basket sizes
- Simple calculation compared to order-based models
Cons:
- Platform assumes more risk by sharing in restaurant performance
- Restaurants may feel they lose autonomy over pricing decisions
Tying commission directly to sales generated favors strategies that expand the entire market rather than focusing on order volumes alone. Visit: https://zipprr.com/ubereats-clone/
4. Order Volume Discount Model
This hybrid approach allows restaurants to earn discounts off their commission rates by achieving certain monthly order thresholds. An example structure could be:
- Orders 1-100: 25% commission
- Orders 101-200: 22% commission
- Orders 201-300: 20% commission
- Orders 301+: 18% commission
Pros:
- Combines benefits of sliding scale and revenue share models
- Clear thresholds to target each month
- Scales incentives as restaurants grow on platform
Cons:
- Slightly more complex than single tiered or percentage models
- May be difficult for smaller restaurants to reach top tiers
This model dynamically scales the rewards as restaurants gain experience and drive higher order volumes over time through the platform.
5. Commission-Free Trials
Newly onboarded restaurants are charged zero commission on orders for a trial period, such as the first 100 deliveries.
Pros:
- Removes financial barrier to try new platform
- Helps gain traction in crucial initial usage stage
- Gives time to onboard new restaurant partners
Cons:
- Delays platform gaining any revenue from new additions
- Top performing restaurants may maximize free orders
Offering initial commission-free periods can prove very effective for acquiring restaurants by mitigating startup friction. Performance is then incentivized over the long-run.
6. Delivery Fee Model
This approach charges restaurants a flat fee per order rather than taking a percentage of order value. For example:
- $3 delivery fee per order
Pros:
- Passes on delivery costs directly to restaurants
- Simple and understandable pricing
- Predictable cost for restaurants to factor in menus
Cons:
- Platform assumes delivery cost risks and overheads
- May not scale well or incentivize sales growth
- Restaurants have less visibility on costs
The delivery fee model distributes delivery expenses in a transparent manner. However, it offers less flexibility compared to commission-based incentives.
7. Subscription Model
Rather than charging per order, restaurants app pay a flat monthly or annual subscription for platform access and order processing. For example:
- $99/month
- $999/year
Pros:
-Predictable monthly/annual costs help budgets
- Reduces menu/order friction if priced reasonably
- Simplifies admin for high-frequency restaurants
Cons:
- May be prohibitive cost for some smaller restaurants
- Lacks incentives for sales growth beyond subscription
- Platform misses out on revenue share of large sellers
A subscription works well for high-volume restaurants seeking optimization. But on its own, it removes performance-based motivation for both parties over time.
8. Hybrid Commission Model
Rather than a single pricing approach, platforms take a hybrid or tiered approach, mixing elements discussed above. For example:
- 15% commission on first $5,000 in monthly sales
- 10% commission on sales $5,001 – $10,000
- 5% commission on sales over $10,000
- $3 delivery fee per order
Pros:
- Customizable to multiple restaurant profiles
- Combines best aspects of prior models discussed
- Dynamically scales incentives as restaurants grow
Cons:
- Increased complexity for all parties to understand
- Harder to implement and optimize multiple moving parts
A carefully crafted hybrid model can maximize alignment of incentives while catering to the varied needs of diverse restaurant partners.
9. Order Minimum Commission
Similar to a hybrid approach, commission kicks in only if certain order criteria are met. For example:
- No commission on orders under $15
- 20% commission on orders $15 and above
Pros:
- Encourages larger baskets and higher ticket sizes
- Reduces friction for smaller, impulse orders
- Simple to understand threshold
Cons:
- Provides less incentive for low average ticket restaurants
- Smaller orders still generate delivery/other costs
- Threshold may not fit all local buying behaviors
While optimizing for larger orders, platforms must be careful not to alienate certain restaurant types through order minimums alone.
10. Customer Acquisition Fee
Rather than charging on every order, platforms assess restaurants a one-time customer fee per new user gained through platform promotions. For example:
- $5 customer acquisition fee for each first-time customer referred
- Discounted to $3 per customer over 100 referrals in a month
Pros:
- Provides incentive to help acquire more users together
- Shares user growth costs between parties fairly
- Scales referral incentives with volume
Cons:
- Hard to attribute individual customer referrals precisely
- May delay fees being realized vs order-based models
- Smaller restaurants less able to afford acquisition costs
By aligning on user growth rather than order volumes alone, this model shifts focus to the bigger picture of market expansion.
11. Sales-Based Incentives
Platforms offer bonuses, promotions or commission tier adjustments for restaurants achieving certain sales targets within a time-bound period. For example:
- 5% commission (instead of 10%) for 3 months if $50,000 sales in 1st month
- $500 cash bonus if double monthly sales by 6th month
- Free marketing boost for reaching quarterly target
Pros:
- Motivates restaurants to continuously perform at higher levels
- Encourages ambitious yet attainable goal-setting
- Flexible incentives beyond basic pricing
Cons:
- Requires ongoing promotions budget from platform
- Targets may not consider natural restaurant growth patterns
- Short-term focus could undermine long-term partnership
Sales incentives build healthy competition amongst restaurants when administered prudently and in collaboration with partners.
Conclusion
There is no single best pricing model applicable for all situations. Factors like a region’s buying behaviors, competitive landscape, restaurant profiles must all inform the right approach. Similarly, the model needs refinement as understanding of both demand and costs evolves over time based on real transaction data.
The ideal strategy often involves testing hybrid structures incorporating elements highlighted above. This allows balancing factors like platform revenues and costs, restaurant affordability and motivation in a way fully aligned with business goals. Regular feedback and collaboration remain paramount as no model can remain static in a fast-changing industry.
