How to Build a Marketplace in 2025: Development Stages, Features & Cost Breakdown

Our team has a track record of delivering B2B, B2C, and C2C marketplace platforms.

We have contributed to the functionality of Eventbrite, a leading event management platform.

We’ve transformed a freelancing platform into a white-label solution, Whitelance, that now serves entrepreneurs and even $3B+ enterprises.

We’ve also built an IT consultant marketplace, Workerbee, that got more than 1,000 users (including enterprise customers) in its first year and continues to grow.

Today, we want to share our insights into marketplace development. In this article, you’ll find:

• Stages of online marketplace development
• Best practices for smooth and cost-effective development
• Approximate estimates of development time and cost, and factors that impact them
• Features to add to different product phases and the real impact they can have on your product

Let’s start with step-by-step guidance on how to create a marketplace website.

How to build an online marketplace website: Key stages & steps

To create an online marketplace, we go through three stages:

• Project discovery stage, when we define marketplace functionality and make technical decisions on how to implement your idea
• Development stage, when our development team works on creating the initial version of your marketplace, from design and coding to testing and deployment
• Maintenance and growth stage, when our team maintains the marketplace to ensure its smooth performance and implements new functionality

Let’s look at what steps each stage involves, how much time it usually takes, and how much it may cost.

Project discovery: Determining functionality and planning development

The goal of the project discovery stage is to make key decisions on your product’s technical implementation and plan the development process so you can build a robust marketplace in a time- and cost-effective way.

This stage is a collective effort of our:

• Business analyst who works closely with you to understand business requirements and defines marketplace functionality and requirements
• UI/UX designer who develops a design concept and user journey
• Technical specialists (such as a software architect and QA engineer) who ensure optimal technical decisions
• Project manager who tracks the progress of the project discovery stage, manages specialists involved in the process, and estimates the project’s budget and timeline

Project discovery can consist of multiple steps; below, we outline the essential ones and the deliverables they bring you.

Project discovery steps & deliverables

During project discovery, we go through six main steps:

1. Analyze the target audience and competitors

In this step, we analyze who is most likely to be interested in your marketplace and what they need. We also research similar products to understand their strengths and weaknesses.

This information helps us choose the right functionality for your marketplace.

For example, when we were working on the Toddy marketplace for babysitters, the client initially wanted to target parents and individual babysitters. But research showed that babysitting agencies would also benefit from Toddy. So, we adjusted platform requirements and developed functionality for agencies.

This simple adjustment resulted in a partnership with a local babysitting agency for our client.

2. Determine your solution scope by defining user roles, scenarios, and flows

We develop user roles, scenarios, and flows to determine functionality that will cover all tasks users might want to perform on your marketplace (along with limitations of such functionality).

Once we’ve created a list of features, we prioritize them to decide which functionalities to develop first. This ensures the initial version of your product delivers real value while keeping development time and costs in check.

As we map out user scenarios and flows, we also start working on the design. A UI/UX designer creates initial wireframes of your marketplace and develops the design concept.

3. Develop product requirements

Product requirements guide our developers in building exactly what your marketplace needs. In these requirements, we outline how your marketplace will respond to user interactions and the standards a marketplace should meet to ensure a great user experience.

Once we develop requirements, our technical specialists step in to choose an optimal architectural approach and technologies to implement marketplace functionality.

4. Building a proof of concept (PoC)

A PoC can be a prototype or a focused implementation of a core feature. It helps us test the technical feasibility of your solution and the developed UI/UX concept. With a PoC, we can confirm that the design, architecture, and technology we’ve chosen are aligned to deliver all product functionality and create a convenient user experience.

Through a PoC, we also identify technical pitfalls and find solutions to overcome them. These insights become part of a risk management plan, which is one of the key project discovery deliverables.

5. Create documentation and estimate resources

At the end of the project discovery stage, we refine documents created earlier, such as product requirements and a risk management plan, and put together other essential documents, including:

• A development plan that serves as a feature implementation roadmap. It includes objectives, tasks, and team members involved in developing each piece of functionality.
• A project timeline that gives a clear overview of deadlines and team members’ involvement throughout the entire project.
• A work breakdown structure (WBS) that lists features broken down into manageable tasks and provides an estimated time for developing each one.
• A cost estimate for developing the desired functionality.
• A product roadmap that outlines the growth of your marketplace over time, detailing features and objectives for each product iteration.

This is not a complete list of deliverables; you can get up to 30 documents. Everything depends on your needs and project specifics.

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Discovery Phase Services

Want to find out what the Discovery Phase at Clockwise looks like? Explore our discovery approach.

Project discovery timeline and costs

In our experience, the project discovery stage takes 3 weeks or longer and starts at around $12,000. Many factors can impact the timeline and cost, including your project’s size, the work you’ve done prior to the discovery phase, and the deliverables you expect to get. In some cases, the discovery stage can take 8+ weeks and cost $25,000 or more.

You can check out our white paper on project discovery for more detailed information. There, you’ll find examples of three discovery packages, what deliverables they include, and how much they can cost.

To get more accurate estimates of the discovery stage for your project, you can contact our team. Knowing your needs, we can estimate how many resources project discovery will take.

Gathering the development team

The results of project discovery help us to determine and gather the necessary specialists to build a marketplace. Usually, a software development team for developing a marketplace includes seven different specialists:

• A project manager (PM) plans and oversees marketplace development, communicates with key stakeholders, and ensures that the project meets deadline and budget constraints.
• A UI/UX designer develops screen layouts for your marketplace.
• Frontend engineers work on implementing the marketplace interface.
• Backend engineers work on implementing the server side of the marketplace (responsible for processing user requests, communicating with databases and third-party services, etc.).
• Quality assurance (QA) engineers test the developed functionality to ensure it meets product requirements.
• A software architect makes decisions on the marketplace architecture.
• A DevOps specialist sets up and manages infrastructure and configures continuous integration and deployment (CI/CD) pipelines to automate testing and deployment workflows.

Additionally, we involve a business analyst in the development stage on demand when there’s a need to create new software requirements or adjust existing ones to new business requirements.

Once we assemble the team, we move to the next stage: marketplace development.

Marketplace development: Steps, features, and estimates

To implement marketplace functionality, our development team follows a well-structured process:

1. UI/UX design

A UI/UX specialist implement your marketplace interface design created during the discovery stage. Designers also make the screen layouts responsive to ensure a great user experience on mobile devices.

2. Infrastructure setup

A DevOps specialist sets up a version control system, establishes repositories, configures development environments, and implements continuous integration and deployment pipelines.

3. Frontend development

Frontend developers create a marketplace interface designed by a UI/UX specialist. They ensure that the visible components of your marketplace provide the desired interactivity and responsiveness.

4. Backend development

Backend developers work on implementing the server-side logic: user request processing, communication of your app server with databases and third-party services through APIs, and so on.

5. Integrations

The next step is connecting third-party services such as payment gateways, maps, and shipping management tools. We prefer to integrate third-party services when the front and back end of a marketplace are developed. This helps to reduce expenses on third-party services as you start to pay for them as close to release as possible.

6. Testing

After the functionality is developed, QA engineers start testing it. The goal is to ensure that developed features meet all product requirements. QA engineers identify bugs and report them to developers to fix before release.

7. Deployment

The final step is deploying all pieces of code to a production environment. After deployment, your marketplace becomes available to users.

We usually build a marketplace following the Scrum framework. Development is divided into sprints: two-week periods during which a team works on a few pieces of functionality, from design to deployment. This approach allows us to stay flexible, pinpoint issues at early stages, and adjust to changes in business requirements as we move from sprint to sprint, which improves work efficiency.

Functionality to build first

To build a marketplace in a cost-effective way, you need to focus on features that cover essential user needs and high-impact features that will bring unique value and address the target audience’s pain points.

In the table below, we gather must-have features for a two-sided marketplace that has three user roles: seller, buyer, and administrator.

Other features to add in the initial version of your marketplace will depend on its purpose. Check out several high-impact features we find valuable for marketplaces:

• Maps and other location-based features

You can integrate a map to enable users to track order delivery, add location-based notifications, or visualize listings on a map for easier search in a specific location. Options are numerous.

For example, when we were building Creadoor, a P2P marketplace for creative content producers, a map was one of the core features. The map visualized available services (such as photography and videography) in various locations so clients could find services in their area. This feature enabled easy search and convenient cooperation with creative specialists.

• Work time tracker

We find this feature valuable for freelancer marketplaces like Fiverr and Upwork. It promotes transparent cooperation between clients and consultants, increasing the marketplace’s trustworthiness and, therefore, helping to attract more users.

We implemented this feature in Workerbee, a marketplace for IT consultants. The work time tracker allows consultants to submit their work hours weekly for client and admin approval. This feature helps to prevent scams, as consultants receive their payout only after approval.

• Inventory management

If you want to create a product marketplace like Wish, you must add a module that enables sellers to manage their product listings, track stock levels, and connect with external inventory management systems. If you plan to build an auction marketplace like eBay, the inventory management module should also enable real-time bid tracking and automatic inventory updates.

• Calendar

A calendar is a valuable feature for websites like Airbnb and many other service-based marketplaces. It enables users to choose rental dates, book services on a specific date, and so on. A calendar improves the user experience and, therefore, helps to grow the user base.

The options can go far beyond these examples. To make a choice, focus on your users’ pain points and needs as well as your business objectives.

When we prioritize features, we assess their value for users and clients and the resources needed to develop them. A high value and low cost to build are indicators of features that are worth adding to the initial version of your marketplace.

Development timeline and cost

The scope of work is one of the main factors affecting the cost and timeline to build a marketplace. For example, developing a marketplace with the following set of features will cost around $150,000 and take 5 to 6 months:

A marketplace with the above features will have basic functionality that covers customers’ essential needs. You can check out our marketplace estimate example for more detailed information.

Each additional feature will lead to extra hours of work and, therefore, a higher cost of building a marketplace. We recommend thoroughly prioritizing features for the initial release of your marketplace so you can keep development time- and cost-effective.

The first release is about validating your idea in the market, so it’s often wiser to focus on core features rather than invest heavily in broad functionality.

3 ways to keep development time- and cost-effective

With our clients, we sometimes consider the following ways to reduce development time and cost:

• Implementing a simple version of functionality first. For example, we saved 3 weeks by opting for simple payment functionality in the initial version of Workerbee. Later, when the marketplace idea had been validated, we improved the payment system by adding multiple payment options and support for complex payment scenarios.
• Using third-party APIs. You can connect Twilio for chats, MailJet for email notifications, and many services through APIs instead of building custom ones. This approach can save weeks of development time and reduce the budget.
• Using built-in templates from development frameworks. By using templates to implement some features, we can build a marketplace faster. For example, frameworks like React or Angular offer templates for the admin panel and many other features.

We don’t recommend saving on the UI/UX design. In a marketplace, a well-thought-out design concept helps ensure a great user experience and makes your product stand out among competitors.

At the end of this stage, you’ll have a marketplace that’s ready for launch. You can start attracting users to validate your idea, collect their feedback, and decide on where to move further.

At the same time, the development team moves to the next stage: marketplace maintenance and growth.

Marketplace maintenance and growth

The initial release of your marketplace leads to the next stage when we:

1. Maintain your released product

Our development team monitors marketplace performance to pinpoint and resolve possible technical issues and ensure a great user experience.

2. Prioritize and implement improvements

Once you’ve collected user feedback, we can initiate the next development iterations. We build new marketplace features and adjust existing functionality to better address evolving user needs and enhance the user experience. Continuous improvement is key to increasing your product’s success rate, achieving your business objectives, and attracting marketplace funding.

High-impact features to add

When choosing functionality to implement in the next iteration, the focus remains on user needs and cost to build. The only difference is that at this stage, you have user feedback instead of a market analysis report, so you’ll know exactly what your users want.

Here are examples of valuable features you can add when your marketplace gets traction:

• Scheduled listing publication allows users to set a time for automatically publishing their listings. We developed this feature for Eventbrite, a popular event management platform. Scheduled listings save users time on listing management and enable them to publish when it’s optimal from a marketing point of view. This resulted in an improved user experience and increased traffic to the platform.

• Enterprise accounts have the option to invite internal employees to create sub-accounts. This simplifies team management and lets individual users act independently within the marketplace while maintaining their link to their enterprise. For your business, it’s an opportunity to _increase revenue _by attracting high-value enterprise customers.

  We’ve seen the demand for this feature when working on B2B and B2C marketplaces (for example, check out our Whitelance case study).

• A smart recommendation system based on a deep learning model can significantly improve search and conversions. Whether you want to create a marketplace like Etsy or a service-based marketplace, this feature can benefit your users and business. For example, Etsy reported a 100% increase in conversions on listings provided by their smart recommendation system and increased user loyalty.

• AI-powered assistants help to create a personalized user experience, leading to increased customer retention. This way of implementing large language models (LLMs) is highly popular and suits any type of marketplace.

  For example, Instacart simplifies the purchase journey by offering the AI-powered Ask Instacart feature. Customers can use it to search in natural language and find recipes, product recommendations according to their dietary restrictions, and product replacements — all in one app. This feature can be highly valuable in retaining customers if you plan to develop a grocery marketplace.

Timeline and costs

Maintaining and growing a marketplace usually involves continuous iterations for as long as you want to improve your marketplace and stay competitive in the market. The monthly budget for a development iteration may start at $12,000. However, the final estimate will depend on several factors:

• Scope of work — the complexity and amount of new functionality you want to be delivered
• Deadline — desired timeframes for finishing the scope of work
• Number of specialists involved — the team needed to execute the desired scope of work within the deadline

All these factors are interconnected. If you want to add, for example, complex payment functionality to your marketplace and have tight deadlines, we’ll involve more developers so they can deliver the functionality on time. As more people are involved, the cost of the development iteration increases.

Conversely, if the scope of work is small and deadlines are not tight, fewer developers will be needed to finish the work, resulting in lower costs.

In the table below, you can find two examples of a monthly budget for a development iteration.

Pitfalls and challenges: How to overcome them

When you create a marketplace website, you can encounter multiple challenges that may impact your project’s success. We want to share with you solutions to four common challenges:

• Choosing a platform to target

Choosing between web and mobile platforms is a strategic decision that can impact your market reach and business success.

In our experience, building a web app is the optimal choice. We usually create a responsive design, ensuring that a marketplace will look and work well on different screen sizes. This option helps you target several platforms at once and keep development cost-effective. No wonder it’s one of the marketplace development trends.

However, there are specific cases when building a mobile app is a priority — for example, if some features of your marketplace depend on mobile capabilities, such as accessing the device’s camera and sending push notifications.

• Feature fatigue

Marketplaces usually have complex functionality, but too many features may cause feature fatigue that leads to low user satisfaction and engagement.

To avoid this problem, we use feature prioritization techniques before each product iteration, implement a user-centric design for easy marketplace navigation, and incorporate regular feedback loops to assess user satisfaction and identify issues.

• Future scalability and growth

As your marketplace evolves, it must be ready to handle increased user demand and expanding functionality. Otherwise, poor marketplace performance under high loads may disrupt the user experience and harm your business.

The best way to avoid negative consequences is to design the marketplace architecture with scalability in mind. For example, a modular or microservices architecture facilitates the scaling of different marketplace components. If you’re considering turning your product into a white-label marketplace in the future, you also need to design an architecture that supports multi-tenancy.

• Chicken and egg problem

It’s a common challenge for two-sided marketplaces to decide which users — sellers or buyers — to target first. One effective solution is to focus on sellers first by attracting them with offerings that other market players don’t provide (valuable features, zero commission, etc.). However, there are several other solutions you can choose from. Check them out in our article on the chicken and egg problem.

Cooperation options for marketplace development

To find specialists who can create an online marketplace, you can choose between three options:

• Outsource development

By outsourcing development to a software development company, you hire a team that takes responsibility for all development steps and delivers a market-ready product.

This cooperation model frees up your time, as you don’t need to oversee the development process. You’ll receive updates on development progress and take part in making strategic decisions, but everything else will be the responsibility of your development vendor.

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Product Development Services

Explore the Clockwise Software approach in software product development. Discover our services, software development process, and tech stack used to build top-notch solutions.

• Gather an in-house team

Another option is to develop in-house. If you don’t have a technical team, you need to be prepared for a time-consuming and costly recruiting and hiring process. You also need to provide your team with the necessary equipment, tools, and space for work.

You can first use software development consulting or project discovery services to validate your idea and define a suitable team composition for development.

• Extend your existing team

If you have an in-house team but lack some specialists to start development, you can use unmanaged dedicated team services. This allows you to hire several specialists from a software development company who will join your in-house team on a project basis.

Conclusion

Building an online marketplace involves multiple steps, from gathering requirements and prioritizing functionality to writing, testing, and deploying code and continuously improving your product. Each step impacts the project’s success, so it’s essential to know how to avoid possible challenges and pitfalls.

By cooperating with a skilled team that knows how to build an online marketplace from its own experience, you can minimize development risks and ensure a smooth development process.

At Clockwise Software, we have ten years of experience in building marketplaces from scratch. Our team knows all the ins and outs of marketplace development, ensuring that each new project goes smoothly and results in a high-quality product.

If you’re ready to take the next step and feel like our expertise meets your needs, we’ll be happy to help you create an online marketplace. Drop us a line and we’ll reach out to discuss your idea and your needs.