How do I model unit economics for a marketplace where I have to acquire both supply and demand?
The short answer
A marketplace has two CACs (one for each side) and its economics only work when the take rate on transactions eventually covers both, so you must model supply acquisition, demand acquisition, and the liquidity that connects them. The hard part is that early on you often subsidize one side, which can look like terrible unit economics until liquidity kicks in. As a starting point, track cost to acquire each side separately and the revenue per successful match, because a blended marketplace number hides which side is actually breaking your model.
Go deeper, your way
3 hand-picked resources, 2 link-checked. Pick how you want to dig in.
✍️ Essay
✓ Link checkedFreeIntermediate
Why we picked it
This is the canonical a16z reference that defines the marketplace vocabulary you actually need before you build a model: GMV vs revenue, take rate, match rate, and market depth (which is how liquidity really shows up). It keeps you honest about the fact that a marketplace has two sides to feed, so your unit economics have to reflect both supply and demand, not just orders. Treat it as the shared language, then plug your own numbers into it.
Why we picked it
Before you tune CAC and take rate, this book gives you the structural picture of why marketplace economics compound: network effects, the chicken-and-egg cold start, and how pricing on one side subsidizes the other. Co-authored by Sangeet Paul Choudary, it stays readable while grounding the strategy behind the numbers you will later model. Read it as the framing layer under the spreadsheets.
Why we picked it
Most CAC math quietly assumes one funnel, and that breaks the moment you have to pay to acquire both sellers and buyers. This piece walks through a fully burdened, two-sided CAC: it allocates seller acquisition cost across the buyer base using your seller-to-buyer ratio, with a worked example you can copy into a spreadsheet. It is the practical companion to the a16z framing, the how after the what.
