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We're sharing a guest blog post from Chad Chriestenson covering KPIs for early-stage marketplaces. This was previously shared as a post in the community here.
I’ve recently been asked many versions of the same question: What metrics should early-stage marketplaces track?
The honest answer is the one founders tend to dislike most: it depends.
It depends because marketplaces are not single-sided businesses. They coordinate multiple participant types, each with their own incentives, behaviors, and failure modes. Liquidity emerges at the intersection of those behaviors—not from top-line growth alone. Two marketplaces with identical GMV can be in radically different states of health.
What follows is a practical, non-exhaustive framework for early-stage marketplaces. Not every metric will apply to every business, and none should be implemented blindly. Metrics do not determine how a marketplace operates; they provide a lens through which you can observe how it actually operates today.
Over time, consistently reviewing these metrics will help teams develop intuition—about users, about constraints, and about the levers that truly drive sustainable growth.
I find it useful to group early-stage marketplace metrics into four layers:
Early teams often skip directly to GMV and CAC. That is usually a mistake. Before scale, liquidity, matching efficiency, and participant quality matter far more.
Gross Merchandise Value (GMV)
Total transaction value processed by the marketplace.
Number of Transactions (NT)
Count of completed transactions in a given period.
Blended Take Rate (BTR)
Percentage of GMV retained by the marketplace, based on final transaction value. BTR is typically not equal to Demand Take Rate + Supply Take Rate. These are based on list price, BTR is based on final transaction value.
Cost of Goods Sold (COGS)
Transaction-level costs (payment processing, chargebacks, insurance, etc.).
Variable Costs (VC)
Costs that scale with activity but are not strictly per-transaction (support, onboarding, tooling, subscriptions).
Marketing Expense (ME)
Paid acquisition costs and related marketing spend.
Buyer-to-Seller Ratio (BSR)
Best interpreted dynamically over time, not as a static benchmark.
Net Promoter Score (NPS)
Useful directionally, but often less diagnostic than behavioral data early on.
Unique Demand-Side Transactors (DUT)
Number of unique demand-side users who completed a transaction in a given period.
Demand Utilization (DU)
Percentage of demand-side users who transacted in a given period.
Demand Take Rate (DTR)
Percentage of transaction value captured from the demand side (fees, service charges, etc.), as defined for your marketplace.
Demand Revenue Concentration
Percentage of GMV generated by the top 10% / 25% of demand-side users.
Track separately for new users vs all users, and make sure your definitions are explicit.
Down-funnel conversion matters more than top-of-funnel volume early. Between each of these steps is a conversion rate that gives you insight into down-funnel efficiency. Carefully define those conversion rates and run experiments that might move them—this is one of the most reliable ways to find early growth levers.
Time to First Transaction
Track median and distribution, not just averages.
Retention
Percentage of demand users active after X weeks / months (define "active" clearly).
Demand CAC (DCAC)
Must be cohorted.
Unique Suppliers (SUS)
Number of suppliers active (or transacting—define explicitly) in a given period.
Supply Utilization (SU)
Percentage of suppliers who transacted in a given period.
Supply Take Rate (STR)
Percentage of transaction value captured from the supply side (commissions, provider fees, etc.), as defined for your marketplace.
Supply Revenue Concentration
Percentage of GMV generated by the top 10% / 25% of suppliers.
Supplier Idle Rate
Percentage of suppliers who are "available" (however you define it) but not transacting.
As with the demand side, down-funnel conversion is where early-stage marketplaces win or lose. Track conversion rates and figure out how to improve them—especially onboarding, activation, and time-to-first-transaction.
(Often missed, and usually the most important early)
These metrics often matter more than GMV pre-scale:
If these deteriorate, scaling spend will amplify problems—not growth.
With the above, you can calculate:
Net Revenue (NR) = GMV × BTR
Average Order Value (AOV) = GMV / NT
Gross Profit (GP) = NR − COGS
Contribution Margin
Note: early teams should pay attention to cash contribution margin, not just accounting margin—especially when payouts, refunds, disputes, or chargebacks lag transactions.
A practical way to think about "marketplace CAC" is:
Marketplace CAC = SCAC + (Matching Ratio × DCAC)
This must be cohorted and interpreted in the context of market maturity. Early on, you are often paying to build supply and demand simultaneously, and the balance shifts over time as liquidity improves.
LTV = AOV × CM1% × average transactions per user
LTV must be:
Metrics evolve as the marketplace matures. Early on, clarity beats completeness. Measure fewer things well, revisit definitions often, and resist the temptation to optimize what you do not yet understand. Keep it simple, stay focused on what matters, and don’t fall into analysis paralysis.
As you begin instrumenting your marketplace, here are half a dozen pitfalls to avoid:
Most importantly: maintain a bias toward action. If a metric is not useful, cut it. If a metric suggests something is wrong, don’t ignore it. Experiment. Iterate. Build.
Hopefully this is helpful and let me know if you have any questions on how this might apply to your marketplace in the replies below.
You can connect with Chad to discuss this post in the Everything Marketplaces community here. A big thanks to Chad for also being active in the community and helping early-stage founders.
