Brokerage model is our matchmaker in 2021

The brokerage model matches two parties with each other in order to then achieve a successful transaction. Read all the opportunities here!

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With the brokerage model, you can think of any comparison sites that compare one offer to another. This strategy helps you to make the best choice in a transaction. After reading the blog you will know what the brokerage model entails, what the advantages and disadvantages are and how you too could possibly use this model.

What is the brokerage model?

The well-known no-cure no-pay, commission or brokerage method is a model where two parties are brought together who are looking for each other. An amount is agreed upon that is charged after a successful transaction. This can be a fixed amount, but often involves a percentage of the financial transaction. You can think of income generated by supply and demand, organizing and facilitating transactions and transferring knowledge about the product in question. The success of the customer is therefore directly related to your success.

Pros and cons of the brokerage model

Pros

• No costs
  One of the biggest advantages of this earnings model is that you don’t sell any products yourself and therefore you won’t incur any costs. In addition, you don’t have to promote a product or service or market it attractively, which is often difficult enough with millions of competitors in the market. You also don’t have to take into account purchasing or transport.
• Neutral party
  You are the neutral party in the middle which can quickly win the trust of the consumer. Because you do not sell products or services, people are more likely to choose you. After all, you are not the umpteenth commercial party that has set its eye on selling its product.
• Competition
  The brokerage model is used by only a small part of the market. As a result, you have fewer competitors than if you were selling a product/service yourself. Of course, differentiation is just as important and of course you do have something to do with competition, but the reduced number of competitors already saves you a lot.

Are you interested in this type of business model? Check out our other startup ideas including the razor and blades model, the service business model and the circular business.

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Cons

• Differentiate in order to survive
  With the growth of the Internet and social media platforms, consumers are well able to make their own choices about which provider they want to buy their desired product/service from. To really matter as a third party, you must be able to demonstrate your Unique Selling Point. It is difficult to be able to prove why people need you.
• No people? No growth
  It’s not too easy to win people over to you. In addition, there is little chance that you will be dealing with regular customers. You only make money when you have successfully linked two parties together (result-based). If you have no or little reach, you will quickly go bankrupt as a company.
• Brokerage model is a matchmaker
  You are dependent on two parties. If the pairing is not successful, you won’t be able to earn anything from it either. In addition, the consumer remains in control; they can change their mind during every possible step. So you need to offer the necessary knowledge, supply and experience to complete the financial transactions successfully but securely.

Examples of the brokerage model

There are different types and forms of the brokerage model, just think of auction houses or management agencies. Are you as interested in the opportunities and possibilities of this model as we are and do you want to be able to apply it in your hustle? We have listed a few for you:

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Online payment methods like iDeal and PayPal

These online payment methods facilitate and secure the financial transactions between buyers and sellers. PayPal is an intermediary that collects a margin on the transaction.

The travel sector (comparison sites)

In the travel sector, the brokerage model is also regularly used by matching hotel operators with potential hotel guests. Booking.com is an excellent example of this.

Real Estate Agents

The model is called the brokerage model for a reason. Real estate agencies put sellers and landlords (brokers) of a property in contact with potential buyers and tenants.

Gallery

Artists can exhibit and sell their work through a gallery. The gallery organizes, provides, communicates and makes the work visually appealing. They also often participate in art fairs.

Fun fact! Did you know that the broker may negotiate with multiple interested parties at the same time? As long as this is communicated to those involved, it is possible.