Leah and her husband were waiting for a cab when she realized their dog was out of food. At that moment, an idea popped into her mind: wouldn’t it be great if there was someone she could pay to pick up dog food.
This idea generated around $5.7 million in revenues and gathered funding of $37.8 million.
The idea we are talking about is Taskrabit.com and Leah Busque, the founder of the company, is forging a leading role in improving the lives of millions.
If you are sitting on such an idea, then this blog is for you! We will discuss everything about why online home service is a profitable business idea and how you can create an on-demand home service app.
A Sneak Peek into Online Home Service App Market
With lives getting hectic, there’s no wonder why home services are becoming popular. On-demand professional service apps enable people to hire professionals to manage chores like cleaning, plumbing, laundry, event management etc. Customers can find low-cost service providers as per their budget on the app; and that’s one of the biggest reasons for such apps gaining popularity.
According to a New York Times survey, the on-demand home services market in the USA currently stands at $600 billion. It also shows steady growth over the forecast period and predicts to hit a CAGR of nearly 49% by 2021.
Lets’ understand how these apps work by taking the example of TaskRabbit.
How Apps Like TaskRabbit Work
TaskRabbit connects the users to freelancers and agencies dealing in household jobs. It works as a middle person between customers who post about a work that needs to be done and professionals who are willing to take up that work. This way, the app creates a supply of services and offers a wide range of options for the customer. The work managed by TaskRabbit includes:
- Acting as an aggregator between service provider and customer
- Offering customer support to aid their selection process
- Managing the cash flow by offering an online portal for payment
- Building a network and adding more taskers on the app
- Updating the app depending on the changing needs
Here’s how the process goes –
- After the customer signs-in, they see various categories like packing and moving, handyman, cleaning, and personal assistance, etc. They select a category and post a task they need to get completed. They need to add a description and provide details regarding date and time for work, skills required, and more.
- After they post the task, they can see different taskers available in the near-by area. After going through the reviews, they select a tasker.
- The in-built chat feature allows the customer to chat with the tasker and exchange any required information. The tasker then either accepts or rejects the work.
- After the completion of the task, the customer makes the payment through the app.
What differentiates TaskRabbit from others is the features-like category filter, push notifications, booking history, online payment, geo-feature, in-app chat, and more.
The main source of revenue is the 15% commission fee (service, maintenance, insurance, customer support) that the app charges. Additionally, users who want to be on the top searches pay advertisement charges.
Now, let’s talk about how you can build an on-demand home service app.
Step 1 – Research
First you need to figure out the type of service you want to provide. If you have already thought about it, then well and good. If you do not know where to begin, we suggest you conduct a market research and competitor analysis. You can stick to only one service; for example, home maintenance or can opt for multiple services like shifting, home cleaning, and event planning.
Next step is to find the suppliers for service. You can either tie-up with individual service providers or with companies who provide the services.
Step 2 – Select a Business Model
Transaction-based Model – Using this model you will be able to take a percentage of every transaction that happens on your platform. The policy is simple – the more transactions you make, the more revenue you bring. This makes your app more scalable. For users, this model is beneficial too as they need to pay only for the service they require.
TaskRabbit, one of the major players in the home service sector works on this model. The three-step model of how the app works –
- A Task Poster posts a job and TaskRabbit suggests three contractors, along with their hourly rates, who represent a range of prices and experience level.
- A Tasker can accept or cancel the job as per his convenience and availability.
- After the tasker finishes the job, the customer completes the payment through the app.
The only way TaskRabbit earns its revenue is by taking a cut on every transaction that happens over the app.
Subscription-based Model – if your business idea is to offer a service which doesn’t require a one-time fee; for instance, cleaning service then this model suits well. You will receive monthly, weekly, or yearly recurring subscription revenue. The biggest advantage of a subscription model for you is customer retention. While for customers, they no longer have to book services every time. This saves time and cost.
‘Super’, for example, works on a subscription model. They charge either a monthly or yearly fee.
Lead-based Model – Suppose a customer is looking for home cleaning service and approaches a platform which works on this particular model. The home service aggregator will bring several professionals at one place who will bid for the task and the customer chooses the quote that they think is the best.
This model is beneficial for all three parties involved – (a) customers can make an informed decision after comparing the quotes from multiple suppliers, (b) the suppliers get the benefit of online presence and market visibility, © as customers do not have to pay for the quotes, the aggregator enjoys the benefit of increased traffic of new customers.
‘Thumbtack’ is an example of the lead-based approach. Thumbtack only charges the service providers a fee to quote. It does not charge a commission for jobs they complete or future jobs that they book with the same customer.
Full-stack Model – Instead of depending on a third-party to accomplish all tasks, the company relies on its team. Because there are no outsiders involved, the company gets complete revenue. An example of this is Lifeasy, an India-based home service app.
Step 3 – Value Proposition
Value proposition defines the benefits your app offers to the customers. Crafting a compelling value proposition is necessary to create a strong differentiation between you and your competitors and increase revenue. A typical USP of your application for task posters will look like this:
- 24 hrs. customer support
- Task completion guarantee
- Security of information
- Offer a pool of job doers
Step 4 – Finalize the Features
Login – for a better user experience, you need to make the sign-in as simple as possible. We suggest you go with the social-login feature as it creates faster access to your app as compared to the traditional sign-in. For you, this option will provide more reliable access to user data which you can use for personalization.
Quick Search – a good app is the one which is easy for the users. You must provide different navigational filters using which the user can find what they are looking for.
Push Notifications – notifications are the easiest way to interact with your users and retain them. With this feature, you can notify users about the latest updates, discounts, etc. The best practice for push notifications is to keep them clear, personal, and timely.
Book Services – this feature lets users instantly book a service. Consider adding a reschedule option in case the service is not available in the given time frame.
Rating and Reviews – when choosing a service, people value the opinion of others. Having a review feature will allow customers to choose a high-rated service provider.
Payment Gateway – secure and hassle-free payment options play a major role in the success of your apps. Make sure you choose payment options which are both commonly used and secure.
App for the Service Provider
Easy Registration – your app should have a quick registration process for the service providers. Once they submit the necessary documents, they can start working immediately.
Service Management – this feature allows the service provider to manage real-time requests by accepting or rejecting it. Here, you can even add the notification feature as it will notify the provider if a customer accepts the service.
Real-Time Chat – this is a must-have feature for both the customer and the service provider. An in-built chat system will help reduce the confusion between both the parties and solve queries.
Analytics – This feature provides the users with an in-depth insight into their business. They can see all the critical information which would help them make better business decisions.
Loyalty Management – with this feature, you can offer various lucrative promotions and discounts to promote your application. The feature will help you deliver appropriate offers and deals.
Review Management – This feature will allow the business owners to go through both the positives and negative reviews of the customers about their products. This is helpful to improve the brand image by considering customer feedback.
Step 5 – Decide the Type of App
Before jumping into the development stage, it is good to decide the type of app.
Native apps: these apps are native to a specific platform. If you create an app for android, iOS users will not be able to use it and vice versa. These apps ensure a good user experience, high speed and performance. However, they have a high development cost.
Web-based apps: these apps work like native apps and provide a mobile app-like experience but within a browser.
Hybrid apps: these apps are a good option if you have limited resources for development and maintenance and yet you want your app to function like native apps. However, they can be slow and lack performance.
Step 6 – Partner with a Development Company
Before you begin searching for app development companies, you need to create a blueprint of how you want your application to function. Known as a wireframe- it is a visual guide that represents the app layout, flow between the screens and its functionality. The biggest advantage of creating a wireframe is that it allows you to visualize a complete app experience thus helping you create a fully-functional and intuitive app.
Your on-demand home service needs a development team who knows what technology to use and what features to add to provide a user-friendly experience.
Looking for a reliable team to build your app? We are here to help.
Step 7 – Work on Monetization Strategy
While the development team works on building you your dream app, you can focus on how you can earn from your app. The most common way to monetize your app is by using in-app advertisements. There are three types of ad revenue: Cost per Thousand Impressions (CPM), Cost per Click (CPC) and Cost per Action (CPA). Make sure you align with established brands, and choose ads that will not cause your brand any damage. Consider implementing banner ads. They are a simple ad format which format enables advertisers to place static or animated ads across a banner within your app. At this stage, you even need to decide what commission or service fee you will charge.
Step 8 – Pre-launch Marketing Strategy
It is a good idea to begin with app marketing at the development stage itself. There are millions of available. If you do not promote before-hand, you fail to gain attention. Begin by creating a hype on social media. Choose 1-2 platforms, create a business account for your app, and start posting. Email marketing is another way to spread the word. Craft engaging emails and send it in your circle announcing the app.
Meanwhile, the development team will be ready with your app. Once your app is live, you should work on ways to improve your services. This starts with staying in touch with the customers. Encourage them to share reviews, talk about your app on their social channels. The key to stay in the market is by upgrading. Always make changes in your app as per the changing needs.
The busy lifestyle is making customers prefer services on demand and that’s the major reason for on-demand home service apps gaining popularity. A right development process and effective marketing can make your app successful.
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