Open-source marketplace software vs. SaaS: Pros, cons, and top alternatives

Online marketplaces offer tremendous opportunities for entrepreneurs. 

The top 100 online marketplaces worldwide, including e-commerce giants like Amazon, Alibaba, and eBay, were projected to generate over $3.8 trillion in gross merchandise value (GMV) by the end of 2024, effectively doubling within six years. And in 2024, the majority of digital shopping took place on marketplaces, which accounted for about 30% of all online purchases worldwide.

With numbers like this, it’s not surprising that many markets are being revolutionized by websites like Airbnb and its business model. Still, many investors believe we’re only at the beginning of the marketplace revolution.

Platform technology used to present a big barrier to entering the marketplace space. Even for teams with several skilled developers, the workload of building and maintaining a site like Airbnb is colossal. The barrier was even higher for non-technical founders, as developers tend to be expensive folks to outsource.

Luckily, no-code marketplace tools and other marketplace development alternatives have emerged. When you’re evaluating how to build your platform, open-source marketplace software often comes up as an option.

In simple terms, open source (or OS) means the source code is freely available for anyone to download, use, and modify. Instead of paying a license fee, you’re responsible for hosting, maintaining, and customizing the software yourself.

Open source appeals to many early-stage marketplace founders because it promises ownership and flexibility. You can shape every part of the code, integrate any external tool, and avoid being locked into a single vendor’s pricing or feature set.

But with those advantages come real trade-offs in speed, cost, and long-term maintenance, so you’ll need to weigh them carefully before choosing this path.

This guide will help you estimate the cost (in terms of both time and money) of building a marketplace on top of open-source code. A lot of our advice will also apply to software and marketplace scripts that are offered as downloads for a one-off fee.

Skip ahead to the sections most relevant to you, or continue to the next chapter to read about the biggest benefits and drawbacks of this approach.

As we explained earlier, if a piece of software is open source, its source code is freely available for modification, redistribution, and commercial use. Open-source marketplace software lets you cut down the cost and time-to-market of your online marketplace idea.

Here are all the benefits of the open-source marketplace approach.

Every marketplace needs a set of essential marketplace features. Sellers want to create pages for their offering. Buyers want an effective way to search and browse the offering. Messages, reviews, and marketplace payments need to happen. Powerful admin functionality is a must.

Creating all this two-sided functionality from scratch is an expensive, time-consuming project. 

A high-quality open-source marketplace solution will have all this functionality pre-built. Open-source software providers let you access their entire source code on GitHub, download it, and host it on your own servers without ever paying a dime for the software. Setting up the foundation of your online business becomes a matter of a few weeks instead of several months.

Even if a technical co-founder is involved, the founding team’s time and focus are a resource with a monetary value. Open-source software offers one way to ensure that this resource is spent wisely and not wasted on the fundamentals.

Open-source code can be freely customized. If you’re familiar with the technology stack of the marketplace software in question (often based on Ruby on Rails or PHP), you can adjust the existing features and develop new ones on top.

These are strong perks. Depending on the foundation of your team, using open-source marketplace software may mean saving hundreds of working hours or tens of thousands of dollars. 

Most open-source marketplace platforms don’t require a license to use the software. Unlike commercial products that bundle the cost of ongoing access into a monthly or annual subscription, open source can be downloaded and run without paying for the right to use it.

This allows more of your budget to be spent on hosting, customization, and growth instead of recurring software fees.

Open-source projects often have active developer communities that create plugins, extensions, and integrations. Instead of building every feature from scratch, you install and adapt these community-built plugins to add payment options, shipping modules, or analytics tools.

A strong community also means regular updates, troubleshooting help, and shared knowledge that can make development faster and more collaborative.

Open-source software can be a solid foundation for your marketplace business. No drawback presented here has to be a dealbreaker in itself. 

Still, unexpected development bottlenecks or surprise costs may bust schedules and shrink runways. So before committing to the open-source approach, consider the drawbacks listed below. The points also largely apply to comparable solutions like marketplace scripts, downloadable proprietary software, and Airbnb, Amazon, or Etsy clone software. 

Compared to months of crunching code, getting a complete marketplace platform in a matter of weeks is extremely fast. But it’s not the fastest.

Any open-source software will require development work. Lots of it, even, depending on the solution you choose. 

At the very least, you need to install your development environment with the correct tools, configure your domain, and set up and deploy your marketplace to production in your chosen environment. Integrations to third-party tools—image processing, emails, server logging and monitoring, map provider, and so on—need to be set up. An online payment provider needs to be selected and the integration configured.

This isn’t anything a skilled developer wouldn’t be able to do, but the setup can take up to a few weeks. That time could instead be spent on strategic initiatives like crafting a quality UX, building custom features, or seeding a user community. Hosted no-code tools and API-based headless tools can offer a much faster path to launching.

Open-source software, by definition, is free to use. Marketplace scripts can be downloaded for a one-off fee and used indefinitely.

The first step that incurs costs is hosting. The base costs will likely land somewhere between $75 and $200 monthly. Any SaaS tools you need will add to the recurring costs, but a careful comparison between providers can bring down the total price tag.

More importantly, having a marketplace platform run safely and reliably is regular, ongoing work. Server uptime needs regular monitoring to make sure traffic spikes won’t crash your site. Data has to be backed up and stored according to the latest data processing regulations. The backend software, databases, and SaaS tools must be updated to the newest versions, as do payment processes when online payment regulation changes. 

As your business scales, this work will quite soon begin to require several hours each day and quickly grow into a full-time job. This time is away from reaping the benefits of open source and developing your unique, custom marketplace features.

One full-stack developer can likely build a marketplace on top of most open-source marketplace software alone, at least in the beginning. Whether this work will be fast or enjoyable is a different question. 

Many OS marketplace tools and scripts weren’t specifically built with heavy customizations in mind. Sometimes, they’re the source code of a piece of software designed to be offered as a SaaS tool. 

Even if the tool was built to be customized, open-source marketplace solutions can be complex beasts to master. They typically contain lots of code that is unnecessary for your marketplace idea and gets in your way. The sheer amount of code easily leads to situations where a simple code change causes something to break elsewhere.

In addition, using an open-source solution commits you to several specific technology choices. For example, if it’s built with PHP and MySQL, you need to use these technologies, too, instead of choosing the right tools for your specific idea.

You’re also committing to a specific type of architecture. One common issue is a lack of a proper API. If you don’t have one, it’s tough to build a mobile app for your marketplace later on. Managing third-party integrations can also become painful without an API. Yet another issue might be that the architecture is designed to only support marketplaces up to a certain size, and once you reach this level, it’s difficult to scale up.

A poor developer experience is frustrating at best. At worst, the increase in manual work may double your development expenses, especially when you scale.

If you’re looking to create a unique, heavily customized marketplace and build a big business around it, an API-based headless marketplace solution is an alternative worth considering. (More on this later.) 

Running an online marketplace means handling sensitive issues like payments, taxes, and user data.

With open-source software, the responsibility for meeting regulations such as PCI-DSS, GDPR, or local tax collection laws rests entirely on your shoulders. Unlike hosted SaaS platforms that bundle compliance into the service, open source requires you to research requirements, set up systems, and keep them up to date as laws evolve.

Open-source marketplace projects depend on community contributions and volunteer developers to add new capabilities. As a result, the pace of innovation can be slower than with commercial SaaS platforms, which invest heavily in releasing new features to stay competitive.

This means modern functionality (such as advanced analytics, fraud prevention tools, or AI-driven recommendations) may take longer to arrive. This will leave you with the added responsibility to build or integrate them yourself.

Below are some popular marketplace solutions that offer their source code as open-source or in comparable formats.

Medusa is a modern, open-source commerce platform built with a modular architecture. It’s particularly popular among developers looking for a flexible, headless setup that can power multi-vendor marketplaces as well as traditional e-commerce sites.

Medusa’s ecosystem includes plugins and integrations for payments, shipping, search, and more, and it can be extended through custom modules.

Medusa is written in Node.js and offers a strong developer experience with TypeScript support.

More information:

• Medusa on GitHub
• Documentation on Medusa’s site

Pros

• Headless architecture with strong API support for customization
• Active, fast-growing developer community and ecosystem
• Modular design allows picking only the features you need

Cons

• Still relatively new compared to long-established frameworks
• Requires developer expertise to build a marketplace layer
• Some advanced features may require building or integrating third-party tools

Spree Commerce is one of the most established open-source e-commerce frameworks. It provides a robust foundation for building online marketplaces and supports multiple storefronts, payment gateways, and extensions.

Thanks to its maturity, Spree has a wide range of third-party integrations and an active community that contributes to its ongoing development.

Spree is based on Ruby on Rails and is known for its stability and scalability.

More information:

• Spree Commerce on GitHub
• Documentation on Spree Commerce’s site

Pros

• Mature project with over a decade of development
• Wide variety of extensions and integrations
• Stable, scalable framework used by established businesses

Cons

• Requires Ruby on Rails expertise for customization
• Can feel heavy for simpler marketplace projects
• Slower pace of new feature development compared to newer frameworks

Bagisto is an open-source e-commerce and marketplace framework designed with Laravel and Vue.js. Its built-in multi-vendor marketplace functionality makes it a popular choice for marketplace projects.

Out of the box, Bagisto offers features like product management, inventory control, payment integration, and multi-currency support.

Bagisto has an active developer community and a growing library of marketplace extensions.

More information:

• Bagisto on GitHub
• Documentation on Bagisto’s site

Pros

• Built-in multi-vendor marketplace module
• Modern stack (Laravel + Vue.js) with wide developer adoption
• Active community with regular updates and new extensions

Cons

• Smaller ecosystem compared to long-established projects
• Performance may require tuning for very large catalogs
• Some advanced features are available only via paid extensions

Shuup is available as a hosted Saas solution with a monthly subscription. It’s also offered for a one-off fee with customization work included. The software is open source and can be downloaded from GitHub to use according to the open-source license.

Shuup’s technology is based on Django and Python.

More information:

• Shuup on GitHub
• Documentation on Shuup's site

Pros

• Flexible deployment as SaaS or self-hosted
• Built with Python/Django, a widely used framework with strong developer adoption
• Supports multi-vendor marketplaces out of the box

Cons

• Smaller ecosystem of plugins and extensions compared to older projects
• Limited marketplace-specific resources compared to e-commerce-first frameworks
• No recent commits since 2021, suggesting that it may no longer be under active development

Here’s how to find the right open-source software or marketplace script for you.

No marketplace script will offer everything you need. All of them will offer something you don’t. Listing your key requirements will help you cut through the noise and compare functionality relevant to you.

For example, retail marketplaces like Amazon allow multiple vendors to sell relatively low-value items. They generate revenue because shoppers use them like online malls and buy from multiple sellers in one go. So, a shopping cart is a core requirement, as is inventory management. This will tip the scales in favor of solutions like CS-Cart or Bagisto.

A rental marketplace (like Airbnb) or a service marketplace (like Fiverr) has no use for a shopping cart. Same with a product-selling marketplace for unique or high-value items like apartments or artwork. These businesses likely require a booking calendar, location search, and user profiles.

If you need to custom-develop even a single key feature at the beginning, your costs and time to market will skyrocket. If you have many features you have no use for, they’ll complicate customization. It pays off to take time to find a solution with the right balance.

When listing your key requirements, it’s good to spare a thought for the future. As your business evolves, you’ll likely want to adjust your transaction flow and pricing logic. So, in addition to core features, make sure that customizing your marketplace is easy.

First, check that there is an open-source license. A service provider may have outsourced only a portion of its offering, while the rest remains proprietary. 

There are also differences in open-source licenses regarding how you’re allowed to use them.

For instance, the MIT license allows for commercial use and modification, and the modified works can be distributed under a different license. The only requirement is that the license text and copyright are included.

The GNU General Public License v3.0 also allows for commercial use and modification, but it has more conditions. For instance, the modified material needs to be distributed under the same license. 

An active community around your chosen open-source project tells you a few things:

• The software is powering real-world marketplaces.
• Support from your peers is available when challenges arise.
• Common developer pain points will be surfaced quickly through discussion.

Before choosing, browse through the community forum to see what kinds of questions are asked and how they’re answered. A community forum is a quick way to identify the most significant drawbacks and understand if you’re willing to negotiate them. 

If no community forum exists, evaluate the depth and user-friendliness of the documentation instead. Try searching the documentation to get answers to your most common questions about development.

Make sure you’ll be happy working with your chosen marketplace software. Try installing the software on your local machine and making customizations. If there’s a developer tutorial, go through it. 

Examine developer tooling by asking yourself the following:

• Is there an API?
• If there is an API, are there SDKs for different programming languages?
• Is there a command-line developer tool available?
• What kind of tooling is available for monitoring errors?
• Does it have automated tests in place, and how long does it take to run the test set? 

Typically, such an evaluation only takes 2 to 3 hours per tool, but it can really give you an idea of whether the tool is a pleasure to work with.

Choosing between open-source and SaaS marketplace software depends on your goals, resources, and timeline.

Here’s how the two differ across several areas:

Launch speed

• Open source: Slower: requires setup, configuration, and development before going live
• SaaS: Faster: ready-to-use infrastructure and features out of the box

Up-front costs

• Open source: Lower licensing costs but higher dev and hosting costs early on
• SaaS: Predictable subscription fees but ongoing over time

Flexibility

• Open source: Complete control over the code; can customize anything
• SaaS: Varies greatly depending on the exact software

Developer experience

• Open source: Not usually built to be expanded; heavy customization can prove labor intensive
• SaaS: Highly dependent on vendor; ideally, solution is built to be expanded by developers

Integration ecosystem

• Open source: Dependent on community-built plugins and your dev team's capacity
• SaaS: Depends heavily on the selected saas solution / vendor

Maintenance

• Open source: You handle updates, bug fixes, and scaling
• SaaS: Vendor typically manages updates, infrastructure, and scaling

Security and compliance

• Open source: It's your responsibility to meet requirements like GDPR or PCI-DSS
• SaaS: Vendor typically bundles compliance measures into the service

Operational uptime

• Open source: Dependent on your hosting and monitoring setup
• SaaS: Guaranteed SLAs and monitoring handled by the provider

Hiring needs

• Open source: Requires in-house or contracted developers to build and maintain
• SaaS: Minimal dev resources needed; more focus on growth and operations

Below are some questions to ask yourself when comparing these options:

• Launch speed: How quickly do I want to validate my marketplace idea? Am I willing to invest in setup and configuration before going live?
• Up-front costs: Do I prefer paying developers and hosting costs up front, or a predictable monthly subscription? How much budget can I allocate to ongoing maintenance?
• Flexibility: Do I need to fully customize workflows and features? What is the best foundation to build upon?
• Developer experience: Do I need to customize the solution in ways it wasn’t built for? What gives the best foundation for my developers to work efficiently?
• Integration ecosystem: Which external tools (CRM, shipping, analytics) do I need to connect? Are those integrations available in the community or vendor marketplace (or can I easily build integrations to them)?
• Maintenance: Do I have the resources to keep my marketplace updated and secure? Can I handle scaling issues as usage grows?
• Security and compliance: Who will ensure PCI, GDPR, or tax compliance? Do I want that responsibility, or do I prefer a vendor to handle it?
• Operational uptime: How critical is guaranteed uptime to my business model? Do I have the in-house skills and infrastructure to monitor and respond to outages?
• Hiring needs: Do I have access to developers with the right expertise? Can my team handle long-term technical ownership?

Use the framework and guiding questions above to determine which path aligns best with your marketplace idea.

There are many approaches to marketplace website development. Our comprehensive guide to the ways to build a marketplace discusses them in great detail and helps you compare the benefits and drawbacks.

But let’s briefly look at a few alternatives specifically compared to the open-source approach.

At a glance:

Develop a marketplace from scratch

• Pros: Option to choose your tech stack; Complete customizability
• Cons: Requires a full-stack development team; Much more expensive (in terms of time-to-market, budget, or both)

Build with a hosted no-code marketplace SaaS tool

• Pros: Extremely fast time to market; Ease of use; No maintenance required
• Cons: Much less customizability; More expensive in the beginning

Use an API-based headless marketplace SaaS tool

• Pros: Great developer experience; Less custom development work needed to add new features, as you don't necessarily need to do any backend development; Reduced operating and maintenance costs; Work with the tech stack of your choice; Ensure you can scale to any size without facing performance issues; Technical support available for no [text appears cut off]
• Cons: Higher monthly cost in the beginning (if you don't account for the development and sysadmin costs); You can't make adjustments to the API or back-end yourself

The key benefit of coding a completely custom platform is, naturally, that it’s completely custom. You’re free to design your ideal feature set and look and feel. More importantly, from a developer’s perspective, you get to choose your tech stack.

The cons are obvious as well. Building a platform requires full-stack development skills and a UX designer from the get-go. Considering the workload, you’ll likely want more hands on deck even if you have all these skills yourself. An open-source solution typically lets you start with front-end customizations, though you’ll likely need a full-stack team soon enough.

Another concern is time to market. Managing the project will be a balancing act between hiring more people to your development team and increasing your time to launch. In any case, this alternative will cost you more than using an open-source solution, either in terms of time, money, or both.

Pros 

• Option to choose your tech stack
• Complete customizability

Cons

• Requires a full-stack development team
• Much more expensive (in terms of time-to-market, budget, or both)

A hosted no-code Saas tool is unrivaled in speed to market. Some Sharetribe customers have launched in a single evening. By the time a competitor is ready to start running beta tests on their open-source-powered platform, a SaaS-based business is already live and listed on Product Hunt.

Another clear benefit is ease of use. Configuring a no-code marketplace is as easy as ticking boxes and writing copy. Maintenance work is even easier, as there is none. Everything from server maintenance to feature updates is included in the subscription.

Often, the trade-off is customizability. Without access to the code, there’s much less you can do to make the platform yours. Many entrepreneurs accept this compromise because they want to launch their MVP quickly and validate their idea.

The subscription fee might pose another barrier. As a developer, you’ll need to consider which resource you’re more willing to part with: your money or your time. If it’s the latter, go with an open-source solution. 

With Sharetribe, you’re never locked into just the no-code functionality. Once you’ve learned about your audience and want to build unique functionality, you can custom-develop on top of your Sharetribe marketplace. Essentially, this means taking the code of your Sharetribe marketplace, customizing it, and self-hosting your front-end app—all the while running your marketplace on Sharetribe’s world-class management tools and without data migrations.

Plus, you can start no-code with Sharetribe and seamlessly transition into code once you’re ready. (Read more about developing on top of Sharetribe in the next section!)

Pros 

• Extremely fast time to market
• Ease of use
• No maintenance required

Cons

• Much less customizability
• More expensive in the beginning

An API-based marketplace solution (also called “headless”) is an excellent alternative to an open-source software solution. A headless solution typically offers open-source templates that connect to a backend hosted by the software vendor via an API. This approach is designed to offer infinite flexibility, fast time to market, and an enjoyable developer experience.

Both API-based and open-source solutions offer you essential marketplace features outside of the box. So, the biggest difference is in developer experience.

Unlike most open-source tools on the market, headless marketplace solutions are built to be customized. More often than not, helpful developer tools like SDKs, CLIs, and developer documentation are offered to make work smoother. You can also freely choose the tech stack you want to work with. APIs simply return data you can process with your favorite tools, such as PHP, Ruby, Node.js, or something else.

More importantly, API-based tools will most likely require much less development work than open-source tools in the long run. There are two main reasons for this.

First, customization tends to be a lot simpler. For example, with Sharetribe, creating a unique transaction flow for your marketplace can be achieved in a couple of minutes without even touching the back-end code, as the software is built to facilitate this kind of flexibility. While the backend of a headless solution like Sharetribe is not open source, it offers an open-source web template that makes building fully functional marketplaces a breeze.

Second, an API-based SaaS tool will require much less maintenance work. Traffic spikes, system updates, and bug fixes are included, which will save you countless developer hours in the long run.

An obvious drawback of API-based solutions is that you need to pay a subscription fee to run your marketplace with them. However, we believe that Sharetribe ends up being a more cost-efficient solution for most businesses than open-source marketplace solutions because of the economies of scale created by its shared hosting infrastructure. 

Another drawback is that you can’t make direct changes to the backend of an API-based solution. This doesn’t prevent you from extending your platform, as you can always plug in a backend of your own. But if you’re only looking to make a very slight backend adjustment, that might be easier to accomplish with an open-source solution.

Pros 

• Great developer experience
• Less custom development work needed to add new features, as you don’t necessarily need to do any backend development
• Reduced operating and maintenance costs
• Work with the tech stack of your choice
• Ensure you can scale to any size without facing performance issues
• Technical support available for no extra cost

Cons

• Higher monthly cost in the beginning (if you don’t account for the development and sysadmin costs)
• You can’t make adjustments to the API or back-end yourself

Many generic websites or e-commerce builders offer extensions for adding multi-vendor functionality. This is the case with common CMSs like WordPress and Magento.

The benefit is that these tools typically allow for a lot of customization without touching the back-end. Magento and WordPress are open source, so there are endless possibilities for both custom development and adding proprietary or community-built plugins or extensions. 

The biggest drawback is that, unlike dedicated open-source marketplace tools, generic CMSs won’t offer you the key marketplace functionality out of the box. You’ll need to design your user journeys and transaction flows from scratch and figure out how to best implement those with an interplay of plugins. As a result, there’s a risk of vulnerabilities in your setup. The failure of one plugin may render your entire site unusable. 

Depending on the exact CMS and plugins you choose, this approach may also incur bigger initial costs than using open-source marketplace software.

Pros 

• Typically offers more no-code customization options
• Lots of community-built and proprietary plugins and extensions

Cons

• No marketplace features out of the box
• Customization can be challenging if you need to make lots of changes
• May require higher initial costs

solutions and how to mitigate them. While its approach has its benefits, it’s not the solution we recommend to people building their marketplace businesses because of all the drawbacks listed above.

Sharetribe offers you both the benefits of a no-code tool and customizability on par with open-source software. It’s an API-based, headless marketplace solution and (in our admittedly biased opinion) the best marketplace solution out there for both founders and developers.

Sharetribe powers hundreds of marketplace businesses around the world and counting. It has the perks of open-source marketplace software solutions without most of their downsides. This is the solution we recommend to anyone who is serious about building a successful marketplace business.

Create your Sharetribe developer account today and take the developer tutorial to play around with its features. You get a 14-day free trial, after which the Build plan costs only $39/month. You only need to subscribe to a live plan (which start at $99/month) if you decide to launch your marketplace to actual users.

Get started with your free trial of Sharetribe today.

Here are some common questions about open-source marketplace software.

Licenses such as MIT, Apache 2.0, and BSD are generally safe for commercial projects because they allow you to use, modify, and distribute the code without requiring you to release your own modifications.

By contrast, more restrictive licenses like GPL or AGPL may obligate you to make your customizations public, which can limit control over proprietary features. Always review the terms of a license before committing to a project.

Self-hosting shifts full responsibility for updates and upkeep to you. This includes:

• Applying security patches to the marketplace software and its dependencies
• Securing and monitoring your servers
• Ensuring compliance with standards like PCI-DSS for payments and GDPR or local privacy laws for user data

You’ll also need to manage scaling, backups, and uptime monitoring to keep the platform reliable.

Open-source software doesn’t charge licensing fees, but you should budget for hosting, developer time, maintenance, and custom integrations. SaaS platforms, on the other hand, bundle hosting, updates, and compliance into a predictable subscription fee.

While open source can seem cheaper at first, many marketplace founders find that SaaS is more cost-efficient in the long run, unless they already have strong in-house technical resources.

Yes. Most open-source frameworks either support Stripe Connect and similar gateways (like PayPal or Adyen) through existing plugins or can be integrated manually with developer support.

The key requirement is having the expertise to set up secure flows and ensure compliance with payment regulations.

It’s common to start with a SaaS tool to validate an idea quickly and then migrate to open source once the business matures. Migration typically involves:

• Exporting your core data, such as users, listings, and transactions
• Setting up the new open-source platform
• Recreating or extending custom features

An alternative to this approach is to build on a solution like Sharetribe, which allows you to launch fast and continue customizing it with code without having to re-platform.

This path allows you to reach product-market fit before making the heavier investment in technical ownership.