A major choice must be made in the first stages of the delivery app project: Should you make your app, or opt for a ready-to-use SaaS service? Spoiler alert—there’s no universal answer. The perfect solution will be different for every company, depending on your business, what you want to achieve, and your budget.
This blog is a great place to start if you don’t know where else to look. We will compare custom and SaaS options for you, think about what makes them different, what they offer, and which is the best choice for your business. If you run a new or established business, working with an On Demand Delivery App Development Company can help you build a strong and flexible company.
Why the Business Model Matters
Your app’s business model shapes:
- Your revenue streams
- Your customer relationships
- How you scale
- Your operational costs
- Investor appeal and long-term sustainability
If you pick the wrong model, you risk low margins, customer churn, or operational chaos. But get it right, and your delivery app can become a revenue engine that grows on autopilot.
Let’s dive in.
1. Order Commission Model (Marketplace)
This is the most popular and widely used model for delivery platforms. Think Uber Eats, DoorDash, or Grubhub.
How it works:
- Your app acts as a middleman between customers and vendors (restaurants, shops, etc.)
- You take a commission fee (10–30%) from every order placed through your platform
- Vendors benefit from increased reach without managing their delivery tech
Revenue Sources:
- Commission per order
- Delivery fees (optional)
- Sponsored listings or ads from vendors
Pros:
- Scales quickly with multiple vendors
- Low upfront investment if you don’t manage inventory or deliveries
- Recurring revenue with every transaction
Cons:
- Margins can be thin due to competition
- Dependence on third-party vendors
- Customer service complexity (you mediate issues)
Best for:
- Entrepreneurs launching a multi-vendor delivery platform
- Startups with limited inventory/logistics
- Apps targeting restaurants, groceries, or retail aggregation
2. Delivery-as-a-Service (Logistics Platform)
In this model, you provide delivery infrastructure to other businesses that want to offer delivery, but don’t want to build the system themselves.
Think of it like Stripe for deliveries.
How it works:
- Local businesses integrate your app or API to offer delivery
- You handle fulfillment, tracking, and payments
- You charge a fee for each delivery or API usage
Revenue Sources:
- Per-delivery fees
- SaaS subscriptions for platform access
- Premium services (white-labeling, custom integrations)
Pros:
- High demand from small businesses
- Recurring revenue, if done as a subscription
- Not tied to one vertical—you can serve restaurants, florists, pharmacies, etc.
Cons:
- Requires strong backend logistics
- Need to build credibility with partners
- High operational complexity if you manage drivers
Best for:
- SaaS-minded founders
- Tech-focused teams solving B2B delivery problems
- Startups targeting hyperlocal logistics or third-party APIs
3. Full-Stack or Cloud Kitchen Model
This is a vertically integrated model where you own everything—from the product to the delivery.
Example: Rebel Foods, Sweetgreen, or ghost kitchens that only operate via apps.
How it works:
- You manage the entire customer experience
- There are no third-party vendors—you control inventory, packaging, fulfillment, and delivery
- Orders are placed through your app and fulfilled through your ecosystem
Revenue Sources:
- Product pricing (you keep 100% of revenue)
- Upselling and cross-selling in the app
- Subscription bundles (e.g., weekly meal kits)
Pros:
- Maximum margin control
- Consistent quality and branding
- Easier to optimize the customer experience
Cons:
- High upfront investment (kitchens, inventory, logistics)
- Difficult to scale across locations
- Operationally intensive
Best for:
- Established brands or D2C operators
- Founders with retail/restaurant experience
- Businesses focused on quality control and brand loyalty
4. Subscription-Based Model
Subscription-based delivery apps offer recurring services—great for daily-use products or loyal customers who value convenience and predictability.
Think MilkBasket, Licious, or GoPuff’s paid membership model.
How it works:
- Users pay a recurring fee (weekly, monthly) for regular deliveries or access to benefits
- You offer a set number of deliveries or products within that period
- Revenue is predictable, and customer retention is higher
Revenue Sources:
- Subscription plans
- Add-on product sales
- Membership tiers with exclusive benefits
Pros:
- Predictable cash flow
- Higher customer lifetime value (LTV)
- Easier to forecast demand and inventory
Cons:
- Harder to acquire users initially
- High churn if product quality or timing drops
- Needs a strong backend for subscription logic and delivery schedules
Best for:
- Products with repetitive consumption (groceries, essentials, pet food)
- Apps focused on retention over volume
- Founders targeting niche but loyal audiences
5. Freemium or Ad-Supported Model
This model isn’t as common for delivery apps, but it’s viable if you’re building for scale, then monetizing through ads or freemium upgrades.
Think of local courier apps that are free for users, but generate revenue via:
- Sponsored stores
- Paid product placements
- Banner or in-app ads
How it works:
- The core delivery service is free or subsidized
- You monetize via advertisers or offer upsells (priority delivery, packaging, etc.)
Revenue Sources:
- Ad sales or vendor promotions
- In-app purchases (e.g., real-time tracking, tip add-ons)
- Premium user tiers (e.g., no ads, faster delivery)
Pros:
- Attracts a large user base quickly
- Works well in ad-driven or emerging markets
- Flexible monetization
Cons:
- Needs massive traffic to be profitable
- Lower margins
- Harder to build loyalty without clear value
Best for:
- Local or hyperlocal delivery apps
- Startups focused on scale-first, monetize-later
- Apps targeting tier 2–3 cities or price-sensitive users
So... Which One Should You Choose?
Let’s break it down by business type and goal:
If you're...
Go with this model
Launching a food or retail delivery app
Order Commission (Marketplace)
Helping businesses enable delivery
Delivery-as-a-Service
Owning your kitchen/inventory
Full-Stack/Cloud Kitchen
Selling essentials or repeat products
Subscription-Based Model
Building a scale-first, user-heavy app
Freemium or Ad-Supported
Bonus Tip: You Can Combine Models
Some of the most successful delivery platforms blend two or more models.
Example:
- DoorDash earns from commissions, delivery fees, and DashPass subscriptions.
- GoPuff sells inventory (like a cloud kitchen) and offers premium plans.
So don’t be afraid to start with one core model and layer on others as you scale.
Final Thoughts
Choosing the right delivery app business model isn’t just about features—it’s about strategy, scalability, and sustainability.
Think long-term:
- What will your margins look like at 1,000 orders a day?
- How will you retain users and partners?
- Can you support your model with tech and people?
If you’re clear on your niche, users, and resources, you’ll be able to pick a model that works, evolve it as you grow, and build something that lasts.
