Blog

How does UrbanLeap's business model work?

By

Shreya Arora

September 2, 2022

At UrbanLeap, we aim to ensure the best outcomes for every government purchase. In this post, we explain some of the most frequently asked questions about our business model and why it works for both agencies and vendors.

How does your business model work?

The UrbanLeap platform is free for government agencies. Unlike the admin fees you see in cooperative contracts, there are no fees to use UrbanLeap. We do not charge vendors to be part of our database or to submit proposals either. Only the winning vendor pays 1% of the final contract amount.

We use this 1% fee to allow us to revamp the solicitation process, so it’s easier and more cost-effective for both parties.

We have a cap and not-to-exceed clause for projects with a total of over $5M.

UrbanLeap is a marketplace. We bring buyers and sellers together, as Amazon or other marketplaces do. And, like all marketplaces, we charge a service fee for providing our service.

For example, if you’re looking for a vacation home, you can call people and ask them if they’re willing to rent out their place during vacation dates to avoid the Airbnb fees. But it’d be easier for you to simply go to Airbnb and book your stay. Similarly, at UrbanLeap, in addition to developing the solicitation, our team publicizes and reaches out to relevant vendors while facilitating the entire solicitation process.

Why do you have this business model to start with?

Our goal is to democratize procurement by making the proposal-to-contract process as quick, easy, and transparent as possible for government agencies and vendors. To facilitate this, we provide all our tools and services for free. Additionally, we believe that agencies should not be inhibited by cost to get the best quality solution to their challenges, such as an outcome-based, low-stress procurement process.

This model seems pretty new in government, right?

Like the admin fees that you see in cooperative contracts, there are no fees to use UrbanLeap. However, UrbanLeap does collect service fees from its contractors when they make a sale, which is how cooperative contracts work.

In fact, because of COVID and budget crunches, many cities are now using fee-based pricing models. You can also think of us as a reseller of products. When you’re buying laptops or supplies, those stores charge a 7%-10% transaction fee to the original merchants. At UrbanLeap, our fees are much lower at 1% and provide more value in the development, vendor sourcing, and evaluation stages.

How can I be assured that this business model is legal for my agency?

UrbanLeap currently has explicit legal clearance to operate in the states of AZ, CA, CO, FL, NC, and OH, and we’ll continue to update for more states. Curious if this can work in your agency or state? Contact us via our website and we’ll investigate for you.

Won’t vendors bake in the fee?

We know that with a simple process, more vendors apply—which makes pricing more competitive, not less.  Notably, the City of Oberlin was able to complete a historic restoration project on time, without stress, and $36k under budget! Here are some other instances where competitive bidding mitigated vendors passing on fees:

While some vendors may add the fee to their proposal, many government agencies have been able to complete projects in or under budget using UrbanLeap. We’re confident that the time and resources saved in drafting, sourcing the right vendors, and evaluating proposals more than make up for the 1% fee.  

Won’t vendors be frustrated about the 1% fee?

That hasn’t been our experience to date! We’re lowering the cost of sales for every vendor by making it easier and more cost-effective for them to identify and respond to proposals for which they are well-suited.

Without UrbanLeap:

  • Vendors spend on average 5 hours per week on business development
  • Many vendors spend a budget on resellers, sales/marketing, and consultants to learn about opportunities, which could be 20%-25% of their budget
  • Most vendors spend 15 hours responding to an RFP

A 1% fee to win solid business is a fraction of these costs, so we alleviate the hidden costs associated with public procurement and become a value-added partner.

What additional benefits does UrbanLeap provide?

Our goal is to optimize the outcome of your procurement. We accomplish this in every phase of the process from the development of the solicitation to contracting.

Interested in seeing how UrbanLeap can help you? Request a Demo

Ready to take the leap?