This post is written by Viktor Hanacek.
It has been a while since we launched picjumbo.com PREMIUM Membership that is using Gumroad. We are using it to publish thematic photo collections and people can access them as soon as they are done. But we use Gumroad for more than only the PREMIUM Membership and we have gathered quite some experience of the years, which led me to the idea to write down what I consider important and what I wish I would have known back then, at the beginning. It can help you, too!
1. Without Gumroad, we would have nothing.
is actually a one-man show. I have created a while back and I have been behind it alone the whole time. And if I hadn’t found Gumroad back then, I think we would not have PREMIUM Membership at all. And if we would have, we’d be using some crappy WordPress-based solution and would have to deal with developers, credit cards, payment processors, taxes, crazy bureaucracy regarding the EU VAT MOSS, and so on. But all of this is handled by Gumroad and I can be out taking pictures. Priceless.
2. Do pricing by value, not by costs
Everything has a price. But the price is one thing and value is other. If you spend 6 moths creating something and then you price it according to time spent on the matter, chances are no one is going to buy it, ever. Price needs to be created according to the value that it will bring to your customers. It is easier to sell hundreds of pictures for $10 a piece than one big collection of pictures priced in the range up from $1000…
3. Always have monthly, semi-annual and annual plans
Your customers want to save money. They do not want to deal with stuff and they want to get things at a favorable price. So when you are offering subscription, always offer something more beyond the standard monthly plan – e.g. annual and semi-annual plans. If people like your product and intend to use it in the long-term, they will be happy to save some money. Others will buy the longer subscription just because it is cheaper when adjusted to the per month price, even though normally they would have ended the monthly subscription sooner than after 6 or 12 months. And you will have more money that you can immediately use. For instance, our yearly subscription includes 5 free months, which makes customers’ decision making much easier when they’re considering whether to go for the more expensive year subscription or not. :)
And if you are running your subscription for a while and you now know that most of the quitting customers quit after an average of 3 months, you can set the yearly price as equaled to 4 or 5 monthly payments. For many customers, this will be so tempting they will rather take the yearly plan and all the sudden you have money for 1 or 2 extra months you otherwise wouldn’t have. It’s all about crunching the numbers!
4. Give people the option of choice
Or in other words, create so-called tiers or plans for your product. Again, we are getting to the point that products have value and that is different for each one of the customers. And everyone has a different budget that they are willing and/or able to spend on your products, which is why it is a good idea to create several variations. One of the most popular practical application of this idea is eBooks. Many writers offer first plan with the eBook only, other with eBook and video tutorials and third one with an eBook, tutorials and one hour of Skype consultations.
In our use case within picjumbo PREMIUM Membership, we have three plans: BLOGGER, DESIGNER, and AGENCY. Bloggers have access to premium collections (both new and old ones), DESIGNERS have the same but pictures are sorted into individual categories plus they can access the All-in-One Pack that contains all of the free photos from picjumbo.com. And AGENCY plan has extra PSD mockups and access for up to 50 team members.
More or less, it’s still the same product, but it yields more money this way.
5. Let people choose their own value (= $10+)
I have made literally thousands of extra dollars thanks to this very simple idea. We have offered a product and for some people it had a larger value than what it was priced at. People wanted to pay more so we let them! Easily, instead of pricing the All in One Pack at $10, we priced it at $10+ and said that we will be happy if people would decide to support us by paying more. Another variation of this is that you price the product at $0+ and you literally let people name their own price. You can try to apply this idea to as many of your products where it could work.
And again, to be specific: We were offering All in One Pack of all of our free pictures for $10+ (it saves time compared to downloading them one by one). Care to guess what was the average price? $12.70! People often paid $15 and sometimes even $50 just for being able to quickly download all the pictures! And the record holder is wonderful one hundred dollars! This October we relisted the All In One Pack for $15 and so far the average selling price is $16.90, which is not bad at all!
6. Explain EVERYTHING
You never know who exactly your customer is and sometimes it is people who are not too friendly with the computers. Which is why it is important to keep everything as simple as possible. There will be always someone to whom it won’t be clear how to do something (buy your product), so try to make that process as simple as possible by describing every step of the way. I had problems with people who didn’t know to put two zip files together; or where could they find newly released collections and so on.
It never hurts to have a FAQ, where you can explain even the most obvious of questions. I have spent way too much times responding to emails about how to unzip zip files, how to download or open something etc. But, these are the little things take moves us forward.
BONUS: Gumroad saved my business (from VAT MOSS)
I am from Europe and about a year ago there was a major change in European laws that govern online sales of digital goods. It was called VAT MOSS and basically, it made you pay the VAT in the state of the BUYER: That’s right. It means if 10 customers from 10 different European countries order my product, I would have to pay VAT for them individually in each one of their countries.
In the beginning, everyone freaked out about how to handle this because it meant a significant change in how the check-out process is developed, you needed to get in touch with local tax offices, learn new processes and most importantly, it added a humongous amount of paperwork. Many online stores canceled selling digital goods. And so did I. But then I moved my mockup products to Gumroad.
Because Gumroad came with a genius solution: they started doing all of this on their part. They make sure they identify the correct location of the customer and they pay the taxes in the respective countries. And that way, we, sellers from the EU, have peace of mind again.