"50" - Old Friends by Martin Fisch

You may think they’re crazy. You may even think they’re ripping you off because 50% – that’s half of “your” money. In reality, if you’re a new author it’s a deal of a lifetime!

John Doe, young guy, knows WordPress, thinking about starting selling;

This looks sweet! Some of these guys are making millions on WordPress themes. I can make themes! So, 40 bucks a theme times a thousand purchases I’ll soon have. Holy code! That’s 40 thousand dollars! I’ll move out of my mom’s basement in a month. Hey, hey, WTF! I’ll only get 50%?! What kind of a ripoff is this!? I’m doing all the work!

If you and John have anything in common please allow me to show you what Envato will do for you and why giving them 50% of “your” earnings is a good deal.

Before it even begins

When you submit an item it will get reviewed by people who really know what they’re doing. If the item gets rejected they will tell you why, give you some pointers and in most cases will even exchange a couple of emails with you. Who’s paying for that (yes that costs money)? Envato. If you were to pay for such advice at very least it would cost $100 per hour. So, I’m writing down $100 invested in your item by Envato before we even know if it’s good enough.

After the item gets accepted it’ll immediately get some traction. Either by people subscribed to the items RSS feed or by visiting the marketplace (not to mention all other ways people see items from marketplaces). Based on my experience, for a CodeCanyon WP item, your item will get at least 3,000 unique visits within a week. “Not much” – you say. Expected millions? Let me remind you that these are not people who are here to buy vacuum cleaners. Those clicks are as good as they get! They are 99% targeted and you didn’t pay a dime for them. Want to pay for such traffic? Not a problem. Google Keyword Tools estimates that cost per click for keywords such as “premium plugins” when targeting USA easily goes over $1,50. I guarantee those clicks are not as good as ones Envato gets you and I’m ignoring the fact you have to know how to set up the campaign and probably make some landing pages but let’s write another $3,000 that Envato “invested” in your item.

Costs keep adding up

Once the item starts to sell another “insignificant” asset comes to play. Envato has a payment gateway setup (and customer service and everything else involved around payment). It works with PayPal and a whole bunch of other payment methods. “So what! I’ll get my WP site up and use Jigoshop to sell items.” Sure, let’s do that. Hosting and domain expenses for a year are $30, a couple of pro Jigoshop plugins at least $70 and I’ll assume getting everything up and running is free because you’re doing it. So that’s another $100 you’re not paying for.

To certain extend Envato will vouch for your item’s quality. At first by the sheer fact it got accepted and later by putting it on various collection lists, featuring it if it’s good and doing all sorts of other promotions. This can hardly be compared to paid advertising because you can’t actually pay for this since it’s unbiased. For the sake of argument let us assume a sponsored article/review will be good enough. Those go for $100 on not so good sites to a couple of thousand on really popular ones so I’ll put down $500.

Battling piracy is another job Envato will do for you. They send hundreds of DCMA notices and I can assume they have a good relationship with many legal file hosting services which ensures speedy removal of pirated items. Let’s say they spend 2 hours per month on your item. At $50 per hour that’s $100 a month they’ll save you.

How much you say?!

Summing up those bolded figures comes down to $3,800. You may argue that that’s unrealistic because “it’s not actually costing Envato anything” but making the item “didn’t cost you anything as well”. It was “just your time”, right? You may also argue that my numbers are quite off. Not a problem, let’s remove one zero. That still leaves us with $380. Not much but if someone’s willing to take a risk for you and invest that money in your item why not take it?

It’s easy to get fooled by the false “I’m doing all the work” premise. There’s quite a lot of work involved between “I have an item that can be sold” and actually getting the money. You’re making the item and Envato is helping you sale it so everyone is doing their part. And while you could certainly sell on your own and not give 50% to anyone, while you’re “green” it’s nice to have someone a bit bigger by your side.

I hope now you see why, especially for new authors, giving 50% is not a ripoff but actually a pretty good deal. And what’s even better once you start making some money your percentage will continue to go up to 70%.

Just to clarify:

• I don’t work for Envato
• Not only do I strongly believe in everything I wrote but can also confirm that I’ve (un)fortunately tried going down the “solo” route and expenses add up faster than you can believe it
• I don’t have any info on whether Envato will change its rates nor does this post have anything to do with that