Gumroad – Ultimate Sales Engine For Solopreneurs?

gumroadWhen I was first introduced to Gumroad several years ago there’s no doubt I was immediately impressed! At the time it was a very simple, yet super slick online payment tool. As I recall, one of the things people were raving about back then was the fact that you could call up an order form right from within Facebook.

With good ol’ Paypal and 2Checkout as my only points of reference, the service seemed to have a lot of promise. But…well…being the creature of habit that I am, I just filed it away in the back of my noggin for future reference. And, as is usually the case with things in the back of my noggin, I then promptly forgot ALL about it. Until this fall (2015) that is!

About a month or two ago (as I type this) I was hunting around for payment handling alternatives to “good ol’ Paypal” (did I mention I’m a creature of habit). A little voice in the back of my head told me to revisit Gumroad as a possibility.

Am I ever glad I did!

It seems Gumroad has been very busy since I last checked them out – adding an amazing suite of new features, and (not too surprisingly) building up a thriving community of loyal users in the process.

Here’s a list of fun facts about this platform:

  • The main categories of products you can sell with Gumroad are: physical goods, digital products, and subscriptions/memberships (i.e. recurring payments)
  • You can create your own affiliate program.
  • They offer free file hosting – each file in your product can be up to 16 GB.
  • Files can be streamed directly from the site (and you can set this as mandatory if you want).
  • You can even offer video “rentals”.
  • They have an internal “email” (much better than basic email actually) system that allows you to send updates to customers – even automated sequences, known as workflows.
  • Aside from customers, you can also build an “audience” of subscribers (who can be notified about your product releases).
  • They have cool analytics to tell you where sales are coming from, along with conversion rates etc.
  • They have something called “Consumption Analytics” which tells you how many downloads there have been, how far people are getting through your media (when viewed within Gumroad system) etc.
  • You can sell directly from special product pages (or your Profile page) – or add a bit of code to WordPress (and other) websites and easily sell from there. (If you want to complete the sale on your site they do recommend an SSL certificate, however).
  • Gumroad pays out money owed on a weekly basis via bankwire (US, CAN, AUS, UK) or Paypal (rumor has it they even absorb the fees for Paypal transfers) for everywhere else.

Believe it or not, this isn’t even an exhaustive list (not even close)! I could go on and on (and I DO actually have plans to create a Gumroad guide and future blog posts, so stay tuned).

After seeing all that functionality you might assume that they are either charging a hefty monthly fee or at least taking a big percentage of each payment that goes through their system (maybe both?).

In fact, the core service itself is totally free (there is a premium account option coming soon – more on that in a minute) – and they only charge 5% + $0.30 on each transaction!

After more than a decade of online entrepreneurship – and countless (countless!!!!) hours spent trying to patch together a wide array of tools and services just so I can effectively operate a business online, the possibilities I see with Gumroad completely blow my mind!

In its present state, this is absolutely the “ultimate” no-brainer tool every new web entrepreneur should be gravitating towards – especially those wanting to sell digital goods (eBooks, software etc) or online subscriptions/memberships. It saves a lot of money, it saves a ton of time (so more time for important things like product creation!) – and just generally makes running an online business so much easier!

Dark Clouds On The Horizon For Gumroad Users?

After all that hooting and hollering, I feel it’s important to balance things out by talking a little about the upcoming premium (paid) account option that was announced earlier this week. Firstly, I want to make it clear that I think a premium version is a fantastic idea! Quite frankly, I think they took things too far with all the free add-ons. I would gladly pay a monthly fee just for what they offer now.

Here’s the problem though…

Because they over-extended themselves, they announced plans (nothing totally “official” as I type this) to pull back on some KEY features for free account users. For example, the number of email updates you can send to customers from a single account is being reduced from unlimited to TWO per month. The number of automated workflows per account is being reduced from unlimited to ONE!

This is a HUGE mistake in my mind! It’s like a slap in the face for all those who have been loyal users and raving fans – helping to spread the word about the platform over the years. When you give something to someone you DON’T just take it back! Or, if it is vitally important (I can accept that) – simply reduce the number from infinity to something more reasonable (say 30 updates and 20 workflows).

The premium features they have announced do look fantastic – but they seem to even be punishing those who sign up with their pricing tiers. Account holders with 0-999 customers will pay $10/mo; those with 1000-1999 will pay $25/mo – and it goes up from there (50,000+ customers? It’s gonna cost you $250/mo). I assumed this was referring to total transactions (maybe even including subscribers and free product “purchases”) – which would be quite generous.

But I learned, directly from Sahil Lavingia (CEO/Founder) himself that this is not the case. Here is the direct quote:

“As it stands, it will be based on unique, active customers deemed as a customer that got one of your products/updates in the last year.”

In other words, even if your business is not actually growing you can get bumped up to the next payment tier just by making sales.

Here is a hypothetical situation:

Let’s say Joe Blow has several new eBooks that are doing quite well. Early on he makes an average of 200 total sales (unique customers) per month. By month 6 he’s going to be in the next payment tier. Even if his sales drop to 5 per month, he is still stuck paying the higher monthly rate.

Don’t get me wrong – I think a database of customers is very valuable. And I would like to think that Joe will continue to build his business and increase his sales totals.

I just don’t think pricing should be based on a variable that only goes up.

I also can’t help but wonder what this will mean for current “power users” – the people like Nathan Barry and Kyle T Webster, who have already built up a huge customer base. If they want to go pro, will they automatically start at one of the expensive monthly tiers?

Anyway – it’s important to note that a LOT remains to be seen here. Nothing is set in stone at this time, and Gumroad does seem to be taking everyone’s opinions very seriously. I’m very optimistic that by the time the premium features are rolled out, they will have come up with some sort of “happy medium”.

Please don’t take this as a warning to stay away from Gumroad. It’s quite the opposite in fact! My recommendation would be to get your account(s) set up BEFORE they roll out the changes, and get your products/workflows in place since I can’t see them suddenly forcing existing members to pay for systems they already have in place.

Bottom-line – definitely stay tuned! I’ll be writing plenty more about Gumroad soon!

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  1. Awesome article ! Thanks for this. I hope for future posts about gumroad you can include reviews or examples of , or success case studies of businesses who use the gumroad recurring payments options – subscriptions or memberships.

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