Can You Go Commercial

What it’s Worth & What to Consider

Can You Go Commercial?

Garth Koyle@eventespresso | eventespresso.com

Disclaimer: Presentations are intended for educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Event Espresso, LLC, its cosponsors, or its committees. Event Espresso does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented. Attendees should note that sessions are audio-recorded and may be published in various media, including print, audio and video formats without further notice.

Event Espresso, LLC. Copyright 2011

MY BACKGROUND

Event EspressoEvent Registration and Ticketing Management

Plugin for WordPress

• 2009 Free

• 2010 Commercial

• 2011 Business plan competition, $40,000grand prize winners

• Forecasted 2011 revenue to within .02%

• Staff

• Three support staff

• Four developers

YOUR BACKGROUND

In the WordPress Repository:

~ 1,600 Themes (49+M downloads)~ 30,000 downloads/theme

~ 20,000+ Plugins (309+ M downloads)

~ 15,000 downloads/plugin

Are you one of them?

Why did you create?

WE CREATE PRODUCTS TO SATISFY NEEDS

Unlimited Use & Free

Ownership and Scalability

Capability

Affordability

Autonomy

Customer Need WP Characteristic

Event Espresso, LLC. Copyright 2011

WHAT IS IT WORTH? – HOW MANY CUSTOMERS?

Affordability

WHAT’S IT WORTH?

It’s NOT ALL about the money, but what’s it worth?

Consider Revenue:• Number of Customers

• Products/Services to Offer

• Pricing

• Licensing

Consider Expenses*:• Affiliate Commissions

• Transaction Fees

• Advertising

• Accounting/Legal

• Contractors/Staff

• Website Systems

• Utilities

• Owner Draws/Salary

*Sales relationship to expenses is non-linear

REVENUE – How many customers?

CASE STUDY: THEME CHECK

Downloads: ~ 623/wk

Current Version Adoption: ~ 95%

Current Users: 32,400 * .95 = ~ 30,780

Conversion from Free to Paid: ~ 10%*Awareness > Download > Installation > Usage > Upgrade.Depends on features of paid version, reminders, prequalification.

Estimated Paying Customers: ~ 30,780 * .10 = 3,078If you don’t have a plugin now use existing plugins as proxy.

10%

*Approximately 10% of customers who download the free

version may download the paid

version.

REVENUE – What type of l icense wil l you offer?

License Types

• GPL – required to be in WP repository

• Proprietary

Service Types:

One-time fee, monthly fee, annual fee, unlimited, freemium, subscription, etc.

REVENUE – What price wil l you charge?

CASE STUDY: THEME CHECK

Potential Services:

• Personal Theme Fixing: $50

• Developer Theme Fixing/Upgrade: $100*

• Custom Theme Design: $8,000

Potential Products:

• Premium Themes: $50

Total Revenue: $307,800

$100

*Approximate average revenue per

customer.

EXPENSES – Affil iate Commissions

Affiliate marketing programs:

• Percent of sale

• Percent of sale + coupon

• Coupon only

Consider your terms of serviceregarding affiliates using your brand in SEM advertising.

5%

Approximately 5% of revenue should be

budgeted as commissions to

affiliates

EXPENSES – Transaction Fees

Transaction fees are similar butthe banks are very different; e.g.:

• Payment Gateway ~ 3%• E.g. PayPal/Authorize

• Merchant Account ~ 1%• E.g. Wells Fargo

• Use an established bank that offers good online access/services

4%

Approximately 4% revenue should be

budgeted as transaction fees

EXPENSES – Advertising/Marketing

You will need to promote your products.

• Email Marketing

• Search Engine Advertising

• Trade publications

• Free demos/trials

• Promotions

5%

Approximately 5% of revenue should be

budgeted for Advertising/Marketi

ng in addition to affiliates for a total

of about 10%.

EXPENSES – Accounting/Legal

It’s worth dotting your “i”s andcrossing your “t”s.

• Business Structure

• Co-founder

• Non-Disclosure

• Non-Compete

• Accounting

• Trademark

2%

Approximately 1% revenue should be

budgeted for accounting service

and legal protection.

EXPENSES – Staff/Contractor Salaries

The largest portion of your budget.

• Support ~ 1 FTE/2k new customers

• Development ~ .5 FTE/2k new customers

• Owner Draws ~ remainder

35%

Approximately 50% revenue will have to be budgeted to pay

yourself, staff and/or contractors.

EXPENSES – Website Systems

The systems you use today will affectyour business tomorrow.

Systems Include:Blog, forums, live chat, ticketing, email, affiliates, invoicing, a/b testing, project and code management, customer surveys, documentation, videos, API, etc.

1%

Approximately 1% revenue will have to

be budgeted for setting up and

maintaining your website and systems.

EXPENSES – Other

The miscellaneous can add up.

• Hosting

• Telephone service

• Computer hardware/software

• Traveling to WordCamps

8%

Approximately 8% revenue will have to

be budgeted for miscellaneous stuff.

EXPENSES – Total

Commissions: 5%

Transaction Fees: 4%

Advertising/Marketing: 5%

Accounting/Legal: 2%

Contractor/Staff Salaries: 25%

Website Systems: 1%

Other: 8%

Total: 50%

CASE STUDY: THEME CHECK

TOTAL EXPENSES: ($153,900)

50%

Approximately 50% revenue will have to

be budgeted for expenses.

PROFIT (LOSS) – WHAT’S IT WORTH?

CASE STUDY: THEME CHECK

• TOTAL REVENUE: $307,800

• TOTAL EXPENSES: ($153,900)

• NET INCOME (LOSS)*: $153,900

• To pay yourself or reinvest

*Assumptions: full-time dedication, getting the proper help, ratio of customers that download the free version and then buy the paid version holdstrue, etc.

50%

Approximately 50% revenue can have to

be budgeted for your income and

reinvestment.

OTHER CONSIDERATIONS – Customer Service

• How would you rate the customer service youhave received from others in the WordPresscommunity (poor, average, excellent)?

• Watch this video and I’ll ask you this again.

OTHER CONSIDERATIONS – Customer Service

OTHER CONSIDERATIONS – Customer Service

• How would you rate the customer service youhave received from others in the WordPresscommunity (poor, average, excellent)?

“A business absolutely devoted to service will have only one worry about profits. They will be

embarrassingly large.” ~ Henry Ford

OTHER CONSIDERATIONS – Why not now?

• Where will you be in 3 years?

• What are you scared about, what do you fear?

OTHER CONSIDERATIONS – Why not now?

OTHER CONSIDERATIONS – Why not now?

“I’ve failed over and over and over again in my life and that’s why I succeed” ~ Michael Jordan

“You don’t need to have a 100-person company to develop that idea.” ~ Larry Page, Co-founder

Google

Questions?

[email protected]

@eventespresso

THANK YOU