Embed Size (px)
Citation preview
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
