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Can You Go Commercial


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Many successful businesses began in the WordPress plugin or theme repositories. If you’re like most developers, you’ve wondered if your development could make enough money to support yourself and possibly a small business. In this session Garth Koyle from Event Espresso will teach you how to evaluate whether there is a market for your code and if it’s worth the effort. Garth will also demonstrate several of the tools, strategies and methodologies he pioneered to win $40,000 in a business plan competition.

Published in: Technology, Business
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Can You Go Commercial

  1. 1. Can You Go Commercial? What it’s Worth & What to Consider Garth Koyle @eventespresso | eventespresso.comDisclaimer: Presentations are intended for educational purposes only and do not replace independent professional judgment. Statementsof fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion orposition of Event Espresso, LLC, its cosponsors, or its committees. Event Espresso does not endorse or approve, and assumes noresponsibility 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.
  2. 2. Event Espresso, LLC. Copyright 2011
  3. 3. MY BACKGROUNDEvent EspressoEvent Registration and Ticketing Management Plugin for WordPress• 2009 Free• 2010 Commercial• 2011 Business plan competition, $40,000 grand prize winners • Forecasted 2011 revenue to within .02%• Staff • Three support staff • Four developers
  4. 4. YOUR BACKGROUNDIn the WordPress Repository:~ 1,600 Themes (49+M downloads) ~ 30,000 downloads/theme~ 20,000+ Plugins (309+ M downloads) ~ 15,000 downloads/pluginAre you one of them?Why did you create?
  5. 5. WE CREATE PRODUCTS TO SATISFY NEEDS Customer Need WP Characteristic Affordability Unlimited Use & Free Autonomy Ownership and Scalability Capability
  6. 6. WHAT IS IT WORTH? – HOW MANY CUSTOMERS? Affordability Event Espresso, LLC. Copyright 2011
  7. 7. WHAT’S IT WORTH?It’s NOT ALL about the money, but what’s it worth?Consider Revenue: Consider Expenses*:• Number of Customers • Affiliate Commissions• Products/Services to Offer • Transaction Fees• Pricing • Advertising• Licensing • Accounting/Legal • Contractors/Staff • Website Systems • Utilities • Owner Draws/Salary *Sales relationship to expenses is non-linear
  8. 8. REVENUE – How many customers?CASE STUDY: THEME CHECKDownloads: ~ 623/wk 10%Current Version Adoption: ~ 95%Current Users: 32,400 * .95 = ~ 30,780 *Approximately 10% of customers whoConversion from Free to Paid: ~ 10%* download the free version may Awareness > Download > Installation > Usage > Upgrade. download the paid Depends on features of paid version, reminders, prequalification. version.Estimated Paying Customers: ~ 30,780 * .10 = 3,078 If you don’t have a plugin now use existing plugins as proxy.
  9. 9. REVENUE – What type of license will you offer?License Types• GPL – required to be in WP repository• ProprietaryService Types: One-time fee, monthly fee, annual fee, unlimited, freemium, subscription, etc.
  10. 10. REVENUE – What price will you charge?CASE STUDY: THEME CHECKPotential Services: $100• Personal Theme Fixing: $50• Developer Theme Fixing/Upgrade: $100* *Approximate average revenue per• Custom Theme Design: $8,000 customer.Potential Products:• Premium Themes: $50Total Revenue: $307,800
  11. 11. EXPENSES – Affiliate CommissionsAffiliate marketing programs:• Percent of sale 5%• Percent of sale + coupon• Coupon only Approximately 5% of revenue should be budgeted asConsider your terms of service commissions to affiliatesregarding affiliates using yourbrand in SEM advertising.
  12. 12. EXPENSES – Transaction FeesTransaction fees are similar but the banks are very different; e.g.: 4%• Payment Gateway ~ 3% • E.g. PayPal/Authorize Approximately 4% revenue should be• Merchant Account ~ 1% budgeted as transaction fees • E.g. Wells Fargo • Use an established bank that offers good online access/services
  13. 13. EXPENSES – Advertising/MarketingYou will need to promote your products. 5%• Email Marketing• Search Engine Advertising Approximately 5% of revenue should be• Trade publications budgeted for Advertising/Marketi ng in addition to• Free demos/trials affiliates for a total of about 10%.• Promotions
  14. 14. EXPENSES – Accounting/LegalIt’s worth dotting your “i”s and crossing your “t”s. 2%• Business Structure• Co-founder Approximately 1% revenue should be• Non-Disclosure budgeted for accounting service and legal protection.• Non-Compete• Accounting• Trademark
  15. 15. EXPENSES – Staff/Contractor SalariesThe largest portion of your budget.• Support ~ 1 FTE/2k new customers 35%• Development ~ .5 FTE/2k new customers Approximately 50% revenue will have to• Owner Draws ~ remainder be budgeted to pay yourself, staff and/or contractors.
  16. 16. EXPENSES – Website SystemsThe systems you use today will affect your business tomorrow. 1%Systems Include:Blog, forums, live Approximately 1%chat, ticketing, email, affiliates, invoicing, a/ revenue will have to be budgeted forb testing, project and code setting up and maintaining yourmanagement, customer website and systems.surveys, documentation, videos, API, etc.
  17. 17. EXPENSES – OtherThe miscellaneous can add up.• Hosting 8%• Telephone service• Computer hardware/software Approximately 8% revenue will have to be budgeted for• Traveling to WordCamps  miscellaneous stuff.
  18. 18. EXPENSES – TotalCommissions: 5%Transaction Fees: 4%Advertising/Marketing: 5% 50%Accounting/Legal: 2%Contractor/Staff Salaries: 25%Website Systems: 1% Approximately 50% revenue will have toOther: 8% be budgeted forTotal: 50% expenses.CASE STUDY: THEME CHECKTOTAL EXPENSES: ($153,900)
  19. 19. PROFIT (LOSS) – WHAT’S IT WORTH?CASE STUDY: THEME CHECK• TOTAL REVENUE: $307,800 50%• TOTAL EXPENSES: ($153,900)• NET INCOME (LOSS)*: $153,900 Approximately 50% revenue can have to be budgeted for • To pay yourself or reinvest your income and reinvestment.*Assumptions: full-time dedication, getting the proper help, ratio ofcustomers that download the free version and then buy the paid version holdstrue, etc.
  20. 20. OTHER CONSIDERATIONS – Customer Service• How would you rate the customer service you have received from others in the WordPress community (poor, average, excellent)?• Watch this video and I’ll ask you this again.
  21. 21. OTHER CONSIDERATIONS – Customer Service
  22. 22. OTHER CONSIDERATIONS – Customer Service• How would you rate the customer service you have received from others in the WordPress community (poor, average, excellent)? “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.” ~ Henry Ford
  23. 23. OTHER CONSIDERATIONS – Why not now?• Where will you be in 3 years?• What are you scared about, what do you fear?
  24. 24. OTHER CONSIDERATIONS – Why not now?
  25. 25. 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
  26. 26. THANK YOU Questions? @eventespresso