Gumroad announces lower prices for creators

Gumroad announces today a new price structure that streamlines its platform’s fees and features, making it easier for creators to sell products or memberships online. Gumroad was one of the first companies to help people sell things online, but this change is sort of a reset for the company as the space gets even more crowded.

The first major change is the end of Gumroad’s free and paid “Pro” tiers. Previously, Gumroad locked down features like using a custom domain name or offering HD video streams behind a $10 per month subscription. That caused some confusion for users just starting out – did it make sense to pay upfront? Now everyone gets the same features without paying extra or worrying about too many obligations.

In return, the fees start at a higher place, although sellers can generally get lower fees. Gumroad’s new transaction count, whether you’re selling handmade comic books or an online cooking class membership, is 9 percent plus 30 cents. That’s higher than the previous fee of the free tier of 8.5 percent plus 30 cents and the paid tier of 3.5 percent plus 30 cents. But Gumroad plans to narrow the discount over time as makers hit bigger sales milestones, reaching a whopping 2.9 percent plus 30 cents. The different reimbursement percentages are broken down as follows:

  • 9 percent fee for income between $0 and $1,000
  • 7 percent fee for income between $1.00 and $10,000
  • 5 percent fee for income between $10,000 and $100,000
  • 3 percent fee for earnings between $100.00 and $1 million
  • A 2.9 percent lifetime compensation for earnings over $1 million

Gumroad credits the $5 million it raised through crowdfunding regulation with the opportunity to experiment with a more creative set-up. That’s money contributed directly by a mix of regular investors and 2,800 Gumroad users. (If you’re curious about crowdfunding approved by the Securities and Exchange Commission, Backstage Capital CEO Arlan Hamilton explained some of the potential on Decoder.) Gumroad CEO Sahil Lavingia called it “a stock kickstarter.”

The added flexibility of that funding, plus a later investment that Gumroad raised, means even more features are on the way. Gumroad’s next focus is introducing the ability for creators to further customize their pages and storefronts, a helpful change for the roughly 85 percent of creators Lavingia estimates focuses on digital products.

The competition Gumroad may face is only going to get tougher, especially now that bigger companies like Twitter and Facebook have their eyes on creators. Offering more features for an overall lower price is a good way for Gumroad to keep up.