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Gumroad announces cheaper pricing for creators

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A more friendly price structure and an end to the ‘Pro’ tier

Image: Gumroad

Gumroad is announcing a new pricing structure today that streamlines the fees and features of its platform, making it easier for creators to get started selling products or memberships online. Gumroad was one of the early “help people sell things online” businesses, but this change is a sort of reset for the company as the space grows even more crowded.

The first major change is an end to Gumroad’s free and paid “Pro” tiers. Previously, Gumroad locked features like using a custom domain name or offering HD video streams behind a $10 per month subscription. That caused some confusion from users just starting out — did it make sense to commit to paying upfront? Now everyone receives the same features without having to pay extra or worry about overcommitting.

In exchange, fees start at a higher place — though there’s the potential for sellers to wind up with lower fees overall. Gumroad’s new cut of transactions, whether you’re selling handmade comic books or a membership to an online cooking class, is 9 percent plus 30 cents. That’s higher than the free tier’s earlier fee of 8.5 percent plus 30 cents and the paid tier’s 3.5 percent plus 30 cents. But Gumroad plans to shrink its cut over time as creators hit larger sales milestones, going as low as 2.9 percent plus 30 cents. The various fee percentages breakdown as follows:

  • 9 percent fee for earnings between $0 and $1,000
  • 7 percent fee for earnings between $1,00 to $10,000
  • 5 percent fee for earnings between $10,000 to $100,000
  • 3 percent fee for earnings between $100,00 to $1 million
  • A lifetime 2.9 percent fee for earnings beyond $1 million

Gumroad credits the $5 million it raised via regulation crowdfunding with its ability to experiment with a more creator-friendly setup. That’s money directly contributed by a mix of normal 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 its potential on Decoder.) Gumroad CEO Sahil Lavingia called it “a Kickstarter for equity.”

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

The competition Gumroad is potentially facing is only getting more tough, especially now that bigger companies like Twitter and Facebook have their eyes set on creators. Offering more features for an overall lower cost is a good way for Gumroad to keep up.