The Almost Perfect Business Model

15 Comments

This is a guest post by Jeff Chandler of Jeffro2pt0.com

During my interview with Small Potato, I realized that this man was very smart. As I dove into the reasoning behind why his theme club was setup in the way that it had been, a number of light bulbs went off in my head. These are just some of the pros and cons I have discovered when looking into the SP theme club.

Pro – The Price
For one, the price to get into the club is cheap. At $5.00 per year, how could anyone not think this is a deal? You get 12, so called “premium themes” for only $5.00. Sure, everyone will have their opinion as to whether or not the themes can be called premium, but considering no one will be able to access these themes unless your a member of the club will be a perk of not seeing a million other blogs with the same theme.

Con – Not Expensive Enough
As I write this post, there are 1,320 members in the SP Theme Club. With each member being worth $5.00, this puts the annual amount of revenue to $6,600.00 I’m not sure if the payments are situated so that any payments made during the year end up recurring on the first day of January of the following year or if the payments are simply made on the same day of the following year.

If it’s the first option, the annual amount of revenue is tiny. I don’t know of anyone who can make a living on that amount of money. Also keep in mind that as it stands, the theme club has initially been filled with free memberships. Will these memberships turn into paid subscriptions? That’s a question I can’t answer but surely, the previous years themes will determine that.

Pro – Awesome Support
The real beauty behind the theme club is that the more members that join, the more people that will be using the same themes. This means that the community of club members will be able to support themselves within their own little community. This really takes the burden of theme support off of the theme authors giving them more free time to devote to the next theme to be released.

Con – Who Knows The Theme Best
SP has said this himself, who knows themes better than the theme author themselves. The quality of support you will receive from the other club members will vary and at times will be disappointing.

Pro – Multiple Theme Authors
It’s been announced by WPDesigner’s new owner that he is actively pursuing some well known WP Theme authors to join the club. If this happens, this will be great for the club as it will provide a variety of theme styles, colors, layouts, you name it. Sure, the themes released by SP were good, and he did experiment with different techniques but having multiple theme authors solidifies the deal.

Con – No More Small Potato
Small Potato can not be replaced and for some, was the main reason why they joined the theme club. Small Potato had a sense of passion for the community he built, people trusted him, and people know that what SP produced would be of good quality. Now with the possibility of multiple authors, you really don’t know what you are going to get. This could be good and bad depending on who you ask.

I think the theme club and the way it’s been managed thus far has been of pure genius. However, as I’ve outlined already, the theme club is not perfect but it sure as hell provides an excellent base from which to start your own theme club. I would of loved to have seen how this theme club would of progressed had SP decided to stick through it all but alas, that won’t happen.

What I would like to know from you is what would you consider to be the pros and cons of the way Small Potato has shaped his theme club? Are you a member? Has SP paved the way for better theme clubs in the future? I’m looking forward to hearing your feedback and watching where you take this conversation.

15 thoughts on “The Almost Perfect Business Model

  1. Very interesting read. I would agree that the admission price is not expensive enough, not if it is to be profitable. I would say higher price will net in less user, but perhaps less headache from support work as well?

    And out of those 1,300+, how many of them came from the free giveaway programs a few weeks back?

  2. I know at least 250 of those members won a free membership; myself included.

    And it’s true that Small Potato can’t be replaced, but I’m excited to see what is to come from the new guy.

  3. I think the main con is that over 1300 users will be using the same 12 themes, that mean that an average of 108 people will be using each theme if they each only use one. If you are looking for something unique then this is obviously not the option. I guess that if you are buying a theme in this manner, then you are not looking for unique, but it still is worth bringing up. Considering the more successful the sites owner becomes the less unique you site becomes.

    With this in mind, I would think that a free theme would be just as good?

  4. You say it was a genius move from SP but I don’t see how your article describes why it was genius.
    I can’t see the theme club as a genius move from SP. The only genius part is the possibility that he wouldn’t have gotten $65k for his blog if he didn’t have 1320 members.

    The price is to low… only 400 are paying members… that is probably enough money to buy the services of a theme author to do ONE new theme. How many years before it becomes profitable?

    He was talking about goals of hundreds of thousands of members. I don’t think that is realistic even if he was paying everybody $5 to become a member.

  5. I paid for a membership on the first day, not because I wanted to use any of the themes (I always design my own), but because I’ve worked with SP’s free themes before, and I’ve found that they are coded very well, and I felt I could learn from him.

    SP was such a friendly guy too, despite the sometimes ‘aggressive’ and personal posts he made. I had occasional personal email contact with him, as I solved an issue on a theme and added some functionality to another, and he was always willing to give back.

    I feel that the WordPress community will miss him greatly, despite what some comments say on his blog at the moment.

    My problem with WPDesigner at the moment is that nothing is being posted, not even updates as to what is going on behind the scenes.

    I still check the feed everyday, waiting for a post of similar quality and insight into WordPress as I used to read.

    I hope the themes club carries on, its a great resource.

    Alex

  6. “Dove”? Shouldn’t that be “dived”?

    Made-up words aside, this is a good article. I personally think that premium themes are a bit of a rip-off but then again, the £5 themes club seems different. I too feel that the arrival of Pawel Ciszewski could be its downfall though.

  7. @Hafiz Yes, it is true that a large number of those users are ones who got in via a free coupon code. But on the flipside, what he was really doing with those coupon codes was building the support base for this themes. Thats why I thought the free coupon code move was genius.

    @zinni Sure, that is indeed a con. But you wouldn’t be able to use a unique theme if they were all free, that would just mean even more people would be using the themes garnishing even less of a chance that you’ll be unique. Of course, you could limit who buys the theme by charging $100.00 for it but I think the price is too steep for mass adoption.

    @Magnus Ok, 400 of the 1320 members are paying, but after 1 year who is to say that the rest of the member base purchases a 1 year account because they have been impressed with what they have received through the club. And let’s be realistic. $5.00 is cheap enough where I believe people would spend the cash on the theme club just for the hell of it, to see what they would get. But, all aspects of the theme club begin to be successful only after a very large number of people become part of the club.

    @Joshua I write things the way I think them, if that makes any sense. Thanks for pointing that out. I’ll try to get Michael to fix that grammatical error. As for Pawel Ciszewski, all one needs to do is check out the commenting section of his introduction post and you can see the trend of poo pooing the new owner before he has really had a chance to get started.

  8. I paid $5 on a lark — as I’ve said elsewhere, it’s $5 I’m pretty sure I wasted, but then, my coffee this morning was $5 so I don’t really care all that much. It’s not that I doubt the quality of the themes (and future themes, assuming we see them), it’s that I doubt I will ever use those themes for anything.

    For me, the biggest con is in fact the low price and right now the ratio of subsidized free memberships to actual paying members is about 4:1 right now. That’s not encouraging from a support perspective (because how invested are people who signed up for a free membership — I forget about 90% of the free stuff I sign up for a week after I sign-up), so the potential community support/involvement is already greatly depreciated.

    Not only that, $5 is almost too low of a price point to be taken seriously — I mean, I did it because I thought I liked one of the themes in demo better than I actually liked it. And because $5. That said, if you look at the Joomla theme club market — like Rocket Theme — the pricing is higher, but the theme quality is exponentially better (and part of that is because Joomla is just better for theming than WordPress, it just is), the featureset is far more advanced and the support is far better because the price can afford the actual designers to be involved — and not just volunteer users on a forum.

    I’ve seriously considered switching to Joomla for an upcoming project just because of their theming engine and some of the Joomla premium themes, and I hated Mambo way back when. My biggest criticism of pretty much every premium theme available for WordPress, theme club or otherwise, is that they look downright amateurish compared to other platforms. The truly revolutionary WordPress design is being done by individuals who aren’t hawking themes but building them for themselves or for individual clients.

    If the quality and variety of the WPDesigner club doesn’t improve, even at $5 it will fail because of the plethora of free alternatives that will be just as good for the user base (and that user base is largely dictated by price — price higher, for a club, you can attract the attention of more serious users).

  9. “the plethora of free alternatives that will be just as good for the user base”

    You have a point, when you look at free themes like The Unstandard Theme, why would you need to pay anything for themes like it, unless the designers/coders being ‘brought in’ are going to be creating similar ‘outside the box’ themes.

    I’m interested to see you the business model can be expanded, and also if it can ever now succeed having had such a set back.

    Alex

  10. Here are my 2 cents:
    1) $7,000 is not a business and is barley a hobbie. However selling a $7,000 hobbie for $65,000.00 now thats business!
    2) If you love to create themes then it really not work and making a $.10 is awesome.

    I like to hack together web site function, however I am short on time and therefore my style takes the brunt of lackiness.
    Sure I can create a WP theme with hidden widget areas and I can create any kind of widget interface so you can have anything from Google gadgets to zoho database forms.
    Who would pay for such tweaking? Is there really a market with so many free tools out there?
    I think the pleasure is going to be more with the artists who love to create and play on the NET.
    Like myself.

  11. looks like it turned out to be the perfect business model: get people to sign up for a year membership then sell your site and not end up following through with the product promised – genius!

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