One of the best things about working on the internet is being able to engage in open dialog about your business. Recently one of our ThemeForest authors, the very talented Mike McAlister, weighed in with a thought provoking post here on WPCandy. From the rate at which comments flew in, it was obvious this is an important discussion to be having.
WPCandy have very kindly allowed me to write an editorial in response to the post and the comments. I hope I can add a little more to this important conversation!
Years ago as a web designer I remember looking at the sprawling empire that is TemplateMonster and thinking that I was sure I could make much nicer, more authentic looking templates. I kept thinking how cool it would be if there was a place to sell them, but at that time there wasn’t. So I contented myself with making Flash components instead and selling them on iStockPhoto. When I became fed up with the focus on photos at their marketplace, I came to the conclusion that maybe I could build a marketplace that suited my needs.
When we built ThemeForest, it was really made to be the marketplace that I personally wanted to sell on.
Creating a marketplace for Flash soon had me thinking back to how cool it would be to sell site templates. And since in the interim I’d fallen in love with WordPress and was using it commercially, I thought we could extend the concept to make a marketplace for both templates and themes.
When we built ThemeForest, it was really made to be the marketplace that I personally wanted to sell on. We fixed pricing, because I was worried about authors undercutting and inadvertently delivering less value for everyone, as had happened with iStock in their early pricing system. We made support optional as I couldn’t think of a way to guarantee it without straying into mediation land. And of course we made it open to anyone to become an author.
ThemeForest was to be a place where we would provide a very easy runway to becoming a theme seller. I remembered myself doing client work as a web designer, and how much more I would have enjoyed putting together awesome designs and selling them without the pressures of freelance work. That was the experience we aimed to create.
The Evolution of ThemeForest
Working at Envato, I often feel like a custodian rather than an owner. I feel it’s our community who really drives our sites, and often I’m very surprised and amazed at the places the community takes us.
Working at Envato, I often feel like a custodian rather than an owner.
It’s now almost three years since we launched ThemeForest, and in that time the depth and sophistication of our WordPress themes has far surpassed anything I’d imagined. Like any open market, there is of course a big range, but at its best I think ThemeForest is right up there with the best WordPress themers on the web. Guys like Mike, Kriesi, Epicera, Orman and many more, produce themes that are way better than anything I could personally make.
Along the way we’ve been evolving the marketplace to match the changes we see our community making. It’s a bit before Mike’s time on ThemeForest, but our pricing actually used to live mostly in the $15-25 range. Yes, I know!
Today our pricing predominantly sits in the $30-35 range, with items still as low as $15 and as high as $45. Despite this gradual increase, Mike has put forward an interesting case for looking at a further price rise. But we’ll get to that shortly.
Quality, Support and Code
Recently Carl Hancock, one of the creators of the fantastic Gravity Forms plugin, tweeted jokingly (I hope!) that he was going to invoice me every time he had to fix a ThemeForest theme. If anyone would know whether ThemeForest themes cause problems, it certainly would be Carl. Gravity Forms are used all over the place! So when I heard his complaint the first time here on WPCandy six months ago, along with some other commenters who felt our code quality wasn’t where it should be, I and our site team began to take steps to improve.
Since then we’ve had two rounds of culling of older themes, removing almost 20% of the library where the authors didn’t respond to update the themes. We’ve implemented more recommendations to theme authors, including to use tools like Theme-Check to test for common issues, and Unisphere-notifier to make sure buyers are notified about updates and fixes. We’ve also added more reviewing checks for things like plugin hooks and common code quality issues.
On the support front, we’ve since added API tools for authors to create their own support forums, and we’re now working on a dramatic improvement to the support system on-site, as well as ways for authors to clarify what level of support they offer.
And while our library is already much better off for the changes, particularly in the newer themes, there is still much more for us to do. While we have more plans to roll out, I’m always interested to hear recommendations, leave a comment or email me (collis [at] envato [dot] com)! We are always looking to improve on these fronts and welcome any constructive ideas.
Contributing to the Wider WordPress Community
Another criticism, arising from WPCandy comments, that we’ve been working on is the level of involvement Envato and ThemeForest have in the WordPress community. In the past our biggest contribution has been the huge number of tutorials we publish on Nettuts+, however it’s become clear that there is more we can do.
When Matt Mullenweg clarified in 2009 that it was possible to license code separately under the GPL as a way to comply with WordPress’ licensing, we were delighted to jump on board.
This year we’ve embarked on a program to sponsor and support WordCamps around the world. So far, we’ve sent Envato’rs to speak at three, sponsored eight camps, two meetups and a conference, and I was particularly excited that ThemeForest authors like Chris Molitor are starting to get involved with speaking at WordCamps too.
When Matt Mullenweg clarified in 2009 that it was possible to license code separately under the GPL as a way to comply with WordPress’ licensing, we were delighted to jump on board. Offering a solution that protects our author’s designs and allows them to use non-GPL items like icons in their work, while simultaneously working with WordPress’ license was fantastic news.
More recently I had an interesting phone call with Automattic’s CEO Toni Schneider. Toni was charismatic enough that I kind of felt like quitting Envato to go work for him! In speaking with Toni, we got to share some of our insights from running ThemeForest for his then unlaunched WordPress.com theme market.
And in the last couple of weeks I’ve been exchanging some interesting emails with WordPress UI Team member John O’Nolan about getting more Envato’rs contributing to the WordPress codebase. John is passionate about cleaning up the CSS, and as a fellow designer I can understand. I’m looking forward to finding a way for us to get on board with John’s suggestions and put back into my favourite CMS, in this way too.
The Question of Price
While much of what I’ve so far said was in response to the deep commentary running here on WPCandy, at last I come to the question that Mike himself raised – the question of price.
My personal philosophy on price is to make things as affordable as possible so that our products are highly accessible to anyone and everyone. Balancing this is the requirement to generate revenue to make our business and our author’s businesses sustainable.
I’ve seen a place where only some people can afford stuff, and frankly it sucks.
I grew up in a country called Papua New Guinea, which was one of the last places on earth to be exposed to the outside world. It’s a country that has tremendous natural wealth, but very poor socio-economic conditions. In short it’s a place where some have plenty, and others have nothing.
This background raised me with a predisposition to making things accessible. I’ve seen a place where only some people can afford stuff, and frankly it sucks. I think it’s vastly preferable to have more equality in opportunity, and the internet is a fantastic tool for driving that direction.
That’s one of the reasons I’ve always loved WordPress, because it puts in reach of people around the world, what might not have previously been in their grasp. As Mike reminds us, you can get Skynet in WordPress form for the price of a tank of gas. Heck for free you can get some pretty darn cool themes (stop in at WPShower and see just how cool).
For me, this is nothing short of miraculous and speaks to the herculean efforts of the whole WordPress community in making such a greatly accessible piece of software.
At Envato our philosophy of accessibility of price is also about providing the best opportunity for authors. Large markets and high volume equate to big sales. On top of that we have worked hard to provide commission rates that make sure our authors receive a high portion of those sales. Three times in the past we’ve increased our author rates, despite the large cost this has to Envato’s profit line. For a counter case, look at iStockPhoto who keep growing but paradoxically have taken steps to reduce the rates they offer!
We have many authors on ThemeForest earning thousands, even tens of thousands of dollars a month. Our record for a single author in a single month is over $40,000 earned – and to clarify that’s after ThemeForest has paid for transaction fees, marketing, affiliates, the cost of running the site, and lots more. That’s actual take-home earnings!
The Subscription and ‘All Themes’ Ceiling
What’s clear from Mike’s post however is that there is a tremendous amount of support and brand building that goes into selling on a marketplace like ThemeForest. Moreover the themes themselves have gotten vastly more complex than our early themes. And if we want to drive up quality, pricing is one mechanism to do so.
And potentially a price rise is needed. As I tweeted back to Mike, this is something the team is now looking at. Of course it’s going to take a while as we need to model and analyse the situation thoroughly. Even small increments of a few dollars have massive effects when you multiply them against a library as big as ThemeForest. And as custodians of ThemeForest we have to ensure that it remains a successful place to sell themes and that we stay competitive.
Mike mentioned a couple of fantastic WordPress theme shops in his post with higher priced themes in the $70 region, namely WooThemes and Press75. While this is true, it’s also true that both these outfits and many others also offer access to literally all of their themes for not that much more.
These subscription rates, 90 themes for $125 over at WooThemes at the time of writing, and 20 something for $100 at Press75, effectively cap how far we can take pricing on ThemeForest if we want to continue to deliver value to our authors by attracting buyers.
Take an even more extreme example, consider the wildly popular Elegant Themes who have been voting up a storm in WPCandy’s Theme Madness contest and have a site ranked in the top 1000 by Alexa. By Elegant’s own advertising on the ‘join’ page of their site:
With a total of 61 designs in our collection, the price per theme is a mere $0.64!
Moreover Elegant’s subscription is actually for a whole year with 2-3 new themes added each month. Holy toledo batman!
Still, at the end of the day there is a big WordPress landscape out there, and we all offer something different. Sites like WooThemes offer one corner of the market even contributing their code into WordPress core, others like Elegant offer another corner for amazing cheapness, WordPress.com’s marketplace is distinguished for its full GPL and exposure to a captured market, and of course ThemeForest is a whole other ballgame.
At ThemeForest we offer access to an enormous pool of buyers. Not only do these people come from around the site itself, but from our other marketplaces, and our other sites. Collectively the Envato network registers close to 20 million visits every month.
This buyer pool, combined with our vibrant community life, combined with the unique split-GPL, combined with our services, and our price point, is where ThemeForest lives. In business terms, it’s the unique value proposition we offer.
Envato Elite and a Price Adjustment Tool
As I’ve stated, it’s going to take time and careful planning to make long term changes to ThemeForest’s pricing. However Mike’s post has encouraged me to bring forward a plan we’ve had for a while to reward and recognise elite authors like Mike himself.
But importantly, as an entry point, the 80 something qualifying members of Elite will immediately gain access to a new tool to adjust their prices upwards.
Today we’re launching our Envato Elite program which provides achievements and rewards to authors, including things like massive promotions, superbowl style rings, and eventually even first class flights to Australia.
But importantly, as an entry point, the 80 something qualifying members of Elite will immediately gain access to a new tool to adjust their prices upwards. Elite Authors will be able to increase the price on any of their items by up to 30% rounded upwards to the nearest dollar. This will mean for instance $35 themes can be moved up to $46.
I’m excited about this as it allows authors like Mike to test out higher margin themes, recognises that they have built brands and followings, and also that our Elite authors have achieved this status because they build and sell great products.
Aside from the price lever, I also think it’s a very cool, very fun addition to our community life at Envato. You can learn more about the program at elite.envato.com
In the meantime, we will continue to plan and analyse pricing models, and as always we’ll be working to improve ThemeForest for authors, buyers and the whole WordPress community. It’s my hope that in the end more than anything else we do, building the world’s largest open marketplace for websites, where new and unknown authors can upload and flourish, will be our greatest contribution to WordPress.
Update: Matt asked me to clarify in this article that my earlier wording made it sound like he recommended taking a split GPL approach, this is however only the minimum legal compliance. A full GPL licensing for themes is the recommended approach. I’ve updated the text in the article to a more accurate statement.