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nickclarson says

Why is Theme Forest taking so much commission when you sell your OWN work? I feel it should be more like amazon where they take out a small percentage. This is considering you’re the one who put all the effort into making it, and Theme Forest is just a medium for you to sell it.

It’s like if you were to sell something off ebay or amazon and have them take over 50% commission of what you sold it for.

Just doesn’t make sense.

I would love to be Theme Forest right now. I’d be making bank off of sitting around doing nothing and watching people sell their own stuff. Maybe having that much commission is to pay for the people who review all of the templates. Still, if you’re paying someone $20/hour to sit there and review templates you’re still going to make a lot of money.

If someone can review even 5 templates an hour getting paid $25 per hour, that comes out to $5 to review each template. If a template sells for $10 they make that money back in the first sale.

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jremick Envato team says

There is a lot more that goes into running a site like ThemeForest than paying reviewers. They take care of all the advertising, payments, file hosting, etc. Not to mention that they have to pay for a legal team (so that when people steal your template and share it on the net, something can actually be done about it) as well as a web dev. team to keep adding features, keep the envato sites running smoothly, etc.

Sure, 75% is a lot at first but you have the potential to earn up to 50% once you’ve contributed to the community a little.

I think the percentages could be tweaked a little BUT , they’ve done the market research, they’ve proven it works and they’re doing a fantastic job which is something you can’t say about lots of other online market places like this.

You would probably actually hate to be ThemeForest right now. They are all working their tail ends off. The best situation to be in, is an author. It takes some investment of time but it pays off in the long haul.

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clarklab says

This is actually the first percentage complaint thats had a real example (through the comparison to Amazon). And it makes total sense. No one would sell through Amazon at the rates they offer on TF.

But basically it comes down to this. They can take such a high percentage because there is no where else to sell with even remotely as much traffic as we get here.

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ThemeKioken says

I have nothing to nag, answers above explain well but it would just be nice, just nice if the commission barrier for the exclusive author gets raised from %50 to %65.

Most authors deserve that.

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jremick Envato team says

Yeah, I agree, 50% moved up to 65% barrier sounds great. Collis said this (and many other subjects authors felt needed attention) would be brought up in their end of year meeting thing so ya never know, it could happen.

One thing Amazon has on their side is how many people use their site. When you have 1 billion people using it, you can afford to take a smaller cut.

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nickclarson says

So if someone stole my template they are going to use their legal team to help me? All I could find in their legal information is this:

“8.2 To the extent permitted by law, any condition or warranty which would otherwise be implied into this Agreement is hereby excluded. Where legislation implies any condition or warranty, and that legislation prohibits us from excluding or modifying the application of, or our liability under, any such condition or warranty, that condition or warranty will be deemed included but our liability will be limited for a breach of that condition or warranty to one or more of the following:

if the breach relates to goods: the replacement of the goods or the supply of equivalent goods; the repair of such goods; the payment of the cost of replacing the goods or of acquiring equivalent goods; or the payment of the cost of having the goods repaired; and if the breach relates to services: the supplying of the services again; or the payment of the cost of having the services supplied again.”

So it sounds like they are basically limiting their involvement in any legalities to just replacing the goods or paying you back.

I also think bandwidth and hosting is relatively negligible to the profits they are making off of each download. Each download is more than payed for with each purchase.

Lets do a little Fermi problem with this. Based off the november popular users and how much they sold lets be conservative and say 1300 templates were sold in November. Looks like the most popular themes are the html templates which sell for around $10-12. So if we consider that some higher cost wordpress and joomla themes were sold as well lets have the average price per theme be $15 (also a relatively conservative estimation). That comes out to $19,500 in november.

Of course now we have to include commission. Lets first assume that most users haven’t made over $500 in sales so they cannot be exclusive members. Looking at the payment rates I doubt any user has sold over 30k to get 50% commission and even if there are users that have they would be huge outliers. Based on that we can conclude that the maximum commission that is being payed out right now is 37% (regardless of anything we are saying we can both agree that is very low). Lets just use the 80/20 rule and say 80% of the users are selling 20% and 20% of the users are selling 80%. Lets over estimate (to make up for our underestimates) then and say there is an average commission of 30% being payed out.

That means based on our estimation, TF made $12675 in profits during the month of November.

Other costs would include a dev theme and advertising of course. As far as advertising goes though, my guess is use most of their other sites to advertise TF for free. Even if they spend 2k advertising a month that’s still over 10k left over for the dev team. Being a dev for over 10 years in my opinion if they have paid over 2-3k all together up to this point for this site to be developed they haven’t spent their money very efficiently (or wisely).

Also can’t forget about the cost to have reviewers review the template. There are currently 490 templates at TF and taking our previously calculated cost of $5 to review each template, that comes out to $2,450 TO DATE cost of reviewing the templates. This is based on paying reviewers an outrageous $25/hour to review and assuming they can only review 5 templates per hour. Even though I’m sure a reviewer can review faster than that. Otherwise again, the system wouldn’t be very efficient and TF would have to take a look at how to speed up their reviewing process.

So to conclude assuming every template on the site was added in November that still leaves us with roughly 8k in profits to toss around at all the other little costs you can think of.

Also remember all the templates weren’t added in November they were spread out over the time since TF has been opened. So maybe only 100 templates were actually submitted in November that would mean TF had a profit closer to 10k.

This was a rough estimation of course but by the way Fermi problems work hopefully we did enough under and over estimation to even everything out to a respectable value.

Either way, you can see that it’s very possible to make a TON of money with this business model if executed properly and efficiently. It’s also very realistic to assume that TF is at least making some sort of profit with this.

I hope that you can now at least understand where I’m coming from.

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nickclarson says

Oops I forgot about commission for referrals.

Anyway, I guess my main point is exactly what onuro said. Sellers IMO should definitely be getting paid more than they are now.

As far as the amazon thing goes. It’s all relatively proportionate. With having a bigger site comes more COST . Yet somehow they can still afford and make HUGE $$ off of much less a commission.

HMM this discussion has really almost given me a few ideas about my next project… hehehe

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clarklab says

Those are some pretty solid and well thought out calculations, but its all comes down to what I said earlier. There simply isn’t any other place to sell templates with even a fraction of the traffic or user base envato already has. And thats how the rates stay so low. There is no competition offering anything better.

Which is why I sell here.

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JeffreyWay says

Costs include…

site hosting, mucho advertising, maintenance, me!, lawyer stuff, reviewers, blog authors, credit card processing, the dev staff, etc.

And sure – there’s some profit. It takes many many people to create these marketplaces. Don’t Collis and the gang deserve something for their time?

It adds up quickly. There’s no use kicking a tired duck. It will be discussed – come January. No promises, but everyone will talk it over. That I can promise you.

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jremick Envato team says

@nickclarson – It was pretty amusing to read your post because you sound exactly like I did most recently a few days ago. When you run the numbers, calculate everything out, ThemeForest simply makes a large profit from author’s work.

Like clarklab said, there really isn’t any other competition. BUT , unless you have run a business the scale of envato, you really don’t know all the little and big things they pay for. Those numbers add up really fast as I’m sure you know.

Jeffrey said something awhile back that I try to keep reminding myself about… ThemeForest is one of the only market places that is NOT hanging on by a thread. All the other places that pay higher commission can’t afford to keep going let alone expand.

In the end, ThemeForest / envato is a business. They are making sure they can pay their bills, employees, make a profit and set some money aside for expansion. As much as I would love getting 65% and think that author’s do deserve more… I would much rather get 50% and see ThemeForest continue to grow rapidly so that my sales also grow just as fast and in turn I make more money at the end of the day.

Also remember, envato has a proven modal of this that has been running for years (FlashDen). They’ve spent money on their research and figured out the “sweet spot” of the market. I’m pretty pessimistic about these pricing structures but after a lot of thought, I think I will just trust them.

Oh and if you know that someone is illegally sharing your files, let them know. They are stealing from envato as well as you and at least they have a legal department that can do something about it.

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