There is a classic question that has been asked many times on FlashDen and has already come up here on ThemeForest. So I thought I would write one big answer and make it a sticky in case anyone wanted to discuss it
The question is “Why is the initial split 25% / 75%? and why does it take so long to get to 50/50?”
Why the Rates are this way … We believe that we have created a rates system here that compensates authors AND enables FlashDen (and now ThemeForest) to build and grow the site to then provide even more returns.
Sure we could give a larger percentage, but then we wouldn’t be able to grow and market the site, to improve the site, to keep it quick, secure and stable. And the more people who are buying here the better the returns.
You have to remember that percentages are only one half of an equation. A larger percentage of nothing is still nothing while a smaller percentage of something can be significant! Currently on FlashDen there are authors earning in excess of $10,000 a month, which by anyone’s standard is a lot of money.
Another thing to remember is that there is always more to a business than meets the eye. It’s a little like when you go into a restaurant, look at a menu, look at the prices and go ‘wow I know how much potatos cost and meat costs, these guys are making a huge amount of money’. Whereas in reality there is equipment, rent, staff, etc etc. And as we know restauranting is one of the hardest businesses around!
Likewise on ThemeForest there is actually quite a lot of expenses that go under the hood. Where does the money go?
- Marketing – We spend a lot on marketing in different ways, through ads, promotional campaigns, and building other sites in our network. By pushing marketing, we bring in a lot of traffic and visitors which thereby increases sales.
- Development – This is our most significant cost as we build more features, make the site more usable, and develop it so that we can expand into new areas – e.g. From FlashDen to ThemeForest. Again by developing more, we bring in more buyers and more happy buyers, thereby indirectly creating more revenue.
- Legals & Support – This is our biggest growth cost. As the site gets larger, we’re putting more money into making sure there are proper license agreements, solid support for buyers, refunds on faulty products and so on.
Expansion … ThemeForest is of course a business, but profits are not our only goal at all. We are all about growth. That’s why for example none of the founders took a single pay check for the first year. We put everything back in, to build, build, build!
You see we believe that by building FlashDen, ThemeForest, AudioJungle and all the other Envato sites, that we can create markets where authors can buy and sell things they couldn’t before. Where creatives like us and like all of you can create an extra income stream that wasn’t there before. And that buyers can build on other people’s work to deliver better results for clients, build better portfolios and generally be awesome!
Of course it’s easy to talk, but its much harder to back it up with actions, and that is exactly what we have been and will continue to do.
Exciting Plans for the Future We actually have some really big plans for the future. As many of you know, at Envato we LOVE doing new things. Not only are we working on more sites, but also figuring out ways to cross link them and merge features to make for a better experience for buyers and authors. Since ThemeForest has just launched, I won’t mention any other expansion plans specifically, because I’m meant to be focusing on growing this site first!!
ONE exciting Plan for the future OK OK OK , here’s one exciting plan for the future. I can say that after we get out of beta and have a decent sized pool of files on the site (which will probably be a few weeks after that) we are going to run a huge promotion where we give away $50,000 worth of ThemeForest money to new buyers. Authors with files will still get paid, but the buyers won’t actually be doing the paying. This promotion should bring us a huge pool of buyers!
In the End … Try It and See I guess at the end of the day though, every author needs to make a choice. I highly recommend you investigate your options and figure out the best plan for you, where you get the most benefits. I’m totally confident that you will find though the initial percentage is low, anyone serious about authoring will soon find themselves moving closer to 50%.
And additionally in terms of the work it takes to sell themes and templates, it’s SOO much easier to list on a site like ThemeForest than to do it all yourself.
Happily the only way for ThemeForest to win, is for her authors to win, so we’ll be doing everything we can to make that happen
Awesome post. And to anybody who is intimidated at first, I started on FlashDen at the very end of January this year, and I’m already at 49%
Explained well, thanks.
You’re welcome! Happily I’ve had a bit of practice answering this particular question!
You might also be interested to know that when FlashDen started it used to be the maximum percentage was 45% and it would take a lot longer to get there. Happily once we saw actual numbers we managed to work out a much better structure for the rates. We’ll be keeping an eye on the rates and rewards here on ThemeForest too.
As I say ThemeForest only profits if her authors do!
Great post collis … like usual
A lot of good points in this article. A key one you hit on was the fact that this is a very attractive market that brings in a lot of buyers. Simply having access to the market is valuable.
One thing I know that could potentially equalize the profit sharing is competition. And currently there is no other ThemeForest or FlashDen out there.
So, until then, I will glady do my business with you all
Thank you collis for your explanation. I also thought that it is low percentage, but I’m curious how big this marketplace becomes, as templates are a very interesting product these days, so maybe we will be really surprised
That explained everything really well, I understand that you need to make a lot of money to make this succeed so I am happy to receive a smaller percentage as I know that Envato sites get very successful, I am really looking forward to putting my work up on this site.
Thanks for explaining all this…I think the rates seem very fair and make sense considering you’ll potentially have a large buying customer base.
I’m a bit taxed with freelance jobs at the moment, but I’m hoping I can squeeze a theme or two before long.
Thanks for this opportunity!