Selling Digital Goods Online

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There’s a realization that every freelance designer must go through at some point: client work isn’t enough to ensure your long-term financial security. What if you get sick? What if you can’t find clients? What if you want to take a vacation?

One possible answer to this problem is earning passive income — i.e. selling products or services instead of selling your own time. A common way to do this is to sell digital goods such as eBooks, PSD templates, WordPress themes, icons, and so on. But how exactly should you sell them?

Although there are lots of marketplaces for selling digital goods, they often take a big cut of the profits. What’s more, they don’t let you customize the sales page, or let you use your own brand. This is where digital goods services come in. These services only take care of the payment, file storage, and download, and let you do the rest. This means you can easily sell your products from your own website, or through social networks.

I recently wrote an eBook about UI design and needed to find a way to sell it, so I compared five such services: Quixly7567625781, FetchApp77686358172, Pulley78696459313, E-junkie79414, and Gumroad74716661525. I’ll tell you which one I picked at the end… but in the meantime, here are the results of my research.

How Does This Work?

First of all, let’s see how those systems actually work. Simply said, all these services let you upload some files, provide you with a link that you put on your site, and take care of the rest. The customer flow usually looks something like this:

  1. Alice clicks the “Buy” button on your website
  2. Alice briefly goes through the digital goods website, and is automatically redirected to the payment processor
  3. Alice pays for your product with Paypal, Google Checkout, etc.
  4. Alice is then redirected to the digital goods service, where she can download the product

Payment Processors

Let’s take a moment to look at that second step. Most digital goods services do not deal with the big credit card companies directly, but instead go through payment processors such as Paypal or Google Checkout.

This means that you need to take into account the additional fees charged by these companies (the standard fee for both service is a 2.9% charge plus a $0.30 fixed fee per transaction). The only service which does notgo through a payment processor is Gumroad, meaning it lets customers pay right there on Gumroad. Now that we have a basic understanding of how things work, let’s take a look at each service.

Quixly

Quixly6
Large view7.

Quixly7567625781 is the brainchild of the tireless Drew Wilson9, who’s also the man behind BuildItWith.me10, Pictos11, and many other projects.

FetchApp

Fetch App15
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FetchApp77686358172 was originally — and still is — a Shopify272118 app (in fact, the first ever!) but has since taken a life of its own. According to FetchApp’s Mike Larkin, it’s “simple enough to be used to sell a single product, but large enough to also accommodate record labels selling hundreds of tracks”.

Pulley

Pulley29
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Pulley78696459313 is an offshoot of BigCartel32; a hosted shopping cart system similar to Shopify.

E-junkie

E-junkie39
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E-junkie79414 has been around for quite a while, and it shows in its homepage and dashboard’s design. But it’s also the most full-featured service by far.

Gumroad

Gumroad50
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Gumroad74716661525 is a relative newcomer in this field, but has been generating a lot of buzz. Unlike the other systems, it doesn’t have a monthly fee, and instead charges a fixed cost plus a percentage on each transaction.

What’s more, Gumroad founder Sahil Lavingia points out that his service is the only one to deal with credit card companies directly: “everyone else uses PayPal as their main processor or sole processor. This means that they’re just making PayPal bigger, and will never own the entire experience.”

This is a strong argument in Gumroad’s favor, since having to deal with less intermediaries is always better. And this means Gumroad works even in countries where Paypal isn’t available, such as Serbia or Pakistan.

  • Supported payment processors: credit card
  • Used by: 39Argyle53, others
  • Pros: no monthly fees; supports credit cards; works in countries where Paypal doesn’t (Serbia, Pakistan, etc.)
  • Cons: expensive for cheaper, high-volume products
  • Special feature: pays you all of your profits at the end of the month

Other Options

Of course, there are a lot of other options, such as Payloadz54, Digital Delivery55, and one of Paypal’s many confusing services56. But I decided to focus on these five because they seem to be the most commonly used among Web designers. Hopefully this article will give you the tools to evaluate other options by yourself if you need to.

Pricing

FetchApp, Pulley, Quixly, and E-junkie all work the same way — they have pricing tiers corresponding to file sizes (and sometimes the total number of files you’re selling), but all have unlimited bandwidth.

Note that Quixly has relatively cheaper pricing tiers (free, $10 / month, and $30 / month), but charges $0.40 extra per GB of bandwidth when over the limit for each tier.

On top of this, all four services require a payment processor, which charges its own fee (usually 2.9% + $0.30).

On the other hand, Gumroad’s pricing model is completely different. Instead of charging a fixed monthly fee, Gumroad takes a fixed fee ($0.30) plus a percentage (5%) for each sale. It’s important to point out that Gumroad does not charge Paypal’s 2.9%, even when it’s time to transfer your earnings to your Paypal account.

For this comparison, I’ll imagine three use cases and then see which service works best for each of them.

Use Case #1: Selling A Short eBook

Let’s say we’re selling a short eBook for $10. The file is pretty light, let’s say 9MB, and we sell 100 a month, using up 900MB of bandwidth, earning a total of $1000.

Website Monthly Fee Bandwidth Costs Percent Charge Fixed Fee Total
Quixly7567625781 $0 $0.40 $29 $30 $59.40
FetchApp77686358172 $5 unlimited $29 $30 $64
Pulley78696459313 $6 unlimited $29 $30 $65
E-junkie706560 $5 unlimited $29 $30 $64
Gumroad74716661525 unlimited $50 $30 $80

Quixly is the cheapest option, since we’re within the limits of its free plan. Although FetchApp also has a free plan, it’s only for files up to 1MB. So for small files, Quixly comes out ahead unless you really plan to use up a ton of bandwidth.

And what about Gumroad? Well, since they charge you extra for each sale, it doesn’t make sense to use them in this case unless you know you’re only going to sell your product a couple of times.

Use Case #2: Selling A WordPress Theme

Our WordPress theme comes with all the PSD sources and a lot of documentation, so it weighs in at 70MB. We sell 50 per month for $30, coming up at 3.5GB of bandwidth per month and $1500 of revenue.

Website Monthly Fee Bandwidth Costs Percent Charge Fixed Fee Total
Quixly7567625781 $10 $43.50 $15 $68.50
FetchApp77686358172 $5 unlimited $43.50 $15 $63.50
Pulley78696459313 $6 unlimited $43.50 $15 $64.50
E-junkie706560 $5 unlimited $43.50 $15 $63.50
Gumroad74716661525 unlimited $75 $15 $90

For our second use case, Pulley is the best option, thanks to their entry plan that goes up to 100MB in storage. That being said, for a couple of megs (more or less) another service might reveal itself cheaper.

So I’d say the mid-size files category has no clear winner — but Quixly, FetchApp, and Pulley are all safe bets.

Again, Gumroad’s model reveals itself a little expensive for our use case. So who exactly is that service for? Read on to find out…

Use Case #3: Selling A High-Def Video

Our video is high-def, 1080p goodness and it’s a whopping 4GB. We expect to sell 10 per month at $50, so that’s 40GB of monthly bandwidth and we’ll earn $500.

Website Monthly Fee Bandwidth Costs Percent Charge Fixed Fee Total
Quixly7567625781 $30 $14.50 $3 $47.50
FetchApp77686358172 $49 unlimited $14.50 $3 $66.50
Pulley78696459313 $49 unlimited $14.50 $3 $66.50
E-junkie706560 $185 unlimited $14.50 $3 $202.50
Gumroad74716661525 unlimited $25 $3 $28

The clear winner here is Gumroad, since it doesn’t care about bandwidth or file size. For files that you only expect to sell a couple of times, it can be a very interesting model, especially if those files are big and you sell them for a low price.

Quixly is also an attractive option, but if you’re dealing with big files, watch out for Quixly’s extra bandwidth costs! Let’s say instead of selling 10 videos, we sell 100, putting our bandwidth at 400GB. That’s 400-60=340GB over the limit, which will cost us 340*0.4=$136 extra!

Thankfully, Quixly will warn you before you reach that limit, which will give you the time to switch to another provider. Still, if you expect to have big bandwidth costs, you might be better off choosing another service from the start.

What About Marketplaces?

Marketplaces, like ThemeForest or the other Envato websites, are also a great way to sell digital goods, and should be seriously considered. Sure, you give up a big chunk of your earnings (one usually keeps between 50% and 70%72 of each sale). But on the other hand, a lot more people will see your product and buy it.

And don’t forget you can also sell your stuff non-exclusively (i.e. in addition to one of the services we’ve already discussed), although be warned that if you choose to go that route, you’ll get an even lower cut of the profits (only 33% on Envato websites).

I would say that marketplaces are a good fit for people who would prefer not to take care of their product’s marketing, or are selling a lot of similar items. They also make more sense for certain items (like WordPress themes, or stock photography) than others.

The Self-Hosted Solution

Another solution is hosting the whole thing yourself. For example, WordPress users can get the free WooCommerce plugin73to set up a shopping cart and then hook it up to Paypal or many other payment processors.

While this approach is cheaper in the long run, it does take a lot more time to set up, and requires more technical skills (so it’s not for everybody). But if you’re trying to build a business out of selling digital goods, it can be a very interesting option.

Conclusion

So which service is best for you? Without generalizing too much, here are some broad guidelines:

You might be wondering which service I picked for myself81. I hesitated between Quixly, Pulley, and FetchApp because they all looked great, but in the end Quixly’s beautiful user interface and detailed reports won me over.

After using it for a few days, I have to say the visual reports, although not a core feature, are a very nice touch to see how your sales are doing. But I did get a sizable number of people who encountered problems with Paypal, or didn’t buy altogether because they didn’t have a Paypal account.

So I’ve decided to let people choose for themselves between Gumroad (if they want to pay by Credit Card) or Quixly (if they want to pay via Paypal). The great thing is that since Gumroad doesn’t charge a subscription, there’s no extra costs in adding it as a second service. And I will probably give FetchApp and Pulley a try soon as well to compare them with Quixly.

The great things with having so many options is that everybody can find the one that suits them the best. So I encourage you to try out and compare these services for yourself!

What I’d like to see

This is clearly a very dynamic space, and I’m sure we’ll see lots of evolution in these products in the coming month. Here’s some of the features I’d love to see:

  • Let user pick their own preferred way of paying: Even though most services support multiple ways of paying, the seller can only pick one at a time. I would love to see an intermediary step that lets users choose their own favorite payment method.
  • Improve stats and reporting: I would love to see reports generalized across every product, as well as more advanced features like filtering, export, etc.
  • Discount code support: When marketing an online product, you need every tool in the arsenal!
  • No fixed fees: Paying a fixed $0.30 fee on every transaction is a killer when you’re selling something for under $5.

I’m definitely going to keep an eye on all five services to see what they come up with. In the meantime, I hope this guide has been useful to you, and that you’re now ready to start making money!

(jvb)

Footnotes

  1. 1 http://quixly.com
  2. 2 http://fetchapp.com
  3. 3 http://pulleyapp.com
  4. 4 http://e-junkie.com
  5. 5 http://gumroad.com
  6. 6 http://www.smashingmagazine.com/wp-content/uploads/2012/03/quixly-l.png
  7. 7 http://www.smashingmagazine.com/wp-content/uploads/2012/03/quixly-l.png
  8. 8 http://quixly.com
  9. 9 http://drewwilson.com
  10. 10 http://builditwith.me
  11. 11 http://pictos.cc
  12. 12 http://paypal.com
  13. 13 http://checkout.google.com
  14. 14 http://steedicons.com/
  15. 15 http://www.smashingmagazine.com/wp-content/uploads/2012/03/fetchapp-l.png
  16. 16 http://www.smashingmagazine.com/wp-content/uploads/2012/03/fetchapp-l.png
  17. 17 http://fetchapp.com
  18. 18 http://shopify.com
  19. 19 http://paypal.com
  20. 20 http://checkout.google.com
  21. 21 http://shopify.com
  22. 22 http://goodsie.com/
  23. 23 http://www.foxycart.com/
  24. 24 http://www.abookapart.com/
  25. 25 http://vectormill.com/
  26. 26 http://www.fetchapp.com/pages/examples
  27. 27 http://shopify.com
  28. 28 http://www.fetchapp.com/pages/help-api
  29. 29 http://www.smashingmagazine.com/wp-content/uploads/2012/03/pulley-l.png
  30. 30 http://www.smashingmagazine.com/wp-content/uploads/2012/03/pulley-l.png
  31. 31 http://pulleyapp.com
  32. 32 http://bigcartel.com/
  33. 33 http://paypal.com
  34. 34 http://bigcartel.com
  35. 35 http://cameronmoll.com/
  36. 36 finegoodsmarket.com
  37. 37 http://pulleyapp.com/customers
  38. 38 http://bigcartel.com
  39. 39 http://www.smashingmagazine.com/wp-content/uploads/2012/03/e-junkie-l.png
  40. 40 http://www.smashingmagazine.com/wp-content/uploads/2012/03/e-junkie-l.png
  41. 41 http://e-junkie.com
  42. 42 http://paypal.com
  43. 43 http://checkout.google.com
  44. 44 http://authorize.net
  45. 45 http://clickbank.com
  46. 46 http://trialpay.com
  47. 47 http://www.2checkout.com/
  48. 48 http://www.iconshoppe.com/
  49. 49 http://www.e-junkie.com/ej/clients.htm
  50. 50 http://www.smashingmagazine.com/wp-content/uploads/2012/03/gumroad-l.png
  51. 51 http://www.smashingmagazine.com/wp-content/uploads/2012/03/gumroad-l.png
  52. 52 http://gumroad.com
  53. 53 http://www.39argyle.com/
  54. 54 https://www.payloadz.com
  55. 55 http://www.digitaldeliveryapp.com/
  56. 56 https://merchant.paypal.com/cgi-bin/marketingweb?cmd=_render-content&content_ID=merchant/digital_goods
  57. 57 http://quixly.com
  58. 58 http://fetchapp.com
  59. 59 http://pulleyapp.com
  60. 60 http://ejunkie.com
  61. 61 http://gumroad.com
  62. 62 http://quixly.com
  63. 63 http://fetchapp.com
  64. 64 http://pulleyapp.com
  65. 65 http://ejunkie.com
  66. 66 http://gumroad.com
  67. 67 http://quixly.com
  68. 68 http://fetchapp.com
  69. 69 http://pulleyapp.com
  70. 70 http://ejunkie.com
  71. 71 http://gumroad.com
  72. 72 http://themeforest.net/make_money/payment_rates
  73. 73 http://www.woothemes.com/woocommerce/
  74. 74 http://gumroad.com
  75. 75 http://quixly.com
  76. 76 http://themeforest.net
  77. 77 http://fetchapp.com
  78. 78 http://pulleyapp.com
  79. 79 http://e-junkie.com
  80. 80 http://www.woothemes.com/woocommerce/
  81. 81 http://sachagreif.com/ebook/

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Sacha Greif is the creator of Sidebar, a site+newsletter that gives you the 5 best design links of the day. He has also published Discover Meteor, a book about the Meteor JavaScript framework. You should follow him on Twitter.

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  1. 1

    Great article team, thanks for the information!

    I like to use DigitalSellz.com they only charge a 3% commission per digiltal sell and there is no upfront payment or ads. I get pay instantly on my paypal account every time I sell :) I recommended it. It worked for me.

    0
  2. 52

    Nice article Sasha! Since this article is from 2012, I thought it’d be worth mentioning Paddle.com — an eCommerce platform (where I work) that’s been created especially for digital products:

    https://paddle.com/sell

    I think it’s fair to say that eCommerce isn’t the most fun aspect of selling products and that’s why our platform aims to take away as many of those boring parts as possible. In addition to the standard things like payments, file hosting & delivery and analytics, Paddle handles things like taxes and chargebacks too — which ultimately lets creatives focus on creating & improving their products.

    Customers can pay for products using PayPal or debit/credit cards, and with the “Overlay” module, they’ll be able to complete purchases seamlessly on the same page too.

    Check it out and let me know what you think :-)

    1
  3. 103

    Quixly shut down Nov 2013.

    0
  4. 154

    Paypal is the way to go! I don’t like using stripe they don’t have a good costume support … I try email them with no luck… Paypal works very good for me so far :)

    Mike thanks Digitalsellz was perfect for me. I’m getting charge 3% per sale which is better than other sites I also send them some emails and they get back to me very quick.

    https://www.digitalsellz.com/faq

    Thanks!

    0
  5. 205

    The reason Gumroad or any other service that uses Stripe can’t aggregate purchases into a sngle charge is because Stripe does not support Authorize and Capture. And according to Stripe they don’t play on supporting this feature ever. So for these services to bring the cost, they would have to make deals with all the major credit card companies to process.

    0
  6. 256

    I’m pretty sure paypall offers a micro transaction payment system… look into that…

    2

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