Gumroad just raised its prices. We’ve all read that. They moved away from their tired pricing, where the lowest tier was 2.9% and the highest was 9% (+ 30c per transaction).
Everyone is looking for alternatives because Gumroad literally quadrupled many creators’ prices. They now charge 10% + credit card fees. One transaction will now cost you about 13%. If you do 100k /year in sales, you’re basically giving Gumroad an extra 10k for the same service, or so it feels at least.
Now, there are many, many alternatives to Gumroad. The one who made the most noise was ConvertKit Commerce. Nathan emailed his entire user base only hours after Sahil announced the price increase.
But there’s a massive problem with ConvertKit Commerce. They are not the merchant of record. Meaning: you have to deal with VAT. That’s the single biggest reason Gumroad should be using to keep you on their platform. Because if you do 100k in sales a year I can guarantee you, you’ll have to apply for VAT in numerous EU countries plus the UK. And you’ll have to file your taxes and pay up every quarter.
Here’s the kicker: You sell your digital download on Gumroad for let’s say $29. If you live in the US it will stay that price in most cases.
If you live outside the US though, the end customer will pay the extra VAT if you live in the EU and don’t have a valid VAT number. So their price will be $29 + VAT. So that’s about $35.
You pay 13% fee on the $35. That’s about $4.55. You will net $29 – $4.55 = $24.45.
If you move to ConvertKit Commerce, you will pay 3.5% fee BUT your price will now be VAT inclusive for people from the EU and UK at least (and probably Africa and the rest of the world too, I’m not sure).
So this is how the numbers work when you move to ConvertKit:
$29 – $1.31 (3.5% + 0.30c fee) = $27.69. The $29 product includes about 21% VAT which is $4.83 so you have to deduct that from the $29.
On ConvertKit you would end up with $29 – $1.31 fee – $4.83 VAT = $22.86
Meaning your net revenue is $22.86. One dollar and fifty-nine cents LESS than when you’d use Gumroad.
Here it is in a single image:
Now, if you do want to save yourself some money. If you’re willing to invest some time to move away from Gumroad to a competitor you should probably go to:
They position themselves more as an alternative to when you sell software, but they’re also great at selling your digital products.
They offer a flat fee of 5% plus 0.50c per transaction, which is much better than Gumroad’s 10% PLUS transaction fees. You’re basically saving about 7% on every transaction. I don’t need to do the math for you on that if you make 10k monthly sales. You’ll net an extra 8k /year. That could be a lovely holiday with the family.
The lower transaction fees are obviously Lemon Squeezy’s most significant benefit. But what are their most important drawbacks?
Well, for one thing, they don’t have an affiliate program yet and they have nothing that even remotely compares to Gumroad Discover. You’re entirely on your own here.
For our sales, however, Gumroad Discover has only contributed to that a couple of percentage points at most. And I think that will be the case for most creators. They take care of their own traffic, and that’s why Gumroad’s Price hike is going to hurt them a lot, I think.
If you rely on the Discover feature, you might want to stay at Gumroad because they actually drive you sales. It costs you a bit more, an extra 10%, but you wouldn’t have had those sales otherwise.
Now, the other big reason it’s hard to move away from Gumroad is because of their (global) affiliate system.
Over the last two years, many creators have invested heavily in recruiting affiliates. Some creators see double-digit revenue from their affiliates as a percentage of their total sales. And as Lemon Squeezy doesn’t have an affiliate system yet, you’ll definitely lose revenue if you move away from Gumroad.
Move to Lemon Squeezy but leave affiliates on Gumroad
It’s also something you could just keep as is right now. You could just let your affiliates keep pushing traffic to your Gumroad products while you push your own traffic to Lemon Squeezy until they launch their affiliate system.
I’m guessing they’ll launch it before January 31st when Gumroads new pricing will be launched. If I were the CEO of Lemon Squeezy, I’d know where to put all my efforts. It’ll be a missed opportunity if they don’t launch it asap.
The other (almost as good) alternative to Gumroad: PayHip
Besides an alternative to Gumroad Discover, PayHip has all the features and more that Gumroad has.
I don’t think they’re as transparent about that on their comparison page. I see a lot of unchecked boxes for Gumroad while they do offer it. Something I think Gumroad should act on because it’s not a fair comparison IMO.
It’s obvious when you look at things like “affiliate marketing”, “automatic UK & EU VAT Handling” and “email marketing”. Gumroad does all those things.
The significant upside to PayHip is that their fees are pretty low when you take a paid plan. They charge 5% + payment fees on the free plan but 0% on their $99 /month plan.
For someone making 100k a year that’s a pretty sweet deal. The only downside, again, is that their VAT remittance is limited to the EU and the UK while Australia, Canada and the US (and probably dozens of other countries) have sales tax rules that can effect you as a creator.
“I Want To Pay the Lowest Possible Fees”
If you’re not worried about sales tax or if you’re OK filing yourself, the best option is to go for it so connect with Stripe directly and just use Carrd or a similar one-page website alternative that’s free.
You’ll make the most money IF you have the traffic to back it up and don’t rely on affiliates at all.
Stripe + Carrd is the most effective way to sell your digital products. Your net revenue will be the highest but you really need to be 100% sure that you don’t have to register and pay taxes in all the countries you sell in. And that, ladies and gentlemen, is in my opinion, impossible to do.
So you’ll be stuck with filing taxes yourself. And unless you make a few 100k /year you’ll have to file it yourself because it will be very cumbersome and expensive to hire someone to do it for you.
“I want the same options as Gumroad but for a lower fee”
Almost no alternatives offer the “Merchant of Record” option besides Lemon Squeezy WITH the same options as Gumroad offers. PayHip does its best but still lacks worldwide Merchant of Record service.
Paddle is an alternative Payment provider but lacks any sales page builders, affiliates, and Discover options. They do handle your taxes for you. But because they’re as expensive as Lemon Squeezy but offer fewer options to creators and entrepreneurs it’s not a viable alternative.
That means we arrive at the other digital product marketplaces and solutions like Podia, SendOwl and MightyNetworks, Sellfy, and PayHip.
Mighty Networks might be the odd guy in the room, but they’re perfect if you want to offer paid communities and (cohort based) courses.
Let’s run through all of them in detail.
Like I said earlier, they’re the odd ones here but perfect for the more advanced creators who have already built a following on Twitter or another social media channel. Why? Mighty Networks doesn’t have a plan without a monthly bill attached to it. Usually people who’re just getting started are reluctant to go for something like that because they know they be paying money before anything comes in the bank.
For those people, I suggest you stick to Gumroad for now until you’ve built a small MRR and are confident enough you can scale it.
The plus side is that Mighty Networks is perfect for people who already have a paid community. They do take a 3% payment fee on the community plan and a 2% payment fee on the business plan on top of their monthly subscription fee.
So with some math, you can figure out that you need to have almost 1k MRR for it to be worth the move.
Mighty Networks doesn’t do anything with your sales tax. So make sure you sort that out.
The software is excellent. It has many features. But if you look at their pricing, it’s pretty expensive compared to Gumroad. They charge 8% fees + Stripe payment processing fees if you’re not on their paid plan. You’ll effectively avoid 2% fees which is pretty insignificant if you consider Gumroad Discover and their affiliates system. Podia does not offer that in its free plan.
Even in Podia’s “Mover” plan, there’s no affiliate system, so you’d have to take the $75 /month plan if you rely on them a lot. If you do, the $75 will probably be the least of your worries because you’ll void the 8% fee Podia is charging entirely.
The big problem with Podia is they don’t do any sales tax remittance for you. You’re on your own here.
SendOwl is an inexpensive platform where creators can sell their digital products. The big upside about SendOwl is that they have an affiliate system built in their free plan. They also take 5% fee as does Lemon Squeezy and offer “tax management”. But that’s far from the Tax hassle that Lemon Squeezy handles for you.
You have to search a bit on their website for you to find out what SendOwls tax management does, but more importantly, what it does not:
The Tax Management system is a way for you to avoid dealing with the tax man by disabling selling to the UK and EU if you’re in the US. But that’s also the big upside of being a creator that sells digital products… Everyone in the world can buy them. You just don’t want to worry about the sales taxes involved.
Again, if you don’t care, SendOwl is a pretty good alternative to Gumroad. They offer the same features for less. The only thing they lack really is a Discover feature.
And here’s a complete list of their features:
As you can see, quite an extensive list. Anything a creator needs, really.
There are two downsides to SendOwl.
On the free plan, you can’t offer any free products. So no freebies you can quickly provide to your audience.
The other downside is that while SendOwl might only take 1% fees on the paid plan (and 5% on the free plan) you also still need to connect with a payment provider. That payment provider also applies their fees to your revenue.
On the free plan, you’ll effectively be paying 5% less than when you’d use Gumroad, but you still have to do all your taxes, and you can’t offer (free) lead gen products to your audience.
For some people, that would mean SendOwl is not a great alternative to Gumroad.
We only see one true competitor to Gumroad right now. It’s Lemon Squeezy. You’d have to wait a bit on their affiliate system, which doesn’t offer a Discover alternative. But besides that, you’ll be able to enjoy 0% fees on all the transactions you do for Jan 1st 2023, and you’ll enjoy the same features as Gumroad offers you.