Gumroad's price increase explained + alternatives
On December 17th 2022, Gumroad announced a fee increase to 10% (plus 2.9% +30c Stripe fees) starting from January 31st 2023.
The announcement was first made in a tweet from Gumroad founder Sahil Lavingia. This was followed up by an email to all Gumroad users. Not surprisingly, reaction to the increase has been quite negative.
How much are Gumroad fees increasing by?
Gumroad will now have a flat 10% fee for all users no matter how much they sell. This 10% is on top of Stripe and PayPal processing fees which Gumroad will now pass on to sellers.
This replaces Gumroad's previous fee structure which saw users pay a lower fee depending on their lifetime sales volume:
- 9 percent fee for earnings between $0 and $1,000
- 7 percent fee for earnings between $1,00 to $10,000
- 5 percent fee for earnings between $10,000 to $100,000
- 3 percent fee for earnings between $100,00 to $1 million
- A lifetime 2.9 percent fee for earnings beyond $1 million
Gumroad's new fees will see some top sellers paying triple what they used to.
Why is Gumroad increasing its fees?
In a followup tweet, Sahil explained that monthly net income under the previous fee structure was too low. During tough economic times, Gumroad needs more income to grow.
How can Gumroad justify these fees?
One of Gumroad's key features is that is acts a merchant of record. This means sales you make through Gumroad actually have Gumroad listed as the seller on your behalf. This is important in the UK, EU and some US states where sales tax must be collected and remitted locally for digital product sales. Gumroad handles this for sellers.
Gumroad also has a developed platform that makes it easy for people to list and sell products without creating their own infastructure. This includes a Zapier integration helping people automate their sales efforts.
Are there cheaper alternatives to Gumroad?
Some popular alternatives that also act as merchant-of-record include:
- Lemon Squeezy
5% + 50c
- Paddle (restricted to software/apps)
5% + 50c
- Payhip
5% + payment processing fees (monthly plans available to lower this)
- GetRevin
$799/m + payment processing fees
