Transparency Report #2 – May 2016

OK. It’s time for my second transparency report. It’s crazy how it’s been a month since I wrote the last one. Since then I’ve been doing a lot of work on refining the sales dashboard tool I use internally to track the sales.

This report will look slightly different to the report I produced  last month. These reports are mostly written for me as a record of how I’m doing in developing the business of epic plugins, but I’m hoping by making these public you’ll be able to learn some cool things along the way.

As an overview, although total revenues over the month is down, there’s been some interesting developments and useful metrics which I look forward to seeing how they develop over time.

Revenue Metrics for May 2016

[UPDATE: 1st Feb 2017. The Sales Dashboard in Zero BS CRM has been improved to have transaction tagging. This means I can filter transactions. The featured image shows the position allowing for full splitting]

I’ll be spending a bit of time going through each overview sales chart for the month of May and add a bit of commentary as I go along under each one. So first is the Gross Revenue report. This is what I was showing in the last report (where Gross Revenue was $5,055 for April 2016).

OK, that’s a bit of a different image to the last month, it’s not split out by revenue type but it’s giving a quick overview of the Gross Revenue, and the movement since April. So, what changed?

Freelance changed.

I didn’t do very much freelance at all throughout May, which is mostly down to the fact I still haven’t finished my notice period, and also the fact I’ve been working hard on a new release (and been refining the sales reporting for these reports).

So, it’s not surprising that my Gross Revenue is down for the month. What I realised while I was refining the sales reporting is that all of my glory so far was based on Gross Revenue, but what really mattered was the bottom line, the Net Revenue, so let’s take a look at that next.

This is actually what I ended up taking into the business (in May before support team and affiliate costs) and the Net Revenue is calculated as

Net Revenue* = Gross Revenue less Discounts less Fees 

*sorta, the below don’t quite add up which I’ll be looking into, but they’re close enough for the purposes of these reports.

It doesn’t include any other expenses outside of the transaction fees / discounts (for example, it doesn’t include any payments made out to affiliates or to the support team). So the actual amount cleared to me is a little less that the figure in the Net Revenue (dammit, no retiring on a beach just yet…).

Still, it’s a decent return given the time I’m actually able to allocate to product development and support (James handles a lot of the support on the forum, so without his help I’d be able to spend even less time building new and enhancing existing products), like enhancing these sales reports.

OK, so this is usually where the transparency reports end. However, like I said, I’ve been working hard on enhancing which metrics I should track for the growth of my business, so I’ve added a few more. The first being the Discounts over the period. This helps to show me whether having the Coupon system is helping sales (it does, by the way) and also how they compare to the prior month.

So wow, in May the value of discounts through the store was massively up from April, the main reason for this is I ran a firesale in mid May. This firesale gave a huge 50% discount off everything in the store. Which boosted sales volumes and new customers (more on this later).

The next new chart is the Fees, these are generally linked to the volume of sales as PayPal take a $0.30 + 2.9% type transaction fee from each purchase. Not a great deal I can control here but useful to know the cost of the payment provider.

So, slightly less fees overall, based on lower sales volumes, understanding why with 27% less Gross Sales my fees are only 10% less is something for another day 🙂 but generally this can be seen as the price to pay for PayPal’s awesomeness. You may have seen on the blog that I removed 9 plugins for sale on CodeCanyon (on the 24th May) but the information from CodeCanyon doesn’t easily give me the level of fees, but I expect an overall reduction on fees going forwards (if I can track the CodeCanyon fees via the reporting system I will (and expect to see a general fall in fees going forward), but it’s currently not in the above figures)

OK, so that’s the make-up of the Revenue for the month, now it’s time to venture even deeper into the deep black sea of Epic Plugins..  customer related metrics. The first being the average revenue per customer.

Why is this an interesting new chart? Well the figure here is showing me roughly, if I can generate a new customer, this is the average value of the transaction they make. So, how does this look

This is pretty cool isn’t it? It’s tracking the average revenue per customer over time, so what I can do with this information is answer questions like the following

• Is the average order value decreasing over time?
  • I expect this to be yes now I’ve got more of the CodeCanyon plugins on the epicplugins.com website (which are priced lower than the themes)
• Am I selling more products to existing customers, or is most of my revenue coming from New Customers? This is a sign of customer loyalty (and something which I’ll be developing the reporting over June)
• What marketing can I put into epic plugins (either via AdWords or other means). If I base on general conversion rates I would need ‘x’ visitors for a sale so my (CPC = £y) under the assumption that advert source converts at the same general conversion rate (currently around 0.6%). Which is low, but as mentioned previously my traffic covers  traffic to demo websites I don’t fully believe this figure so will be looking at relative increases in conversion rates.

One thing to note in the above chart is this excludes the revenue from CodeCanyon sales.  I mentioned in recent rant that Envato won’t provide customer details for the sales I make so it isn’t great that I can’t get this accurately. I could assume each sale is one new customer, but I’ve no way of tracking, so rather than skew the figures I’ve excluded the revenue from CodeCanyon in the Average Revenue per Customer chart.

So looking at some super quick maths on the above marketing spend point, if a new customer is generally worth $53.31 and 0.5% of visitors convert to be a new customer means I would need 200 visitors to reach my site (so I need 200 clicks).

200 clicks * 0.5% conversion rate = 1 customer

So, based on needing 200 clicks to generate a customer (conversion rates of Adverts may be lower depending on source, watch this space), I can afford $0.26 per click in my marketing efforts (assuming this generates a sale)..  I may try some advert testing over the coming months to see how this theory holds, but this is showing how powerful knowing the average revenue per customer metric is. Sweet.

Now onto customers.

Customer Metrics For May 2016

These are a couple of new charts again, and also they’re super powerful and useful. New Customers and Total Customers. I was pretty surprised with the Total Customers figure as I’ve not really been looking at this (I’ve been monitoring things like my Newsletter list size, or my Support Forum membership – both sitting at around 1,000) which isn’t large by any means.

     

Quite an increase over May for new customers compared to April (driven by the fact that, excluding freelance revenue, the revenue for plugin and theme sales was up – more on this next month).

But wow, 1,788 customers for Epic Plugins since we launched. This is pretty Epic. If you’re reading this and aren’t on the email list it’s worth signing up below (see how much we give away in discounts? these are mostly to the email list) it’s also an interesting metric to read and understand that of c1,800 only about 50% sign up for support…. let that one sink in.

Future reports I’ll be delving a little deeper into each of the charts above (as I develop the underlying breakdowns of each summary chart) and further back historic trends as I develop the flexibility of the dashboard tool.

But, there’s a lot to take in above. What went well and what didn’t go so well over the month of May?

Things that went well?

Well, more sales were made of the plugins and themes, and less freelance work was completed. Overall I personally spent less time on freelance meaning I’ve been able to drive the development of the sales charts above over the month. I’ve also managed to do some minor theme updates but these have been minimal due to me also being on vacation in May for a week.

Things that could be better?

I’m well aware that there’s a number of refinements to themes, feature requests and bug fixes that have popped up over May, these are high up on the list of things to look at, but with a great new product coming in the next few weeks, I’m head down on pushing it over the line (with theme tweaks and updates to follow).

I hope this transparency report has been useful for you, I’d love to hear your comments below