Friday, March 26, 2010

Profit through generosity

The number one question I always get asked is how Umbraco is making money and how on earth we can be profitable when we give things away for free. Our business philosophy is internally coined as "Profit through generosity". Not only do we believe that generosity - not to confuse with philanthropy - leads to business, but we've also walked the walk and proven for almost two years that it's sustainable.

Let's start with some tiny facts about Umbraco HQ (the company):

  • We have been profitable since Q2 2008
  • We're four employees
  • We see ourselves as an equal part and participant of the Umbraco community
  • We make our money by adding value to the Umbraco CMS ecosystem
  • We use the profit to work on the core of Umbraco CMS

And here's some on the Umbraco CMS:

Our sources of revenue are three:

Our mighty training/certification empire
We've developed a very successful and appreciated course system. In the beginning all courses were run be ourselves but now we've started to franchise the system to other key persons in the Umbraco CMS community.

Why this adds value: We ensure that people learn to use Umbraco CMS in the very best way, we take responsibility in terms of setting a standard for what makes a skilled Umbraco Developer/Solution Provider which makes it easier for companies to screen the market. For Umbraco HQ it gives a stable and predictable income which in returns gets invested in the core product.
While the above is awesome for the people attending, it's not for all. Not only do the courses (almost) always sell out, but the price tag and regional availability can prevent it from a broader appeal. This is why we introduced in the fall of 2008. It doesn't replace the courses, but enable us to share our knowledge with many people at a very low price while still ensuring a revenue flow.

Why this adds value: It makes it easy for everyone to get started with Umbraco CMS at a price less than a book. Being a service it also lets us add more and more content to people who subscribe ensuring that they can keep improving their skill sets also on very narrow topics which makes it an awesome supplement to the courses. For Umbraco HQ it's a source of income that both scales and is attractive for the huge and constantly growing user base. For me - this is likely the product that I'm most proud of.

Umbraco PRO
This was for a lack of a better name and I hope it'll change in the future. Umbraco PRO is our supported and guaranteed version of Umbraco CMS. Today it's a mashup of different services and products we had in the beginning, but we're starting to release the product in the bundle as individual offerings with our successful form designer - Umbraco Contour - being the first. At the very heart of it, Umbraco PRO tries to solve some of the concerns we meet from bigger companies. With Umbraco PRO they get better bug fixing warranty than any standard Web CMS EULA meets and with the support option on top, they get stellar tech support from the very people who make the software.

Why this adds value: The bug fixing warranty brings great comfort for companies and the support not only ensures that companies and solution providers can get solid answers in very short time but also ensures that we - the company - get a great sense of what areas of Umbraco CMS need more attention.

As our revenue sources clearly show, our business is not rocket science. We use the power of our brand, trademarks and knowledge to ensure revenue. The more people using Umbraco CMS, the bigger market for our services. Hence a strong motivation for a solid core product. Hence a motivation to invest back directly on the product [generosity] as it makes the platform more attractive.

And while some might argue that our business is small, Umbraco is fast-forwarding towards one of the biggest install bases for Microsoft based Web CMS. This while being strongly profitable. Something very few VC-backed projects can boast. You don't need to be big to make change. But you need to be profitable to be sustainable long term.

Our business model is a perfect mashup of ongoing trends such as Freemium, Transparency and Open Source and at the same time we get to do what we love - being part of a stunning change backed by the most wonderful community.

That's sustainable change.

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