denise: Image: Me, facing away from camera, on top of the Castel Sant'Angelo in Rome (Default)
Denise ([staff profile] denise) wrote in [site community profile] dw_biz2011-04-05 07:53 am
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2010 Year End Update

So, the year-end accounting is finally finalized, and we can look back at 2010 and analyze the business end of things!

In summary: 2010 was slower than we'd hoped due to three months of being unable to accept online payments and due to higher fees from the merchant processor we switched to in April of '10, but we came very near to breaking even for the year, and would probably have broken even if it weren't for the entire quarter of downtime. In the end, we only spent about $6,000 more than we took in (not counting taxes, which are paid by Dreamwidth).

On the whole, I'm pretty pleased with our performance for the year, and I hope that 2011 will be just as good if not better!



* Our year end income was lower than it was in 2009, but that was expected -- the two factors involved there were the seed account sale in 2009 (giving us a one-time boost to income) and the three months of being unable to accept payments.

* Our three biggest expenditures for the year: data hosting, contractor payments, and travel (for conferences). We expect much less travel in 2011, which will help to lower that cost.

* The merchant processor we found to replace PayPal when they dropped us provides us great service, but their fees are correspondingly much higher. Between the merchant processor fees and the merchant bank account fees, approximately 9% of payments go to processor fees, as opposed to PayPal's 3%. It's less than optimal, but we didn't have much choice!

* Also impacting the cash flow for the year, our merchant bank account required us to hold a rolling reserve against chargebacks, where they held 25% of our incoming payments for the first 6 months we were a client. (This is because internet-only transactions, aka card-not-present transactions, are considered "high risk" in the banking industry, and sites with user-generated content are even more high risk.) They lifted that requirement after six months of no chargebacks, but they continue to hold on to the funds they reserved, and we haven't been able to get them to release that money yet (they're still a bit skittish about not having the reserve). That reserve, plus our tax bill, is the reason why our "operating fund" is lower than we'd currently like.

* This year we also tried an experiment with Google AdWords advertising; we budgeted $1,000 over approximately six weeks to experiment with different keywords, ad copy, and landing pages to see if we could prompt an increase in signups (and retention). The experiment wasn't very successful; I think it failed mostly because we don't have a very good pre-signup "site tour" that explains to people why DW is awesome and why they'd enjoy using it. Plans for 2011 include sprucing up our on-site pre-signup information and giving people a stronger sense of why they should give DW a try, then repeating the AdWords experiment.

* Paid account numbers increased slowly but steadily over the year, both in raw numbers and as a percentage of total accounts (and total active accounts). Around the middle of the year (which is when we started recording statistics in this fashion), paid accounts taken as a percentage of the entire userbase were 1% of total users and 6% of active users and premium paid accounts were less than 1% of total users and 2% of active users. At the end of the year, paid accounts were 2.3 of total users and 9.7% of active users, and premium paid accounts were 1% of total users and 3.7% of active users. (Those figures today are paid: 2.3% of total users, 11.2% of active users; premium paid: 0.8% of total users, 3.9% of active users.)

* Our overall growth through the year was modest, but definitely there. Mid-year, our total accounts were 518,320; 24,288 active in some way; 46,632 having ever posted an entry; 15,336 posting in the last 30 days; 9,878 posting in the last 7 days; 4,524 posting in the last 24 hours. Near the end of the year, total accounts were 676,630; active in some way, 22,969; ever having posted an entry: 60,783; posting in last 30 days: 18,839; posting in last 7 days: 12,208; posting in last 24 hours, 5,396. So, activity level was variable over time, but the stats say that while not everyone who tries DW will stick with us, the people who do stick with us are fairly active (more so than conventional wisdom states that members of a site like this will be) and tend, on the whole, to update at least once a week or so.

(Those numbers today, for comparison's sake: total accounts: 715,393; active in some way: 21,815; ever posted an entry: 66,695; posted an entry in last 30 days: 18,919; posted an entry in the last 7 days: 12,968; posted an entry in the last 24 hours: 6,117.)


On the whole, I'm relatively happy with our 2010! Obviously I wish that we hadn't had such a long period without being able to accept online payments, and the combination of that period of no income, taxes, fees, and the reserve-against-chargebacks our merchant bank is holding means that our operating fund reserve is a lot lower than I'd like it to be right now. We are, however, heading into "payment season" -- our biggest spike in payments happen at the end of April/beginning of May, which is the anniversary of when we first opened for business. (And, therefore, the time when people who pay by the year renew their accounts.)

I'm also expecting a less pronounced, but still present, bump in income in the next few days; the anniversary of our payment system coming back online is in a few days, and we definitely saw the spike in yesterday's payments. (The announcement of payments being back online was April 7 -- so yesterday was the day that the 3-day expiration reminder email went out for people who'd bought a year of paid time as soon as it came back up!)

Our initial plan for DW had us breaking even or having a slight profit in 2010. The fact that external circumstances meant we didn't isn't a dealbreaker, though we are looking at ways to replenish that operating fund for peace of mind. So far in 2011, we are looking to be on track to, again, break even or have a small profit. (I'm rooting for the extra income. It would be very nice to be able to upgrade my pay from 'peanut shells' to at least 'peanuts'!)

If you have any questions about anything, feel free to ask! I may not answer in depth, but I will do my best to get you an answer.

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