How I Grew Plugin Sales By 21% By Increasing Prices

Recently there’s been a lot of discussion on how to price your premium WordPress plugin.

Chris Lema started it with WordPress Plugin Prices Are Too Low, and many comments followed.

I followed up with Setting Your WordPress Plugin Prices, then Jeffro of WP TavernChris Lema and David Peralty of Gravity Forms continued. Even more comments and discussion ensue.

For one of my own premium plugins, Pinterest “Pin It” Button Pro, I ran two price tests recently and wanted to share the results.

My Standard Plugin Pricing Model

For a little background, I launched Pinterest “Pin It” Button Pro in October 2012, so less than a year ago. Prior to that, in December 2011, I released a free/”lite” version on the WordPress repository. The success and number of downloads of the “lite” plugin is what prompted me to create the Pro version. Since then I’ve basically been following the “freemium” plugin business model and it’s been working pretty well so far. No add-ons or packages (yet).

Besides the two tests described below, I’ve mainly been following the 3-option pricing plan that many popular premium plugins use, such as Event Espresso and Gravity Forms.

So far I’m basically charging for how many sites I’ll support, and currently it’s as follows (subject to tests and changes going forward of course):

  • 1 Site: $29
  • 5 Sites: $49
  • Unlimited Sites: $99

Total sales per month has ranged from $2000 to $3500 between October 2012 and May 2013. Not high volume, but it’s a niche social network plugin done in my spare time (I have a software development day job currently). I’m also the only developer and support person on the plugin right now.

I have an annual license renewal rate in place, but when I launched I briefly offered lifetime licenses for my top two plans for a quick cash injection.

Pricing Test #1: Lowering Prices

For the month of February 2013 I lowered my 1-site license to $19 and my 5-site license to $39. Below are the results compared to March 2013. I didn’t have any other major deals, advertising or promotions running at that time that would skew it a bunch in my opinion.

 
February 2013
March 2013
Grand Total$2,932$3,542
1-Site Cost$19$29
Units Sold10995
Total$2,071$2,755
5-Site Cost$39$49
Units Sold1710
Total$663$490
Unlimited-Site Cost$99$99
Units Sold23
Total$198$297

The results speak for themselves. $610 more (about 21%) by raising my prices back to $29/$49 as opposed to $19/$39. If you can’t see the above table that’s $3,542 in March vs $2,932 in February.

I even multiplied the February units sold by 1.11 to account for February being 3 days less than March.

Also important is that there were significantly less support requests and nasty complaints at the higher prices. So even if dollar totals came out the same, less support is always better.

A case could be made that the 5-site plan at $39 is better. But would it work to have only a $10 difference between the two lower plans?

Pricing Test #2: Eliminating the Single Site License

Since I heard “Raise Your Prices!” again and again by successful startup owners at MicroConf a month ago, in mid-May I decided to run a 2-week test that simply eliminated my 1-site license.

Yes, that means the lowest plan was $49 for 2 weeks.

I had only one complaint that there wasn’t a cheaper plan available, and I simply informed that person I’d re-introduce the 1-site license soon.

Since I only ran it 2 weeks, I broke down the weekly average and compared it to the 4 weeks prior.

Date Range
Total Sales $
Weekly Average $
Weekly Units Sold
Apr 10 to May 7 (4 weeks)$3,227$80720
May 8 to May 21 (2 weeks)$1,030$51510

$807 per week (with 1-site license) is about 150% the $515 per week (without 1-site license), so I’ll stick with the more profitable one for now. But I should point out that without the 1-site license I sold half the number of units, so profit per sale was actually higher, which usually means less support.

Conclusion

Like I said before, test your prices. Try raising your plugin prices in increments to see what happens. Split test if you want. Possibly test lowering or adding a new tier if you’re not convinced.

Obviously my Pinterest plugin appeals to many single site owners. Yes, some sales are made on the 5-site plan, but very few purchase the highest plan right now, which causes me to believe I don’t have a ton of consultants buying the plugin. I’m sure other plugins lean more towards the consultant side. It just depends who your audience is.

Any other WordPress plugin shops want to reveal pricing tests that have worked for them? If not dollar amounts, maybe units and percentages?

  • http://pippinsplugins.com Pippin Williamson

    I experienced the exact same type of results when I raised my plugin prices after moving away from Code Canyon.

  • http://gravatar.com/garthkoyle2 Garth Koyle

    Hey Phil,

    Good work.

    This continues the discussions we’ve had offline…lots to gleam from this data…

    What are you defining as “sales”? Technically you grew revenue by 21%, but the number of licenses sold (excluding the unlimited license, or can you quantity those too?) decreased by 49 licenses (194-145=49) or -25.25%% (145-194)/194 = -25.25%). You increased your price by 29.4%. You might adjust your title to clarify.

    Also, notice that proportion of sales by license type. When your prices were low you sold 56% 1-site licenses and 44% 5-site licenses. When your prices were higher you sold 90% 1-site licenses and 10% 5-site licenses. As you raise your prices your customers were looking for the cheaper option…suggesting your nearing the top of your price range? Your weighted-average price elasticity is .86 which is relatively low at those price ranges which means your customers are willing to pay more for your product rather than go without it (which you saw). Your percentage in price was higher than the amount of unit sales decline. That doesn’t mean you can continue raising prices, because your weighted-average price elasticity is not constant (changes with each price increase).

    You hint that the higher paying customers might require less support. Any quantification there? The difference in the number of support requests during a certain period that you might compare the two? I’d challenge you on the fact that the customers who are paying more for your product don’t need so much support (you have a short time period to compare). I’d guess that the clients purchasing multi-license packages will be less support over time because they know how to use your product on the 2nd, 3rd, etc. site in the future. I almost bet that if you calculated the drop in support requests that the percentage change will be closer to the drop in the number of licenses you sold than the price change…But if you compare the two price cohorts over time the customers who buy more licenses will need less support (per license) or per dollar of revenue.

    What do you think the effect will be (positive or negative) based on the fact that when you raise your prices that you now have fewer people using your plugin? Small businesses generally use lower prices as a way to get the word out…what about you? If those 50 sites aren’t using your product then are they likely to be purchasing from a competitor? What are your thoughts about the long-run effect of raising prices on your market share?

    Last quick thing…when your prices were higher you had more people purchase the unlimited license (just slightly more and might be due to natural variability). However, as you raised your prices but left the unlimited license the same price then you made the higher packages look more favorable.

    Longer-term ROI per price-cohort will give you a more complete picture.

    Anyway, I gotta get back to work. What are your thoughts?

    • http://philderksen.com Phil Derksen

      Thanks for the questions Garth. I’ll have to get back to you on some of these.

      For support requests I’ll have to look through my logs (ZenDesk and emails). It just “felt” like it is my best answer for now (as lame as that is). I definitely have less technical folks at the 1-site license level and it seems more of these have a higher number of outdated/incompatible themes, aren’t familiar with non-repo plugin installations, etc.

      As for getting the word out, I feel my lite/free plugin does that well enough (near 150K downloads).

      I’ll post back here when I have better answers for you.

    • http://philderksen.com Phil Derksen

      Just a little more detail here…

      >> What are you defining as “sales”?

      Your numbers are right if the 5-site licenses were actually used on 5 sites each. But I’m not tracking them that closely right now, and I assume many of them may only be 2 or 3 sites since the price is less than double the 1-site. So yes, sales are purely revenue dollars at the moment.

      >> You hint that the higher paying customers might require less support. Any quantification there?

      I looked at my Zendesk stats and I had 13 new tickets during the 2-week period where I didn’t sell 1-site licenses (May 8-21), which is 6.5 tickets per week.

      The 4-weeks prior had 40 new tickets (Apr 24-May 7), which is 10 tickets per week.

      Now this is not totally accurate. Obviously some requests come through days or weeks or anytime after they purchase. Also, some still come through email and my contact form though I try to route everything through Zendesk. So again my best answer is it “seemed” like I was spending less time on support with just multi-site licensed owners during the test with no 1-site license. But I definitely need to see if I get a better handle on more accurate support data in the future.

      As far as raising prices but having less market share, I feel OK with that especially if I get the higher end of that and have smaller support volume. But maybe I’ll feel differently once I hire a tier 1 support person that can answer most of the technically easy support questions (need a new download link, couldn’t download the zip file, etc).

      Reading some of the other comments as well as yours makes me think maybe a bigger gap between price points could work. It’s definitely worth a test.

      As always I appreciate the detail Garth. Keep the questions coming!

  • http://gravatar.com/codeodor Sammy Larbi

    Curious: why did you only adjust February by 1.11%? Shouldn’t it be closer to 10%?

    • http://philderksen.com Phil Derksen

      Oops. I meant multiplied by 1.11 (added 11%) for basically making February have 31 days like March for an equal comparison. Thanks for the clarification and updated the post.

  • http://jeffc.me Jeffro

    I think the moral of the story here amongst this discussion around plugin prices is that Experimentation is the key word. It’s a matter of the developer finding that sweet spot between price, profit, support queries and the customer seeing value. No such thing as a one price fits all.

    • http://philderksen.com Phil Derksen

      I definitely think most can agree on that. There’s always opinions on “best practices” or good starting points modeled after similar plugins, but it always comes down to your own plugin’s unique circumstances as you pointed out.

  • http://www.facebook.com/JoshLedgard Joshua Ledgard

    I’m glad you took everyones advice and blogged about it. I might offer another test:

    Unlimited should be $199. You’ll sell just as many. These are people with a corporate card who don’t want to fail at something because they bought too little. It’s a nice little boost each time.

    You could also try 1, 3, and Unlimited as the site numbers as well to see what happens. IMO, at 5 sites, you are doing something professionally and can afford the expense.

  • http://philderksen.com Phil Derksen

    Great points Josh and I may do just that. Thanks!

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  • http://wp-buddy.com/wp-rating-plugin David

    Hi Phil,

    Interesting experiment which I might try for my first premium plugin as well. Currently I sell it for 19 EUR (ca 23 USD) which I think might be too low.

    I have the following question:
    How can one control if a person who buys a single license uses it only on one site and not on more? I also thought of a multi site license but am now selling the ‘Purple Heart Rating Plugin’ as a multisite license only (http://wp-buddy.com/wp-rating-plugin), because I don’t have a clue how I could control that. Can you share how you do that with your own plugin/s?

    Your displayed numbers are pretty sweet, at least enough to make a decent living off of it.

    Best regards,
    David

    • http://wp-buddy.com/wp-rating-plugin David

      Another question that popped up is:

      Have you had issues with clients that complained because they bought your plugin for a higher price after maybe you lowered prices again after testing?

      To explain further:
      In your tests you might raise prices first and some people buy. Then you decide to lower prices again. Maybe some of the clients who have bought for the higher price found out about that and feel ‘ripped off’??

      Best regards from Greece,
      David

    • http://philderksen.com Phil Derksen

      David, good question. I’m using Easy Digital Downloads with the software licensing add-on (https://easydigitaldownloads.com/extensions/software-licensing/). It has a way to check remote licenses, and you can also log what domains are using the license when an automatic update occurs.

      However, you can’t truly enforce any plugin or theme to be installed a limited amount of times. Technically it’s tough but legally the GPL allows it (if you follow GPL for your plugin, which I do).

      When people put in a support request, for the volume I get I can usually tell if anyone’s abusing their license.

      But it’s not perfect, and it’s always possible a few have installed on more sites than the license states, but I’m not going to sweat it or put too much time into it if/until my sales volume goes way up.

      • http://wp-buddy.com/wp-rating-plugin David

        Awesome, thanks for the reply, Phil!

      • http://eventespresso.com Garth Koyle

        At Event Espresso, we’ve worked with Plugin Updates Engine (http://pluginupdateseng.in/) for quite some time to build a more advanced WordPress updates system. We can limit updates to a single domain per license key and disallow someone from receiving upgrades to a second website (and more). While people can use the files on multiple sites, it does keep us from having to support people who are outside of our terms and our agreement with them.

        We don’t limit how many times and in what ways they user the GPL files, just the service they we provide.

        • http://wp-buddy.com/wp-rating-plugin David

          Hi Garth,

          That’s also a good way of handling it, thanks for the info!!

          Best regards,
          David

    • http://philderksen.com Phil Derksen

      To answer your second question, no I’ve never had any complaints. And personally I never worry about it myself when I buy something like a theme or plugin.

      • http://wp-buddy.com/wp-rating-plugin David

        OK, good to know how others see that.

        Sometimes maybe I worry too much about things that in the end will never be an issue. And that although I am currently reading Dale Carnegie’s bestseller ‘Stop worrying and start living’… :D

        Best regards from Greece,
        David