This is a response to Chris Lema’s recent post WordPress Plugin Prices Are Too Low.
There are several important issues that Chris points out about the current state of WordPress premium plugin prices.
The “race to free” is definitely a scary one. Many mobile app developers can relate to this. They work for months (or even years) on a complex app only to be able to sell it for $0.99. There are actual reviews out there of customers complaining that a useful mobile app is “not worth it” at $2! And this trend seems to be heading the same direction a decent portion of the premium WordPress plugin marketplace.
Set your price according to the value it provides
What do you value your time at? Chris points out to consider how much time you’re saving when you buy a premium plugin. How many hours did it shave off your various projects and how much is your time worth? That will give you perspective when thinking about purchasing a $19 plugin vs. a $199 plugin.
This is obviously a subject that has a wide variety of views and opinions, so I highly recommend reading at least some of the huge number of comments in response to Chris’ post.
For the most part I tend to agree in that you need to price at the value your providing the customer. Many developers and product creators tend to undervalue their products and the time spent supporting them. You probably need to raise your prices more than you think. This is something that’s been drilled into my head over and over by successful SaaS startup entrepreneurs like Jason Cohen, Patrick McKenzie and Rob Walling. All three have slashed lower price plans multiple times personally and made huge strides forward in their businesses, and they aren’t afraid to talk about it.
Here’s a portion of my comment in reply to Chris’ post:
While I agree with you on leaning towards pricing higher, like John Turner said you need to test and find that sweet spot that works. I also tested my single site license (with annual renewal) at $19 for a short period but then moved it back to it’s original $29. Same sales in dollars in the end, but with more support and refund requests.
Recently I tested eliminating my single site license altogether, and I haven’t yet gathered the data, but I believe it may NOT work. Like Syed Balkhi mentioned I think that’s only because of my target audience. I think too many of my customers are non-technical single-site owners that don’t make a ton off their sites. But I’m going to dig into the numbers and post more on this soon.
If you have a plugin that’s more B2B or appeals mainly to other WP consultants, I bet your chances are better of a higher price for your cheapest plan working. Or maybe you don’t need a single site license plan at all. But you won’t know until you test, even if it’s only a split test and/or only for a couple of weeks. As part of your test don’t forget to include support costs, whether it’s your own time or support staff.
As for lifetime licenses, I believe they should rarely be used. Following the common model of other non-lifetime plugin plans, I’m using a discounted annual renewal rate as well. However, I haven’t quite yet reached a year since selling my first premium plugin so the jury’s still out how many renewals come in.
I agree on eliminating lifetime licenses except for one scenario: Quick cash injection (but very infrequent). When launching a plugin maybe offer a lifetime license only for your higher priced premium plan, possibly doubling your current highest plan. State that it’s time or quantity limited. A boost of cash when launching a plugin can be a huge motivator for keeping the project going. Another cash boost where you might consider lifetime licenses is when using a deal newsletter like AppSumo or Mighty Deals, especially since you’re discounting it pretty heavily already.
But I don’t have a documented test to prove the lifetime license exception. It may only work for motivation and probably not a good move financially for established plugin businesses.
You won’t know until you test
In short, you need to test, test, test to find your ideal price points. I like testing new pricing plans for 2 weeks. Others will run A/B split tests. Any test is good as long as it’s gathering valuable data over a reasonable amount of time.
Sometimes a price increase doesn’t decrease sales quantity at all, and that’s awesome! Sometimes eliminating the lowest plan decreases the total revenue a little, but you’ve just cut out 80% of your support requests, which is also a huge plus.
Finally, as a WordPress plugin shop it’s tough to sell monthly recurring plans, so the next best thing is annual recurring. Lifetime licenses should only be used in a few cases. But again, you’ll need to test. Every plugin has a different value point and is targeted towards different audiences.
Have you tested different prices for your plugin? What have you found that works or doesn’t work?
Updated May 30, 2013
The discussion continues with some great follow-ups.
Jeff at WP Tavern believes that there’s room for both consumer and consultant price points for the same plugin as the value is quite different for the two audiences.
Chris Lema followed up to his original post with some more perspective on the idea of variable pricing based on value and offering add-on options for your customers.
Thomas Griffin introduced support tokens for his Soliloquy plugin last month instead of charging an annual renewal.
David Peralty of Gravity Forms posted his take on lifetime vs subscription licenses, add-ons vs packages, and what (hypothetical) costs might look like to support a larger plugin business.
Updated June 3, 2013
I ran two pricing tests for one of my premium plugins and posted the results. One price increase resulted in 21% more plugin sales. Dollars and units sold revealed.
If you’re in the business of making money from WordPress plugins, there’s not just one way to go about it. If you’ve gone through any videos, podcast interviews and posts on selling premium plugins you’ll see that revenue models vary quite a bit.
The Smashing Magazine article “How Commercial Plugin Developers Are Using The WordPress Repository” by Siobhan McKeown already covered some of these, but I wanted to dive in a bit more detail on some of them.
The “freemium” model (also called “free + premium” or “lite + pro”) is popular not only among WordPress plugins but also themes, desktop software, mobile apps, and many SaaS (software as a service) web apps. In most cases, the idea is to get a bunch of users signed up for the free version with hopes that a decent percentage of them will pay to upgrade to a more fully featured (and better supported) premium version.
For WordPress plugin shops, free plugins published to the WordPress.org plugin repository give them quite a bit of exposure. When WordPress users are searching for plugins in their dashboard or on wordpress.org, these free plugins will show up while paid plugins are not allowed.
Update October 2017: A new service called Freemius now enables users to upgrade free WordPress plugins to their premium versions right from within the WordPress admin dashboard of their users’ websites. Payment is processed right there and the user can activate their license and continue straight to the pro version.
Doing a Google search for plugins will bring up both paid and free, but many times the free plugins on wordpress.org will rank equally or higher than the same-named paid plugins.
Examples plugins using the freemium model:
- Ultimate Coming Soon Pro / Lite
- Soliloquy Slider Pro / Lite
- Event Espresso Pro / Lite
- WP Simple Pay Pro / Lite
For all of these examples, you’ll see a fair number of downloads. This volume is necessary for most freemium models where you’re usually converting only a single-digit percentage of these users to paid.
However, as a plugin shop, you’re not required to publish a plugin to the WordPress repository. You could go after organic search (Google) by itself and skip the repository and a free version altogether. You could also publish paid-only plugins in a marketplace like Code Canyon. You’d miss out on the exposure the WordPress repository gives you, but it works well enough for some.
Free Base Plugin with Paid Add-Ons
Another business model is to have a free plugin “base” that works out of the box (and is listed in the WordPress repository), but then sell add-ons that extend the functionality of that plugin instead of replacing the entire thing (add-ons are sometimes referred to as “extensions” or “modules”).
An added benefit for the plugin add-on model is that users don’t get a large bloated base plugin. Instead, they only purchase and install the add-ons needed for their specific site requirements.
Examples of plugins with paid add-ons:
Backed by SaaS
A WordPress plugin that requires a SaaS (software as a service) for full functionality is another possible revenue model in certain scenarios.
Scribe is an SEO tool that used to be solely a SaaS-backed WordPress plugin. Now they’ve branched out to other platforms, but the Scribe plugin still exists in the repository. It allows a “test drive” for free but requires a monthly subscription for more features and usage.
The best thing about a SaaS-backed plugin is that it lends itself better to annual or even monthly recurring subscriptions. And recurring monthly revenue especially is one of the tougher things to do well as a WordPress plugin business.
Pay Only for Support
Some plugins offer their full-featured plugin for free (no freemium model), but then charge if you need support outside of a public forum or FAQ. The idea here is that many of their users will become dependent on the plugin and not be able to run their own business websites without it. When issues arise time is money, and most business owners will pay for reliable support. This is where a WordPress plugin shop can charge for support either on a recurring basis or even per request.
Once again the beauty of this model is that the plugin can gain the exposure in the WordPress repository like any other free plugin. However, this free plugin might receive more downloads and higher ratings than a comparable “lite” version of a paid plugin since they’re typically not going to put a limitation on features to entice an upgrade.
At the time of this post, a great example of the paid support revenue model is Paid Memberships Pro. If you want to hear why the founder chose this model more in-depth, just check out this podcast interview on MattReport.com.
Update: PMP Pro founder Jason Coleman also wrote a detailed post on his reasons for a “paid support only” approach.
Combined Business Models
Sometimes revenue models are combined. Soliloquy is freemium (lite + pro versions), but you can buy paid add-ons to its paid plugin (and only with a developer license at that). There are no add-ons to the “lite” version.
Easy Digital Downloads is a free base plugin with paid add-ons, but you can purchase priority support that covers the base plugin and add-ons combined.
Gravity Forms is paid plugin only, but it provides free add-ons to business and developer license holders. Basically, they provide add-ons as a part of your license, with the functionality being optional (not included in the base plugin), and available only when you upgrade to more expensive license.
Paid Memberships Pro and some others have a “white glove” offering. In this model, customers can pay a high premium for services such as installing, configuring and consultations related to the plugin.
Finally, some developers create free WordPress plugins just to boost their portfolio or as a lead generator for their consulting services. The focus isn’t product revenue but they benefit financially from their plugins nonetheless.
Want to learn how to market WordPress plugins from experienced product founders? These are some of the more helpful posts I’ve come across for inspiration and takeaways to apply to my own plugin business.
I may add to it periodically, and it’s certainly not an exhaustive list. Feel free to post your own favorites in the comments.
Vladimir Prelovac shares how he started out with a free SEO plugin in the WordPress repository, gained a following, then built a premium plugin. He details out what he did for his launch and breaks down his pricing plans and percentage of revenue for each. Vladimir went on to build the startup Manage WP, an awesome multi-site WordPress management SaaS service.
Yoast (Joost de Valk), author of some of the most popular free plugins out there (such as WordPress SEO), talks about making his newer plugin (Video SEO) paid-only, which allows him to keep it a higher quality plugin for his customers with more frequent updates and better support. He also lays out why he prefers to sell his plugins using Easy Digital Downloads through his own site instead of a marketplace.
Two great posts from Thomas Griffin (founder of the Soliloquy slider plugin). This firsts describes his transition from a code-focused to a customer-focused product. The second lays out six marketing changes he made that rapidly increased plugin sales in a short time.
This is a lengthier post by Siobhan McKeown on Smashing Magazine that covers quite a few topics for premium plugin businesses. For starters, it goes over the guidelines to follow if you’re publishing a free plugin on the WordPress repository. Then it goes into various business models for plugin shops including:
- Free plugins that connect to paid services.
- Offering feature-complete free plugins but charging for support and extensions.
- The “freemium” model where a free plugin with basic features is available on the repository, but for more features customers need to upgrade to a premium plugin. This is the model I’m currently using with the Pinterest “Pin It” Button plugin — free / paid.
- Complimentary plugins (free and paid), themes and paid installation services.
A detailed list of pros and cons for building a commercial plugin shop wrap up the post.
Pressnomics 2012 Aftermath
I got the awesome opportunity to attend the first Pressnomics last year and met tons of smart people in the WordPress business world. At one point Matt Mullenweg spoke to the subject of selling plugins, which in turn stirred up many discussions in person and online.
Tony Perez of Sucuri Security summarizes what Matt stated about premium plugins and expresses a thought out opinion about it. There were 53 comments from folks in the WordPress plugin community and from Matt continuing to debate the subject. Unfortunately the comments aren’t hooked up at the moment but hopefully Tony can dig them up sometime. :)
Brad Touesnard of Migrate DB Pro and WP App Store follows up Tony’s post with responses to Matt’s comments on the freemium plugin model, plugins backed by a service (SaaS) and commercial plugins that may get rolled into WordPress core.
I’m definitely looking forward to the commercial plugin debate at the next Pressnomics.
Updated Oct 24, 2013
If you search around you’ll find plenty of podcast interviews with successful WordPress plugin founders. Many get into nitty-gritty of the plugin business and share what works and doesn’t work for them.
Below is a list of audio podcast interviews you can load up on your favorite listening device and start taking notes (some have video too).
I’ll continue to add killer plugin business interviews to this list so post a comment if you find any I missed. Here’s the list so far:
From MattReport.com with Matt Medeiros
The Benefits of Failure (August 2013) – Brad Touesnard talks about the ultimate failure of the original concept for his WP App Store and the success of his awesome WP Migrate DB Pro plugin. For even more insight on the WP App Store story check out his post and comments on it.
How BraveNewCode built a million dollar business from WPtouch (July 2013) – Co-founder Dale Mugford of BraveNewCode shares how his business exceeded $1 million in revenue since the premium plugin’s inception, the big differences between their free and pro versions, and the big changes coming to version 3.0. Great insight on the plugin business from someone who’s been doing it for quite a while.
How FooPlugins co-founder lost $30k in revenue. Now earns double. (June 2013) – Adam Warner of FooPlugins shares his story of the fall, then rise, of his plugin business and the mistakes and victories along the way. Detailed numbers revealed!
Blair Williams, the founder of Memberpress (June 2013) talks about growing his plugin business, shifting from a developer to a business mindset, pricing plugins, annual vs. lifetime licenses, etc. Lots of good stuff.
A WordPress business built on selling buttons (April 2013) – Dave Donaldson of Max Foundry (who also has a WordCamp TV video) discusses his strategies for selling multiple premium plugins (like a button generator for WordPress), why to start out simple and how to build out from there.
Improving your WordPress craft (April 2013) – Thomas Griffin of Soliloquy (a powerful responsive WordPress slider) talks about his journey and how he had to focus on marketing and what his customers were asking for to build a real business on his premium plugin.
Why a SaaS model might be better than selling a plugin (March 2013) – First listen to the Mixergy interview listed above with Contest Domination founder Travis Ketchum. Then listen to this interview where which takes place 7 months later. Travis catches us up on how he scaled up his plugin to a SaaS model and skyrocketed his startup.
How to start your own WordPress marketplace (Feb 2013) – Hear Pippin Williamson talk about how he started with freelancing and a few plugins on Code Canyon, but then took his business to the next level by offering outstanding customer support and building an extendable plugin marketplace.
How to monetize a freemium product (Feb 2013) – Jason Coleman has an interesting twist on the freemium business model with his membership plugin for WordPress. His take: Sell awesome customer support, not code. Check it out.
Overall MattReport.com is an excellent WordPress business-focused podcast to keep on your list. If you’re interested it also touches on other areas such as freelancing and marketing.
From Bootstrapped Web with Brian Casel
2 Years, 77+ Different Products?! An Inside Look at Pippin Williamson’s WordPress Plugins Business (June 2013) – Title says it all. Great business insight and stories from the trenches from one of the top successful plugin devs out there.
From Foolish Adventure with Tim Conley
How To Make $10,000 A Month With A WordPress Business (Oct 2012) – John Turner discusses how he built up a significant business with his single coming soon & maintenance mode plugin (Coming Soon Pro) along with the ups and downs along the way and thoughts on the WordPress economy as a whole.
I highly recommend adding Foolish Adventure to your podcast queue. It focuses on all kinds of ways to market your products online (software or not).
From Mixergy with Andrew Warner
Contest Domination: How To Launch A Software-Based Business (Aug 2012) – This one’s interesting for two reasons: 1) Contest Domination founder Travis Ketchum is not a coder, so he reveals the hits and misses of hiring developers. 2) Soon after this interview he evolved his plugin into a successful SaaS app, which he follows up with on MattReport.com (see below).
How We BootStrapped PadPressed To Our First 10k In Sales (Oct 2010) – Way back in 2010 Jason L. Baptiste talked about building his plugin PadPressed to help WordPress publishers better format their content for the iPad. It appears PadPressed eventually changed to OnSwipe.
I would definitely keep Mixergy on your podcast list. Andrew interviews folks from small to large startups and even some pretty high-profile entrepreneurs, but there’s a ton of useful information to note down if you pick episodes that you think will apply to your business.
Updated Oct 24, 2013
If you’re actively selling premium WordPress plugins or looking to get into the plugin business, check out these videos of business owners sharing their advice. So far most are from various WordCamps hosted on WordPress TV.
Creating and Selling Premium WordPress Plugins
I had the opportunity to talk with Daniel Espinoza at length at Pressnomics 2013 about this very topic. The guy has a ton of experience and knowledge to share. Luckily for everyone one of his WordCamp talks on the subject is now available.
Description from the page on WordCamp.tv: Whether you have premium plugins in development or are just thinking about building them this talk shares valuable lessons on how to design, build, support and sell your plugins.
Lessons Learned Selling Plugins & Themes
Dave Donaldson, co-founder of Max Foundry, goes through trade-offs between selling themes and plugins and explains why they landed on selling mainly plugins.
- Why premium themes are so much harder to sell than premium plugins
- When competing with free you’re actually selling support, not code
- Non-development tasks: Building your sales site, support system, mailing list and ads
- User support strategies (email, forums, phone)
- Plugin pricing
- Avenues to drive traffic to your site
- Branding and consistency
- Auto-update options
Commercializing your plugin
Garth Koyle, co-founder of Event Espresso, an event management plugin for WordPress, has three recorded presentations from 2011.
- The $40,000 WordPress Business Plan [slides] (Chicago 2011)
- Can You Go Commercial? [slides] (Utah 2011)
- Can you commercialize your plugin? [slides] (Detroit 2011)
As these three talks were all in the same year, some information is repeated but there are added tidbits in each new presentation. Here are some key points Garth touched on:
- Analyzing the wordpress.org plugin repository to estimate the number of premium plugin customers for a specific market
- Calculating your fixed and variable costs to estimate profits per month you can make from your plugin
- Pricing your plugin
- How to use Google Trends, Google Keyword Tool and Alexa to analyze search and traffic volume for the market you want to reach
- Systems Event Espresso has put in place to manage the business: sales, support, hiring, affiliates, development, plugin updates, etc. You name it.
Decisions to make while running a premium plugin business
- Plugin marketplace vs. selling on your own
- Using wordpress.org to test your plugin ideas
- How a freemium model can work for plugins
- Finding ways to get recurring revenue
- Experimenting with advertising, landing pages, A/B split testing and using metrics
- Plugin pricing, plans and using an add-on model
- User support strategies
Side note: Isn’t it cool that two companies with multiple founders and competing products are both thriving in the WordPress premium plugin market?
More videos pop up occasionally, so I’ll update this post with any new ones I come across. Same goes for any existing videos I missed whether they’re on WordPress TV or elsewhere. Just let me know in the comments.