Pricing Models for WordPress Plugins

Recently I have been thinking about pricing premium WordPress plugins, specifically around pricing trends and how I price my own products.

When I first started selling Instagrate Pro back in June 2012 it was available at a single price point of $35 for use on unlimited sites with unlimited support. Since then a lot has changed in how the plugin is sold and the majority of the change has come about by following the general trends of pricing and selling premium plugins.

Pricing Tiers

Single tiered pricing is great for the customer but bad for business. Sure, the majority of your plugin customers might only need the plugin on one site and one site only. However, if the plugin is valuable enough to sell, then it should have the reusability for customers. Those customers are getting a great deal.

As the premium plugin market flourished I noticed authors adding different usage tiers to their pricing. Typically this was based on the number of sites you could use the plugin on. The lowest price point was the 1 site tier, a 3-5 middle tier and the unlimited ‘developer’ tier which commanded a much larger price. It made sense. If you had a customer who knew they would be using the plugin across many sites then a single purchase of the higher tier would be of more value than numerous single purchases.

For the most part around the plugin market this type of selling was based on trust. The actual plugin code delivered to the customer was the same across the price points. Rarely would code be encrypted or obfuscated and without fancy code activation systems in place. In reality there would be nothing stopping someone who purchased the single tier from using it as many times as they liked. In the spirit of WordPress, OSS, and GPL the value of the plugin came from support and updates, not from the actual lines of code.

Annual Licenses

Tiered pricing works in the short term, but it does not scale on its own and actually can have a detrimental effect on a business over time. Supporting a one time purchase for the entirety of the product’s life is unfeasible. You are always playing catch up, needing more customers to help pay for the support of the existing ones.

WooThemes were probably the first and biggest WordPress business to embrace the annual licensing model. Licenses are valid for 1 year and during that period customers receive updates and support. At the end of the license period the theme/plugin code would still be fully operational but customers would need to renew their license to have access to the support and upgrades. They certainly took a lot of flack for their decision at the time, but WooThemes opened the door and now this approach seems to be an industry standard.

I introduced annual licenses for Instagrate in November 2013 and as the yearly renewal date approaches this year I can’t help but wonder how things will go down. The plugin still sells strongly, support is a constant level and there are updates in the works. But will people pay the (reduced) license renewal fee? It sounds like an experiment but in reality it is a core financial aspect of my business that I hope works out.

Freemium

Although Instagrate is not the best plugin to benefit from the freemium model, it is certainly an extremely intriguing and potentially rewarding model to adopt. Plugins like WooCommerce, Easy Digital Downloads and Ninja Forms are massive successes, all built around a core free plugin.

Over at Dev7studios we dipped a toe in the water with the free Media Manager Plus plugin and its premium extensions. What have we learnt? Freemium is hard. You are playing a numbers game; requiring a large number of free downloads to convert to extensions sales. Although MMP has mass market appeal and performs great out of the (free) box, it hasn’t taken off as yet with only ~7,600 downloads on the WordPress plugin repository. It isn’t the main Dev7studios plugin so the launch was soft and we have not really marketed it as aggressively as possible, but it continues to be a great learning experience.

Premium with Add-ons

Developing a premium plugin means that, over time, added functionality will grow the size of the plugin. Not all users will need these features and you don’t want to bloat the product. So what do you do?

The most recent trend in premium plugin pricing is the premium + add-on model. Plugins like WP Migrate DB Pro and AffiliateWP are premium core plugins (with annual multi tier licenses) and have a number of add-ons that are only available to higher tier license holders. This is an extremely interesting concept. For the plugin author and their business this is a positive move.

For example, AffiliateWP has 3 price tiers; Personal at $49, Business at $99, and Developer at $199. There are currently 2 add-ons, with three coming soon (and no doubt lots more in the future). These are free and available only to Developer license holders. It encourages license upgrades and purchases of the large license from the outset.

If you are a Developer license holder you control what further features you need so as not to receive a bloated product. However, as a consumer is this model flawed or just unfavourable? If I need a plugin on one site, and only need one of the many add-ons, then I have to spend far more than I need. Should add-ons be made available to be purchased separately for any license tier? I will continue to ask these questions as I add more larger features to Instagrate over the coming months.

What are your thoughts on the pricing models and which do you use if you are a plugin author?

About Iain

I build things with WordPress and PHP. I also make free and premium WordPress plugins, most notably Instagrate Pro. I curate WP App Store.

34 Comments

  1. Norcross says:

    I think it’s different based on what the plugin actually does. I’m not a fan of freemium myself, but I see how it can work if your plugin is more of a “platform” like EDD.

    for Design Palette (my largest commercial plugin) I’ve gone the paid annual route with paid add ons for the larger ones, but have released free add ons to addres smaller issues / needs. that way people don’t feel nickel and dimed for everything, but I’m not stuck supporting a huge set of free users.

  2. Interesting thoughts and pricing is hard. I spoke to Pippin about the “Premium with Add-ons” model when AffWP came out. Like you say, I’m not sure forcing people to buy a developer license to get add-ons is great for the customer. What if they only want one of the add-ons and only use the plugin on a single site? They would be paying way more than if they could simply buy the add-on as a one off.

    • Pippin Williamson says:

      You are absolutely right: as a consumer being forced to purchase the top level when you only need it on one site can be a hard bite to take.

      We decided that we liked the model because we weren’t trying to sell the addons, we are only selling the main plugin. The add ons are simply perks to high level customers. Obviously this doesn’t help those customers that do just want a single add on for one site.

      For the business side of things, I’m confident I can say the numbers work out well with this model too, much better than they would if we sold individual add ons.

      One issue that I saw with the premium core + premium add ons is deciding the price point of the addons. Since the base is paid, the addons would need to be cheaper, but go too cheap and, well, they are too cheap. Go not much higher and suddenly the cost of purchasing the base and a couple of addons. Isn’t that far from the cost of a dev license.

      • Sure I think if you went the premium core + premium add-ons route a customer would quickly find it would be more viable to go the premium core + free developer add-ons route. I just think premium core + premium add-ons is poor form. If I have paid for a premium plugin, I don’t want to pay for any add-ons. It feels like you are trying to squeeze me for more money. I’d rather it was premium core + free add-ons or free core + premium add-ons.

        • Pippin Williamson says:

          Premium core + premium add-ons sucks. I have a plugin that operates under that model and I don’t like it (I’ll likely be changing it soon).

          Having free add-ons that available to high-tier purchases is really no different than simply offering additional functionality to top-tier customers (a very, very common practice). The only difference is that the extra functionality for top-tier customers is in the form of add-on plugins instead of being unlocked via a license key.

          • I agree with what you are saying but it still means lower-tier customers can’t access single add-ons without upgrading and paying more than they might otherwise. What do you think about @jameslaws:disqus suggestion of “free for the highest tear and pay per add-on for the lower tears”?

          • Pippin Williamson says:

            It’s definitely doable but I don’t know that I think it’s wise from the business perspective. A few things:

            1. Maintaining two separate purchase and/or licensing routines can be difficult and costly. Not necessarily a reason to not do it but definitely something to keep in mind.

            2. It makes it more difficult for the consumer to decide what they want. Numerous studies have shown that when presented with more options, customers are far less likely to complete a purchase. Make it simple with as few options and possible and your conversion rates will be better.

            When add-ons are available only to the top-tier, it’s a very straight forward set of options for the customer, but when each add-on is available a la carte, it’s more difficult for customers to decide what is best for them. “I could purchase a Personal license and 3 add-ons now, but wait, maybe I will use it on more sites . . . “.

            If you have a customer that does purchase a Personal license and some add-ons and then later decides they want to upgrade to unlimited, what do you do? Do you refund them all of their purchases? Do you provide a discount for the amount of the personal + add-ons purchase towards the unlimited license? These are real questions that will come up and that you will have to face. Giving one straight forward upgrade routine from personal to developer/unlimited makes things dramatically simpler, both for the customer and for the business.

          • Fair point. I suppose it comes down to a toss up between keeping things simple vs. possibly annoying your customers when they can’t purchase add-ons individually.

          • Pippin Williamson says:

            On the extreme side, I can tell you that I’ve annoyed tons of customers with the sheer number of extensions available for EDD. They get overwhelmed at the options. Obviously 5 extensions is a very different story than 125+, but I think the point is the same: sometimes customers are happier with a higher price but simpler process than dozens of options and a lower price.

          • Excellent points. Especially the one about upgrading. I hadn’t really thought through that part of it yet and it will get complex to code, but that’s certainly not a reason to withdraw from the idea.

            For #2: too much choice and customer confusion, this is an excellent point and I’ve thought about it a bit. I’ve been considering just making the addons purchasable after the Personal license has been purchased and not complicate the pricing page by showing all the possibilities. Not perfect, but gets around this issue of complicating the purchasing decision.

          • Pippin Williamson says:

            It could be presented in the account page as additional upgrades. That definitely helps get rid of potential confusion.

          • Leo Koo says:

            Hmm, hope you don’t mind me chiming in. If you’ve 125+ extensions, and 90% hardly sells, what incentive does the developer of some of these extensions have to keep updating their plugins? This becomes crucial if you plan to do a major update or WordPress releases a major update, which forces a rewrite of the plugin. As such, freemium might not be the best choice 🙂 Keeping it simple might be better.

          • I think it’s important that the developer of a “long tail” plugin also uses the plugin themselves. Then there’s an incentive beyond financial. I think those plugins should also be priced higher, to make up for the low sales volume.

          • Leo Koo says:

            Not really. The price should be based on the amount of work put in, not how popular the extension is, no? 🙂

        • I think you can do both. We get quite a few requests to buy the Media Files addon with the Personal license. At the moment customers must have a Developer license or better to get access to the Media Files addon. Once we have another couple of addons, we’ll probably allow Personal license customers to buy addons individually, but price them so that the Developer license will still be a better deal than buying Personal + all the addons. For example, let’s say we priced addons at $70 each. It would make sense if you just wanted Personal + Media Files ($160), but wouldn’t make sense if you wanted Personal + Media Files + CLI + Multisite Tools ($300). You could just get the Developer license that would include all of those for $199.

          • Pippin Williamson says:

            Pricing add-ons in this model gets really tricky really fast.

          • Sure I’m all for the Developer license being a better deal than Personal + all add-ons. I just don’t like personal license holders not having an option to access add-ons.

          • Leo Koo says:

            Indeed, but wouldn’t that be redundant? For $39 more, you get a developer licence with the add-ons? Wouldn’t it be better to price add ons by license as well? If you’re charging for the personal site, then add ons shouldn’t be too expensive as most single site owners are on a budget 🙂 Also, not everyone needs 12 installations. Any plans for something like two, for those who just wants to maintain a staging site.

  3. Pippin Williamson says:

    Freemium is hard, no doubt about it. I have three large commercial plugins / platforms that I sell now, each one under a slight different model. Freemium, while it has some nice benefits, is by far my least favorite, both personally and from the business perspective.

    EDD has been pretty successful with the freemium model, but unlike many May suspect, it doesn’t have much to do with the sheer number of extensions. Every extension that contributes to the market places sales is helping the business, but the vast majority of revenue comes from 10 of the 120+ extensions.

    There are extensions that sell many, many copies every month, and there are extensions that only sell occasionally, and there are extensions that have never sold a single copy.

    I have been thinking about the model a lot lately and have been trying to determine what the main deciding factor is for whether a extension sells well or not. I’ve determined it isn’t how pretty you make the sales page, or how well you put together the demo video, or even how many people you promote it. Of course all of these factors help, but the primary factor is “need”. An extension that is “needed” by users will always sell, while an extension that is “fun” or “cool” may sell.

    Every single ecommerce store needs a way to accept payments from customers, so payment gateways (for popular platforms like Stripe at least), sell very well. Every person selling software of some kind usually wants a way to license their software, so The Software Licensing extension sells exceptionally well. The vast majority of people want a way to add their customers to a newsletter, so MailChimp and Aweber sell exceptionally well.

    An extension will sell well it if fulfills a strong need in the user base. Users won’t often purchase addon that they think are cool or just fun to play with, but they will absolutely purchase addons that they need to run their business.

  4. Dave Navarro says:

    The one thing that seems to be lost on a lot of plugin authors is that many believe their plugin is the most important plugin that will be used on the end-user’s site. So they price it as such, which usually ends up being cost prohibitive. Very few WordPress sites can live with just one or two plugins that cost a lot of money.

    You start adding up the cost of this plugin, that plugin, etc.. and you end up with a site costing hundreds or thousands of dollars in just plugins alone. There is a *LIMITED* amount of money to be spent and all plugin developers are fighting against each other for a piece of that.

    And of course, developers deserve to be paid for their hard work.

    But in my opinion, they should stop trying to make a living off a single plugin. I have a very comfortable 5 figure income from selling a lot of products at a low price-point (within the next 2 to 3 years I expect to be in the 6 figure range). The cumulative effect of selling more items results in a high overall income. Most authors, in my opinion, try to make a high income from a few sales of a few items. And in the end, I think they end up losing.

    • Pippin Williamson says:

      I’ve sold over 100 different plugins in the last four years and there’s one thing I can say for sure: I’m not actively increasing that list, instead I’m shrinking it down to a few core products because I learned that maintaining that many different plugins (both on the code side and on the support side) was overwhelming. I’ve managed to double and triple my business by cutting down on the number of unique products I offer and focus instead on the core items. Not only has the improved focus improved the business, it has made me happier because I don’t feel so stretched across so many different products.

      Everyone finds their own way so mad props for finding the one that works well for you 🙂

      • Dave Navarro says:

        I mostly agree with you regarding products that require a lot of support. Fortunately for me, very few of the products I sell require any form of support. You definitely don’t want to bite off more than you can chew.

        And, of course, it all depends on what the plugin is and does. Very narrow plugins that don’t support revenue should not be selling for $100.

        EDD and the support addons actually make people money, so I don’t look at them the same way I would a premium weather widget or menu enhancement. That’s where my frustration lay… Plugin authors with plugins that make things a little bit easier or slightly better, and insist on charging high dollar. Plugins that require very little support.

        Also, I’d love to see a pricing model that include updates for another year, but does NOT include direct author support. I’ll use Peer-to-Peer support forums if I need help. But I want the latest updates.

        • Pippin Williamson says:

          Yeah, there’s a huge difference between a fancy widget that shows the weather and a plugin that helps generate revenue for the user.

          • Dave Navarro says:

            I am a subscriber on your site and a fan of low-cost subscription models for support… Perhaps an auto-renewing $20 quarterly support contract for EDD direct support?

          • Pippin Williamson says:

            That’s exactly what we have with the Priority support mode: https://easydigitaldownloads.com/support/pricing/

          • Dave Navarro says:

            That’s why you da-man. 🙂 A little pricey, but I’d definitely pay for a month of support for help with a critical issue.

            One thing I would like to mention is that with the last 3 companies I’ve worked for, my discretionary limit for spending was $100. At $100.01, I had to fill out paperwork to spend the money. Something had to be REALLY worth it for me to do all that paperwork when it was a lot easier to move on and find something $100 or under.

  5. James Laws says:

    Pricing that is fair is one of the most challenging aspects of selling WordPress products next to the cost of supporting those products. With Ninja Demo we are exploring the premium + Add-Ons model and I’m very seriously considering the idea of add-ons being free for the highest tear and pay per add-on for the lower tears. I feel like that might be the best possible solution at this point but it’s definitely an experiment. The point is to never think the current way is the only way or even the best way. You have to be willing to test your market and learn from the results.

    • I like the idea of add-ons being “free for the highest tear and pay per add-on for the lower tears”. In my opinion that would be fair way to do the premium + add-ons model.

  6. MapsMarker.com says:

    When starting the development of my mapping plugin Maps Marker Pro 2 years ago I considered offering unlimited updates+support as unstainable and therefore decided to go for a model where the license is unexpiring but access to download and support limited for 1 year with optional renewal at 50% of original package price. More infos about this model at http://mapsmarker.com/pricing

    The challenge in the beginning was to convince customers that this is no subscription model and that their licenses will not expire but only no updates and support will be possible if they don’t.

    At the beginning all packages included 1 year access to updates and support but due to customers demand I introduced a 1 month package a few weeks later.

    It might also be helpful for others too to offer 3 or 5 years access to updates and support at a reduced price – this newly added options have proved very effective.

    Also important for me was to offer an easy way to upgrade from my free to the pro version. This is achieved by the integrated upgrader – I users are also able to switch back to the free version at any time without loosing any data (if a user switches back to free version, an admin notice is displayed asking him for feedback in exchange for a coupon)

    For more best practices and lessons learned please have a look at my Slideshare presentation “Best practices from building a premium plugin” at http://de.slideshare.net/robertharm/best-practices-from-building-a-premium-plugin

    further knowledge exchange with other plugin devs would really be appreciated!

  7. […] I don’t want to go into too much detail about the different plugin pricing models here, so what follows is just a short overview. For more details and a good discussion in the comments have a look at this post by Iain Poulson. […]

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