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.
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.
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.
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?