On December 14, 2016, my team and I pushed a significant change to our Easy Digital Downloads products: we increased the price on all extensions by 50-250%. Yes, you read that right: up to a 250% price increase on certain plugins. This change was done for a number of reasons, which I will get into shortly, and has resulted in a very interesting last three months. Since I have always been very open with my company’s financials, I would like to now share some reflections on the change that we made and to also share some of the aftermath of the change.

The backstory

Since the beginning of Easy Digital Downloads, and I imagine many products, customer support has always been our biggest challenge. Taking care of customers is hands down the most difficult job in the company. It is ripe with challenging problems to solve, long hours, relentless flows of new tickets, on-going conversations that spread not only over days but even weeks and months. Providing good and, when possible, great customer support is, to put it simply, exhausting.

There have been many times over the last 5-7 years where I thought to myself I’m sick of this; I just can’t keep taking care of these people, maybe I should quit. I have had those thoughts and every member of my team has had those thoughts. On one particular evening back in November, I was sitting on my couch doing my best to work through a not-abnormally sized support queue, and it hit me: this has to stop. This wasn’t the first time I (and many other members of the team) had spent insane hours working through support queues, nor was it the 50th time. Working late to help finish support requests is an every single day occurrence. It literally never stops. This time, however, I had had enough (fifty times too many) and decided it was finally time to take drastic measures to reduce support. I hopped into our Slack channel and told my team this and within a few minutes we’d made a decision: it was time to increase prices. It was past time, actually, but late is always better than never.

When a company is faced with an over burdensome support load, there are a number of ways that most companies look to address it:

  • Fix the bugs that cause problems to happen that then result in support tickets
  • Improve UX so customers better understand how to achieve certain results
  • Write more and better documentation
  • Hire more support team members
  • Move team members from non-support roles to support roles
  • Outsource support
  • Release fewer updates
  • Release more updates
  • Remove problematic features / products

All of these methods are 100% viable and our team has implemented all of them. There is, however, another method that people tend to gloss over or ignore, and it is perhaps one of the most effective of them all.

To lower your support load, all you need to do is have fewer customers.

It may seem like the opposite of what most companies want, after all customers are the people that make it possible for companies to pay their bills and their team members. Without customers, companies cease to exist.

The real answer to lowering support burdens is to have fewer but more valuable customers.

On that evening in November, my team and I decided it was time to try and drastically reduce our support burdens by dramatically raising prices, thus reducing the number of customers while simultaneously increasing the average value of customers. Theoretically this would allow us to keep our revenue about the same (which was just barely covering our monthly expenses) or, if all goes well, raise our revenue and lower the total number of support tickets we received each month.

That was the hope anyway.

The change

We threw a lot of numbers back and forth while discussing the possible changes we’d make to pricing. In the end we had several goals:

  • Raise the average customer value
  • Lower the number of customers, thus lowering the number of support requests
  • Keep overall revenue steady or raise it

Due to the sheer number of plugins sold through easydigitaldownloads.com, there were a lot of different price points. We sold plugins as low as $6 and as high as $149. Our primary plugins were priced at $29, $49, and $82, and just one was priced at $149.

As a general rule, we came up with the following guidelines on picking new plugin prices:

  • Plugins that power fundamental aspects of a store, such as licensing, multi-vendor marketplaces, subscriptions, etc, would be priced at the top tier of $199. These were previously priced between $82 and $149.
  • Plugins that are priced at $49 (mostly payment gateways) would be increased to $89.
  • Plugins priced at $29 (email marketing plugins and some other miscellaneous plugins) would be increased to $49.
  • Plugins priced between $12 and $19 would be increased to $29. This was determined to be the lowest price point we’d offer.
  • Bundles, such as the Core Extensions Bundle and the Digital Marketplace Bundle, would be increased according to the new value of the plugins included in the bundle.

In some cases, this resulted in plugins having $10 added to their price tag, and in others the increase was as much as $117.

The results

There are a number of statistics we can look at to help gauge the effectiveness of our price increase and we’ll go over those shortly, but there’s a non-scientific metric I want to look at first.

Team happiness and morale.

I do not need a psychology degree to tell you that the price increase has significantly affected the happiness and day-to-day mood of the team. For more than 12 months, our team has been faced with the problem that is Easy Digital Downloads. Yes, I mean that: the problem that is Easy Digital Downloads. You see, EDD is seen around the WordPress community as this great plugin that is wildly successful and a model to look up to in the commercial plugin ecosystem. While this is a reputation that we take great pride in, the honest truth of the matter is our team has struggled with EDD for months because in many ways it has felt like a sinking ship. We’ve seen stagnated revenue growth (even declines), higher-than-ever maintenance costs, relentless support queues, and a whole series of other challenges that our other two primary projects (RCP and AffWP) simply do not have. In comparison to EDD, those projects are cake walks.

The price increase has been enormously successful in making the team feel good, and the importance of that should never be ignored.

Support tickets

One of the primary results we needed to see in order for this change to be successful was a significant decrease in support tickets. It has now been three months since the price increase, so how’ve we done?

  • New tickets submitted: down 0.2%
  • Total tickets handled: down 43%
  • Total customers interacted with: down 35%
  • Conversations per day: down 42%

The total number of tickets submitted barely changed, but the other three statistics are incredibly significant. A 42% decrease in the number of tickets handled each day. That means EDD handled 10-15 fewer tickets every day, which translates to a considerable less amount of time spent working on tickets for our team. We have an average handling time of 5 min and 49 seconds per ticket, meaning we have removed one to one-and-a-half hours of support work per day by increasing prices.

Assume, for a moment, that we pay $25 per hour for support technicians. Removing 1.5 hours per day equates to approximately $37.50 in savings each day, or, when extrapolated out, approximately $13,687 per year in reduced support costs (if assuming zero volume change).

Revenue and sales

Along with a decrease in support burdens, we hoped the price increase would also provide a much needed boost to our monthly revenue. As mentioned in my 2016 in review post, Easy Digital Downloads operated at a loss for much of 2016, so increasing our revenue was an important measure on the success of the price increase. If we managed to decrease support and increase revenue, we’d consider it a home run.

To gauge the effect the price increase had on revenue, I decided to compare three different time periods:

  • January to February, 2016
  • August to September, 2016
  • January to February, 2017

These time periods are good representatives of our average revenue as they do not include any special promotional sale periods and they allow us to compare similar periods from before and after the price adjustments.

The summaries below provide a good overview of the revenue statistics for each of the time periods used for this comparison.

January to February, 2016:

  • Sales (including free): 3,861
  • Refunds processed: 106 – $8,765.40
  • NET revenue: $100,530.39
  • Average order value: $28.31
  • New paying customers: 664
  • Average value for new paying customers: $131.30

August to September, 2016:

  • Sales (including free): 3,930
  • Refunds processed: 74 – $4,454.95
  • NET revenue: $100,262.55
  • Average order value: $26.65
  • New paying customers: 565
  • Average value for new paying customers: $116.57

January to February, 2017:

  • Sales (including free): 3,009
  • Refunds processed: 65 – $7,530
  • NET revenue: $114,376.70
  • Average order value: $40.57
  • New paying customers: 373
  • Average value for new paying customers: $154.95

There are a few primary changes I’d like to highlight here. First, notice that the NET revenue increased by ~$14,000 in 2017 compared to the two 2016 time periods. With that NET increase, however, the total sale count decreased significantly, by more than 800 in fact. This also resulted in our average order value increasing from $28.31-26.65 to $40.57.

The total amounts refunded also possibly suggest that higher value customers are less likely to request a refund, perhaps because they do more ample research before committing than lower value customers.

This change also caused our average customer value (for brand new customers) to jump up to $154.95 from $131.30 and $116.57.

We are only part of the way through March, but the numbers are already looking even better than January and February. This is partly due to the promotional sale we ran for the end of winter, 2017. We shall see if the remainder of March and April hold up with the trend so far.

The price change has also had an interesting effect on commissions amounts that we pay to 3rd party vendors. In 2016, we paid an average of $16,000 per month to 3rd party extension authors. For February and January, this average has dropped to a little over $12,000 per month. While this is not an overly positive change for most extension vendors, it is a change that we see as an overall positive change for our company. This change primarily happened because of a decrease in the total sales, though it is also due in part to us reducing the number of 3rd party products we sell through the site. We have repeatedly learned just how difficult running a multi-vendor marketplace is and, as a company, we’ve determined that is not something included in our long term goals so we have continually worked to reduce the number of 3rd party vendors we directly work with. I hope to share more on various changes we’ve made over the years that have affected vendor commissions soon.

When combining the increase in revenue with the decrease in support burdens, this price change has so far appeared to be incredibly positive for us. It is a single move that might just be one of the most important changes we have ever made.

Customer response

Gauging the success of a price change based on customer reactions provides some really interesting insights. Using customer satisfaction as a metric, however, is something you must be careful with. In much the same way that star ratings tend to highlight the most unhappy and, oftentimes, unreasonable customers, the customer reactions to price changes typically show those customers that are the most unhappy. It’s unfortunately rare to hear from the happy customers or those that support your price change.

Within hours of pushing the price change live, we received our first reaction from a customer that who been considering a purchase during the time we were updating the prices:

Can you please confirm what is going on? How price jumped to the sky in a matter of seconds, I’m client of you and want to include multi-vendor option, it is even an effort to invest those 91 USD.

That reaction is fully reasonable, especially if he’d already added the items to the cart (our system could not account for already-in-cart items).

The second reaction we received:

Did the price of the Recurring Payments plugin really increase from $83.00 to $199.00 since January?? This was an unpleasant surprise. :/

Technically this was true, though with a brief explanation from Sean, her reaction completely turned around:

Awesome. Thanks for the explanation. I’ll look forward to exploring the features.

This customer did end up completing her purchase and has not contacted us since.

So within a few hours, we’d had two negative reactions but one of them turned into a positive experience for both parties. Over the next few weeks, we continued to receive emails from customers reacting to the price change. Many customers, interestingly, asked if the price increase was some kind of error.

Is there an error on your website or did your price in the last week just over double in cost? I was looking at making a purchase when I just did a refresh and saw the huge price increase.

We knew we’d get a decent amount of  flack for our price increase, especially as we chose not to alert customers (new or old) of the price increase before it happened. Whether this was the right choice or not, it was one we made intentionally. We felt there was a good chance that publicly mentioning our price increase before it happened would simply provide a place for people to pile negativity on us, and it would create a permanent record of that negativity for others to stumble upon. Doing it silently was like ripping the bandaid off in one fell swoop. It’s done, it hurts, but then it’s forgotten a short time later.

I still don’t know if doing it silently was the right choice, but there were numerous customers that were irate because of that particular decision. One person’s response was perhaps the most difficult to stomach. They started out perfectly reasonably:

I am in the process of renewing my plugin licenses again, everything looks good but I noticed that you’re now charging $199.00 (139.30 discounted) for Software Licensing? What is up with that?

I paid like $42 last year and certainly can’t afford to shell out $140 or more every year for a plugin. Not to mention the additional $40 every year for the other EDD plugins I’m using…

Please, tell me that a 200% price increase is some kind of mistake..

To that I gave a calm, collected, though perhaps too generic response, which really did not go over well, as can be seen by his reply:

Wow, so calm and collected.

Well, regardless of what YOU think about it:

1) It’s a 350% price increase (!!!)

2) It’s called gouging the customer

3) It’s called betraying all those people who got on board for 350% less, thinking that, even if the price increases, it will remain an affordable deal despite the annual renewals

4) You should grandfather existing customers at the original price instead of screwing them over

5) I expected much more from you, Pippin.

6) Maybe it’s time to create a similar competing plugin, sounds like it’s a very lucrative market, and would be much less expensive than getting screwed for a 350% price jack.

7) You won’t get away with it

8) It was a horrible decision

9) Even if I do renew this year, I’ll be looking for a complete replacement of the very overpriced EDD plugin suite that I have to keep paying for, over and over and over and over again.

10) Raising prices by 5%, 10%, or even 25% is reasonable. 350% is just greedy.

11) Do your current customers get 350% more value? Nope. They get the same old thing, only YOU benefit.

12) This list will be the outline of my next blog post

13) A textbook example of a bad move, how not to raise prices, and how to screw over your customers.

Seriously unbelievable move. I was all on board with you guys. Not anymore.

350% price jack = unbelievable gouging of your “valued” customers.

I could go on and on, but I’ll save it for the post.

I have had a fair share of people throw derogatory remarks my way, but this one was a bit different. This felt incredibly personal because it came from a person I’ve respected and looked up to for a long time. In fact, this response came from one of the very first people I looked up to in the WordPress community. Having them express their extreme displeasure at my decision to raise prices and method with which we chose to implement the change was painful.

It should be noted that we did grand father in all customers that had an active subscription (one that automatically renews). The only affected customers were those with manual renewals and new customers.

When you get these kind of reactions, it’s important to keep a fact in mind: companies do not need to justify their prices.

Perhaps the most telling thing from all of the reactions we received was just how horribly undervalued Easy Digital Downloads (and similar platforms) are in many customers’ minds. Here we had a customer that was seriously unhappy about paying $140 per year for plugins that provided the functionality they needed to operate their own store. Previously this customer had paid just $42 per year to run their store with EDD.

I’ve had friends, colleagues, and advisors tell me our prices have been too low for years, and I couldn’t agree more. It is absolutely crazy that we’re more accustomed as a society to pay $5 for a latte from Starbucks, which we will consume in a matter of minutes, than we are to pay $12-$20 per month for platforms that allow us to operate our businesses. We are accustomed to paying $80-$100 per year for subscriptions to Netflix and Hulu but we react with revulsion and disgust when a company asks for $150 per year to provide software that businesses literally rely on to bring in their own revenue. In the United States (where the customer above lives), we’re used to paying $50-$100 per month for cable TV subscriptions, but we expect software to be provided for so much less.

As a world, we are better at paying for things that rot (figuratively and literally) our insides than we are paying for things that help us provide for the health and wellbeing of our families and employees.

This disparity in pricing expectations is asinine. Unfortunately, huge companies like Apple and Google have perhaps single handedly helped to create this through the rock-bottom prices of their respective app stores. Between the 1980s and early 2000s, it was common for video games, which take hundreds of hours to create, to cost $40-$50. This price was normal and expected. Once the app stores rolled around, however, expected prices dropped so low that companies now get practically eviscerated if they try and charge just $10 for a full length game in the Android or iOS app stores.

Quote from a review of Super Mario Run:

With a £7.99 price tag, Super Mario Run certainly isn’t cheap, but it’s easily one of the best smartphone games around.

Isn’t cheap? Seriously? It’s roughly the cost of just two lattes or one-three pints from many pubs, both of which are gone within a matter of minutes.

It’s high past time software providers charge appropriately based on the value they provide. If we cannot even ask for a decent price, how can we possibly continue to build platforms that power the web and the world around us?

My final reply to the angry customer was lengthy and has served as a good sounding board as I worked through this reflection post. I ended with:

Perhaps our definition of “appropriate” is different, but the last time I checked, EDD provides me (with the ability to run my stores) far more value than any monthly TV subscription or coffee service. Would I pay $500-$1500 per year to operate the stores that provide for my family and employees?

Absolutely.

Perhaps it was my explanation of why we chose to increase prices so severely or perhaps it was the price disparities provided that convinced this customer, but they did end up sticking with us.

Thanks Pippin.

This makes sense, I understand where you are coming from.

I went ahead and upgraded. The renewal discount always is appreciated.

Thanks for the great response. Enjoyed it.

Going forward

At this point, we are very happy with how the price change has worked out for us and Easy Digital Downloads. We were happy enough, in fact, that we decided to implement a similar price increase on Restrict Content Pro and AffiliateWP, which went live on March 1, 2017, just a few weeks ago. We did end up making some adjustments to how we rolled out those price changes and so far the changes appear to have worked well. It is too early to tell just how effective they will be, but we are confident that it will prove to have been the right choice in 3-6 months.

Do you have thoughts or reactions? I’d love to engage with you in the comments.

  1. Andre Gagnon

    Yes! I think the price increase is much needed. For the amount of value I get from EDD products it’s a no-brainer. People, these products literally make you money.

    I’m sure we’d much rather EDD devs put more focus on developing great software rather than being bogged down with support. Keep up the good work!

  2. Matt Whiteley

    EDD is absolutely worth every penny. I simply could not run my hosting business or develop the advanced functionality needed for client sites without EDD.

    Andre is right – the amount of value EDD provides, and the fact that people run their entire business around it, makes the higher prices more than justified. Keep up the amazing work!

  3. John Teague

    Thank you for the update. Not only does your logic make perfect sense, it mimics what happened here. We found that low prices invited undertrained and over-needy customers who expected support that stretched the limits of good will into resentment and cost overruns. That immediately changed after dropping lowest tier packages. Yes, there was a backlash, and plenty of second guessing on my part. But we are more profitable and a better team, and our best customers stayed with us. I only regret not having done the same earlier. ☮️

    • Pippin

      We found that low prices invited undertrained and over-needy customers who expected support that stretched the limits of good will into resentment and cost overruns.

      That is exactly what we have found as well.

  4. Hi Pippin!

    I support your decision, it’s a fair change in the prices and even with the raise, I would say it isn’t expensive.

    As you said, we are used to pay for really expensive things without even asking (entertainment, mostly or a brand new iPhone) – it’s just non-sense wanting a tool that saves you from hours of intensive coding/testing/reports for a few bucks.

    All the luck and I really hope this improved your team’s daily workload!

    Keep up!

  5. Your prices are still very fair. If I consider how long it would take for me to build an e-commerce solution on my own, it would probably take months (if not years) to come up with something functional yet still not be as good. A few hundred dollars per year is a small price to pay so that I can focus on actually selling my plugins instead of “reinventing the wheel”.

    I’m guessing you’ll see your support volume decrease even more a year from now. You still have “lower value” customers with active licenses from last year, who may get weeded out by this time next year.

    BTW, your support team has always been top notch! Keep it up!

  6. Joshua Strebel

    We should compare notes + and angry customer responses. 😉

    • Collins Agbonghama

      I am part of those that considers Pagely to be very expensive 😀

  7. Ross McKay

    I was at first a bit surprised when I renewed Software Licensing recently at $140, but in perspective, it’s a small cost for making online sales work. I think I currently have < $200/year in EDD software that helps me sell product. If I add in the other software I buy annually for my websites, it's still under $500/year.

    Even with hosting costs and HelpScout, I currently come in under $1000/year to have a shop that sells product and works 24/7. I can cover that cost with 20 sales at $50 — that's less than two sales/month.

    Nobody likes it when prices go up, but they do. Rain is wet. Sun is hot. Politicians lie. Interest rates fluctuate. Prices go up.

    Personally, I'm just happy that it means EDD will still be there next year so that I can keep making sales.

    • Kyle B. Johnson

      > I’m just happy that it means EDD will still be there next year so that I can keep making sales.

      I think this is a very important point that wasn’t mentioned. With out a price increase, the project could disappear. What would THAT cost customers?

  8. Joe Hana

    Well, this is pretty inspiring. You make some great points and go well into detail. Basically I struggle with the same issues at the moment, and thinking about a price increase for quite some time now, but as probably know this is not an easy step, at least not for me. There was some fear that sales completely drop but your shared insights really helps to better understand how a price increase could work out and finally “re-vitalize” the whole team/company/business. It should definitly be considered as a win-win. Thanks for sharing

  9. llity

    Any data from RCP and AF?

    • Pippin

      Not yet, it’s too early to tell.

  10. Justin Ferriman

    Pippin-

    Another great post, and one that strikes a chord with me.

    In the same day we had one customer express displeasure over an increase in the price of a renewal (an increase made roughly 15-months ago…) we had another potential customer confused as to why we were priced so low given that they were used to paying $10,000 per year for their current learning management system.

    Finding that “sweet-spot” is tough to do, especially when factoring in international customer expectations against the U.S. dollar (as your one example clearly demonstrated).

    I firmly believe that a business must raise prices over time to continue serving both current and future customers effectively. As a product becomes more popular, so do the support demands, and well – employees require capital.

    You mentioned that a business doesn’t have to justify their prices. I agree for the most part.

    Funny thing is, I think EDD has fully justified its price increase by the commitment and innovation it has continued to show to its customers over the years. So, while not explicitly stated, your day-to-day operations have justified it.

    Again, great post and stay well.

    Kindly,
    Justin

  11. Anh Tran

    Very interesting story. I think the price is fair in comparison with the value that EDD gives to its customers. It takes years and thousands of dollars to build a similar product. I think the businesses, which are the main customers of EDD will be okay with this decision.

  12. Mario

    What some customers don’t realize is the direct impact EDD has on their businesses. Obviously, they acknowledge EDD is the backbone of their store from a pure technical perspective, but they don’t bother figuring out the exact (positive) impact it causes on their business.

    Say someone is paying $500 a year on EDD to keep their store running. Aren’t they making that money back in a whole year? Yes, they have other expenses, but if they believe EDD in their case it not paying for itself, I wonder if they should use it at all.

    @Pippin, do you have a customer persona? If you do, you may have the minimum yearly revenue the ideal EDD customer gets defined there as well. I think that will be a key driver to EDD fate.

    • Pippin Williamson

      In my 2016 in review post, I mentioned that EDD’s average customer value was $128.69. I’m not yet sure where the ideal number is, but it’s higher than that for sure.

    • Mario

      Oh, sorry I didn´t make myself clear.

      I meant the revenue which EDD customers make.

      Some EDD stores make $100 yearly revenue selling digital items. Others make $100K.

      In other words, I believe you want to surround yourself with customers who make a reasonable revenue figure and subsequently feel extremely comfortable paying a premium (and very fair) price for EDD ecosystem, as opposed to customers who are (sadly) struggling to hit the $1K yearly mark.

    • Pippin

      We are going after the larger stores for sure. They are not only the more valuable customers, they are also the easiest to support and maintain good relationships with.

  13. John Fraskos

    Very courageous move, I can hardly imagine the emotional stress you’ve been through handling customer displeasure. It was a bold and inspiring move, I totally agree.

    I also support your move regarding RCP and revisiting a product from the ground up, instead of silently abandoning it, a challenge we, as theme authors are often faced with.

    I am now following a similar approach to old themes, and instead of retiring them as products, me and my team are re-building them and reasonably adjust the pricing.

    Thanks for the insightful post!
    Cheers.

  14. Collins Agbonghama

    To be frank, i was very surprise when i saw the price increase when renewing my software licensing and EDD recurring extensions.

    I think the price increase justifies the value of your plugins. I can’t imagine running my digitial store without EDD.

    • Pippin Williamson

      “Sticker shock” was a pretty common reaction for a lot of people. No one likes to see a higher price tag than they were expecting. In retrospect, I think we could have mitigated a lot of that by emailing existing customers ahead of time to alert them of the impending change.

  15. Tom McFarlin

    I always appreciate the amount of detail you provide on posts like this – regardless of it’s one around a change in the business or a year in review.

    Showing both the positives that come with and the negatives demonstrates the true nature and challenges that come with this and it’s an extremely “real” perspective of what you’re dealing with.

    You and the rest of the EDD team are great people and are people who are respected, admired, and looked up to (regardless of what a fraction of what some of your responses to the price hike might show – I mean look how many remain silent and continue to pay).

    All that to say, the EDD team does fantastic work, embraces challenges, evaluates them, chooses what’s best for the business (and those who make *up* the business), and moves forward.

    Keep up the good work. There’s a lot of us who are fans and who *consistently* endorse your products even if you don’t hear from us directly. 🙂

  16. davebach

    This insight alone might be worth the price increase!

  17. garthkoyle

    Hi Pippin,

    Thanks for sharing; kinda fun how we’re all going through the same stuff.

    Pricing is a major lever that influences a business overall strategy that leans toward exclusivity (high price) or ubiquity (low price).

    A couple thoughts:

    – How do you think these numbers (specifically Net Revenue) are affected by the automatic renewals that began on January 21st and not the price increase? There are several ways to look at this but if you compare the revenue from new customers in 2016 (~$87,000), compared to 2017 (~$57,000) that means you had a drop of $30,000 from new customers. You had to make that up, plus the extra $14k so is that $44,000 are renewals in 2017, what were they in 2016? (I hope I have that right)

    – When prices change, it takes people a little time to adjust, but they often come back around to the current market price. You might see some of that happening now (hopefully).

    – We’ve raised prices several time and will do so again. We’ve found that giving people waring is empathetic for the customer and profitable for us.

    I find this fun and fascinating; especially when you consider comparing (or even benchmarking) the performance of our WordPress businesses to publicly traded software and SaaS companies.

    • Pippin

      These numbers weren’t affected by automatic renewals in any way because EDD hasn’t started processing auto renewals yet. AffiliateWP started processing auto renewals on January 21st; EDD doesn’t start until next week.

      The auto renewals for AffiliateWP have had a significant impact there, so I hope to see a similar affect in EDD starting next week.

    • garthkoyle

      Thanks for the clarification. So, did the differential come from existing customers?

    • Pippin

      Here’s some additional stats:

      Between Jan and Feb, 2017, $36,387.70 came from license renewals. $1,701.10 came from license upgrades. The rest came from new customers and/or existing customers that bought new plugins.

  18. Tyler

    The WordPress community as a whole charges too little. For a platform that powers 27% of the web, the total revenue is probably only a few hundred million.

  19. John Epps

    First of all, the highest amount of kudos possible to Pippin for sharing not only his thoughts but also his inner workings, it’s good to see that kind of transparency in business.

    I do though have some nagging doubts. It’s like watching one of those quiz shows where the contestants answer most of the questions right and win some good prizes but then right at the end the host says, “ah but here’s what you could have won …”

    For any prospective business owner wanting to sell on the internet, the self hosted WordPress choice largely comes down to EDD vs WooCommerce.

    I think in years gone by it’s been fair to say that WooCommerce has been winning many battles with them being a more ‘household’ name, first to maket and it’s fair to say that they’re a well oiled machine.

    Of course they now have new owners so it’ll be interesting to see where they go from here. I do think raising your prices so you’re going more head to head with them is a huge mistake.

    How many folks with a WooCommerce site are going to make a swicth over to EDD? Well let’s look at some figures. A quick glance on Themeforest reveals 5,347 WooCommerce themes vs 180 for EDD, so it’s fair to say that your choice of themes are going to more limited if you make the change.

    Pricing? Well how many webshops use Stripe? A heck of a lot. What’s the pricing on this most fundamental add-on?

    Woo = free
    EDD = $89

    So whilst Woo were taking their plugin into free mode, you’ve hiked the price on yours. Bad move. Seriously, that’s a roadblock for a lot of people straight off the bat.

    I can start a basic Woo shop and take payments in PayPal and Stripe right from the get go for free. With EDD it’s going to cost me $89. I mean I accept your skinny latte example and $89 is small change in the grand scheme of things but it’s still $89. I wouldn’t go buy a coffee from Starbucks for $20 when I can go to Costa next door and pay $5. It doesn’t make sense.

    Mailchimp is $49 in both places. Your checkout field editor that I see a lot of is $89, Woo’s is $49. PDF invoices is $29 vs Woo’s $89 so it’s not all bad news but like you’re charging $49 for a shipping plugin when it’s baked into Woo from the get go.

    Your advantage was always your pricing. You’ve just given it away. There’s little to no incentive for existing Woo customers to move across to EDD with all the technical aggravation that will cause. And for newbie website owners they now have to make decisions that are not factoring price into the equation. You’ll lose more times than you win.

    There’s also the elephant in the room that is Shopify. $29/month including hosting and no aggravation such as having to mess about updating all the plugins. 24/7 support. That’s your competition right there. I see more and more of our customers migrating away from WordPress altogether towards these kinds of solutions. It makes good sense to be able to run a shop without hassle, for small business owners it means more time being spent on the customer and marketing without faffing about updating a plugin that’s just broken your sidebar widget. You need to be capturing this traffic and encouraging them to stay with WordPress and make the move to EDD. All you’re really doing is pushing them out the door. Once they’re gone they’re gone.

    Sure we all need to make a living and if EDD isn’t self sufficient then you need to react to that but I have strong doubts this is the right move.

    The other elephant in the room is trust. When you lump the prices up by 340% you make people think twice about getting locked into EDD or any of your other products. What will next years price rises look like? Or the year after, or the year after that? When you want to lose some more customers how much will you raise the prices again?

    I think people can accept that prices will change over time but that’s a kick in the nuts. Sticking with EDD is like saying well you’ve kicked me in the nuts once, but I’m going to hang around and see if you do it again. I think the guy who sent you the mail above with his 1-10 points on it had it pretty right if I’m being honest, I wonder if his tone softened because you gave him a discount … ?

    No, sorry Pippin. You’ve screwed up on this one no matter how many of your fan club above enjoy paying more for the same cup of coffee.

    • Pippin

      Thank you for your thoughts and comments, John! I sincerely do appreciate them!

      Your advantage was always your pricing.

      That may have been true in a small part, but that was never an intentional advantage that we crafted. Our focus has always been selling digital products and only selling digital products. That’s where our advantage lies and has always laid, not in pricing. That’s also precisely where we will continue driving this ship.

      I wonder if his tone softened because you gave him a discount

      We did not offer him a discount of any time. His tone softened because he realized that everything we’d done was justified and made sense, from all angles.

      I do though have some nagging doubts. It’s like watching one of those quiz shows where the contestants answer most of the questions right and win some good prizes but then right at the end the host says, “ah but here’s what you could have won …”

      Let me ask you this: what do you believe we would have won had we chosen not to do this?

      No, sorry Pippin. You’ve screwed up on this one no matter how many of your fan club above enjoy paying more for the same cup of coffee.

      I happily accept that not everyone agrees with my decision here, and that’s perfectly fine. I do not write open posts like this to get slaps on the back or words of encouragement. I write about the decisions made in my company as a way to share our experiences in a hope that they help others in their own adventures. If you read this and think “wow, I’m never going to do that” that’s great! If you read it and think “okay, I see the value there” that’s also great!

      At the end of the day, the real determining factor will be how this change affects my company in the long run. My prediction? We’ll be 10x stronger, better, and more focused because of it.

    • Carl Hancock

      Since we are talking about elephants in the room…

      Do you know WHY the PayPal and Stripe extensions are free for WooCommerce? Do you think it’s out of the kindness of Automattic’s heart? It is not.

      The PayPal and Stripe extensions for WooCommerce are free because Automattic gets a percentage of every single transaction that is executed by users and their customers via the WooCommerce PayPal and WooCommerce Stripe extensions. Every. Single. One. Of. Them. Not only that, but they are able to use Automattic’s clout in the industry to get a higher rate on this revenue share arrangement than a smaller software developer would be able to get.

      This is why those payment extensions are free yet the other WooCommerce payment extensions are not.

      If it weren’t for the fact WooCommmerce had economies of scale and great deals with PayPal and Stripe they would most definitely not be free extensions. From a support standpoint alone they wouldn’t be sustainable. It’s only sustainable because of the fact they get kickbacks from PayPal and Stripe, this allows them to make them free, which in turn increases their transaction volume, which in turn makes them more money from the revenue sharing.

      Small software developers like Pippin and EDD don’t have this luxury. They have to charge more and differentiate their offerings from that of the competition or they’ll run themselves into the ground both mentally and financially.

      What happens when a big business runs all the small businesses out of the marketplace? The big business then gets to capitalize on this by charge whatever they want and the consumers will just have to suck it up and pay it. It also means less choice and less innovation. None of which is a good thing for consumers.

      But I shouldn’t have to tell you this because you sound like you know everything anyway. Which begs the question, who are you exactly? What successful product business have you run? What is your experience running a successful software business, or any business at all?

      I ask because all of that matters when you are dolling out advice on business. And from where I sit I can’t find any information on a “John Epps” as it relates to successful WordPress businesses, or WordPress as a whole. So I can either assume you don’t have the experience and success to back up your statements and opinions on business OR you don’t have the balls to say them using your real name. Which is it?

    • John Teague

      Truth be told, I’ve never once experienced any degree of blowback from any direct site owner when recommending they purchase RCP, EDD, AWP, or Gravity Forms for that matter. Not before or after price adjustments, including Pippin’s latest.

      The only people who pitch fits are nickel and dime, kitchen sink theme enablers who gut prices to slam sites together and hire out for anything remotely technical.

      I described them early on as the 10% of customers taking up 90% of our time.

      We put up with them for three years, and they sucked the joy, productivity, and profit out of the business. I wish I had priced them off our services much earlier. I lost good team members and nearly my will to operate because of it.

      If we can provide outstanding service and support, and raise per customer hour revenue by not having to deal with the kinds of soul killing clients I let us get sucked into before, I say thank the forces of (insert yours here).

    • Ross McKay

      I evaluated exactly the choice between WooCommerce and EDD when I set up my shop.

      I build websites based on WooCommerce as part of my living, so I know a fair bit about WooCommerce. I even build extensions for WooCommerce, and heavily customise it through hooks and filters to meet client’s requirements. I know this animal well.

      I chose EDD for my shop because of what it does, not what it costs. EDD is a better fit for digital products (IMHO). Performance was a factor too; EDD lets me host a shop on a smaller VPS than I’d be happy doing with WooCommerce.

      Not all cost is in dollars.

  20. Marjorie

    Is it cost effective to have a monthly subscription service like Netflix? Thanks.

    • Pippin

      Yes it can! Tons of majorly successful companies are based on monthly subscriptions.

  21. John Epps

    Wow I don’t think I’ve ever been cyber stalked before, I guess I should be flattered. Bit of a creepy thing to do just because I disagree with a post on a website though don’t you think?

    As for WooCommerce. If they’ve negotiated a deal that means that they’re able to give their customers the Stripe gateway plugin for free then that’s great news. Why would I not be happy to save money?

    As for monopolies then yes, for sure I’m against them in principle. They usually lead to prices going through the roof … 😉

    I’ll leave it at that, I can see from Mr Hancock’s behaviour that comments which disagree are not welcome here. I was just trying to give you your customers persepctive which to be honest seems to be a little lacking in some of the comments. You might have customers that understand the price rises but you’ll have few that are doing cartwheels about it.

    Good luck with your plugins. I just think you’ve made a mistake with the pricing. I’d be more than happy for you to prove me wrong though 🙂

    • Pippin

      I welcome all opinions here, in agreement or not.

    • Carl Hancock

      My comment has nothing to do with agreeing or disagreeing with anything Pippin has said.

      When expressing an opinion or giving advice on any subject, not just things specifically related to this blog post like pricing and business models, the experience of the person giving the opinion as it relates to the subject at hand matters greatly.

      You are giving your opinion and advice on software product pricing and business models (free vs. paid) in these comments. Therefore, I don’t think it is out of line to ask who you are and what you have done as it relates to this topic.

    • Alec Kinnear

      Carl, while I deeply disagree with Pippin’s pricing change (though I’m grateful for him for sharing the logic behind the move), I have to agree with you about people using their real names. John Epps should be linking to his own site before throwing dynamite around.

      While talking about pricing, what finally got us on the GravityForms train was that you chose to have a single stiff fee up front, included all the extras in the package and the renewal fee is very reasonable. If you keep up the good work, we’ll be customers for as long as we work on WordPress. GravityForms sane pricing policy is a credit to you and asset to your business. I can’t recommend GravityForms highly enough. Carl, please don’t change your pricing model. You have a good one which is keeping your customers happy and quietly making you wealthy.

      EDD Pricing Change

      We’ve spent thousands on Pippin’s software and not required much support. We’ve been mainly happy with support (1). I count another four or five support requests over three years across three major product lines and three minor products we own. That’s about $500/support request. This is just to say not all customers are creating a lot of support requests.

      The main selling point for us over WooCommerce and to our customers were the reasonable maintenance costs for EDD. WooCommerce offers ridiculous pricing – it’s sad to see Pippin chasing the market leader. We were offered lots of ecommerce projects and always sold EDD to our customers for the reasonable maintenance costs. Pippin has made liars out of us. I feel like I’ve deceived our customers. Our clients could have gone with WooCommerce and enjoyed the larger platform and more robust support infrastructure (there are lots of venues to talk about WooCommerce, there’s lots of third party stuff well-packaged).

      Pippin had a lot of other options than gouging those of us who’ve helped him build his business.

    • Alec Kinnear

      Other options to increase revenue and/or control support load

      He could have added a pro support option as we’ve done for our pro video plugin. “Yes, but support is included with a plugin purchase and updates,” I hear you say. Yes, it is. Email support. When customers go beyond asking for email support for plugin features and require hands on training or even manual intervention on their websites, that’s not support. That’s web development. We went into the product business not to do more web development for far less money or free but to sell products.

      It remains that customers do need the extra help. Those who don’t have the technical skills (our FV Player is easy to use for everyone and the advanced features and API are easy for web developers but difficult for normal publishers) can always get hands on help from FV. But at a price. The price is ridiculously low in fact (our pro support incident is $70). In exchange you probably get an hour of hands on development and support from a developer who normally cannot be booked at less than $200 hour (as it’s our product we use the pro support incidents to improve documentation and simplify processes so we offer a discount). A pro support incident covers one issue but we’ll stretch to cover 1.5 where we can.

      What additional hands on paid support does is threefold:

      – it sets boundaries on support
      – it makes customers think for themselves and read documentation before requesting extended support
      – it makes it easy for those who need the extra help to get it
      – it allows one to price one’s product attractively to make it available to a wider audience

      In the beginning with WordPress we were all here to share free code with one another, to democratise publishing. As true open source advocates, our revenue was supposed to come from service work. Our model with lower prices and paid support is much closer to where we all started.

      Pippin is a giant among us for creating some very high quality code systematically with good documentation. At the same time, he maintained customer friendly pricing. He was a model for the WordPress development community. To see him join the price maximisation crowd really makes me wonder what it is that makes WordPress special. Not much at this point. It’s slow and insecure by design (caching and security should be built in up front). The development pace is absurd, breaking publishers and small business sites willy nilly for dubious enhancements. Almost all good quality code is going commercial or freemium. There’s very little free left.

      The goal gentlemen is a higher one. It’s to democratise publishing. Alas I don’t see anything in Pippin’s pricing change which advances that cause.

      There’s one support incident which left us deeply unhappy (we offered to help fix broken automated backups in AffiliateWP brought on by SQL views). Pippin just kept this ears closed even though we could have fixed the issue for him and his team. The issue remains unsolved which is a pity as we could have solved it. In any case, Pippin’s biggest support load from our company has been an offer to fix a major failure.

    • Alec Kinnear

      Last paragraph of previous comment should be preceded by an hr break and it should come with a number one in front of it. I created the footnote style using a numbered list (ol doesn’t work in Jetpack comments (I see). My comment was broken into two sections as the fancy quotes were causing a security failure which I tried to solve by breaking the comments into pieces (I thought it might be a length issue). Anyway, my apologies for the strange formatting. There’s no way to go back and edit a comment. A preview button would be great. Perhaps something besides Jetpack whether our Thoughtful Comments or Postmatic.

      A big thanks to Pippin in any case for hosting such an lively and important discussion.

    • Pippin Williamson

      Alec,

      Would you be willing to share an example of why you feel the new prices are gouging? I’m going to specifically request that you refer back to my price comparisons of monthly subscriptions and drink items that I made above?

      I agree fully that when you compare our new prices to some of the existing plugin prices on the market, they can seem high (that was not unintentional), but that does not in itself equate to the same thing as gouging.

  22. Milan Petrovic (@milangd)

    I am running WordPress plugins development studio (much smaller then EDD and other Pippin plugins), and I completely understand the reasoning behind the price increase.

    Problem with current WordPress plugins (and themes) pricing is that most users expect low prices because large markets (like Envato’s ThemeForest and CodeCanyon) have set very low prices in attempt to drive large number of sales. But, the more you sell, more support is needed, and in the long run, support and future development is the most expensive part of running a plugins/themes development business. Large market that doesn’t actually create products or support them directly has the interest in large sales volume and they don’t care much about the continuing support someone else has to provide.

    And, I think that many negative comments are product of this tendency to sell more at any cost (and no cost is too low). We are not creating spoons or forks, we are developing complex software that requires constant maintenance, improvements, support. To do it properly and to provide best quality to customers, that requires pricing that can cover all that and leave enough to drive development and to ensure that plugins and themes will remain active in the future and that customers can rely on them to grow own businesses.

    Large number of plugins and themes on Envato markets are abandoned by authors because the low prices can’t cover the future development and support. In the end, customers are left behind because the whole system is based on prices that can’t sustain future development and support.

  23. multimediaproject

    Stablity is the most important thing. If I as a designer/developer want my set of tools to be around for as long as possible, then I’ll pay. Generally plugins are too cheap and that’s the concern.

    I was lucky enough (this is always the way with me lol) to buy the plugin a day or two after the price increase (RCP) and before the 20% discount offer. Nice eh?
    However, I don’t care… I’ve made the lifetime account cost back on the first project I used it on. 20% means very little. So I was happy.

  24. I’ve always appreciated Pippin’s approach to business being, at it’s core, a non zero sum game.

    This understanding forms the root of my knowledge that John Epps ain’t right.

    Both in doubting his dissenting opinion being welcome on Pippin’s site and in thinking the price increase is the iceberg to Pippin’s titanic.

    I see EDD blooming beyond the 24th century.

  25. David

    EDD may be worth its price – old and new prices alike – yes, and I certainly believe in the product. However, I fully agree with those customers who complained about the price increase. Such a high increase – silently – is something a company should not do at all. It’s just really bad customer service in the end. And laying out those negative reactions of customers in a blog post which serves “explaining”/ fighting the price increase doesn’t make it any better.

    I’ve bought a lot of products in the WP ecosystem so far, and I experienced a lot of price increases over the years, but in most cases I was grandfathered in as an existing customer or I got special offers for a limited time and had enough time to think about all consequences. Ending up with higher prices, but no info all around must be really a burden. I never want to experience something like this.

    No one likes price increases as a customer. Period. But the practices laid out in this post really making me think if something may be starting to go wrong a bit in the WP ecosystem?!?

    And so you don’t get me wrong: I have a business myself and currently working as head of customer support for another company — I do know both sides of the thing here very well.

    • Pippin Williamson

      I appreciate the feedback, David!

      In case it was missed in my post above, we did grand father in all customers that had active subscriptions. No active subscriptions were affected in any way and those keep the previous price forever, so long as they remain active.

    • David

      Hi Pippin!
      I must somehow really missed this piece about grandfathering in existing subscriptions – sorry about that. That shines another light on it for me 🙂
      Thanks, Dave

  26. Andrea

    As someone who has purchased nearly every plugin you’ve built, both for personal and client projects, as well as someone who has done support for commercial plugins and themes, I applaud your decision. I can understand why the average end user may not see the driving forces behind price increases, but I’m thrilled you recognized that EDD support was a source of burnout BEFORE your team got fed up and ran away screaming.

    In my experience, clients who don’t see the value in paying for well-coded, well-supported products either (1) don’t anticipate enough sales to justify paying, which makes me question why they open a store if they don’t intend to make money, (2) are just inherently cheap or entitled and will suck the souls out of your team members, or (3) aren’t working with a developer or other professional who has properly explained the value of what they’re getting.

    Between EDD, RCP, and AWP, I’ve probably opened more tickets with your team than every other plugin I use combined. Support is something I generally don’t need, but when I do need it, there’s a problem or a gap in my knowledge and I need an answer ASAP. I’ve never waited longer than maybe overnight for a response. I’ve received answers that go above and beyond. I’ve seen documentation updated on the fly because something was not 100% clear. I am happy to pay a premium for that type of support. People will always compare EDD to Woo, but if they’ve ever opened a ticket with the Woo team, they have to see the difference between the replies they get from your team members vs. the generic (and usually irrelevant) answers they get from Woo support.

    I can’t wait to hear how these changes take shape in the long term, and I appreciate your transparency as always. Don’t let anyone make you feel bad for doing what’s best for your people and your business!

  27. Damian Logghe

    This is something I did last year. Of course at a much lower scale being a 1 man only company and with much less % increase so I totally understand the change and I really appreciate the transparency to communicate it as you always do.

    On the other hand as a customer it hurts a bit to pay more than I pay for my phpstorm license 🙂

  28. jakecaputo

    I have some more numbers for you from the other end of your ecosystem.

    As you know, my Stocky theme requires EDD and has built in styles and support for a number of the EDD extensions. I implemented a mere $3 increase in December. Using the same months you used above, the sales (minus refunds) were:

    January 2016 – 28 sales – $1321.60 + $133.56 EDD affiliate = 1455.16
    August 2016 – 30 sales – $1416.00 + $75.14 EDD affiliate = 1491.14
    January 2017 – 24 sales – $1200 + $202.61 EDD affiliate = $1402.61

    Obviously I don’t have as large a pool as you, but it looks like sales are down, but with a bit of increased earnings from affiliate sales it balances out.

    I’d also like to note I have had an increase in refund requests that note the price of plugins as too expensive. Users seem to be coming in on the ground floor, buy the theme, and then rethink it when they realize they need to spend 500% more on plugins than they did the theme. In fact, this one came in a few hours ago:

    > I see much of the functionality is not available without spending a considerable amount more. I think your theme could be a great option but at this point I don’t have the capital to invest to meet the needs of the project. I purchased your theme an hour ago, can you please offer a refund as I am not going to use the product for my project.

    Perhaps I’ll bump the price up a bit more… Though I don’t know about 250%.

    • Pippin Williamson

      Thanks for sharing, Jake!

      Theme Forest customers typically seem to be the lowest spenders so that reaction does not surprise me too much. I’d be really interested in knowing if increasing your own theme’s prices mitigated those kind of reactions.

      I hate hearing that changes on our end have a negative impact on developers and designers earning a living (all or part) from their own EDD products, but at the same time we have to ensure we protect ourselves, otherwise we cannot benefit anyone.

      If you ever have any suggestions that you’d like to share that would help reduce our impact on you (and others), I’d love to hear it!

  29. Derek Ashauer

    Having made over $100,000 selling my plugin via EDD and Software Licensing over the past 5 years, I think the few hundred dollars I have spent on it has been the best investment. Pippin has always provided great support over the years and that alone has been worthwhile.

Leave a Reply