Stage-Based Pricing: The Secret to Profitable Product Growth

Amber Hinds
00:02-00:43
Today, we are talking about one of the biggest levers you have to grow your product, pricing. But here's the twist. Your ideal price isn't set in stone. It changes as your product grows. We'll share real stories from the WordPress world, including how a change in a competitor's pricing created a golden opportunity for one WordPress plugin company to capture a whole new audience. Stick around. And by the end of this episode, you'll have strategies that you can use right now to boost both adoption and profitability and ideas for how you can think about pricing across all stages of your WordPress product business.

Intro
00:48-01:09
This is WP Product Talk, a place where every week we bring you insights, product marketing, business management and growth, customer experience, product development, and more. It's your go-to podcast for WordPress product owners by WordPress product owners. And now, enjoy the show.

Amber Hinds
01:14-01:17
Hey, everyone. I am Amber Hinds from Equalize Digital.

Katie Keith
01:18-01:20
And I'm Katie Keith from Barn2 Plugins.

Amber Hinds
01:22-01:27
And today we are going to be talking about stage-based pricing for WordPress product businesses.

Katie Keith
01:28-01:33
Yeah, and that's why we've invited Ionut Neagu on today from Themeisle.

Katie Keith
01:35-01:35
Hey, how's it going?

Ionut Neagu
01:37-01:41
Hey, Katie. Hey, Amber. Nice to be here. Yeah, trying to survive the heat.

Amber Hinds
01:43-01:50
Well, we are very excited to have you on today. Can you share a little bit about who you are and what you do at ThemeIle?

Ionut Neagu
01:52-02:48
Yeah, happy to. So I just a little bit of background so people understand where I'm coming from. So the computer science university, I have a little bit of technical understanding. Started off as a freelancer, started then from freelancer to kind of small agency. And from that we started to build products and we created T-Mile 12, 13 years ago. i don't know exactly yeah we started away by creating teams and we got we got like the the popularity and capital and the name from from that era and later we tried to reinvest that money to to create content content products uh content marketing and create a lot of other plugins it's a little brief let's say brief history and a lot of acquisitions along the way

Amber Hinds
02:49-02:56
yeah how many plugins do you have currently i'm not we are not i'm not keeping uh keeping count

Ionut Neagu
02:57-03:50
but there's more than 10 i think i know for sure but i'm not always always changing always yet some of them getting discontinued we acquire some others and it's it's always always a changing number we try to look when we uh when we i'm thinking about products we made a change a couple of years ago where we're trying to look like each product as a sort of business itself so i'm not looking at us as you know like we are t-mile collection of 30 20 50 products but it's more like i mean we are product one we are product two we are product three and okay we use this common store to kind of simplify things but the product brand is the one that's that matters more for the people I mean, this is what we see also in search volume. So that's why also my mind is a little bit wired in that way.

Amber Hinds
03:53-04:52
That totally makes sense. So we always like to start off by discussing why this topic matters. I do want to throw out there real quick before we dive into that, that if you are watching us on YouTube, please use the chat to ask questions or put comments and we will definitely address them on the show. You know, of course, we talk about when we think about why this matters, you know, pricing, obviously, everyone's like, well, yeah, pricing. But I think sometimes we don't think about pricing as stage based pricing, and how pricing can dramatically impact profitability. But if you do the right, the wrong thing at the wrong time, it can also hurt you. So I thought it would be good for us to kind of start in, you know, are there specific reasons why product owners should be thinking about pricing through the lens of their product stage? Yonat, do you want to start us on why that might matter?

Ionut Neagu
04:54-08:56
Yeah, happy to. I thought for me, pricing, OK, it's very clear that it's related to profitability, right? You find a better pricing model or you increase the price, you sell more, you generate a higher margin. That's the obvious part. But it's also part of your positioning and your marketing strategy. This is what I've learned along the way. And it's also part of, let's say, of your offering and the satisfaction of your customers. So you might have a great product that is priced a little bit slightly above that what people feel comfortable. Maybe they would buy it, but they won't be as happy about your product. So they won't recommend it. So for me, I see it as an integrated component of the offering that you are having. So I think that you can use it to employ different strategies based on when you want to launch. So, for example, here, personally, I like, I know a lot of people are against lifetime deals. I like and I find them helpful, for example, at the beginning when you launch a product to have a number of licenses, to get some people on board, to test also, okay, there is interest in this MVP. and get some feedback and get some people on board, for example. It can be used like that, but it doesn't make sense to use it when the product is growing and it's really reputable and stable and so on. And again, it might be helpful to do it when the product is closer to the end of life. So, for example, if we are talking about WordPress themes, we see there is a lot of movement, right? Elementor is growing, there is Gutenberg, there are blog teams. And slowly, I think even on the show, this was discussed that the importance of teams and the relevancy is kind of going down. So if you believe that maybe there would be no market in two years, right? Doing a lifetime deal now might be something that's helpful. you kind of in your mind you know like okay you cannot use the previous lifetime value of the customers that you had for the future when you make are you are making your your predictions so i think that's our it are some some i think some areas i don't know if i answered well your question but but some areas where you cannot think about pricing in isolation and you need to to think about it based on the stage of where the product is and what you want to achieve. Then another thing for me is like the type of product. So if you are having a product where that people use it on multiple sites. So I've heard on the, I was listening to a previous show and there was this discussion about leaving money on the table by selling an unlimited plan, which is true. But what also an unlimited plan, it's doing for you. For example, I think, Amber, you mentioned about your contact form plugin that have an unlimited license. And then you keep using it for all the clients' websites and the clients, they don't need to buy, which is fair. But at the same time, it's a great way to protect your market share. Because next time when you create a new website, you ask yourself, okay, do I try another plugin? Or I already have a license for this one. So, okay, as a product owner, I'm not making more money from you, but I'm protecting my position because you have an incentive to not try the competitors, right? Which then it makes it easier for me to sort of, yeah, not do a lot maybe on the product because I'm a little protected to this.

Amber Hinds
08:57-09:57
Yeah, I actually think that is a really great response that no one has ever said to me when I've said that example about why I think unlimited licenses are not great from a product perspective that I never really thought about, which is true. So the particular plugin that I've used as an example is Gravity Forms, but also I have been using Gravity Forms and putting it on client websites for, I don't know, 15 years at this point, like a really long time. And I have never once thought about going and trying another form plugin because I'm like, it does everything I want and it's there. And then, yeah, a lot of times those clients leave us, particularly now that we don't build websites anymore. And like if they need a new update or something, we're like, yeah, we don't do that. So they go find someone else and they may be keeping Gravity Forms, but now having to buy their own license at that point in time. So that is really great. I appreciate you saying that. Katie, what do you think about like stage based pricing and why this is important?

Katie Keith
09:58-10:56
Yeah, because it's not one size fits all. So you do your competitive research, you think, what's everybody else doing? That may be of no relevance to your product, because say you're new, even like how professional your website is affects your pricing. So if you're at a very early stage and you haven't spent a lot of time fine tuning your website, you're not going to get away with charging that much. So you might go for $49 or something like that. And then if you've got a really flash website that people are going to be very impressed by, and you're established enough to have lots of trust factors and testimonials, maybe some logos from big companies, all of that, then you can get away with a higher price. So just looking at things like what your competitors are charging is not going to get you that sweet spot, which is the absolute perfect balance between number of sales and price and therefore your profitability.

Amber Hinds
10:59-11:28
Yeah. You know, actually, I think this is really interesting. Like you're talking about just getting started and if your website doesn't look that good. And Blake, I saw asked us on YouTube, if we could talk a little bit about thoughts on offering a launch discount when launching a product and then raising the price in, they said, approximately three months. Or maybe there's a specific point at which you know this is our pivot point when we have to raise our price. Maybe we could start with you, Yonah. Have you ever done that? Do you have opinions on that?

Ionut Neagu
11:30-12:24
Yeah, I think it's, I was mentioning that there are multiple ways to do it. And we tried it, for example, starting with a lifetime price that also low to even more aggressive than what Blake it's saying basically to really test the input. So I think it's, for me, I personally find it very fair as well. I mean, I find it a good, it's a win-win situation. So it's a win for the person to get a better price if they trust that you will deliver. It's a win for you because you might get, for sure, usually you get more users. I mean, what we see is like a lower price. It's not necessarily correlating perfectly, but the lower price would mean more users. And at the beginning, this is valuable because you need to have feedback and you need to have real people using your product. So I find it very difficult to work on a develop,

Katie Keith
12:25-12:27
to develop a product with no users.

Ionut Neagu
12:27-12:44
So if I can get very quickly, get, you know, like, okay, 10 20 100 users and i can accelerate that that would be uh that would be uh great not from a financial perspective but just to kind of move forward with the product development and getting

Katie Keith
12:45-14:07
more ideas yeah and there's a few ways that you can approach that so yeah it's all about getting lots of users for your new products that and in that case you need to provide an incentive because you haven't got that reputation or the reviews. So pricing is a good tool that you've got, which wouldn't be appropriate when the product's more established and you can get away with charging more. There's a big discussion going on in the WordPress community at the moment with Leslie Sim and her new events plugin. She's been asking advice on both X and post status Slack about a lifetime deal for a new product and people are giving their views. So look that up. But my recent experience of this is from the Shopify world because we're just expanding into building our first Shopify app. And when I got to know people in the Shopify community, I started coming across loads of people that were recommending start with a free product. Even if you're going to be premium only later, start free because you need to get those early users, the feedback, the reviews. And so the most successful Shopify apps start with a free version, which they may then remove. And of course, they would continue allowing it to be free for existing users. So they're not going to annoy them. And we're trying that with our first app. So I think that has a lot of value to WordPress products as well.

Amber Hinds
14:10-17:03
Yeah, so we did this with Accessibility Checker. And one of the reasons why I decided to have a discount instead of just having flat pricing. So when we first launched Accessibility Checker for, I think it was about three or four months, it was 50% off. And then we went up. And it was because we had done some market research and we knew what features we needed to have, but we wanted to launch early before all of those features were built. And I thought a lower price is going to be more justified at that point in time. But one of the things I didn't want to do is anchor people to the lower price. So if we had just said like $79, I think is what we sold it for initially, then they would see $79 on our pricing page and they would think it's a $79 plugin. Whereas what we did with the 50% discount and the coupon code was they saw like 150 crossed out and the discount. So then it's like, oh, the value of the plugin is 150. And that was a price I knew I wanted to raise to. And so I thought like psychologically it was better to anchor people to the higher price, even though we weren't ready yet. And for us, it wasn't like we're going to do this for three months. It was we're going to do this until we have X features built out. And we literally communicated that to people. Like we said, this is the list of features that we are going to have. When we get to these, we will raise the price. But until then, you can buy it at 50% off. You will have that lifetime 50% off discount as a thank you for opting in early before all the features are built. And then a thing that we did right before we raised the price, and we did this again with our courses just two weeks ago, we had a course that I started promoting that I had not created any content for at all. And I said, I'm going to have the content August 4th, but if you want to buy it now, you'll get a flat $50 off. And you'll have to wait for the content, but it will be discounted. And so for both Accessibility Checker and the courses is like three days before the price went up, we sent an email and we're like, it's going to be out on this date and the price will go up on this date. And we did that. And I think I got an additional like 25 or 30 sales in those last three days, because it created the urgency of, I have to buy it now where I won't get a discount. And so for me, I think the introductory pricing is a really valuable strategy to use, especially having it as a discount with a timeline, first just having low introductory pricing, where you never communicate that it is going to go up or you're planning for it to go up. Have you personally done this, Yonat?

Ionut Neagu
17:07-18:25
Yes, as I think I've mentioned before, I haven't done exactly. I mean, I did a lifetime deal, but I agree with you. I mean, I would not have done like a cheap price, right? I think that because then you you you get in it's i don't find it i find it i think very smart what you you you did when you you launched to present it as a discount uh i i did it i think for some products starting very cheap i i didn't uh thought about it at that at that time but i i think it's a it's a great uh great tip because you you want to encourage people to buy but at the same time yeah uh clarify that that it's the price will change in in some time we did it also on the course talking about courses we launched a development course on wp shell and we launched at 50 off and the price would go up by 10 every week uh so it was like a clear timeline you know like of course or um i think most of the people bought you know like at 50 right they didn't just wait it to 10 10 so it's it's i don't think it necessarily give a lot of extra let's say extra value but but this is how we uh we we did it so again i like it and i find it also fair and win-win

Amber Hinds
18:29-18:35
yeah um and i think you had put in our internal chat there that you had some extra thoughts on oh

Ionut Neagu
18:38-20:27
i'm still here okay because you you froze amaria uh yeah i uh back to to the example that katie on the design, you know, like, okay, what's the price in relationship with how polished is your product? It was not an intentional experiment, but we redesigned Optimal. So Optimal is one of our product, one of the biggest, it's an image optimization solution that it's also CDN. So not like Imagify or ShortPixel, but more like Cloudinary. And we thought like, yeah, our website is not necessarily very polished. I used some vibe, did some vibe coding on it and came up with a new version. And then I was just surprised when we did a three-month analysis that we didn't change the price. The pricing was the same, that a lot more people bought like the middle plan. Before we would have majority of people would get the cheapest plan, which is something around 20-something dollars per month. But after the redesign, more people would get the 40-something per month plan, which was not something I just thought the sales will kind of hopefully because we had more trust element and it was more aligned with also the our positioning because that the pricing also it's more much more expensive than using something like like Imagify or short pixel or other other optimization plugin or smush so I thought like the design should also reflect the pricing and positioning but I didn't yeah I didn't expect it that would make such a significant difference that both tend to opt for for a for a bigger tire so i still could not explain it fully but it was just something that that observation that we we've made and yeah thanks for bringing it up

Amber Hinds
20:34-20:47
yeah um i don't know katie do you have any additional thoughts about like the pricing and pre-launch pricing for that stage? Yeah, I think pre-launch is really important,

Katie Keith
20:47-21:48
but you have to be really good at marketing. So I've never actually done a really successful pre-launch campaign because I haven't got the marketing right. You need to kind of generate buzz and things that I'm not very good at doing. My marketing is more like SEO and being there when people are searching for a solution. But I think a really good example is Kevin Geary and Etch. We've previously had him on the show talking about his pre-launch campaign. And he's taken, what is it, something ridiculous number of thousands of dollars over a year before his product was launched through the massive hype and buzz that he has created around that product and the benefits and people are really buying into that ecosystem and paying quite high prices for exclusive early access. So I think, yeah, have a look at what he's doing because he's the most recent example I can think of somebody who's really nailed pre-launch marketing and finding

Amber Hinds
21:48-23:45
a price that works even way before the product exists. Yeah, I think, I mean, I think that is a testament to the importance of having an audience and growing a brand, whether it's your own personal brand or the brand of your company, because we've also seen companies do this that are not just tied to one individual. I don't know if someone who's just thinking about launching a product would be able to do that in the same way, unless you have the audience and the trust. But even on that same thing, if people follow Rand Fishkin, he's talked a little bit about what he tried to do with SparkTuro, which was his product after Moz. And I think he thought that he would be able to get more out of his personal brand reputation than maybe he actually got and that it was slower growing than he expected it to be. And I'll say that too, like for our courses, like totally behind the scenes, honesty, they have not sold anywhere near what I thought they would sell. Like we were looking at our list and thinking, what percent do we think will convert? And we budgeted on that for this year when we were writing our budget last year and planning. And I'll tell you what, last month we did our six month check in. Do we need to adjust our budget for the final part of the year? And we ended up budgeting down. So, you know, it's interesting. on that specific revenue line item. You can sometimes do really well, even if you have an audience, and sometimes the product won't, people won't buy it the way that you think they will. Yonah, do you want to share anything else that you have on thoughts with pricing related to competitors? Because I feel like we should transition into that

Ionut Neagu
23:45-23:47
because I teased that a little bit. Yeah, exactly.

Amber Hinds
23:47-23:56
Because you had been talking about a few things that you had done and some successes that you had. So can you share those?

Ionut Neagu
23:56-27:30
So I would put a little bit of context around it. So what I saw in the type of marketplaces that we are playing in the digital space is like it is, you know, two things. One, it's important to sort of be number one. So rather than be like the 10th best WordPress team, if you can be the best free team, it's always better, because you kind of differentiate and you own or you are kind of a certain type of market. That's one point. And second, going into the competitors, first example that I had in my journey was I was working as sort of consultant for Brevo. It was called Sendinblue. It's an email marketing solution. And they did something quite interesting. And I was doing SEO for them. So at that time, MailChimp was really the go-to solution for small business. But MailChimp had a pricing where they charge for the number of contacts. And this is not always work, you know, like, because you might have, like, in our business, which was freemium, we would have a lot of contacts. But we would not send that many emails necessarily. So then they came on the market with a completely different pricing plan, charging for the number of emails that you are sending. So you can have a 1 million people contact list, but then maybe you send 10,000 emails to one niche and then you send, I don't know, next month, 15,000 to another audience. But this was not possible in MailChimp. So we did a big campaign of, you know, like positioning us, you know, like cheaper MailChimp alternative for this particular group of people and trying to push on on that on that part and really show the the the value for the people again that they had more contacts but they would not send contact them you know like every month which was the assumption in the in the mailchimp plan in our own case in our products we uh i saw like as i'm on reddit on facebook on on you know listening and and looking at different things. And I saw like WP Rocket after the acquisition, they kind of did some changes, increased their pricing, changed the pricing on the unlimited plan. I think Elementor did this also before and so on. And we were having a free caching plugin that I wanted to launch a premium version. So seeing all this, I tried to structure a little bit the pricing that would be super appealing. So for one website, the difference, so WP Rocket maybe will be a better value. But if you have 10, 20, 30 websites, then our solution will be like a no brainer. And then I was also, you know, like once I figured out this positioning, I tried to sort of look how people are responding, you know. and then there are, and trying to be active when there is some discussion on Reddit on, you know, like, hey, guys, do you think of any alternative of WP Rocket? I'm really upset on the pricing and so on, et cetera, et cetera. So trying to kind of play into this, which is not an insignificant group of people. Again, it's not the whole market, right, that cares about this. But we've been just starting. And if we can find like an audience where our solution is the sweet spot, we can start from there and eventually get bigger.

Amber Hinds
27:32-27:44
Were you actually, when people posted in those groups or on Reddit, I'm so mad that WP Rocket increased their pricing. Would you actually comment and be like, hey, you should try my solution. It's cheaper.

Ionut Neagu
27:47-28:47
Not exactly, but I would follow the discussion. I would see that some people tend to recommend it. And then what I also did was to start the trade myself asking, hey, guys, what solution are you recommending for as an alternative to WD Rocket? And, you know, if it's possible, a free solution, right? So then, you know, like, okay, what is maybe a kind of freemium solution that it's great for, and then I would just let people kind of, you know, but the question, it's phrased in a way that it's sort of, you know, like giving you a better chance of being mentioned naturally by people. So I was not just saying, yeah, we use my plugin, use my plugin, because that would never work. But try to sort of, you know, like guide the discussion, you know, in that direction. Also, for example, by starting myself a thread around it.

Amber Hinds
28:49-29:21
That's kind of sneaky, Mark. We had a question from a friendly web guy. This is Dave, right? Some people collect LTDs on discounts. For those that bought and haven't installed in X months, would you try and engage with them or just focus on new customers? And maybe you could start this, Yonette, since you said that you have used lifetime pricing as a lever pull. Do you care if they actually ever install it?

Ionut Neagu
29:22-30:09
So we are not doing anything on it, but it's one of the things that I was thinking since a long time, but I never got on the top of the list because I find it important to sort of monitor, you know, like, are those, you know, like, as we can see, we have some data, we can see if the licenses are active or not. So should we email those people? Should we, you know, like, we should act differently on renewal or when they request a refund and they keep the site active, should we do anything? So for now, we are not doing anything with that data. but I think it's something that's very valuable just we don't have a system around that because we cannot do it manually. Katie, what about you?

Katie Keith
30:10-32:03
Yeah, it's funny. Some people do actually collect lifetime deals. It's almost like a hobby for them. It's a bit like those people that collect domain names. It's a similar, it's a sort of a slightly more specialist small group but similar psychology. So people just buy lifetime licenses on products they have no idea they will ever want because they feel they're getting great value. As a product owner, I'm happy to take advantage of that sometimes. And I am pleased if they use my product, but it's up to them if they buy it and never do. But in terms of whether to encourage them to get ongoing value, from a business perspective, for me, it's about what can I get out of the customer over the longer term. If I want feedback and reviews and things, then yes, I want them to use my product. But more commonly in my case, because at Barn2 we have multiple products, I want them to buy my other products. So we will email people that bought lifetime deals when we release new products, for example, often giving them a discount off on a lifetime deal for the new product to try and get them into our ecosystem. And it works really well. When we launch a new plugin, we normally get a few thousand worth of sales within the first couple of days from lifetime customers of our other plugins who have bought into our ecosystem and collect all of our products at a discount. So I think that's a good reason to engage with them. And also, of course, you've got them, let's hope, on your Black Friday list and things like that. Again, only if you want to sell them something. If you only got one product and they bought lifetime, maybe you can get them to upgrade to a higher number of licenses on their lifetime plan. There might be something you can get out of them. So it depends on what there is to sell.

Amber Hinds
32:05-34:04
Yeah, we did a limited lifetime license on a single site of Accessibility Checker Pro a couple of years ago. At the same time, we experimented and it was on AppSumo. And so it was that lifetime single site license. Our thought around it was we were only going to do a certain number of them because we didn't want to put ourselves in a support nightmare for many years. right? Many of them, some of them did, but many of them never installed and we never really reached out to them because I think from that standpoint, it doesn't, once it's a lifetime, it doesn't matter if they're using it or not because there's nothing to cancel. I think you really care a lot when someone has a subscription if they haven't installed, because if they haven't installed, that's a sign that they're likely to cancel. But from a pricing standpoint, we were very intentional about only giving them a single site and not doing any of our other tiers because our other tiers, in addition to having additional sites, they also have add-on plugins that are included with them for free. And so my thought was if they do the single site lifetime and they like it, but then they want more features, they might decide to upgrade to a paid plan in order to get the add-ons, which are not included with their lifetime license. Otherwise, they can use like the base plugin for free forever or for the one time, not free, but for the one time payment forever. And then the other thing that we did when we did that was we priced the lifetime. I think we thought like, what if they use it and ask for support for like four years? And that's how we priced the lifetime sort of thinking what that would be. So I think you have to figure out what your multiple is that you're comfortable with if you're doing lifetime pricing. Yeah, there are some

Katie Keith
34:04-34:24
recommendations about that. We've been told try to keep lifetime under 15% of revenue. So we change our multiple based on whether it's more or less than 15% of our revenue. So it might be for one year and then we reduce it to 3.5 times annual and just try to keep it that balance. But things

Amber Hinds
34:24-35:10
like company valuation purposes and ongoing cash flow, of course. Yeah. So I think, you know, it would be really interesting to talk about what signals product owners should look at, whether it's like what you're talking about, Katie, with a percent of revenue or if there's other signals that we could look at from our customers or our own internal profitability that would tell us it is time that we should adjust our pricing. So when do we say, okay, we're out of that initial stage and now we need to move up or we are moving into high growth or what are those signals? And I don't know if which one of you wants to jump in first, if you have thoughts on this.

Ionut Neagu
35:12-36:30
I can, one of the things that we are doing now and what we are looking at it is we are doing a lot to measure NPS. So we are looking at both, you know, like, okay, sales and NPS, and then we do experiments. And often it can happen, like raising the prices can lower the NPS score. So if you have, I mean, if you have a great MPS score, there is maybe more room to experiment with the pricing. If people are not necessarily really happy already, I think I would focus and we are focusing more on the product part and not really spending too much time trying to do different experiments on the pricing side. So I think you should start doing experiments or when you have a high NPS score for the product. So you kind of nailed it. You have, I mean, users are very, very happy with extremely happy with what they have. And there maybe is the moment where you should, you can try experimenting with it in my perspective. That can be a sort of trigger. Katie?

Katie Keith
36:31-37:32
Yeah, I would say that there is no trigger for this. You should do it routinely. Once you're getting a decent amount of sales, you should be constantly experimenting with your pricing. It's not a set and forget thing. It shouldn't necessarily be triggered by something happening. So at Barn2, every six months, we do a massive pricing analysis. It's actually done by Ellipsis, our marketing agency. I don't do it myself. So they look at all our sales data for all our products, historical price changes, conversion rates, the impact of previous price changes. They go into so much depth. So that gives us a very scientific approach to our pricing. And we do that on a six month schedule and then we evaluate. Ideally, you do it even more than that. It's just such a lot of work. But yeah, I'd say do it routinely and ongoing. Do you have like a concrete example of

Amber Hinds
37:33-37:38
something that came up in one of those reports that said your pricing should go up or your

Katie Keith
37:38-38:13
pricing should go down? It happens all the time. Usually pricing going up is instinct. So I might say, look, Document Library Pro is the market leader and we think it should be more than $99. And then they might say, okay, I've had a look around, go for 119. And then we experiment and they might say, yes, that was a success. Or they might then say, actually, that wasn't a success. So generally, I would say I think this might be worth more and then we change and measure.

Amber Hinds
38:16-40:17
Yeah, I think for us, we've tied to features and what we think our competitiveness of our pricing is in combination with what the plugin offers comparatively to competitors. So we do spend time looking at competitors. But what is odd and difficult for us is that our competitors are SaaS companies. There's not really another WordPress. There's one or two WordPress plugins that kind of sort of do what we do, but not really. And so that has been a challenge in and of itself. I mean, we are dramatically lower than a lot of the SaaS's which charge like a utilization-based pricing beyond just number of sites. It's more like number of scans or something like that. And so that's been difficult for us, whereas people who are used to paying for those sometimes think we're inexpensive and therefore not good, right? It's like a weird thing when you compare on that. But if people who are used to just buying WordPress plugins see us on the other side where they think, oh, they're expensive because we are more expensive than a lot of WordPress plugins, particularly once you get to multiple sites scenarios. So I'm always interested to hear, you know, like how people look at that. I do feel like in my head we are going to go up more at some point in time. And if you had asked me when we launched in 2020, I would have said like even our baseline pricing will be higher by now. But we haven't hit the mass user base that I feel comfortable enough with to say, okay, let's go up in pricing. Right now, I think we would rather have lower pricing and try and have greater adoption than higher pricing with fewer users. So I don't know. It is interesting.

Ionut Neagu
40:17-42:59
I think that's a good point. And I mean, not easy to navigate the positioning, but also a good point to look at where you are in the market. So if you are still on the fifth position, maybe you can stay where you are if you feel like you have moved up and you are the market leader, what Katie was sharing, then it's the right time to do it. For example, like for example, with WP Rocket. I mean, they are the market leader. it's the best time for them to to try to do that and not one when they were just you know like starting or in the middle and it was still a lot of room to to grow and to kind of really dominate the space same as elementor which they kept a very affordable price for a long long long time but katie something that i wanted i'm thinking and i'm challenging in my mind and i think also in something that you shared with testing and experimenting and not leaving money on the table And I hear this advice also from other people. But at the same time, I'm thinking that, you know, like pricing your product perfectly, you won't decrease the chance of people recommending your product. So you talk about, you know, for example, Ellipsis or iPhone or if, you know, like if I'm very happy, there is a high chance I would recommend if they will increase, like if Ellipsis will increase their prices 30%, maybe you will still use it. but you will be a little bit more, okay, it's worth it, but I'm not really sure. I think I'm also paying a good amount of money. I'm getting value, but you are also pricing, if you are pricing, let's say, at the maximum that you can, won't this decrease the chance of viralization, let's say, or recommendations, which I see something that's really important when everyone is an influencer, right? Everyone is sharing on Twitter, on Reddit, on Facebook, on et cetera. And I'm looking at our products, which products of ours have fans, you know? People that say, always say, okay, when people ask about the team, they mention our team. When people ask about the caching plugin, they mention our plugin. And I'm monitoring across the product this organic viral loop, right? And I see that, you know, like, as we increase the prices and we position the product at the, let's say, more efficient. And we make more sales. We make more money. But the level of recommendation, I'm not sure if it's the same. I don't know if you have any thoughts on this, just to blame the devil's advocate on this and question a little bit.

Katie Keith
43:00-44:43
Well, recommendation drives sales. And sales are one of the things that you're measuring following a pricing increase. So the idea is that if you did go too far so that people stopped recommending and therefore getting people to use your product, that would then be in the data. And so you would know in six months that it wasn't worth it. So that is a valid point. And there's certainly a ceiling for most products, but the data should tell you when you get to that. But sometimes it's the opposite. It's a bit like what Amber just said about being the only WordPress solution and the competition is SaaS. So sometimes if you say double or triple your prices, your number of sales can stay the same or go up because of the added credibility that the premium tag gives. We had that a year or so ago with our easy digital download EU VAT plugin where it wasn't that profitable. There wasn't that many customers. It was a lot of maintenance. So we hugely increased the prices, something like 250% because it wasn't very profitable. We weren't trying to get more customers. We were just trying to reduce the maintenance overhead per customer. And strangely, the number of unit sales increased. And the thing with that plugin was that at the time, its competitors were SaaS that were very expensive. And so maybe people were thinking, oh, this is like $99 plugin. It can't be as good as the SaaS. And then when it was $250, people maybe saw it as equivalent. So you never know if it's going to increase or decrease your credibility.

Amber Hinds
44:44-44:57
Yeah. So one of the things about this season, and I know we don't have a ton of time left, but we had been talking about we might show some stuff. Katie, you came with a few things to show. Would now be a good time to pull that up and you could share that?

Katie Keith
44:58-46:53
Yeah. So we, as our product range developed, we found quite an unusual way of increasing average order value, which I haven't seen anybody else doing. So obviously, when we started, we didn't have many products. So we just sold them all individually. But now we have lots of closely related plugins. We have started selling the majority of our plugins with two options. So you can see that here on our pricing table. This is for our WooCommerce product options plugin, where you can buy the WooCommerce product options on its own, which is on the right, or you can buy it as a two plugin bundle, which comes with a live preview add-on. Actually, that's not the best example because it's just an add-on for that plugin. So I'm just going to go to a different one. So this is our document library plugin, where you can buy it on its own, just document library or you can buy it with our password protected categories plugin which is a completely different plugin that you can buy separately and we found that that increases average order value even though it means we have to hide away things like the number of sites and lifetime options in a drop down previously we had columns for all these things but they're kind of hidden now so yes we have reduced the number of people buying the biggest site licenses But average order value is higher as a result of the number of people who buy two plugins. And for our really closely related ones, it's actually like about two thirds of people. For example, two thirds of people buy our wholesale pro plugin with our WooCommerce product table plugin because so many wholesale stores need that order form product table layout. So when we did the maths, it was better to be doing the two plugin bundle for the closely related ones, even though you're sacrificing number of sites.

Amber Hinds
46:55-47:00
Wow, that's really neat. Do you, Yonah, you said you have a lot of plugins. Do you bundle them?

Ionut Neagu
47:02-48:09
So we, I really like the idea, Katie. We tried different things, but I think the way you did it, it's really smart. So we had this all access bundle or pass, and this is something that we tried in the past. And people were buying it, but in order for them to buy it, basically you need to discount a lot. So for example, if the single product will cost $100, if you will have the bundle at $130 or something, a little bit more for all the products, they would get it just as, you know, like, okay, maybe I need something, right? But I found that that's not really smart to do it because who will, the persons that will really need it will be only a few. And those people would potentially pay close to the full price. So the way that you are doing it, I think it's very smart that I was looking at your sharing. And I think it's important that you didn't discount a lot the second plugin. So people would get like just a small discount, right? So they really need to be interested.

Katie Keith
48:09-48:10
Yeah, it's 50% of the second plugin. Yeah.

Ionut Neagu
48:12-49:47
but still it's not like having 30 teams if you look at the teams providers and before the model was one team again was 130 teams 200 so you will get each team for two dollars or something so it's it is a significant discount but it's not let's say getting it for free so it's if you don't need it you know you you you you won't get it basically so so i think that's that's really really smart And also for me, hiding the number of sites, I think it's better than showing them in your context. And we have this situation on, so we partner on an LMS plugin, Masterio, and we have also a payments plugin, a Stripe payments plugin. And for those types of plugins, same as yours, I thought usually people will need it for one site. I mean, you don't have more than one stores. Most of the people, again, they won't have more than one. It's not like, okay, and then you have agencies and so on, but it's not like other plugins where it's common that you will use it on a couple of sites. So when people usually use it on one site, I think it's harmful to actually present them options like, okay, one site, five sites, and 20 sites. If 90% of your audience have one site, I mean, it's just crowding the screen. So I think in your case, it might be more people that would need the second plugin versus people that would need five sites. I don't have the numbers.

Katie Keith
49:48-49:57
Yeah, I did get the numbers and it was better, which isn't necessarily what I would have guessed. But that's what worked for us if the plugins are closely related.

Ionut Neagu
49:57-49:58
Right. Right.

Amber Hinds
50:00-50:06
Yeah, I think, you know, that's a good point on knowing your audience, though.

Ionut Neagu
50:13-50:14
I think Amber got...

Katie Keith
50:14-50:15
Yeah, I think it's her.

Ionut Neagu
50:17-50:51
Yeah, we seem to be here. For us, we did also this sort of, we are doing for a couple of products, let's say two product bundle, but it's more like part of the pricing plans. So for our team, you can have the team, then the team plus the blog's plugin. And then the, but we kind of mixed it with a number of sites, mixed it with extra features and had it also sort of in the plan, but not as standard as two plugin. Amber, you are back.

Amber Hinds
50:51-51:48
My internet dropped. You know, that's okay though. I think we are about at the end of this episode. So it might be good for us to transition to best advice, which is how we always end every episode. This is like our elevator pitch, very short 30-second snippet on what is your number one advice for people about pricing based on the stage of your product. And I'll start to give you two a second to think about that. I would say we have had a lot of success with doing the pre-launch pricing where they get a discount, but they can see what the eventual price is going to be. Or having it, you know, initially you have launched, but having it for some amount until you have all of the features that you expect. So I would recommend if you have not tried this and if you're launching new products, that you should try that. Katie, do you want to go next on best advice?

Katie Keith
51:49-52:21
Yeah, mine is to analyze really closely exactly what you are doing and at which stage of your business. For example, the two plugin bundles we just talked about, they are only relevant once you have a certain number of products, if that's your goal. Other examples, different models and different pricing structures will work. So it's so hard because you want to just learn from other people, but actually you need to learn how to think about these things and what sorts of opportunities to look for, because it isn't one size fits all.

Amber Hinds
52:23-52:24
Yonah, what's your best advice?

Ionut Neagu
52:25-54:54
for me uh i something that i've learned over the years is that and it's it's not easy if you've been in this uh since for for a long time and you are not necessarily just starting it's from time to time i think you need to question your assumptions so the us the the over the years the kind of pricing change for for across the industry and expectations change so for example you know like if you would have introduced recurring you know like subscription selling subscriptions 10 years ago you know like it would have been a different impact versus doing it now uh when everyone was selling lifetime you know like so the from from a strategic perspective it's not the same thing to to to to do a lifetime now and or to do a lifetime 10 years ago 10 years ago it was just just the normal right at the same and now we see the other way where we saw i think it was this base camp guys that launched like uh some solution with the pay once pricing so things i mean when too many people got into sass and people are starting to feel a little bit tired everyone increased their pricing everything is recurring uh you know like it's a breed of fresh air to get something that okay i paid once and then i know like i won't have support or updates and et cetera, but it's working, I'm happy. So I think you need to, if you are doing this since a long time and for a long time, periodically you need to drastically question your assumption because the perceptions change and what looks interesting now, it might be the norm in a couple of years and you need to think about it fresh. So it's like everyone is doing the two plugins bundle, Katie. I think that the people would look at it differently and expectations would be different. So that's something, again, based on my experience, that it's easy to fall in this trap. And because you did it and you did a test five years ago and it worked, you take it as a learning for the next 10 years, right? Which you don't question it again. Like I think you discussed in the previous show about AwesomeMotive and some of their things. And if they are still working today or not, or they are just continuing doing it because it worked some time ago. So yeah, it's something that, something you can follow easily. And we did this mistake and it's not easy to question those things.

Amber Hinds
54:55-55:10
No, well, great advice. I think continuing to question things and test as Katie has said every six months or maybe more frequently if you can is really important. Thank you so much for coming on, Yonah. Where can people find you online if they want to follow up?

Ionut Neagu
55:12-55:48
I think the easiest it's on X or Twitter. I have a hard time still with X. It's HackingLife7. I'm not sharing a lot, but my DMs are open from time to time. I'm either promoting some of our product or trying to share some learning when I get a chance, but that would be the easiest. And yeah, thanks for having me. It's been a great discussion of a topic that I think it's very, very interesting for me.

Katie Keith
55:51-56:59
So next week, Amber will be back with our co-host Zack and guest Jack Arturo. They'll be doing a special show and tell episode about how AI automations are transforming workflows. Jack everything. He's got everything linked up. It's doing like AI fixes for WP Fusion and saving him a huge amount of time while increasing his efficiency. So yeah, he's going to share all of these amazing things he's done. So definitely one to watch, especially if you're more on the technical side. Another thing coming up is that our other co-host Matt and I will be doing a masterclass at WordCamp US in two weeks, where we'll be talking about analyzing what the top WordPress product companies do differently, and how we can all learn from that to make our own products more successful. So if you're going to WordCamp US, then that's in the morning of the first day. So

Amber Hinds
56:59-57:40
definitely put that in your calendar. Yes, sounds very exciting. I'm so sad that I'm going to be missing it. So you should come. I wish I could. First WordCamp I haven't been to in a very long time and I am going to be having major FOMO. Special thanks to Post Status for being our green room. If you enjoy these shows, everyone who is watching, please do us a huge favor. Hit like, subscribe to our YouTube channel, share this video with your friends, reference the show in your email newsletters. And of course, don't forget to tune in again next week. Thanks so much.