WordPress Product Pricing for the Right Audience

[00:00:00] Matt Cromwell: Hey everyone. This is WP Product Talk, the place where every week we interview an experienced WordPress product owner on strategies and tips, experiences, failures and successes of running successful and thriving WordPress product businesses. I am Matt Cromwell, co-founder of GiveWP, and Director of Customer Experience at StellarWP.

[00:01:04] Katie Keith: And I'm Katie Keith, CEO at Barn2 plugins. So we've got some exciting news this week. Um, we are gonna make a change to WP Product Talk, which is that starting on July the 12th, we are going to have four rotating co-hosts instead of just Matt and myself. So our two additional hosts are Zach Katz from Gravity Kit and Amber Hines at Equalize Digital.

[00:01:29] And they're both fantastic product people. They've both been guests on the show in the past, so if you've been watching, you know how good they are. And we're really excited that they'll bring additional, um, insights and share their experiences. Um, so there'll be a different combination. There'll be two hosts each time, plus a guest just like you're used to.

[00:01:49] Uh, but we'll rotate between the four of us so you get those additional perspectives.

[00:01:54] Matt Cromwell: Yeah, I'm really excited. I was really happy that they were both open and interested, um, and, um, excited to mix things up, make things interesting for folks.

[00:02:03] Katie Keith: Yeah.

[00:02:04] Matt Cromwell: Uh, and with that in mind, today's, uh, topic is pricing for the right audience.

[00:02:12] Not just pricing, but making sure that you're actually setting your pricing in a way that matters to the people you're trying to sell to specifically. Um, yeah.

[00:02:21] Katie Keith: Yeah. And this is a great topic because customers will only buy your product if the pricing is right, but it's surprisingly hard to get that pricing right.

[00:02:31] Matt Cromwell: Absolutely. And today for this, we're bringing on, uh, a person I've got to know a little bit over the last couple years who I'm excited to have here, Hans Skillrud. Hans, welcome. Thanks for having me. Yeah. Can you give a short little intro to who you are and what you do?

[00:02:48] Hans Skillrud: Yeah. Um, my name is Han Skillrun. I'm one of the co-founders of Termageddon.

[00:02:53] Uh, Termageddon is an auto updating website policy solution. So we provide privacy policies, terms, cookie policies, consent solutions, all the things that we know everyone loves about websites and can't wait to get involved in. So, um, we have been known to provide a little bit more of a. Uh, more boring kind of topic as it relates to websites.

[00:03:14] Um, but you know, the fact is regulations are entering our space and we as website owners have an opportunity to respect people's privacy rights, um, by providing them the disclosures we're required to provide them.

[00:03:26] Matt Cromwell: Yep. Absolutely. Nice. Well, thanks so much for being here, um, on this subject in particular.

[00:03:32] I, when, uh, you and I first started chatting, I was definitely interested in the privacy rights stuff for sure. Uh, and your wife Donata does a great job, uh, as a legal expert in the field. Um, which is also cool that just have another, uh, WordPress product chop that, um. A married couple like Katie is as well.

[00:03:52] Um, and the Colemans at paid members is pro. It's a unique thing. I think it's cool. Um, but one thing that stood out to me was the way in which you have monetized your product. Um, and as we get into the first subject of, um, why anybody should care about this subject at all, I'd love you to give us a little bit of context on how term McDon is monetized.

[00:04:13] Hans Skillrud: Yeah, absolutely. So, um, we. We tried to make things as simple as possible for end consumers, um, where we just have one price point. It's $99 a year. Granted July 1st, it's gonna go to $119 a year. Um, but this one price point covers a full set of policies for one website. We felt like that was very straightforward and anyone could digest that pretty quickly.

[00:04:36] Be like, okay, I get all the policies I need to comply. For one price. And I think that's really resonated in our market because, um, when doing our competitor research prior to starting term again, um, it was quite clear that there was a lot of confusion with a lot of, uh, pol, uh, one with a lot of our competitors, uh, providing an array of price points that, that caused confusion.

[00:04:58] So, um, point number one was, let's have crystal clear pri pricing. We don't try to upsell people on like a per privacy law basis or anything like that. You know, our mindset's either you're either compliant or you're not. So let's give 'em a price point that people can just know, this is what I'm gonna pay.

[00:05:15] I'm not gonna be upsold along the way, nothing like that. Um, so that's how direct customers pay us. Um, but really I think what brought us to having me come on to the show was really our agency partner program. Um, so as a former web designer who built many websites for clients, I would get asked the question all the time, you know, for my clients, what should I do for my website policies?

[00:05:35] And my immediate thought was, well, I'm not your attorney. I have no idea. Like I, you know, why are you asking me your web designer? Well, that was our motivation for why we created term Edin. And it turns out this is kind of like a industry-wide issue. It turns out like just about every small business owner ask their, their web agency first.

[00:05:53] Mm-hmm. What did I do for policy? So, um, we decided we wanted to invest our entire business model basically into forming relationships with people who build websites for other people. And, um. To form the relationship with a product, like to form a partnership with these agencies, um, we decided let's give our license for free to them forever.

[00:06:15] Um, so we give agencies, um, in, you know, single freelance web designers, um, a free set of our policies for, and we do that in the hopes that they're willing to take the time to apply to be a partner. And we actually manually review these people who apply and we approve them or reject them. But, um. If they have a working website and they offer web design services, we approve 'em right away and, uh, send them into our custom welcome email sequence, which teaches them not only how to get set up with their own policies, but to learn the basics on what policies are so that they don't have to be sitting there lost and confused about what policies do.

[00:06:49] So our goal is to. During that onboarding sequence, like, yes, you got something for free, we manually vetted you. That gave us an opportunity to send a personalized welcome email to 'em, and then they receive a series of emails that educate them on why this stuff is important, why it's becoming more important, and how they as an agency partner can educate their clients about website policies, let their clients decide if they want to comply with laws or not, and give them both reseller and affiliate opportunities to offer our solution to their clients.

[00:07:17] So agencies can make more recurring revenue while helping protect their clients.

[00:07:22] Matt Cromwell: That's fascinating. I think it's really, really interesting and a really great approach. Um, uh, and honestly, I don't feel like I've heard any other, um. Uh, WordPress product shop that has, uh, such a strong approach like that.

[00:07:36] Katie, have you heard any type of way of doing that anywhere or anything along?

[00:07:40] Katie Keith: No. That sounds completely unique and really thinking about who the audience is and how to really appeal to them. And you're absolutely right about the pain point. When we were doing web design, people would all the time ask us for GDPR policies, cookie policies.

[00:07:55] All that. And we were like, I don't know. I'm not a lawyer. So you do something template based that from a very unofficial website that you're never that confident about. So Yep. I get the pain point as well as being impressed by the pricing strategy.

[00:08:09] Hans Skillrud: Yeah. Well, thank you. Yeah. And, and another, uh, key aspect at least I found valuable is for like resellers.

[00:08:14] Um, because we were able to manually approve these agencies, we were able to unlock the ability for them to buy wholesale rates one at a time. So an agency partner. Because they're approved, because we manually reviewed them, we know that they're an agency. So we actually, uh, set up their accounts so that they can just buy licenses one at a time at a fraction of the retail price so that they can resell it to their clients.

[00:08:38] Make a little recurring revenue on top, uh, while, you know, helping share the license with their client and ensure their client gets protected.

[00:08:45] Matt Cromwell: Yeah. Do you feel like that has gone well for those, uh, clients? Are, are, are they actually turning, uh, a bit of a, a profit on that front or do you get that kind of info?

[00:08:55] Hans Skillrud: Uh, actually it's funny that you say that, Matt. Um, I think last month we decided finally to like look into it a little bit. Um, and I'm pleased to say that, uh, we found out that our, our agency partners are, uh, in total, um, making over a million dollars a year in recurring revenue from us. Whoa. Um, and that was like, we just, and it's, it's, it's.

[00:09:13] It's quite a bit more than that. Um, but it's not over 10. So like we, we, we only wanna say the number, you know, once we surpass certain thresholds, but it's over a million a year in revenue. And I, I was quite astonished to see it myself. Um, and I'm pumped. Um, yeah, I don't think agencies are gonna get rich off term again, but I do think they're gonna be making.

[00:09:31] You know, uh, I, I, I like to think of it as you kind of get like a 13th month of hosting and maintenance fees kind of with uh mm-hmm. By offering a solution like Otin. Uh, 'cause that's where it kind of lands at in terms of profitability.

[00:09:42] Matt Cromwell: That's interesting. I think, uh, I think another one, like when I was also, uh, freelancing, building websites, the other one I al often got pegged with was, uh, SEO and it's like, like, can you make sure my website gets on the front page of blah, blah, blah?

[00:09:58] I'm like. I could try, uh, that might be an interesting model for, uh, Yost or, uh, rank Math or those types of folks to think about as well. I don't know. Do you think that that would translate to other types of services or products at all, Hans?

[00:10:13] Hans Skillrud: Yeah. So, uh, that's a such a great call. I would build websites for clients and right before site launch, they're like, oh yeah, we also want SEO, like.

[00:10:22] It's like the three letters they know in the alphabet, and now all of a sudden they want it. And it's like, we've already budgeted for your website. We never set aside a even a conversation to have about this. And, um, so I, I can relate to that. Um, and yeah, I would encourage, you know, I, I feel like so many w uh, WordPress product owners.

[00:10:39] Want agencies to embrace their product, and I can't think of a better way than to offer it for free to them so they can tinker around with it and test it out and see if they like what they see. Um, that ability has been very liberating for us because, because they get the free license, you know, there's.

[00:10:56] And they know they need it. You know, policies are always falling into that. I know I need it, should I put in the time to get it kind of done? That's kind of the space we live in. And then they kind of learn about, okay, these are legal requirements, like we as professional agencies do need to educate our clients on this stuff so we can protect our own agency when building sites for clients and mm-hmm.

[00:11:15] Once they kind of unlock that in their mind, like, oh yeah, I should probably get it documented that I told my clients. It's their responsibility to comply with laws not mine. You know, that that kind of messaging really resonates with them. And I, I think there's a lot of, uh, products in this space that could, that could leverage a tool.

[00:11:30] And, and yeah, I guess when I, when I kinda reflect and think about it, um, there's a company in Chicago called Trunk Club, which is a very fancy group of people that like, will do your apparel shopping for you and like mm-hmm. And like, we'll, like, um, you know, um. Giving clothes. And I obviously did not accept if you can't tell from my $10 Amazon shirt.

[00:11:52] But, uh, um, but I remember I, I had to apply to be like a member at Trunk Club and, and I was like, okay, what's this all about? So I apply and then like a day later I got like a personalized response and I'm like. This is interesting. Like that's that's really cool. I really appreciated it. It felt like there's an actual human on the other side actually vetting me.

[00:12:11] And, and that's what we applied to term again, and we, yeah, we actually review your website. We actually do have thoughts about your mm-hmm. Dog, like head of, head of barking, you know, and they have like a dog photo on there about page or something. Like, we like that stuff. We're, we're people too. And um, it's just a great way to form a relationship and, and really build a true partnership in my opinion.

[00:12:32] Fascinating. You know, that

[00:12:33] Katie Keith: could be relevant for all sorts of plugins and or WordPress products. Anything that the agency is likely to use for multiple clients. You could have that relationship, give them free access for themselves or whatever, and then that would get that loyalty. So I think it does apply much more wide.

[00:12:50] Hans Skillrud: Yeah, it gives you an opportunity as an as, as a business owner to form a relationship and like, and that relationship can do volumes for your, your work because you build that trust and we're in a space where there's very little knowledge or a lot of confusion, so we can clarify things with them over a call or through email or things like that and get them confident not only in how do I address these regulations as a web agency owner.

[00:13:15] On an ongoing basis, but how do I also help my clients understand this? And, and I th for now, the communications we have, whether it be automated or just on a phone call, um, they seem to be going well. I.

[00:13:27] Matt Cromwell: Nice. Well, let's jump into, um, that's a lot of good context, um, for what we wanna talk about. Um, we're talking about broadly speaking, pricing for your audience in particular.

[00:13:39] And it sounds like, uh, Hans, you really had, uh, web agencies in mind when it came to this partner program in particular. Um, and, uh, we all have our target audience in mind. Um, without going too deep, we don't want to go into like why you need a target audience or things like that. But like once you have a target audience identified, how do you go about the question of like, pricing?

[00:14:00] Um, why is this subject so important for WordPress product owners? Katie, I'd love for you to kick off. What do you think?

[00:14:07] Katie Keith: Okay. For me it's, yeah, you're right. You choose an um, audience. And target your pricing at it, that's fine. But a lot of product companies have multiple audiences. So for example, when we've surveyed our customers at Barn2, about half of them are individual website owners or WooCommerce store owners.

[00:14:28] The other half are web designers, agencies. Um, that sort of thing. Doing it on behalf of somebody else. So what audience do we target? We have two split audiences. Um, so that makes a kind of dilemma with the pricing and we've, um, implemented various strategies for this, um, such as offering options, so different prices based on the number of sites.

[00:14:50] Obviously agencies would be attracted to the higher. Sites with the discount per site, um, and also a choice of like lifetime and annual 'cause. Another dilemma, um, if you have these kind of split audiences is that some, a agencies in my experience have different approaches with regards to renewals. So some of them will, if they've got an ongoing relationship with their client, they're happy to pay that annual subscription on behalf of the client.

[00:15:19] Others are designing a website and they're moving on. So they either need to transfer it to the client, which is a real problem, um, with certain payment gateways, and then you're likely to lose the subscription, uh, or they just want to pay lifetime so they don't have to worry. So you have to think about your audience with regards to the type of pricing, um, as well as the amounts and things like that.

[00:15:41] So it's an important and challenging topic.

[00:15:46] Matt Cromwell: Absolutely. Uh, Hans, what's your take? Why is this such an important subject for any WordPress product owner?

[00:15:53] Hans Skillrud: Uh, well, piggybacking, you know, off of, um, what was just shared, um, I think, uh. Knowing your audience, obviously important and, and sure enough we've seen the same thing.

[00:16:03] Um, agencies either have a very hands-on approach, which is, I'll be your point of contact for all website related stuff, for which we created the reseller program where agencies can buy one at a time at wholesale rates. And then agencies that are like, I'm a very hands-off person. I need the client to pay.

[00:16:20] So we created the affiliate program where we pay recurring commissions for the lifetime of each referral. Um, uh, so, so yeah, we, we definitely had to adhere to both. And one thing I did not see coming was how popular the affiliate program was gonna be. 'cause naturally I'm more of a reseller. I'm like, I want, you know, I wanna have everything in one place for my clients and that's all there.

[00:16:40] And I'll, I'll control it because typically my clients. Tended not even to know how to like log into a portal. Um, and, um, but the, but I was shocked to see a, a very large, uh, percentage of our audience. Our agency partners are, um, doing the affiliate program very happily doing the affiliate program where the, they have nothing to do with billing.

[00:16:59] Client pays us directly and we just pay the agency, um, recurring commissions, um, as a thank you for the, the referral. So, um. When, when pricing things out, I, I, you know, I certainly reviewed our competitors. Um, and really where we honed in on was we wanna, we, we have to have a subscription. And that was kind of a new thing we had kind of introduced to the market, which is you can't just have policies anymore, you have to have a strategy to keeping them up to date over time.

[00:17:25] You know, prior to us, uh, going live today, we were just chatting how Texas just passed their privacy law two days ago. From the time of this recording, um. Which requires new disclosures of applicable to your business. So that's kind of an introduction we provided in the space, which is static privacy policies are a thing of the past, like you have to update this over time as laws change.

[00:17:46] Um, so we knew we had to have a subscription model. Um, when we looked at our competitors, there were certainly people that were saying they're free, but then you go through the checkout experience and you're being upsold along the way, and then paying like $500 upfront. Um, which doesn't, I don't know, I, I get a really icky feeling like.

[00:18:02] I thought I was getting something free and now I'm looking at a bill for $500. Like that's just, I don't know, not cool. Yeah. Um, and then other ones where it's like we have more of an a la carte approach where you can tack on as, uh, little aspects. I didn't feel like that fit well with policies because policies are already cons, like overwhelming and concerning and scary.

[00:18:22] Why do we need to make pricing that as well? Like let's make that e the easy part so that we can have 'em focused on, you know, generating truly. Comprehensive policies for their business. Nice. Yeah. Um, we landed, we landed on 99 a year because, um, uh, we felt like it was a price that we would be happy to do this service and, um, we felt like just about any small business website owner could afford it.

[00:18:48] Um, and I know we're gonna talk about failures later, but immediately thinks about a failure. I think we did. Which is that I do. We have some billion dollar businesses using us, but I think a lot of bigger businesses turn their turn away thinking, okay, a company called Term Mageddon for $99 a year, there's no way they could fulfill my complex business.

[00:19:08] And mm-hmm. Unfortunately, I think we've missed a lot of business by not having a higher tier plan, uh, for, uh, companies making like over 25 million in revenue, for example. Mm-hmm. So I think maybe we'll address that one day, but for right now, we. We certainly love the simplicity of our price points.

[00:19:25] Matt Cromwell: Nice.

[00:19:26] No, that's really good point. Really interesting. Um. I think from my perspective, why this subject is so important is because, uh, mostly from a business perspective, um, that you wanna make sure that you find that right balance between what is your audience willing to pay. And how profitable can you be? Um, there and there's, there's this spectrum at which at one point you just get just beyond, uh, a, um, where your audience is willing to pay or you end up targeting only higher end customers.

[00:20:03] Um, and, um. And then also the profitability, like you said, like, are we willing to do this at 99 a year? Um, on the, the, are we willing to do this side, uh, for me it's about, um, your, what they say in the, in the business cogs, uh, your cost of goods sold. Uh, in a product, WordPress product business, the biggest cog that you're gonna have is often, uh, technical support.

[00:20:27] Uh, quite honestly. Uh, 'cause development is really classified differently. Um, but technical support is your, your cost of goods sold. And, um, for me, I've often had that lined as well, uh, is that I don't wanna provide access to my team for less than 99 a year, generally speaking, um, because they're experts and they know what they're doing and we provide really high quality support.

[00:20:51] Um, so as much as possible, I want to try to get that up. Um, at the same time, with give in particular, we offer a, a spectrum of products. Um, we have a whole bunch of add-on. And you can buy them in bundles or plans. Um, and so it's not only about thinking about the individual price of each individual add-on, which we do have a couple that are like $79 for example.

[00:21:14] Um, and that does happen sometimes where somebody will get that only that $79, uh, add-on, and that to me is just a little bit of a discount. But as a whole, we're looking at our, uh, average job size. Um, and, um, when, uh, currently, right now the GiveWP average job size, which is essentially like the average amount that an individual customer will pay at the checkout for their entire checkout.

[00:21:42] Um. Our average job size is currently 240. And, um, on average, when I compare that with a lot of other WordPress products, we're on the, on the higher end, definitely not the highest end, but most of 'em that I find tend to be around the like a hundred fifteen, a hundred twenty five, a hundred fifty maybe. Uh, sometimes they're sub a hundred, and when they're sub a hundred, then I, I find that to be problematic.

[00:22:06] Um, but average job size, I think is a really significant one to be paying attention to. And, uh, especially in light of your costs of goods sold, um, because you wanna be able to find, um, the right balance of like how many, if your cost of goods sold is primarily, uh, your technical support team, how many technical support tickets are you generating per sale?

[00:22:30] Um, and then you start to see, well, how much does it actually cost me to sell this product? Um, and that's. Like really, really, really nuts and bolts, um, practical, boring business language of why I think pricing is so important. Uh, I feel like that took a long time to get there, but No,

[00:22:51] Hans Skillrud: that's great. It reminds me of, um, as an agency owner, I had to learn this the hard way.

[00:22:56] Um, and we've seen the memes probably, we've all seen the memes where it's like. An image and it says client budget and then another image and client. Expectations. Expectations, expectation. Yeah. How much they differ. And what I would bet is, you know, the lower you. The more you lower your prices, the higher your technical support is going to increase.

[00:23:15] Because from my experience, the people that are paying us our lowest monthly fee, like they don't even do annual, they do monthly. They tend to have them the highest expectations. They're basically asking us for legal advice at some points where we have to stop them, be like, you know, we're not a legal service rider.

[00:23:28] You know, we can't tell you what to do here. Um. And so I, I would say, you know, always are people that race to the bottom. That I don't know. I, I, I guess I wasn't born for that. I wasn't born to, how do I offer our cheapest product ever? 'cause I'd rather pro, I'd rather focus on how do I provide quality support because it doesn't matter until it does matter.

[00:23:50] Quality support. Yeah. And, and that's why, yeah, that's how we kind of also considered our price point. Like anything below $99 a year, I don't get terribly excited for, and, and. And it sometimes can tend to drive in some, um, less than favorable customer bases too.

[00:24:05] Matt Cromwell: Absolutely. Nice. Well, I'd love to jump into our personal stories, uh, personal experiences with this subject in particular.

[00:24:15] Um, and, oh, I have me up as first. So I, what, what I'll say is like, from the GiveWP perspective, uh, we often, in the WordPress world, uh, people will often be like, well, what's your nonprofit discount? And. Especially at Word Camps, I'll have folks come up to me and ask, well, at, GiveWP, what's your nonprofit discount?

[00:24:36] And sometimes I just repeat the question back at them. You're asking a donation platform, what our nonprofit discount is, is that your question? And they went, well, I guess. I don't know. Like as soon as they hear it out loud back, they're like, I, I guess all of your pro your, your customers are nonprofits.

[00:24:54] I'm like. We do target nonprofits, like that's our target audience. Like we're trying to get them. So like, does that mean that everything is at a discount or do I need to provide a nonprofit discount to our target audience? Probably not. Um, and so one way we went about it from the very beginning and I went and I pulled up a, a, a canned response that we have, uh, from.

[00:25:16] Like years and years and years ago. Um, and one thing that we really try to do is just emphasize why our pricing is what it is. Um, and we say really clearly, we know that pricing is important for you. Uh, it's important to us too. Um, and we put a lot of thought into our pricing. And our goal is, uh, twofold.

[00:25:35] That we're gonna deliver the value that you get out of the, out, out of what you pay us, um, and that we're gonna price in a way that is sustainable so that we continue to be here for you in the long term. Um, that's kind of like the way that we positioned our pricing for the nonprofit organizations in particular, uh, or even why we answer them in saying we don't have a nonprofit discount because.

[00:25:59] That's our audience. Um, and that all honestly in the, in the very beginning, um, for the first, I would say five years of GiveWP I was actually really strict that we don't offer discounts ever under any circumstance. We never offered any discounts, and it was because I wanted to say that this is the cost of.

[00:26:19] Product. Um, things have changed a bit. We definitely have discounts now, now for sure, uh, in different ways. Uh, but we also have increased our pricing over the years, uh, to make sure that there is a gap, uh, or there is space for discounting and that's really more of a marketing strategy than anything else.

[00:26:36] Um. So that's part of it. Another big part, uh, like everything I said earlier about like cogs and, uh, the average job size and all of that really came about through our last big pricing experiment, um, which, uh, happened. Um, in, uh, 2021 end, end of 2021, we did a major revamp to our pricing strategy. And that was me just like digging in as deep as I could into the history of.

[00:27:04] How often do, uh, people buy and, uh, what is the average price point that they, that they buy at? How many of the individual add-ons did we get compared to the plans or the bundles that we were selling? Um, how often were we getting individual pe individual add-ons to upsell into plans, um, and all of that.

[00:27:23] And that type of deep dive research really is a lot more effective when you have several years of data. Um, of course, but I think even, uh, for brand new folks who are maybe a year into it, it's worth looking at for sure. Um, but it starts to make a lot more sense when you're at least two or three years in.

[00:27:41] Um, I would say, um, because in the course of one year, you're, you're having to adjust for seasonality. Um, you're having to adjust for, for all kinds of things. Um, but. The other really interesting experience I have recently, um, is having a conversation with James Kemp, uh, from Iconic, um, uh, who also has a product called Orderable.

[00:28:02] Um, and he has, uh, a lot of folks who use Orderable, our web agencies also. Um, they serve, um, uh, delivery, uh, shops, be, uh, like, uh, storefront shops that do delivery services in different ways. Um. Primarily food, restaurants and things like that, but also flower shops and other things. Um, and the request that a web agency that serves those customers will often have is whether or not they would white label the product.

[00:28:29] They, they want to kind of own that client as much as they. Possibly can. And if it's like I see a third party blo, uh, third party logo in my website, then you know, that means it's, it's somebody else. So, uh, they want to not say orderable, they want to say my agency orders or whatever. Um, and the conversation there was mostly around like, well, um, how do we price that?

[00:28:55] Um, and in my mind, uh, the feedback that I gave was. Generally is that folks who want white labeled want essentially to be able to make money off of the product that you built. Um, and in that case, uh, we're talking about, uh, a large multiple, um, uh, if, if, if that's their intention and their motivation. In my mind, it's similar to folks like, um, back in the day theme, uh, forest, uh, theme authors would often wanna bundle your product into their theme.

[00:29:26] Um, and it's 'cause they want to be able to make money off of your product and then, you know, you're never gonna, they're gonna own that customer and not you. And, um, I think it can be very problematic. Um, but as soon as that comes into the question, then I think the pricing conversation changes a ton. Yeah.

[00:29:42] So. Those are a couple of my experiences recently, so yeah. That's good.

[00:29:48] Katie Keith: You know, that's interesting because we have never, ever had anybody asked to white label one of our plugins, and I think that is because we don't brand the admin. We go. We integrate it as much as we can. So it will be like the settings page will be hidden amongst the WooCommerce settings or something.

[00:30:07] So I suppose if you are getting into like having a, a top level admin, a link called Orderable or something like that, then that opens the door to people saying, hang on, uh, we need to white label it because. We, we actually have a competing product to order or a restaurant plugin, and nobody's ever asked for that, so that's really interesting.

[00:30:27] Yeah. But obviously they've

[00:30:28] got the more prominent branding than what we have, which can benefit them in other ways to other audiences.

[00:30:34] Matt Cromwell: Yeah, for sure. And in the early days of Give, we had some folks ask for white labeling as well, and we don't even put, like, our main level menu item just says donations.

[00:30:45] It doesn't even say give, but it does have the give icon there. Uh, so it's like give icon donations and then, um, it doesn't really say a whole lot about give until you get into our settings right now. Um, so, but that was for some reason it was only early on in the Give. Um, uh, history. I haven't heard a white label request forgive in a really long time.

[00:31:06] Katie Keith: That's why you need to listen to your audience. I suppose that even different, similar products will generate different requirements in the audience.

[00:31:14] Matt Cromwell: Yeah, exactly.

[00:31:16] Hans Skillrud: Yeah. At our, at our beginning, we got the white label question a lot. Uh, we get it less now, uh, which is interesting, Matt, that you, you also have experienced that.

[00:31:23] Um, but, um, I, I, I certainly think there's a time and place for white labeling. I don't think that is when it comes to. Legal compliance and policy. Mm-hmm. So, um, I actually tend to tell agencies, you know, technically you could white label us, but I wouldn't recommend it because, you know, you won't be able to take advantage of the fact that you can share our license term again, licenses with your clients.

[00:31:46] So we can email them directly when policies are changing, why they're changing, if they have any new questions they need to answer. So I always try to acknowledge the inquiry, just being, Hey, I totally understand the value of white labeling. Like, you know. I've white labeled as an agency owner before when it comes to legal compliance, I don't think it's a good fit.

[00:32:03] Um, mm-hmm. And here's why. And I kind of share that. So I think, um, uh, one thing that if you are considering white labeling, uh, Matt talked about just higher, having a higher multiple of a, of a, of a fee. There may be, um, just a flat out licensing fee you could charge. On an annual base or some, or some or something, um, some kind of feed to kind of gain access to that type of offer, um, where you're kind of leveraging someone else's product to offer hopefully a more, you know, some sort of combination of other things

[00:32:34] Matt Cromwell: that you offer

[00:32:34] Hans Skillrud: as well.

[00:32:34] Yeah.

[00:32:35] Matt Cromwell: Yeah, that's similar to what Igor is saying here as well. It might be interesting with licensing of products, at least those on for sure. Oh, nice.

[00:32:44] Hans Skillrud: Um,

[00:32:44] Matt Cromwell: yeah. Uh, cool. Katie, what about you? What's your story time on, uh, pricing?

[00:32:51] Katie Keith: Um, so I've already talked a bit about how we offer different options to attract different audiences, like different numbers of sites and lifetime versus annual.

[00:33:01] So I think for story time, I'll share a bit about how we come up with our pricing because all plugin and theme companies need to think about that. So, um, we constantly evaluate our plugin and use an elastic pricing strategy where. We look at the data every few months for every single product and the conversions, um, and things like that over time and make decisions to experiment and change.

[00:33:28] We do that with the help of ellipsis. Um, the marketing company we work with, um, and James particularly ellipsis is very good with data and so he does a really deep dive through our sales and conversions and everything and looking at the different factors and trying to take out. Uh, anomalies like Black Friday and Christmas and things that might have affected that.

[00:33:50] And to make, um, as objective as possible recommendations about how to adjust our pricing. So once we might go from 99 to $119 on a particular plugin and, and then we'll reevaluate that and see how that goes. And so we are changing the pricing all the time. Which is complex when we have 21 products in easy digital downloads each with quite a lot of variations.

[00:34:18] So we've actually done some custom stuff where we have a spreadsheet, a Google sheet, which automatically syncs with our website to update all of our pricing on a weekly basis. We also have all, uh, multiple currencies. So that's even more pricing options. So that all comes through this spreadsheet, which links in with live currency data, and.

[00:34:40] Pushes it all so that we can quite easily make price updates. Whereas if we had to update it, I did, I used to do this manually actually, and it, we have over a thousand different prices on our site. Oh, wow. And I, I used to do this manually for like Black Friday and things. It was ridiculous. So I'm very happy that my developer Paul, has, um, made this easy.

[00:35:02] So now I can just change a price in seconds whenever SSIS make that recommendation. It

[00:35:09] Hans Skillrud: sounds like a glorious spreadsheet. I like that, that spreadsheet sounds powerful. That's awesome. You,

[00:35:14] Katie Keith: you should see the, the, uh, formulas in it. It is got things like rounding, like if it's between this and this, then it rounds to this.

[00:35:22] Uh, 'cause oh, the other thing is, um, what do you call it, psychological pricing. Um, yeah. Known something value. Perceived value or something like that. Mm-hmm. Where, um, you wanna end everything in a nine or something, but it is more than that. Like you don't want to charge, say, $139 for something. You may as well round that up to 149.

[00:35:42] Mm-hmm. Similarly, you

[00:35:43] don't wanna go just over a hundred dollars because 99 is so much more powerful. Absolutely. And probably the increase in conversions from having it at 99 will outweigh the extra 10% ish that you get. From having it 109. So our spreadsheet takes all that into account. Um, that's and automates it.

[00:36:03] Matt Cromwell: That's cool. I think, I think all three of us share that. Uh, uh, I don't wanna speak for everybody, but I think we all have had conversations where we're passionate about spreadsheets one way or another. Right. That

[00:36:14] Katie Keith: for sure. Uh,

[00:36:16] Matt Cromwell: the term I've used for that, or I've heard through from other folks. To is mental speed bumps.

[00:36:20] Um, like when you're looking at pricing and if you see it as $69, like it probably doesn't really, um, it doesn't impact you. If all of a sudden that was $99, you're like, ah, that's in the range. It's still fine. But as soon as it was like $104, then you're like, ah, I don't think it's worth it anymore. Like, uh, and if it was.

[00:36:40] $129. It wouldn't bother you if it was $149, um, but as soon as it's 157, then it's all of a sudden it's like, ah, this doesn't make sense. Like it makes people start to think once you hit, uh, or go over that mental speed bump. Um, that's a really good one. Katie. A good call out there. Um. Uh, Igor has a question here too.

[00:37:02] I'm not totally sure. Let's see. He says how to tackle, let me see. This might have context a bit hard. I guess it gets any complex support from the origin. Um, oh, I think this is still related to white labeling. Yeah. Yep, yep. Um, in terms of like licensing and things like that. Okay. Uh, we talked about that earlier.

[00:37:21] Katie Keith: Well, they can't get support from the origin can they? If they're white labeling, they've made a decision to be that point of contact exactly

[00:37:28] Matt Cromwell: for the customer. Exactly. Yeah. And that, that's part of why I was, I leaned towards it having to be a pretty high multiple because it really is like that they start to take on the relationship with the customer or the client.

[00:37:41] Um, and, and we don't have that relationship anymore. And that's one of the things I find most valuable in our, in our business, is being able to have a relationship with our customers. So, um, cool. Uh, story time. Hans, you're up next.

[00:37:56] Hans Skillrud: Um, yeah. So. I wanted to talk about, um, just key metrics and, you know, what, uh, what are some variables that have like kind of popped up over the years, uh, running, um, the business.

[00:38:09] And the one that immediately came to mind was, you know, I mentioned earlier we give agencies a free license. Well, that agency's important to us. We really wanna encourage them to like, you know, start offering our solution to their clients. Otherwise we don't make any money. So the uh, key variable for us is how many.

[00:38:25] Agencies convert, meaning they resold or referred at at least one client to us. And we have that number, I know it by heart. Um, let's just say it's one out of five. One out of five agencies convert and they actually start generating revenue for us. Um, well, we know how much the average agency makes for us, so we actually can draw that all the way back to even a marketing budget.

[00:38:50] Being like, okay, well I can spend this much in ads to get, get this many agencies to get a free license because I know in our example, one out of five of those will convert at an average amount of this. So that, that really connected the dots for us and it allowed us to create quite impressive, um, projections.

[00:39:09] And, and what I mean by impressive projections, I don't mean like we're gonna go to the moon or anything like that. What I mean is. Stable. Like we, we can predict, uh, where we're gonna be at, uh, financially over time, which is very exciting for any business. Um. And, um, and that's been very beneficial for us.

[00:39:28] Um, knowing the conversion of how many agencies convert from free to paying us is, has been extremely beneficial. And it has allowed me to hire even, um, uh, an employee who oversees partnerships now with agencies because I can, mm-hmm. I can manage that employee based on the historical, this is what we convert at value.

[00:39:47] So if he's doing better and we're converting even better, um, well that's great. How can I reward? That, you know, for doing better than I was able even able to do. However, if they do worse, we see that there's maybe opportunities for them to improve, uh, their work and, and give them like, um, critical feedback on how they can, um, improve their work efforts.

[00:40:07] So by having that number, knowing, okay, if we nurture 'em this way and do it this way, we can. Project out this way. Um, it's just a extremely beneficial variable for us to work with when, when running our business.

[00:40:21] Matt Cromwell: Absolutely. Yeah. That's really good insight and metrics too. Um, extending story time, just a tad.

[00:40:29] Igor again has a good comment here. Anybody try anything with price anchoring? If, uh, folks aren't familiar price anchoring, it is similar to what we were talking about a bit ago about mental speed bumps. Um, it's like 99 is this anchor in our minds and, um, uh, often you'll see it even, uh, honestly, honest, awesome motive has come under, uh, some negative, uh, criticism.

[00:40:54] About this a little bit in the sense that they'll often have an anchor price, uh, that's slashed and then, uh, a discounted price. And it's like, it's actually not really discounted. It's that that new, that price is actually their real price all the time. Um, but having that like, uh, 1 99 or that 99, there is.

[00:41:15] Setting this, like this is kind of the value of the product and, but we're gonna give it to you at a discount. Um, uh, any kind of experiments or experience with that at all, folks?

[00:41:25] Katie Keith: Is that anchor pricing or is that just. Illegal permanent discount?

[00:41:30] Matt Cromwell: No, that I described it in the context. Anchor pricing is just like the idea that 99 is like an anchor that, uh, to weigh against, um, uh, Igor again, having a good comment or having a three table pricing structure is another good example.

[00:41:45] Um, and having one that's called out as popular. Um, um, so that's, that's one thing that folks, uh, talk about sometimes we, in my big pricing experiment where we went back, uh, I definitely was experimenting with that, and I did, we did have some pricing before that in which we, I think we, one of our plans was like, um, one.

[00:42:07] We were experimenting with sevens. There was a a while where folks thought sevens were really significant in pricing, and so we had like, 1 27 was a price. Um, and I, and I thought, you know, honestly, I think the idea of anchors, pricing anchors is more significant than the magical seven. And so 1 49 became the number instead of 1 27.

[00:42:27] Um, things like that. Um, and um, when it comes to the pricing tables, um, uh, often folks are saying like. Um, the one in the middle, uh, is gonna be the most popular always because you actually don't want a lot of folks choosing the lowest end. Um, and you know that you're not gonna get a whole bunch on the highest end.

[00:42:49] Um, and so you, this is like, this is what I want my average job size to be. So it's like 99 is like. What you don't want, but you wanna encourage the 1 99 and then you have another one that's like 4 99. Um, and just having those kind of anchors there makes the people choose the middle one a lot more often, um, a lot more often than they normally would, honestly.

[00:43:12] Katie Keith: Um, yeah. And you can further do things like, uh, drawing a box around the middle one and things like that. Mm-hmm.

[00:43:18] Um,

[00:43:18] another thing I found worked is reversing them. Um, I think I got that from Jason Coleman or someone who, and then I did a Google optimized test on it where I reversed it and had the most expensive ones on the left, um, rather than the right, as you might intuitively think.

[00:43:35] And that made a real measurable difference to both, uh, sales and revenue on Wow. That page. And I know quite a lot of plugin company owners that have also reversed. Their pricing table in that way, and they've all seen a similar result.

[00:43:49] Matt Cromwell: Interesting. That's awesome. Jason Coleman's great with experimenting with pricing.

[00:43:54] Um, he also is one I saw that, um, saw an increase in conversions when he added the free product or the free option to his pricing table. Um, uh, and he intuitively thought like, if I'm showing people that they can get it for free, why would they buy? And it would sound like it would convert less. He actually found they got more conversions when they added the free option there.

[00:44:17] Hans Skillrud: That's awesome. We're we, we have only one price point, so we haven't ever been able to like test out the three table things. Um mm-hmm. Uh, but I will say that, uh, as a consumer visiting a website that has the tables, every time I see the free option right next to the price options, to me it builds trust.

[00:44:35] Like, I'm like, okay, they're willing to flex like this. Like they are willing to, Hey, here's the free version and this is why people are paying. Uh, and to me, I think that is a trust builder thing. Where I think trust is lost is when I'm using, looking at the three table layout and the one in the middle says popular and I can't like truly grip.

[00:44:55] Why is this the popular one? Like I don't buy it. And so I go with the cheaper option. So like I would just say if you're doing the three table pricing and you're wanting to kind of bump people up to a higher plan. Really emphasize why is this the most popular plan? And, and if it's not the most popular, maybe don't select it.

[00:45:12] Like, 'cause that's not, yeah. Um,

[00:45:14] yeah.

[00:45:15] Uh, so that, that, that's kind of my thoughts. Um, but when I hear anchor pricing strategy, you know, I think about like how easily can someone message off our pricing to someone else? To me that's very important. Um, like. You know, and, and right now you happen to catch me interviewing, right tween when we've been $99 a year for seven years, and when we happen to be going to 119 a year, I'm gonna miss the $99 a year era.

[00:45:39] Like I really am. Like, um, I, I, it was so easy and simple and we're gonna be testing these new waters just given what. All the changes that are happening right now. Um, but it's a new era for us. I'm like, I'm, I'm excited to see what it is. Um, yeah, you know, you certainly can't be locked in forever at a price point, either as a business owner, because Yeah.

[00:45:58] Reality is there's factors outside of your business that will impact you, like inflation, um, like the cost of living increasing and things like that. So just know that, you know, things do have to be somewhat fluid in the sense that like, you can't, you can't be still 99 for, uh, a year. 50 years from now.

[00:46:15] Yeah. Like, there's just no way. Um, so just keep that in mind that things do change in life.

[00:46:19] Matt Cromwell: Yeah, absolutely. Nice. Well, we have actually hit our time, but we're gonna go a little bit more and try to wrap up quickly. Our best advice, uh, let's do an elevator pitch version of this. Um, what is your best advice for folks, um, who are new WordPress product owners who need to consider how they can, uh, target their audience with pricing?

[00:46:40] And Katie, you're up first.

[00:46:43] Katie Keith: Okay. Uh, my advice would be either choose one audience and go all in with them like harms did, and really target to them. Or accept that you have multiple audiences and offer different options that appeal to them while trying to make things look as simple as possible.

[00:47:01] Hans Skillrud: Excellent. And. Um, launch products for an industry you've been a part of. Um, I think you'll have, uh, that intangible, fundamental understanding of how things work. And once you get an MVP out, a minimal vi, minimal viable product out, then just listen to what your customers have to say. Um, because you'll be able to, if you're coming from the industry, you'll already understand why they're sharing the feedback that they're sharing.

[00:47:26] And you'll be like, you'll probably sit there at least for the first couple years. I sat there. How did I not think of this? Um, so, you know, my recommendation is if you're, if you're targeting an industry, know that industry, you know, hopefully you've serviced, been in that industry for a long time and have learned the pros and cons, um, of it.

[00:47:43] Matt Cromwell: Nice. I'm gonna be slightly contrarian in my best advice. A lot of folks will tell you with pricing to experiment all the time. Katie is a great experimenter with pricing, obviously with a giant mega spreadsheet. Um, if you're new, I'm gonna say don't experiment with pricing. If you're having trouble with, um, sales, nine times out of 10, it's not gonna be pricing that's really stopping you from.

[00:48:09] From selling, it's gonna be features, it's gonna be marketing. Uh, it's not gonna be your pricing unless you're like way a hundred percent off base. You're not gonna know if it's gonna be pricing until you have at least a year of data. So yeah, you need numbers,

[00:48:23] Katie Keith: don't you, to do experiments,

[00:48:25] Matt Cromwell: you gotta have enough data in order to really experiments.

[00:48:28] So if you're new, don't experiment. Go out of the gate confidently, strongly with something and get the data. If you wanna do any kind of experiments at all with your pricing, then start with discount strategies. Uh, that will help you understand if the discount is the thing that's really pushing people over the edge or not.

[00:48:45] Um, but for the immediate. Just try to be confident in what you think is the best pricing for your product and run with it and just plan on next year to do a big, uh, data dump and experiment at that stage, um, or maybe even two years out. So. Nice. Well, this was a great conversation, Hans. Thanks so much for being here again.

[00:49:08] Hans Skillrud: It was an absolute pleasure. Thank you both for having me.

[00:49:12] Matt Cromwell: And next week is gonna have to be a surprise, right? I think we, again, are surprising folks. Um, we don't have anybody lined up right.

[00:49:19] Katie Keith: Uh, nope. That we will do. Uh, we've got lots of ideas and people on our short list. Um, so basically, yeah, we need to plan the next three months in total.

[00:49:28] So we are gonna, um, start that now. Yeah, we just finished our last three months

[00:49:33] Matt Cromwell: exactly. And soon we're gonna have some new co-host too, so I'm excited about it. Yeah. So everyone have a good week and we'll see You'all next time. Thanks so much. Bye everyone.