The other day I wrote about lifetime licenses. In the software world, and specifically in the world of WordPress, sometimes a plugin author will offer a lifetime license. And that's when you wonder, “How long is a lifetime?”
There are several ways to answer this question.
Technically, how long is a lifetime?
The technical answer, when we're defining how long a lifetime is, is simple. The length of a lifetime is measured by how long you offer the product. The “lifetime” is based on the product availability, not the lifespan of a customer.
This is often something that gets confused when a company announces that they're wrapping things up. People say, “but wait, I'm still alive.” But the lifespan that matters is the one that measures the life of your product.
Practically, how long is a lifetime?
Practically, when people are pricing a lifetime license, we see it cost something around 3 or 4 times the price of a single year license. That's because the common wisdom was that customers would only renew for a year or two. So getting 3 years upfront was awesome.
But times have changed a bit since we all collected some of that data in 2014-2017. Today, more product companies are doing automated annual billing. And that means that the answer to how long is a lifetime may be changing. Make sure you check your own data. Evaluate if 3 years is the right practical answer still.
But hold one…there's still one more way to look at this….
What's the Average Lifetime?
I've spoken to several plugin developers in the last few months and I'm seeing two very different patterns.
The first pattern is that people may have a subscription on auto-pilot, renewing each year, even if they're not actually still using the product as much. This is hard to monitor and compute, but the dynamic is easy to track if you have the right metrics in place. If a person has a license for XX sites, is the actually quantity growing or shrinking under XX? This first pattern that I'm talking about has folks still using the plugin, the number is moving away from XX, instead of towards it.
That should be worrisome. And if you aren't tracking it, you should be. Because it might suggest that the average lifespan of your product is shrinking and you're not aware of it.
The other pattern is the opposite. With the costs of some plugins going up, people are doubling down on the lifetime licenses they've already bought and making these plugins key to every project they touch. In other words, the lifespan of a product is increasing, not decreasing.
While this sounds awesome, there's a hidden challenge embedded in this pattern. The longer your product is used, the less profitable it gets. This is because you aren't getting more money, but you could be getting more support tickets.
Handling Two Opposite Dynamics
I'm sure, as you read this, you're saying – “Chris, this is crazy. You're saying you're seeing two opposite dynamics in the market. There's no way to reconcile this.”
You're right. It certainly sounds like that. So let me suggest two ways to mitigate all of this.
Do not offer constant options for a lifetime license. Instead of putting it on your pricing page and making it available everyday, be choosy and decide proactively when you want to offer a special. This allows you to control when, and how many of, these licenses are available.
Consider making a lifetime license only available some customers. If you want to ensure that your product becomes more and more of a key component of site building, then consider only creating a lifetime license for those who are already making good use of your product.
These two dynamics, working together, can actually mitigate both challenges and help you keep growing the popularity and use of your plugins.
Hope that helps.
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