More Thoughts on Pricing

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airline pricing modelWhether it was the sixty seven comments on my last pricing post, or the fact that it spawned two more articles from others about WordPress plugin prices, it's clear that pricing is not only a hot topic but a challenging one.

Pricing for Value

Phil makes the case that you need to price for value—and he's right. Unfortunately, the challenge is that no two people are alike, and they don't all value things equally. This is the challenge that Jeff highlights when he mentions that he would hate to see Gravity Forms raise their single site license to a higher rate.

He's highlighting that the value of the plugin is different if you're an end-user with a single site, compared to a serious developer creating tons of sites using this plugin on all of them.

Value is in the eye of the beholder—making it a really difficult challenge to set the right price for a plugin.

When Value is Variable

So what do you do when value is variable? How do you define a price that nets you enough to serve your customers and still make enough profit to make things worthwhile?

One way to think about this is to step far away from the WordPress world and the dynamics of plugin pricing. We need to look at other models and see what they can teach us.

Looking at Airline Ticket Pricing

The other day I booked a flight for a friend. During the process I was offered the following options:

  • To pre-purchase the option for them to check a bag.
  • To pre-purchase the option for them to skip to the front of the security line.
  • To pre-purchase the option of sitting in a seat with greater leg room.
  • To pre-purchase the option to upgrade to a seat in business class.

It seems a bit silly, doesn't it—almost as if they'd seen the same video we've just watched.

If you read the comments, you'll see real airlines like Spirit getting called out for the same techniques. Another you see mentioned is Ryanair.

Buyers buy different Benefits

When we talk about value, we're often thinking about the value the product delivers to the buyer. That's good stuff, but it's not the only way we can think about value-based pricing.

We can also think about it from the values a client has for different “perks, benefits, and interests.”

Think about airline pricing for a second:

  • Want to fly during peak times (Monday morning)? You'll pay more.
  • Want to fly first class? You'll pay more.
  • Want to be able to change your flight? You'll pay more.
  • Want to be able to cancel the flight altogether? You'll pay more.

Ryanair takes it further.

  • Want to print your boarding pass at the airport? You'll pay more.
  • Want to check a bag? You'll pay more.
  • Want to take a car seat or stroller? You'll pay more.

I know what you're thinking. That sounds like the video above. People will just find an alternative, right? Well, it's not true. Ryanair isn't losing customers.

It's gaining them—by giving them options.

It's crazy, but they saw sustained growth in the midst of this piecemeal approach to pricing – growing from 42 to 75 million yearly passengers (2006 to 2011).

Pricing WordPress Plugins

All of this brings us back to WordPress plugins and their prices. I wrote, saying that I thought some plugins were priced too cheaply.

The issue isn't just a matter of price. Instead, it's a matter of options.

When I go to buy an airline ticket, I get a base price—it's fast and easy. But I also, as I get ready to check out, see various options (some more prominently placed than others).

I can upgrade to a refundable ticket. I can upgrade to a better seat. I can upgrade to boarding early. I can even send my luggage from my home to my destinate and never take it to the airport.

Those options are all available for additional fees. But they don't stop me from seeing a baseline price and the ability to check out quickly with defaults.

Most importantly, the selection of those options by a plugin developer's audience would help that developer segment their customer base, which could help them with LTV calculations (always a good thing).

So one suggestion I have, when it comes to pricing, is that we start looking at breaking things apart a bit more like Thomas Griffin or Jason Coleman have done. They've modeled a world where you can pay extra to install and set up a plugin (in the case of paid memberships pro) or pay for tokens after your first support ticket (in the case of soliloquy).

About Chris Lema

Chris Lema has been working with WordPress since 2005. Over the years he's been a blogger, a speaker at WordCamps, a coach for WordPress product companies, and the founder of the conference for WordPress business owners, called CaboPress. Today he's the VP of Products at Liquid Web, where he manages the world's first managed platform for WooCommerce stores.

Chris Lema

Chris Lema has been working with WordPress since 2005. Over the years he's been a blogger, a speaker at WordCamps, a coach for WordPress product companies, and the founder of the conference for WordPress business owners, called CaboPress. Today he's the VP of Products at Liquid Web, where he manages the world's first managed platform for WooCommerce stores.

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