Did you read Freakonomics?
I don't know if you ever read the book Freakonomics, but there's a chilling story in there about education and the kind of folks that end up as teachers.
Now before you get all angry at me – I love teachers. I especially love one amazing and fantastic teacher (Melissa Lema). This isn't a slam against teachers. Give me a sec.
I don't remember the exact statistics but the general narrative went something like this:
Of all the best college students, a very small portion decide to teach.
Of all the best of that small portion, only a very small portion get their credential.
Of that even smaller portion, another small portion last to get tenure.
The result is that the low pay, high cost of effort and low recognition create an environment that bleeds the best of the best.
It's seriously depressing. And while salaries aren't the only thing to blame, it's a big part.
Do you remember when you were in elementary school and people talked about what they wanted to be when they grew up?
Kids said things like lawyer, doctor, engineer, and movie star. No one I knew wanted to be a property manager, insurance adjuster, or work at a video rental store.
The things they had in common were that they were “professional” and they paid well. At least that's how I thought of those jobs. Did you?
Let me ask you a question
Now, I know you're probably wondering what that has to do with WordPress themes. I hear you. But go with me for one second longer.
I was having a conversation the other night with someone who was asking me about WordPress developer salaries across the country.
I talk to a lot of folks, know a lot of companies that are hiring, and am connected to a bunch of freelancers as well. So they were asking me what the going rate was for someone on the Coast, as well as someone in the middle of the country.
My answer is unimportant. What was more important was the fact that it was much lower than many other kinds of developer roles we each knew about.
What I mean by that is that we knew positions for Ruby, Python, SaaS (not Sass) and other technologies, both on the Coast and in the middle of the US, that paid 25-100% more than the going WordPress rate.
So here's my question.
What if the pricing of WordPress themes has created an ecosystem, that like education, is bleeding the best of the best?
Think about it for a second
I love open source. I didn't always. But I do. And I believe you can even make money selling code that is free to read, copy, and distribute. It sounds crazy, but I want to make it clear, I'm all for the GPL. And I'm not blaming the GPL for any of this. I'm blaming people. You. And. Me.
We were young. (Ok, you were.) We were excited. We wanted to give back. And we just thought it was amazing to create something that anyone would pay for. Regardless of price.
Plus Steve Jobs started selling software for $1. Bastard. (j/k)
But think about it for a second.
You take a serious developer. You have them spend a month or two coding a theme (maybe more). Have them rigorously test it with others. Tweak and adjust it. And then tell them that they can sell it for $30-50. Let's do that math.
If they worked part time for 6 weeks – that's 120 hours. At $50/hour, that means they had already invested $6000. Let's further assume that they get enough initial tickets to keep them busy part time for another two weeks -until the product gets really, seriously stable. That's another 40 hours, or $2000. So a total of $8000.
That means that if they don't sell it 200 times, it's a failure.
But wait, 200 doesn't seem like a lot, right? Until you realize that on ThemeForest – with tons of eyeballs – about half the themes there don't sell 200.
So the developer has a 50/50 shot of not breaking even. We haven't even begun talking about profit.
That's the bleeding I think may have already happened.
We have great and amazing WordPress engineers in the ecosystem, just like there are great and amazing teachers in the system. But there are also a lot of amazing and brilliant folks that I think moved to other technologies that gave them a better chance at living the life they hoped for.
What happens when WordPress theme prices are low
Three things happen when theme prices are low.
The first we've already looked at. My hypothesis is that we bleed talent who don't look at the ecosystem because they consider it unsustainable.
The second relates to customers. With low prices, there's no reason not to change themes like underwear. This creates several ancillary issues that are probably obvious to most:
- Greater support requests because changing themes broke sites (increased cost)
- Decisions are made on appearance rather than deep due diligence, leading to worse code (bloatware)
- More competitors jump into the space because of higher churn but don't really invest in the community
- Overall quality goes down because the focus is simply on the quick cash in the first weeks after a release
When all this happens, you end up with a really crappy dynamic where end users – promised an easy and awesome experience – get frustrated and walk away.
And guess what? They don't say that a theme sucked. They think that WordPress sucked.
And that brings us to the third issue. When theme prices are low, we create an environment that potentially causes future prospects to throw the baby out with the bathwater.
What happens when WordPress theme prices get higher
This post is the result of a single tweet I saw tonight.
Will higher prices mean better themes or just higher prices?
— Bradley Potter (@bradleypotter) June 19, 2014
It's a great question, and as you can tell, I've typed over 1000 words without answering it yet, so I have thoughts on the subject!
It's true that themes will get more expensive, for sure. But the appearance of higher priced themes won't actually kill low-priced themes.
When markets mature, we naturally see market segmentation.
We see expensive hotels and cheap hotels, business hotels, resorts and extended stay hotels. Each caters to a different segment.
I suspect that if some people start pricing themes higher, we'll see more segmentation in our market.
We'll discover people that buy a single theme and don't change it for a year – because they're running a business and they're focused on conversion more than a constantly changing design.
We'll discover companies that request a more complicated theme with tons of embedded features (via dependent plugins, of course) that they see as an investment. But still cheaper than custom development.
When prices rise, we'll see new market entrants.
The reverse of the “bleeding talent” situation is that when we see markets mature, and pricing go up, it will likely lead to new market entrants. People who suddenly look at the space and decide it's worth getting into.
Some will head to ThemeForest. Others will go to other marketplaces. Some might show up with their own sites and simply look for ways to announce that they're here. Their success or failure may be a result of their channel decisions and the trust they build as they enter, but enter they will.
With segmentation and new entrants, we'll see new platforms.
It's still a remarkably young space – so I would imagine that we'd not only see new market entrants developing themes, but we'd see them bringing more complicated and feature-rich solutions to the table – a bit like the RainMaker platform I've written about.
I'll be talking about another one soon, which my friend Brian is writing about here.
But you can imagine many more – as people start creating application-specific themes (eLearning theme + LearnDash/Sensei/WP Couresware plugin + hosting?).
I don't think that the only thing we'll see is just higher expense. I think we could very well see several benefits. Not the least of which is that some prospects who just couldn't believe that their entire site could cost $60 with the help of some free plugins (read: higher end segment), will look at themes that cost $750 or $1500 and suddenly feel a lot better about their choice.
It's crazy. It's something we don't always understand.
But let's think about a car for sale. If I told you that you could buy my Lexus ES 350 (which I'm selling) for $50, would you trust the car? Would you buy it? Or would you walk away and look for something that cost more?
In the end, my sense is that as we see a price adjustment, we'll see some people complain and stick with cheaper themes. We'll see some others embrace the more expensive ones. And when all is said and done, we'll look at our ecosystem and consider it a bit more mature.
And that's a good thing, in my book. What's your take?