WordPress Products versus Services

So, there has been a small but substantial swell of frustration at Woo for changing the pricing on their themes and plugins. You can read their post here: A Sustainable WooThemes.

The argument most people are making is similar to the following:
You can’t increase the price of a product after you sell it.

The issue with that argument is related to continued development. A WordPress theme or plugin is not a product. You don’t just buy it, take it home and use it. You aren’t solely responsible for its upkeep and maintenance. WooThemes continues to improve on it, update it, fix things, and support you. Your theme or plugin isn’t a product at all, it is really a service.

You want themes and plugins to be updated, provide new features, and generally be better than when you purchased them? That costs money. You want to get help when you run into a stumbling block? That costs money.

Like a cell phone or Internet connection, there is only so much development and communication bandwidth in a company to send information between you and the service you’ve purchased, and by paying a monthly, yearly or per “product” fee, you are really engaging in a service contact that lets the business hire the staff needed to provide you with that interaction.

Yes, retroactively changing terms and conditions isn’t fun, but what would you really rather? Are you so selfish that you’d rather see the company die or stop supporting the tool you are using? Can you really justify being a drain on a company because you think you were promised something? How entitled are you really?

I understand that everyone wants things free, or cheap. I understand that people purchased under the assumption that they would always be so. But while software can scale, people can’t, and it takes more people to run a small business than an independent startup. It takes more people to run a medium sized business than a small business. And this isn’t an easy growth as a company often can’t just hire one or two people, but instead has to hire a whole chain of people, including management, human resources, accounting, and support.

I think now that most people would agree that no one should sell unlimited/lifetime licenses unless they have another route to receive continuous income. That’s not smart. Read my post about WordPress Plugin Pricing for my thoughts on why that is.

Gravity Forms still supports a small group of people that were lucky enough to purchase during the introductory phase and purchased such a license. Thankfully, overall, I don’t think they’ve been a huge drain on resources, and are part of the initial advocacy group that made Gravity Forms popular. In this situation, it works okay, but the value to the company of those users is very small, four years later.

Note: I have NO internal data regarding how many lifetime licenses rocketgenius sold or how much support they require. My statement is based on perception, not fact.

WooThemes ran their business this way for too long, and now their success under that model has made them a target for people that thought they were buying something forever, only to find out that it isn’t the case. That was a poor business decision, and one that the WooThemes team is trying to rectify in as nice of a way as possible. They are trying to grandfather people in various roles, and give discounts and bonuses to people that have supported them. They gave an extra year of support and updates to lifetime members and over the next two years, I think those people will get an incredible value from WooThemes.

I don’t think that any choice they could have made during this transition would have made everyone happy. Had they left lifetime/unlimited license holders to continue to be supported and managed as they were, then they’d be causing a drain on company resources that could only be compensated for by increasing sales, which would require more staff and resources, making things ever more complex.

I also feel that their blog post was badly laid out, and should have stuck to the facts of the transition, versus laying out scenarios to try to justify the change. I think they frustrated a number of people because of how it was written, and some extra common sense in its creation could have gone a long way, especially knowing that people see themes and plugins as products instead of services.

At the end of the day, every company, especially service companies, need to make sure they are profitable so that they can continue to provide the service expected of them.

For all of you complaining about the changes, and the price increases. No one is making you continue to subscribe. They aren’t holding you hostage. You can leave at any time. You are a subscriber, but you aren’t locked into a contract. If you don’t like what they are doing, leave! If you need what they are selling, then you’ll have to pay for it. That’s how business works.

Others have brought up customer loyalty, and I’d like to think that it exists, but in the five years I’ve worked online, I’ve never seen it. Sure, people like what Gravity Forms does, and over the last year, I’ve seen plenty word of mouth marketing, but I’ve also seen people scoff and try to threaten us saying they’d move to another system if we didn’t do what they want. No service provider can make everyone happy, and we are lucky we live in a world of options.

When it comes to software, I would be interested in seeing what kind of loyalty there really is. If you are truly a loyal customer, you will understand the change, support the change, and help others to do the same because you love the service, and want the business to succeed.

Lastly, I just want to say that this change is going to happen to other companies going forward. The unlimited/lifetime model just isn’t sustainable and doesn’t scale. The theme or plugin that you purchase today might have to change their mind down the road, so please stop trying to promote things based solely on the unlimited/lifetime model that they currently have.

Good luck to WooThemes and their change.

And now a note to Adii – I’m glad you finally did it. You shouldn’t have waited so long. Your current pricing is probably too complex for most people (too many options). I think in two or three years, when the “lifetime” members have been made to decide, you’ll have a better understanding of where you business is and where it is going. Oh, and interesting move on dropping the unlimited sites and going to 25 sites maximum. I’d love to hear about the reasoning behind that choice. And get the renewal prices out quickly. That was a little silly not to do as part of your overall pricing revamp.

10 responses to “WordPress Products versus Services”

  1. I think the biggest complaint isn’t that they’re changing the price but that they’re changing the terms and conditions after the fact — sell a product with “lifetime” support and updates and then change that to “2 years of updates and then annual maintenance agreement”.

    I understand their position and I can’t say I completely disagree with them. While Woo may be legally allowed to changes the terms like that (IANAL), from a PR perspective it comes off cheesy, especially when they offered an upgrade option on theme purchases that would give you lifetime updates and support.

    That said, I applaud Woo for making this hard decision. I’m sure it was not made lightly.

    • You are right, a great many responses are the change from Lifetime to not. I think they made this change so late in their product development lifecycle that they shot themselves in the foot.

      The entitlement that some people are showing really sucks.

      I would hate to see WooThemes have to shut down because they made a bad decision in pricing and licensing their plugins and themes. How would that help the people that purchased the product? What kind of compensation should a person expect for such a change? I don’t think they could have done anything to really make people happy, so they took a hard line. They had to protect their business or they wouldn’t be helping anyone.

      If I were running Woo, I would offer refunds on any lifetime account that wanted to leave, but limit them to processing that refund in the next 30 days. I would also offer lifetime subscribers steeper discounts on renewals. It wouldn’t solve all the problems, but it would let people make an easier decision going forward.

      I’m lucky that where I work, they made this decision a long time ago, and I was on the WordPress news reporting side of the issue, AND they didn’t have to do it retroactively.

  2. As the guy who wrote the post and spear-headed the pricing updates, I think I can comment here 🙂

    First off, if there was anything I laid out badly: that wasn’t my intention. It was always going to be a tough post to write.

    I totally agree with you; all theme and plugin authors are providing a service. Being able to provide great support and product improvements is an ongoing cost to all WP companies, and we’d like to remain as competitive as possible, as well as still being able to push the boundaries of what’s possible with WordPress. In an ideal world we’d be able to run the functionality we provide in some sort of SaaS model but that’s just not possible.

    I hope that most of our customers understand why we’ve made the changes we’ve made, and that other WP consultants and companies understand too.

    Great post, I hope many people read it 🙂

    • It is definitely a difficult post to write. I’ve tried to do it in my head a few times since reading yours. Again, I guess I’d just stick with the needed facts. It doesn’t help that your pricing set-up is so complex. I felt adding more than just the facts caused confusion. I’m reading a bunch of people on Twitter not knowing what to expect in pricing going forward. You might want to get someone working on a pricing quote system to help people figure out what they’ll be paying for all of your plugins and themes depending on what they want.

      Thanks for commenting here. Keep up the great work with engaging the community, and I wish you guys all the best. I think this will all blow over over time. All my best!

  3. The analogy that I would make, with something else that requires continuous service, would be buying one car over another, because that dealer offers lifetime oil changes and other types of maintenance, while another doesn’t. Except that after you buy it, the dealer says “we changed our minds. That may have been a factor in your purchase, but we decided we’re not going to honor that part of our deal with you in 2 more years.”

    Would the terms of service that allow that one party to unilaterally change the terms of the deal hold up, legally? Maybe, maybe not (probably not, at least where I practice). Either way, though, the ethics of it stink to high heaven.

    • In your scenario, how would you like things to be handled? If having the deal meant that the car company went belly up, would that be better? Now no one gets any more oil changes. Would you rather the company allow you to return the vehicle? You drove it and enjoyed it potentially for miles and miles and still have free oil changes for two more years. You now have that time to decide if you want to continue “driving” this car, or switch to something else. In the end, there was no fair way out of this situation for them or for you.

      I appreciate that it sucks… I really do, but sometimes companies have to make such changes or risk losing everything. It isn’t just your needs they have to satisfy, but the pay cheques of the 30+ people they employ. They should have done this a long time ago, when grandfathering people in older plans wouldn’t have been such a burden to their business, but that’s not what happened. They made a mistake, and now the people that paid for lifetime licenses won’t get them.

      In some ways, to keep your car analogy going (which is a really bad one)… this is the government bailout of their company. Your “taxes” have gone up so they could receive more money, and they need to restructure their offerings if they want to continue to do well.

      Again, I see plugins and themes as a service, like Internet or cell phones. You want faster data transfer speeds, you pay more. Remember those unlimited data plans that cell phone providers marketed? Did you ever read the fine print? Here in Canada, it says “unlimited” = 2 – 5GB. Anything over that, and they throttle your connection to around dial-up speeds. There is no such thing as lifetime. There is no such thing as unlimited. These are truly marketing terms and should be treated as such, especially in the service industry.

      I am sorry that this happened to people. I wish they didn’t have to make a decision like this. Gravity Forms made this change in 2010, and was lucky enough that they could afford to grandfather all lifetime licenses at that time. I also know that if rocketgenius hadn’t made the change to a subscription based system, I wouldn’t be working for them today.

      I like Woo and their products, and I usually point to them when someone wants to integrate Gravity Forms with more advanced e-commerce features. In the future, I’ll continue to do so, as people will adjust to the higher costs, and the loss of any lifetime license options.

  4. The problem is that they aren’t changing prices, they’re changing what features someone gets for what he or she has already paid for. Illegal in most places. And, even if this can be spun as a price change, illusory contract terms like that don’t hold up, at least in the USA (“here’s our deal, that we’re bargaining for, but . . . I get to modify the deal when I want, after you’ve upheld your end.”).

    I was always a big fan of Woo, and even wrote a very supportive blog post in the past about them, but I’m really starting to question their moral compass. It started with the tracking they were doing (their justification for which ultimately boiled down to “but we really want it!”), and now this. I hope I’m wrong, but it really seems give a hint at how they think, unfortunately. They just don’t seem to get it.

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