Jeff Starr posed the question at Digging into WordPress: Which Pricing Model Do You Prefer: One-Time or Recurring?
It is not the first time the question has been asked in the WordPress community and will not be the last. It is important that we keep coming back to it from time to time.
In the early days of the commercial WordPress ecosystem, many shops sold products for a one-time fee. This was particularly true during the 2007-2010 years, which were what many dub the “WordPress themes heyday,” a period in which theme shops raked in tons of cash due to lack of competition.
As the market became more saturated, many businesses saw the writing on the wall. One-time fees for commercial themes or plugins did not make for a sustainable business model. Of course, some companies pushed forward with that model. They were either large enough to capitalize on an influx of new customers every year or they continued to push out new products for existing customers to buy.
Today, most theme and plugin shops utilize a recurring business model. Many of those shops also set up automatic renewals. From a business perspective, companies need to keep existing customers while bringing in new buyers to continue maintaining, supporting, and building new features for the current product catalog. Companies also need growth to build new products. A recurring fee helps ease the burden of supporting and maintaining the existing products.
Pippin Williamson saw massive revenue growth over 20 months after turning on automatic renewals across his company’s various products. Other companies have seen similar increases with the same model.
As a former business owner, I dumb-lucked my way into yearly, recurring payments. When I first launched a theme shop in 2008, that was the model I went with. I did not know a single thing about running a business except that money exchanged hands. I was in my early 20s and accustomed to living off minimum wage, digging change from the couch to buy a value meal, and finding creative ways — short of dumpster diving — to scrape by. Anything better than that was a success for me. Recurring payments just made sense, especially because I was vastly undercutting my competitors in price. That one decision helped sustain my business for many years. In hindsight, I would not have had the little success I had with a single-payment model because I never brought in enough new customers.
Having worked on the business end of WordPress for over a decade and being a member of the community for even longer, it is easy for me to say most companies should use a recurring business model.
However, as a software customer in general, I have not always maintained that mindset. There are many pieces of software that I loathe paying for each year. This was particularly true before running a business that dealt with software. There is a part of me that feels some shame for disliking the recurring model with non-WordPress software. Those businesses need to pay their employees and afford to continue making the product better.
On the other hand, there is always that part of me that simply wants to pay for something once and always have access to it. Perhaps I am a product of my culture. Software is unlike other art forms where Version 1.0 is the finished product. Customers do not always see the work that goes on to maintain, support, and continue building a product. That is certainly true when I look at non-WordPress software.
For WordPress products, I am always more than happy to pay a recurring fee because I have been on the other side. I also get to talk with others every day who are trying to run their own companies. That human variable in the equation changes how I view software in the WordPress ecosystem in a way that is much harder with other software.
A Middle Ground
Starr pointed out a middle-of-the-road option that few WordPress companies take but is often the model used for other software products. Major releases of software carry an upgrade fee while minor and patch releases are included with the initial purchase. Often, major software releases have years in between. Customers may not feel like they are constantly having to pay for updates in this system. Major upgrades also mean feature upgrades. Features are what sell the product to the average end-user.
Scrivener, a writing program for authors, uses this model. Instead of having to pay yearly, I can upgrade to the new, shiny version when it drops with loads of features. As a customer, I feel like I am getting something tangible when forking over the cash for an update.
Perhaps I am happy to continue paying for software that helps me pursue my lifelong dream of becoming a novelist. Perhaps the company simply knows how to sell to its customer base. Either way, it is one piece of software that I have never complained about renewing.
What is the Best Option?
To answer the question posed by Starr, I will always prefer a one-time fee as a customer simply because it is in my nature to want to pay the least amount I can for anything. However, I would prefer most WordPress businesses to go with whatever model is most sustainable for their specific business. We are all in this boat together, and I wish growth for the ecosystem.
One of the missing pieces with many WordPress plugin and theme shops is that they need to find creative ways to sell the customer on coming back. Support and maintenance can be eye-catching for agencies and freelancers, but they are not always selling points for the average consumer after that initial purchase.
Right now, there is a sense of complacency as WordPress-related businesses have stuck with similar recurring options over the last several years. It might be time for someone to shake things up.