Phase I: The Beginning – Patience through Randomness
We began as a very small team of 4 from Chennai, India and we were into Client Servicing.
We first discovered the potential in the world of WordPress when one of our clients expressed a problem that he faced while maintaining his sites. We then noticed that this was a problem that most people in the WordPress community faced.
Client servicing became monotonous by then and we decided to take the plunge and enter the world of WordPress. We knew there was a market but we had no clue about the potential. So we began to test the waters.
As we began working on IWP, we decided to sell the whole deal for $699 but then we decided to be more flexible and dropped that idea. We felt that our users will not have a choice but will have to buy the whole package even if they don’t need most of the features.
Why we chose the Freemium model
We then looked for inspiration elsewhere and we scanned the market as well. We realized that the WordPress community is inclined towards the Freemium model. WooCommerce was a great inspiration with their Freemium model back then. They had a free base model along with an option to buy individual extensions. We also decided to give our very valuable base panel for free.
The pain of constantly updating and maintaining websites takes the fun out of WordPress and makes the experience tedious. This is why our core features are always updated and available for free.
A glimpse into our perspective on marketing!
Here we realized that real value speaks for itself and its not necessary to invest in marketing. In our case, we had a very valuable base panel which was available for free and people who saw value in it spoke about it.
Real value creates an aura of credibility around your product especially when the “free” part of your freemium model is very valuable.
Phase II: The Transition-Courage through Chaos
Lifetime licenses and the initial buzz
Our free base panel created a lot of buzz around IWP among the WordPress community. Donnacha MacGloinn (https://twitter.com/wordskill), introduced us to the lifetime license model Gravity Forms adopted when they started out. We decided to go with it as well. We introduced our first paid package with lifetime licenses for $199 when we released our first 6 addons.
The lifetime licenses gave our initial set of customers, who were like our investors, lifetime access to all our current and future addons and updates. We will forever be grateful to those who trusted and invested in us when we were nobodies.
An uncomplicated pricing strategy with addons
Donnacha also advised us to keep the pricing simple and we went with his advice here as well. We segmented the prices of our addons into three categories: $49, $69 and $99 based on the development, maintenance and support costs.
What we learned in this stage
We made $100,000 at this phase which was much more than what we earned from Client Servicing! This helped us build our team and improve our support.
We now learned that pricing should be simple and straightforward. It shouldn’t confuse your potential customers . When your pricing strategy is centered around the needs of your target group and not profitability, you will eventually become a profitable business.
Phase III: Clarity, consistency and the desire to persist with value
Our current Pricing Model – Addon Suite
We cannot say we arrived at a final destination with pricing but our journey so far has led us to where we are today. We decided to withdraw the lifetime licenses plan. We figured out that all our addons together cost more than $1000 but we could afford to give the bundle out for $399 considering the support and the recurring costs were not very high for a lot of our addons.
This is how the Addon Suite came into being. With Addon Suite, our users could afford the whole deal for $399 with an annual renewal fee of $199.
Creating further value through customer support
At this point, we discovered that there was a huge imbalance in our support. We gave suite owners and free users the same priority. We hold value exchange as our core belief but our support did not reflect this. This is when we decided to prioritize support based on how much our users invested in IWP.
What we learned from Pricing so far
Now we learned that no pricing model is ideal for any business. Businesses should learn from their experiences because pricing cannot be standardized in the new economy.
Pricing is an interaction between three elements:
1. The size of the company and its nature
2. Market Dynamics
3. Interaction with individual customers
The size of a company matters; in our case we are a bootstrapped company with small team so we had the option of flexible pricing but we don’t have the luxury to experiment too much.
The market has particular needs and there is a demand for services to solve issues that arise out of those needs. The market also has a spending pattern which businesses have to be aware of.
Pricing acquires a new dimension when businesses personally listen to individuals who use their product and try and understand the best way to solve their problems.
Maybe we’ll write again when we rethink our pricing strategy!
This is what we learned though our pricing trials. Share your thoughts in the comments below or if you have a story about pricing your business, we’d love to hear all about it!