Jigoshop – to free, or not to free?
As you may have seen we’ve spent the last couple of months developing a premium WordPress eCommerce plugin. Initially we planned to offer the plugin solely to our own clients but we think it’s going to be so awesome that we should share it with the community.
We now have to make a perilous decision as to how we offer the plugin to customers. When we first had the idea it was generally assumed that we’d upload it to our CodeCanyon WordPress Plugin portfolio. However, the recent rebrand of PHPurchase to Cart66 and their reasons for doing so have made us think twice.
It turns out that offering a plugin of this magnitude for a one-off fee and including support isn’t a great business model, as explained here.
For simple math, suppose we have a product that sells for $1.00. In year 1 we have 100 customers and bring in $100 dollars. In year 2 we get 100 new customers. Now we have to support 200 customers in year 2 on the same $100. By year 10 we have to support 1,000 customers on that same $100. Obviously that business model cannot be sustained.
Lee Blue – Cart66
There’s no obligation to support products on CodeCanyon but it is (justly) expected. And we do want to offer support, but we cannot sustain a flawed business model. We also do not want to suffer the wrath PHPurchase incurred from their user base when they introduced an anual subscription fee to customers who signed up believing their one-off payment would fix them up with support for life.
So we have two options:
Option A. is to offer the core of the plugin for free (sans-support) with basic functionality (PayPal payment gateway, flat-rate shipping), while our saleable products are extensions to the plugin and support packages. Things like additional payment gateways, added functionality in the form of related products, cross sells, discount coupons, shipping tables etc. Due to the smaller size, support of these extensions would likely be more manageable.
Option B. is to adopt the Cart66 approach and charge an anual fee for the entire plugin which recurs year on year should the customer need access to our support area.
Option C. is to make the entire plugin free and charge for support on an annual recurring subscription.
We’d be very interested to hear the opinions of any potential customers or indeed any customers of other WordPress eCommerce solutions.
Don’t forget to sign up over at Jigoshop.com to receive a launch notification.
matt kersley
Personally, as a customer of a system, I would like to pay for the product once (major release versions are additional costs), and get a year’s support.
After that year of support, I would then decide to pay for another year, or just use the product I paid for without the support.
If later down the line, I needed that support again, I would pay for another year of support.
This way, you are getting the lump sum for the product when its purchased, and the support pays for it’s self when it’s needed?
Just a thought
Jay
Hi Matt, thanks for your comment. We’re kind of edging towards making the core free purely because we want to distribute it on WordPress.org.
Hard to predict, but we believe the exposure generated through the official WP plugin directory would be more lucrative than charging for the plugin itself.
matt kersley
I’m inclined to agree.
One of the quickest ways to increase a product’s user base is to offer it free of charge, and people WILL pay for good quality support, especially if the product beats the competition hands down
Jay
That’s definitely the plan
If we chose to go down that road there would be premium modules too such as additional payment gateways, themes etc.
Carl Hancock
It depends on what you ultimately want to be in the business of doing. Do you want to do consulting and custom client work? Or do you want to turn into a product development shop?
If you want exposure and continue doing custom client work and consulting, then WordPress.org can bring you exposure and leads. However, also keep in mind that a large number of people that rely on the WordPress.org repository and steer clear of commercial/premium plugins are NOT exactly prime custom client work customers. They are looking for a free solution for a reason and probably don’t have a budget to pay for something so they wouldn’t exactly be a good sales lead for custom work.
If you want to become a product developer then you have to have a different mindset. You have to treat it as a real product. Market it as a real product and support it as a real product. Otherwise, it’s just some free plugin that is a side project and isn’t something that will be looked at as a serious option for businesses.
Can you still use WordPress.org to market it in that situation? Certainly, but you have to find a way to do so that turns users into buyers for it to be successful.
With our company (rocketgenius), Gravity Forms and plugin product development is what we do. We don’t do client work or consulting. We focus on product design and development. Gravity Forms is our first product and we are developing more.
Toni Anicic
How about this:
Give the plugin for free. Create different support plans like:
Monthly support plan A – includes XY hours of support and costs $XYZ.
Monthly support plan B – includes XYZ hours of support and costs $XYZQ.
Plan C – On demand support with response time up to 48h, no monthly subscription fee but support costs 2x the hourly rate of monthly support plan A.
Support doesn’t include custom development, custom development is a different service you also provide.
This is a business model that makes sense on your side. Customers will not like it, but you don’t care, they’ll like it once they realize they get the support they paid for instead of waiting in queue for months while store isn’t working and they are loosing money.
Jay
Thanks for your response Toni, interesting ideas. I think it depends on how long on it will take the average user to set up and configure their store. Assuming it will take them a month, it makes sense to me to offer a 3 month minimum deal. That ensures we maximise income while the customer gets peace of mind – they’re covered post launch and can extend the deal quarterly.
Like the idea of Plan C
Rg Enzon
Hmm it will be beneficial to all of the WordPress users out there who’s looking for a free solution when it comes to ecommerce. Though, it will be somehow tricky for your business if you keep developing it and not get some money back.
My thought is, you can have this be made available for free, though maybe offering support will be a premium feature, or customizing the ecommerce plugin based on the user’s need.
On this way, you’ll get more clients, as everybody likes free stuffs, and if they need something custom, they will come to Jigowatt as you guys are the creator of this plugin and ask if you can give support or customize it based on their site’s need.
Just thinking.. Thoughts?
Jay
Thanks for your response. I think that’s where we’re heading. The plugin will be free while support for a year will have to be paid for. We’ll supplement this with other premium modules like payment gateways and themes.
Jayson Brown
I have extensive experience with PHPurchase, if you visit Cart66 today, you would find Red Sand Editing, one of my recent projects.
I was disappointed and confused, when I found out about the switch, then realized you don’t need to pay any annual fees, the software will continue working.
As for updates, to be quite arrogant … You might not want to update the software, considering it never worked quite right in the first place, I certainly assume majority of people modified the core files.
PHPurchase worked quite well, because it was the alternative option before custom post types, now with Jigoshop being developed by a reputable company, overtime we won’t have to look back!
That said, please erase there name from your memory. A better example from an incredibly awesome WordPress Plug-in developer is Gravity Forms.
They offer a single license (with support) for $40 and a multi site developer license for $200.
Now basically for $40, I don’t even need to buy a developer license, I can continue installing and supporting every site I produce…
But, there intuitive application and incredibly efficient support screams quality, I would easily pay $500+ even if didn’t have to… Just to support there company, considering they’ve supported mine!
PS a developer licenses receives special modules including PayPal checkout and mail chimp integration.
Jay
Does the $40 multisite license grant you unlimited support? If you take a look at the quote in the blog post you’ll see that unfortunately this isn’t a sustainable business model for a product of this scale.
How would you feel about the entire thing being free and paying an annual (or monthly) subscription for support which you can cancel and renew as and when you need it?
There could also be premium modules such as payment gateways for other nations etc.
Jayson
Jay,
Honestly, I needed the developer license for the additional features so I paid $200.
Of course not everyone is like me, but if do some groundwork you will find there are probably thousands of developer licenses for Gravity Forms all around $200.
For those who can’t afford this (or don’t understand monthly fees?) $40 plan is just fine.
You could always cap support after 2 years on the single and 4 years on the dev. PS this pricing is for a highly advanced contact form … I expect your single to be around $60+.
My point, offer a price point for every scale of business. Nevertheless, in the end we are saying the same thing … Just don’t call it a ‘monthly or annual’ fee.
Or we’ll yell and scream at you just as we did with Cart666.
Jayson Brown
One more thing, the community’s biggest concern with PHPurchase & Cart66 is what countries they support. This includes standard merchant providers and shipping calculations.
If your application only works in the UK & US could you please let us know before we purchase.
I understand nobody can support every single country, but maybe consider offering custom integration for a fee, and or document a developer resource area.
Jay
For launch our aim is to support UK and US markets as we believe they will be the biggest. We will assess post launch and if demand is high enough we will endeavour to support other regions.
Obviously we will offer custom integration but due to the complexities this might not be an affordable solution for some customers. We will certainly need help from people outside the UK / US as our knowledge of international eCommerce is limited!
Jayson
I included the paid customizations rant because I didn’t want too seem off topic, I am actually desperately awaiting your software’s completion as I sold a website and cannot produce checkout capabilities. My bad.
But in the end, if you create a support network for developers who wish to contribute, or document help fine a cute kitten photo saying coming soon … anything more then, sorry we cannot help you sucka.
In my country, shipping goes by weight and distance (by postal code same as zip code) … I assumed most country’s charge the same?
Meow
Jay
There will definitely be a forum as part of the support packages and there may even be a public forum… we’ve not decided yet!
Products can have weight specified and there are table shipping rates so you should be fine.
As a precursor which payment gateways would be most useful to you?
Jayson
Well, surely you will support the basics such as PayPal and my little pony checkout and rewards…
However, seriously, for a ‘WordPress’ scenario; I don’t expect a large warehouse store to immediately jump on board, that’s what Magneto’s for, not to say they shouldn’t!
PayPal should be sufficient for most considering it accepts multiple payment formats… that and some of your fancy UK options!
Jay
Interesting. We’ve committed to Paypal and Google checkout in the free version. We’d like to offer SagePay, 2Checkout and perhaps Authorize.net as further premium options but haven’t committed to any just yet.
David Calhoun
I believe Gravity Forms has a pretty solid business model that works well for them and their users.
Jayson
Hell yea!
Hundreds if not thousands of companies purchasing their $200 development license sure adds up… The secret sauce is the quality programing and amazing support. Lets get Carl from Gravity Forms on this discussion,
I will tweet him.
Carl Hancock
Glad to hear another company is considering getting into the commercial plugin space. Don’t believe the naysayers, there is a market for it. People are willing to pay for quality and they value support.
Our flagship product is Gravity Forms and our sales model is not a traditional subscription model in the sense that we have incorporate recurring payments as part of purchasing our product. But that being said we do not provide lifetime support and updates, as Lee’s quote in your post states, it is not sustainable. I believe I actually originally said that scenario to Lee when we were discussing the support burden of offering lifetime support and updates.
What we do is we provide 1 year of support and updates. After that year, the plugin isn’t going to stop working. It will continue to work and function just as it always has. However, you will no longer have access to the support site or receive updates when we release new versions. If you want to continue receiving support and updates after 1 year you can renew your license at a discount.
We are providing a discount on license renewals. The discount varies by license. The middle and upper tier receive a greater percentage off (50%) than the lower tier (25%). The renewal is good for another year of support and updates and is one time payment for that additional year.
To renew your license it is a decision that is up to the customer and they have to elect to do so. We feel this is a better way to handle it than using recurring payments because let’s face it, people forget they signed up for it and they may no longer want it but because the recurring payment is scheduled… they get billed.
We have found this is the best way to handle sales for our commercial plugins.
That being said, if you want to be successful you have to treat your plugin as a real product. It isn’t just a plugin, it’s a full featured piece of software. Quality is key and support is a big part of that quality. The product has to kick ass and your support has to kick ass. Do that and your clients will love you and sing your praises.
Jay
Thanks for your input Carl. I think we’re getting very close to some sort of conclusion here.
Very interesting to hear that a simple detail like making a subscription not automatically renew has such a big influence on customer satisfaction.
Sean Johnson
Option A is the most common, and the most transparent. You are giving users something for free – if they then need more advanced features they pay. It’s the quickest way of quickly building a user base, in turn raising the profile of your product.
You can offer 1) FREE basic features 2) PAID FOR basic support for one year, 3) PAID FOR pro features and 4) PAID FOR pro with support for one year
I’m also a supporter of paid for plugins as (typically) the quality and level of support is far above that of free plugins
BUT, don’t ever auto renew support subscriptions because everyone forgets to cancel and it’s pisses them off when you take money they don’t want/need you to
(you reading this PHPurchase/ Cart66??)
Jay
Thanks Sean, we’ll be putting a post together soon outlining our plans and including a preliminary feature list
Rachel Andrew
Found this post via a comment on my blog post discussing our pricing model for Perch. We opted for a fixed price per site, no additional costs for support. In our experience the idea that support requirements continue throughout the life of the license hasn’t held true. People might need support at the beginning, when they first install – after that we don’t usually hear from most people as their site is up and running. Ongoing support is also balanced by the fact that people buy a license for each site they do – but don’t need the same amount of support for each install.
A possible point of difference however between our products is that we offer a standalone CMS – you have a plugin for another product. I imagine that you may well get more support requests during the life of a site using a license as there could be issues with WordPress upgrades and so on. You have less control over the overall environment than we do.
Ravi
Hi, JigoShop looks really good, although I’m aware of other PayPal e-commerce plugings for WP so you’d really have to outline how this is better than the competition. I prefer to use a plugin before I outright buy it, so I would really say offer a free version which showcases how good your kit is. However, obviously you are looking to make money from it, so the simplest way I can imagine is to offer a premium version. Please bear in mind however that if the free version just doesn’t cut the mustard, then I won’t really bother with any other versions. Maybe the free version could work for a limited number of products, and for a larger catalogue/more customers users can upgrade to premium versions?
As for charging for support – in my experience I rarely ever use paid for support since I can post on a forum online (for free) and then try to get help that way. Actually another idea just popped into my head is if you can somehow implement advertising into your plugin – the backend only however. Some sort of vertical advertising could generate some extra revenue for you guys…
Really looking forwards to seeing the plugin!!!
Jay
Why Jigoshop?
Leo
Hi there! I’m running our webstore on Cart66. While paying ensures we get good support, at times, it’s frustrating for paid customers like us when there are many missing features on the plugin.
I personally would vote for paying for the extras =)