April 17, 2015

For episode 38, we dive into how we have validated the business models for our plugins and how we use similar methods to validate new features and enhancements.

This episode was sponsored by WP Ninjas, the creators of Ninja Demo and the highly popular Ninja Forms plugin.

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Show Notes:

Transcript
INTRO: Welcome to Apply Filters, the podcast all about WordPress development. Now here’s your hosts, Pippin Williamson and Brad Touesnard.

PIPPIN: Welcome back to Apply Filters, everyone, for Episode 38. Today, we want to talk a little bit about business validation, kind of looking at if you’re building a commercial plugin, you’re building a plugin that you want to sell and you want to put out there, how do you kind of validate the business model behind it? Will you have a customer base? Will you be able to sell it? How do you want to sell it? Kind of like what model do you want to go after? We want to just look at that a little bit from our own perspectives and our own experiences and how to share some of those experiences with you.

First though, Brad, I believe you just got back from MicroConf, which sounded like a really cool conference. Are there any highlights or anything you’d like to share with us before we get started?

BRAD: Yeah. MicroConf is a business conference, but it’s like the antithesis of the VC kind of way of starting a business, like the typical go around asking for money, a bunch of money, and then start a business. You know, I’m going to be the next Facebook for dishwashers or something, you know. It’s the antithesis of that, right? It’s people that might have a full-time job and are trying to do something on the side to not have to work a full-time job; to work for themselves going forward and maybe even have aspirations to hire people and start a full on business.

It was really cool. I went last year, and I just took away so much, I just had to go back this year. It was, again, phenomenal, a phenomenal conference, and just little takeaways that you get in the sessions and just chatting with everyone. I’ve just got a list probably with 20 things on it that are just things to do this year.

PIPPIN: That’s awesome.

BRAD: Yeah, so it’s definitely worth attending if you are thinking about starting a business.

PIPPIN: How many people were there this year?

BRAD: I don’t know. It seems like there are 300, I would say, but I’m really guessing.

PIPPIN: So not super large, but not really tiny either.

BRAD: No. It’s, yeah, a good size, I think. I definitely didn’t get to see everyone, like talk to everyone. It was bigger than that, but I felt like I got maybe 25% or something. You move around quite a bit, and it’s kind of like back to back.

I went to Vegas, and I probably got ten minutes of sunshine the whole time. The rest was just indoors. That’s partly my fault for going, flying in the day that it starts and leaving the day that it ends, but still it’s pretty packed. There’s not a lot of downtime, which is a good thing, right?

PIPPIN: Really, there shouldn’t be at a conference, not if you’re going to go and get your money’s worth.

BRAD: Yeah, and the WordPress contingent is definitely growing as well. I noticed that this year. There were a lot more WordPress folks and folks that have been in the WordPress space for a long time, actually, started to show up, whereas previously it was more kind of guys like me that are kind of just getting started. So that was really cool to see.

PIPPIN: That’s awesome.

BRAD: Yeah. Man, what have you been up to?

PIPPIN: Well, over the last two weeks, we’ve finished up Affiliate WP 1.6 and finally got that shipped, which had been a couple of months in development. That was a nice little relief to get that done and kind of take it easy after that.

BRAD: Nice.

PIPPIN: …shipped it out.

BRAD: That’s a major release, is it?

PIPPIN: Yeah, it was. It was probably one of the larger ones that we’ve had, and we actually ended up shipping it out on the one-year anniversary for Affiliate WP, so that was fun.

BRAD: Oh, that’s nice. Yeah.

PIPPIN: It was kind of cool to look back and see, okay, over a year, we’ve had 6 major releases and something like 25 point releases.

BRAD: A little birthday cake in there somewhere.

PIPPIN: Yeah, I think we put a birthday cake on our post, actually.

BRAD: Oh, yeah? Nice. It was our anniversary yesterday.

PIPPIN: For, let’s see — would that be two years?

BRAD: Two years. Migrate DB Pro was released two years ago yesterday.

PIPPIN: That’s excellent.

BRAD: Yeah. I never really celebrated these milestones until I kind of saw you doing it. I was like, that’s kind of a nice thing to do actually.

PIPPIN: I think it’s a good opportunity to kind of look back and see what you’ve done, both good and bad, whether you want to look at it financially or just how you’ve changed as a product, how your code base has changed, how your team has changed. We had Affiliate WP, which was on the 8th, and then we had EDD’s three-year mark two days ago? Yeah, I think on the 14th was three years for EDD, and it’s always fun. We’ve got to kind of step back and look back over a year and then over three years of what’s changed to kind of look back at highlights and not highlights.

BRAD: I wonder. It seems like there’s a pattern here of, like, launching in spring. You know what I mean? You slave through the winter on something and then it’s ready by spring.

PIPPIN: I know that I at least do everything in spring. I don’t know if that’s intentional. That’s just how it’s happened. I’m not 100% sure, but I feel like I launched Restrict Content Pro in spring as well.

BRAD: Hmm.

PIPPIN: I don’t know what it is. Maybe it’s just kind of a natural — I don’t know. Maybe you get done with the holiday season and you start kind of sitting down and focusing during winter. Then, as things are kind of warming up, both figuratively and literally, you want to get productive and push things out.

BRAD: Yeah. I’ve heard Canadian entrepreneurs use the winter as, like, a plus here for starting a business and running a business because horrible outside, right?

PIPPIN: Yeah.

BRAD: It’s super cold and probably rainy sometimes, so it’s easy to stay in and work when it’s so crappy outside.

PIPPIN: Yeah, definitely.

BRAD: Whereas if you were in California or something, it’s pretty much nice year round, right?

PIPPIN: They don’t ever get anything done there because it’s always nice.

BRAD: Yeah, exactly. Exactly. It must be really hard to be in a startup in San Francisco because it’s just nice out all the time.

PIPPIN: If you like the outdoors, at least.

BRAD: Yeah, exactly. Yeah, do you want to move on to business validation, and talk a little bit?

PIPPIN: Yeah, we’ll talk about this.

BRAD: How did you validate the idea? Easy Digital Downloads or, actually, Restrict Content Pro was before Easy Digital Downloads, wasn’t it?

PIPPIN: Yes, it’s one of the oldest for me.

BRAD: Right.

PIPPIN: It’s four or five years old now.

BRAD: How did that come about and how did you validate that it was a good idea to go forward?

PIPPIN: Well, for me, each one of the major products has been different. Restrict Content Pro was done differently than EDD, which was done differently than Affiliate WP. I’m going to kind of go through each one and look at them because I think each one has valuable insights that we can look at.

For RCP, that was built purely for my own purpose. That was right when I was starting PippinsPlugins.com. I wanted to start writing tutorials. I wanted to take a membership. I went and found the membership plugin from CodeCanyon at the time, and just found it was not what I wanted. It kind of hinted at the features that I wanted, but felt very incomplete to me.

BRAD: Right.

PIPPIN: At the time, I was not aware of any of the other membership systems that we have now, some of which were actually around then, and there were a couple of them that I just chose not to use. And so, I decided to just build it myself, and then I did. Then, at the time, I was starting to release more and more plugins on CodeCanyon, and I had built a couple that were reasonably successful. And so, I just decided, let’s throw it on CodeCanyon and see how it does. That was as much business validation as it had. It was building it for myself, and saying, “Hey, I built it. Let’s try and sell it.”

BRAD: Right.

PIPPIN: And it worked out well.

BRAD: It was kind of a scratch your own itch kind of thing.

PIPPIN: It was very much a scratch your own itch type thing.

BRAD: You needed it anyway, so why not build it so other people can buy it from you too?

PIPPIN: Yeah. Yeah, exactly. I had already managed to get some success with selling plugins through CodeCanyon at the time. I had an image slider up there. I had a post types plugin. I had a couple other little, small plugins, and they were doing reasonably well. I guess I could also claim that some of the business validation came from simply knowing that there was a marketplace on which to sell it.

BRAD: Right, right.

PIPPIN: As opposed to try and put it on my own site and selling it, which would be a little bit different.

BRAD: And you said there was another membership plugin already up there.

PIPPIN: There was….

BRAD: Did you look at their numbers to see if it was–?

PIPPIN: I did. And, at the time, they had reasonably good sales, at least in my opinion, and so I knew that there were customers buying membership plugins on CodeCanyon.

BRAD: Right.

PIPPIN: And I felt that I could make one that was much better, and I could try and do well. It actually ended up surpassing theirs by quite a bit in the end. Honestly, I think that’s just because it got built out more. It ended up having more features because I built the features that I needed to have that that one didn’t have when I tested it.

BRAD: Right. Aren’t there some people with high profile using Restrict Content Pro?

PIPPIN: There are. One of the examples that most people in this world would know about it CSS-Tricks.com.

BRAD: Chris Coyier.

PIPPIN: Yeah, Chris Coyier uses it. It’s called The Lodge, runs on it, which is his membership section. There are several others as well, but they’re less known, at least in this community, but that would be the main one. That’s been fun for me to see it validated in that kind of scenario as well.

BRAD: Right, and I imagine it’s being used quite extensively there. He probably gets a lot of traffic.

PIPPIN: I would assume so, just based on his site. We actually migrated his site for him. He used to be on aMember. Wait. Is that right? Yeah, I think he was on aMember, and we moved him to RCP.

BRAD: Right. There’s definitely some room for improvement when you’re talking about aMember.

PIPPIN: Well, unfortunately, it’s a difficult system to move away from.

BRAD: Yes.

PIPPIN: Moving subscriptions from any system to any other system is difficult.

BRAD: Yes.

PIPPIN: And it’s not something that is particularly enjoyable.

BRAD: Yep.

PIPPIN: But it can be very rewarding. Going back to business validation, so let’s compare. You asked about EDD at first, and then we talked about RCP. That one was actually very different. Well, not very different. It started the same way. It started by still scratching my own itch.

This was about two years after RCP, maybe a year and a half, and I decided that I was starting to get tired of selling through the marketplace, and I wanted to build my own site. I wanted to sell through my own site. And, at the time, I didn’t really like the e-commerce options that I had, and so I actually built a really tiny plugin that just allowed people to pay for a plugin through Stripe and then they got a download link.

It’s still available on GitHub. It’s still there, but it was never released on .org or anything like that. I built that, and that to me was kind of my initial testing ground for what would become EDD is selling my own plugins through it. It worked pretty well.

But, there was more validation to it than just scratching my own itch that that point because, then, once I had built it and realized that I really wanted it, I started kind of reaching out, asking people, “Hey, is this something that you feel is needed? Is this something that you would want? Do you want a better or a different way to sell digital products?” There was a lot of validation that came from that. That just showed me that there was some need for it.

BRAD: Right. It’s funny, just while you’re talking here about, you know, you’re looking at the other systems that are out there, and you’re just not happy, or they’re not quite fitting for you. I can totally relate to that. It reminds me of a quote from Shuan Inman. Do you know who Shuan Inman is?

PIPPIN: The name sounds familiar.

BRAD: He’s a developer. He does HaveaMint.com and Fever app.

PIPPIN: Okay.

BRAD: Anyway, he’s a PHP developer, and he’s been around for quite some time. And a designer too, I guess you’d call him. Anyway, his quote is awesome. It’s, “Never met a wheel I didn’t want to reinvent…sigh.”

PIPPIN: Nice. Yeah, I think it’s very applicable. Everybody has their own specific wants and needs, and there are a lot of great systems out there for everything that you can imagine, but not one of them is perfect for every use case.

BRAD: No, that’s true.

PIPPIN: At the time, even when building these, there were good options out there. They just didn’t fit what I wanted.

BRAD: Yeah. The options out there, my guess would be that they didn’t really serve digital downloads great. Is that why?

PIPPIN: Yeah, that was a lot of it. At the time, EDD started before WooCommerce …Jigoshop. At the time, it was Jigoshop that we were looking at as one of the other main e-commerce. It was Jigoshop and WP eCommerce were the main ones. Jigoshop had, I felt, a very severe limitation in that you could only sell one file. You couldn’t add multiple files to a product.

BRAD: Right.

PIPPIN: WP eCommerce, on the other hand, that was when it was just starting to turn around, so it’s got a bit more of a rocky history. Now it’s doing really, really great things, and the team behind it is doing really awesome things. But, at the time, it was still kind of in that limbo period where WordPress was evolving.

BRAD: A lot of legacy stuff, right?

PIPPIN: What was that?

BRAD: There was a lot of legacy stuff still.

PIPPIN: There was a lot of legacy, but it was also, WP eCommerce was built on top of pre post types and things like that, and so there were a lot of really kind of janky systems that they had to put in place to make things work, whereas we had new systems like Jigoshop and WooCommerce and Shop coming around that were able to do things in more elegant fashions because they were newer. And so, at the time, I wasn’t really looking at that. They did digital downloads pretty well, but they had other legacy parts that were causing difficulties.

BRAD: Right, so if you wanted to extend it and stuff, it would be a little bit of a pain.

PIPPIN: Yep.

BRAD: Or maybe a big pain.

PIPPIN: Yeah, depending on what it was.

BRAD: Yeah, exactly.

PIPPIN: How about you? For WP Migrate DB Pro, was it some of scratching your own itch? Did you just see a pain point in the community? Where did you get the validation for the product itself? Then, I think, maybe after that we should jump into validating business models for them.

BRAD: Yeah. Okay. I was working at an agency in Vancouver, and we just started doing WordPress sites because we were kind of experimenting with a bunch of different CMSs and just started doing WordPress. I was running into the problem of having to move a site from my dev environment to staging and then staging to production. Sometimes I’d have to do this multiple times a day because we had content editors in-house, and if I finished a feature, I’d have to get it up there so that they could use the feature to add the content.

It was just scratch your own itch, and it was not a business idea or anything like that. It was – this was a little tool I built to make my life easier. I just threw it up on .org just kind of haphazardly, and it just sat there for a few years. It just kind of developed a following because other people started to appreciate that it solved that problem for them. I didn’t even market it or tell anyone about it. It just sat there, and people just stumbled on it through a search.

PIPPIN: That’s kind of the accidental business where you build something with no intention of turning it into a business, and then you realize that simply by people expressing their interest and their need for it, you realize there was a business behind it.

BRAD: Yes, absolutely. I kind of get the sense that it had a loyal following because this was before there were reviews on .org. There were only ratings, right?

PIPPIN: Right.

BRAD: People’s voices weren’t being heard, so I didn’t really know besides the support forum. But it’s a pretty simple plugin, so there weren’t a lot of support issues. But I just had the sense that it was doing pretty well, so I put a form in the sidebar of the plugin and asked people, “Pro version?” and asked people if they would be willing, for these extra features, to pay a price for it. I collected 300 email addresses and how much they’d be willing to pay and that kind of thing. It seemed like people were willing, and so that was how I validated it as a potential business.

PIPPIN: That’s awesome. Are you doing the same thing with the new ACF plugin that you’re working on? Was that kind of validated in the same way?

BRAD: I’m doing exactly the same thing, yeah.

PIPPIN: Nice.

BRAD: The only thing I’m not doing this time is asking extra questions for, like, how much they’d be willing to pay or not. They just sign up for the mailing list about the pro version, if they’re interested, because I have a good feeling already that people are willing to pay for it, so I don’t feel like I need that extra information this time around.

PIPPIN: Sure.

BRAD: I plan to do that again. I plan to use the same kind of process repeatedly in the future. Kind of put a free plugin up to see how it does and then collect user feedback to see if they’re willing to pay for….

PIPPIN: I think it’s a great way to both validate new plugins, but also to validate features within plugins. We’ve done that a few times. Actually, I’ve done it in Restrict Content Pro, Easy Digital Downloads, Affiliate WP and others where we’ll have this plugin or this feature that we built, either as just a code snippet that somebody can use, or we built it as a plugin on .org and released it for free. Then just kind of see how people use it. It kind of validates the idea of, well, maybe we’ll go ahead and put this into the core plugin, or may be we’ll flesh this feature out a little bit more and actually build it as opposed to just kind of here’s a little pseudo version of it.

BRAD: Right, so actually make an add-on or something that fleshes it out.

PIPPIN: Yeah.

BRAD: Yeah, yeah. I totally agree with that. Also, we tend to just kind of listen to our support. If we get the same question over and over again or the same request for a feature over and over and over again, those ones kind of just bubble up and stick in your mind.

PIPPIN: Yeah.

BRAD: We don’t even keep track of them because it’s kind of like a natural filter, right?

PIPPIN: Mm-hmm.

BRAD: Your brain just kind of remembers, oh, gees, I heard that last week, and I heard that the week before. You kind of just know the ones that are top of mind.

PIPPIN: Absolutely. For us, an example would be our front-end submissions extension for EDD, which allows for creating a vendor marketplace so that the vendors can have their own dashboard for managing products, orders, and such. We have an Amazon S3 extension, which, since you’ve done some Amazon stuff, you know it’s widely used. A lot of people really want Amazon S3.

BRAD: Right.

PIPPIN: What we didn’t have is we did not have support for using our Amazon S3 plugin with front-end submissions. Every week, we would just get tickets in the form that says, “Do these two work together? Can I use this one? Oh, I need a refund because I didn’t realize that these two didn’t work together.”

BRAD: Oh, yeah.

PIPPIN: It was just very apparent that we needed to build support in between them, and we do.

BRAD: Otherwise you’re just going to have to keep fielding those questions. There’s motivation.

PIPPIN: Yeah, over and over and over again.

BRAD: Yeah. Yeah. I like going that route. I used to think that, like, I know User Voice, I think it is, where you can have a features board.

PIPPIN: Yes.

BRAD: And have people vote up features and that kind of thing. I used to think that was a good idea, but then I don’t know. I think it’s better just to kind of listen because, the problem is, that sets expectations, right?

PIPPIN: Absolutely.

BRAD: It’s a public list, and then people think that just because–

PIPPIN: That’s why we don’t do roadmaps.

BRAD: Yes, that’s why I don’t do roadmaps either because we might decide in the future that’s a bad idea, right?

PIPPIN: Wait. Let me clarify that. That’s why we don’t do public roadmaps.

BRAD: Yes, yes.

PIPPIN: Because there’s nothing worse — well, maybe. There are not many things worse than having a feature that’s been roadmapped and say, “This is coming later this year,” and getting tons and tons of vote for it. People really want it. Then be like, “Sorry, guys. This is not happening.”

BRAD: Yeah, I totally agree. I made the mistake when I redesigned the features page of Migrate DB Pro. I made the mistake of putting a coming soon, a multisite tools ad on there. I must have redesigned like eight months ago or something, right?

PIPPIN: I saw that one, and I got really excited.

BRAD: Yeah. Lots of people did, and so every once in a while we get an email saying, “When is that coming? You said soon.”

PIPPIN: Yeah.

BRAD: Soon is very vague and subjective.

PIPPIN: We’ve had a release coming soon for six months, and it’s still a couple months out.

BRAD: Yeah, exactly. That’s the other thing why I hate giving dates because things take longer than expected, even when you allow for….

PIPPIN: Yeah. I have a ticket right now that just sticks in my mind where we have an update for an extension coming out. It’s been almost ready to go for, like, three months. Every time we go back and forth between the developer of the extension and the customers that want the feature, and they’re like, “Hey, is there any update on this?” “Yep, it’ll be out by the end of the week.” Seven weeks later, “It’ll be out by the end of the months.” Two months later, “Eh, it might be out by the end of the month.”

BRAD: Exactly. Yeah. Yeah, I mean I hate doing that. I feel bad when I do that.

PIPPIN: Oh, yeah.

BRAD: So that’s why I just try not to do it anymore.

PIPPIN: I think it just goes to show that it’s good to try and avoid setting hard dates or setting those kinds of expectations.

BRAD: Yeah.

PIPPIN: I wouldn’t want to encourage anyone just to not tell people features were coming because that’s a great way to help build up excitement for a product and to help build, especially when you do follow through with those features. But they are very easy to kind of get yourself into a trap.

BRAD: Yeah. Here’s an example. Just yesterday someone was asking about scheduling, scheduling migrations. And I told them they could do it with the CLI add-on and a cron job, right? But we were considering building a UI so that you could schedule migrations through the plugin. But, just considering. There’s no date. It’s not even scheduled to start working on it. We haven’t even scheduled that yet, so just keep that in mind.

PIPPIN: Yeah, it’s an idea.

BRAD: Yeah, it’s in the idea phase.

PIPPIN: Until there is sufficient code actually written to show a demo, I don’t really consider a feature to be going in.

BRAD: No, exactly.

PIPPIN: Let’s jump over and talk a little bit about business models now. We’ve covered a bit of business validation, business and just kind of like development validation of – should you do this.

How about for you? How do you validate how you’re going to sell your plugin? When you’re building WP Migrate DB Pro, or as you’re building the new ACF plugin and other plugins that you may release in the future, how are you validating how you want to sell it? Do you want to do a free version with paid add-ons? Do you want to have only a commercial version, light, and a pro?

BRAD: Yeah.

PIPPIN: What do you do?

BRAD: Yeah, those are the three different models that are pretty common in the WordPress space. So, like Easy Digital Downloads, you have a free, core plugin, and then most of the add-ons are paid. There are some free ones out there too, but then there’s another model would be just paid. An example of that would be BackupBuddy, right?

PIPPIN: Mm-hmm.

BRAD: I don’t believe they have a free version of that, right?

PIPPIN: They do not.

BRAD: Yes, so that’s a good example. Then a light version and a pro upgrade, that would be like our plugin: Migrate DB Pro. We have a free version in the repo and then we upgrade. You can upgrade to the pro for extra features and stuff. We have add-ons, but they’re part of if you pay more, if you get the second package up.

PIPPIN: Right.

BRAD: Then you get access to the add-ons. I think you’re using the same model for Affiliate WP, right?

PIPPIN: Yes, we’re using the same add-ons model where, if you buy a higher license, you get these extra add-ons. We don’t sell them individually, but we do not have a free version.

BRAD: Ah, so you don’t have a free version. Oh, I didn’t know that actually.

PIPPIN: There’s no free Affiliate WP.

BRAD: Yes, I guess I should have.

PIPPIN: With the exception of GitHub.

BRAD: Yes.

PIPPIN: Because it’s on a public repo.

BRAD: Right, right, right. I guess what I did initially for this is I looked at one of the most successful plugins out there that I admired, which was Gravity Forms. I just said, “That’s what I’m going to do. Seems to be working for them.” Right? I mean I think that approach is a pretty good way to go, right, if you haven’t done it before. Look at someone who is succeeding and, if it makes sense, go with that.

PIPPIN: Absolutely.

BRAD: That’s really what I did. It wasn’t anything magical. What about you? How did you decide on the model you did for EDD?

PIPPIN: EDD, which is the only plugin I’ve done that way. It’s the only one. EDD, the core plugin is free and then there are paid upgrades for it, which are the add-ons, so things like payment gateways and stuff like that. I think I did it for two reasons: one, because WooCommerce was doing it and Jigoshop was doing it, and they both appeared to be doing very well. To me, it seemed like the model made sense for an e-commerce plugin.

I think one of the reasons it made sense, and I still think it does, is because an e-commerce plugin is going to have far more add-ons than just about any other plugin out there. You could look at something like Gravity Forms or Ninja Forms or any other form plugin or a bunch of other different types of plugins and be like, yes. They could have a ton of add-ons. There are tons of little add-on features you can build for them. But they’re not things that you would market commercially a lot of times.

Whereas an e-commerce plugin, on the other hand, you have 100 payment processors that you’re going to integrate with if you’re building out because there are so many payment processors around the world. You’re going to integrate with every newsletter system. You’re going to integrate with a bunch of different affiliate marketing systems. You’re going to integrate with all sorts of different things like that, CDNs, et cetera.

And so I think an e-commerce inherently plays better to having the paid add-on model simply because there are a lot more features that people need that are much more difficult to build into a core plugin. Sure, you can build an e-commerce plugin that has Stripe and PayPal and Authorize.net, et cetera all in core, but if you really want to start building out a system that a wider audience can use, you have to do a lot more than that. While the majority of people use Stripe, there are still a huge number of people that use smaller payment processors around the world.

BRAD: Right. Is the advantage there? By making the core free, you’re inviting a bigger army of developers to help you out?

PIPPIN: I think that’s one argument for it. Whether this actually works or not, I think this is one of the ways that you can look at it is that by providing a free one, you make it very easy for someone to jump on and try it. Then once you have convinced them that it is a good system that they want to use, it’s easier to get money out of them as opposed to just putting up a paid version that is going to immediately shut off a ton of people. I think it’s one of the same reasons why a lot of services, like subscription services, will say your first month is free because it gives you that no risk option. You can try it. If it doesn’t work, you cancel and you don’t pay anything.

BRAD: Yeah.

PIPPIN: I think there are definitely cases where that does not really apply or doesn’t work out as well as we want to think it does, but I think it is still a benefit. It also opens up our immediate audience. Just the traffic from .org alone is enormous.

BRAD: Right. What are the downsides of that model that you felt with EDD?

PIPPIN: Nickel and diming is one of the biggest ones that we see every now and then where somebody just says, “Hey, I really want to use this, but suddenly I realized that I need this add-on and this add-on and this add-on and this add-on and this add-on and this add-on,” and suddenly you’re paying $500.

BRAD: Right, right, right.

PIPPIN: Which is very easy to do, and I don’t know that it’s a good thing or a bad thing. As a business, it’s a good thing when that person does make that commitment. But if we were to bundle all of those features into the core plugin, would we have priced it at $500? Probably not. And so it’s easy for someone to look at it that way and not be very happy with it.

Outside of that, it makes it complicated. Going to a site and seeing 200 different upgrades that they can purchase is overwhelming. Go to the extension store of EDD or WooCommerce or any other plugin that is an add-on model that has a large number of add-ons, and it’s going to be difficult for you to figure out what you need.

Some people know, when they go to the store, that they need Stripe, so they can find Stripe and get it. Some people are going and they don’t know what they need yet, and it can be very difficult and overwhelming. I think that’s a huge downside to it.

BRAD: Right. If they have some payment processor that’s obscure, there’s probably no extension for that.

PIPPIN: Yeah.

BRAD: But I guess that would be a problem, regardless, no matter what system you’re on.

PIPPIN: I think that’s one really where a model like what you’re using or Gravity Forms uses or we use for Affiliate WP really shines because there is no question about what you buy. It’s a question of are you going to buy or are you not?

BRAD: Right.

PIPPIN: As opposed to do I need this, do I need this, do I need this, do I need this? Well, maybe I want that one too.

BRAD: Right.

PIPPIN: If we look at trends in e-commerce, there are a lot of studies that have been done that show the longer it takes someone to decide on the purchase, the more likely they are to abandon it.

BRAD: Right, and the more options they have, the longer it takes.

PIPPIN: Right, right.

BRAD: Yeah.

PIPPIN: Which makes things difficult.

BRAD: Yeah.

PIPPIN: I think that’s one of the biggest downsides from it. The other model that we have, which we’ve touched on briefly, so like with WP Migrate DB Pro, you have a free version and then you have the paid upgrade.

BRAD: Yeah.

PIPPIN: Now let’s look at Affiliate WP for example. That one has no free version. It’s only a paid upgrade. I think that one of the downsides to that is people come to you and say, “Hey, is there a free version that I can try, or is there a demo that I can try or something like that?”

BRAD: Yeah.

PIPPIN: Now, we don’t do it. We don’t have a demo. We used to. We found out it actually decreased our sales, which was kind of interesting.

BRAD: Right. If people ask for it though, is it still around? Can I get to it?

PIPPIN: No, it is not around. We disabled it completely.

BRAD: What do you do when people ask for a demo?

PIPPIN: We have a 30-day refund policy. If it doesn’t work, with no questions asked, here’s your money back.

BRAD: Yep.

PIPPIN: And so that’s our answer to, “I want a free trial.” Well, okay, purchase it. If it doesn’t work, here’s a refund.

BRAD: Right.

PIPPIN: There are still people that battle that, and they’re like, “Well, no. I want a free trial.”

BRAD: Yeah.

PIPPIN: We’re like, “No. Sorry.”

BRAD: We do the same. We have the same thing, and we have a 60-day. I think it’s 60 or 90. I can’t remember. But, yeah, a money back guarantee, you know, no questions asked, and so yeah. Give us your money first. If you don’t like it, then we’ll give you your money back. No problem.

PIPPIN: Yep.

BRAD: I find that works pretty well. It has for us, anyhow.

PIPPIN: Yeah, I think it works really well. Also, I think it’s a great sales pitch just putting up there that says, “Look. Even if you’re not sure, it’s okay because you can purchase it as a risk-free.”

BRAD: Yes, exactly. Take the risk out of the purchase and it makes the buying decision a lot easier. I’m going to bring up a new topic here. It’s very common in the WordPress space to do a year of updates and support that come with the purchase. Then, after that year, they have to renew to continue receiving updates and support.

PIPPIN: Mm-hmm.

BRAD: That’s pretty much the golden standard across WordPress products now.

PIPPIN: Yes.

BRAD: It’s also common that, after that year, when it comes time for that renewal, they have to manually renew, so they have to either put in their credit card info again or maybe it’s stored again, but they have to hit a button somewhere that says, “Yes, I want to renew.”

PIPPIN: Yeah.

BRAD: I haven’t seen too many people doing automatic renewals. What do you think about automatic renewals, and do you think it would be a bad idea to implement them?

PIPPIN: I think it’s a phenomenal idea, and I’ll give you a simple number to why.

BRAD: So a good idea?

PIPPIN: I think it’s a great idea. Our renewal rate, I don’t know what our renewal rate is, but it’s not upwards of 50%.

BRAD: Right.

PIPPIN: Let’s put it somewhere between 20% and 30% at the moment. Great. I know the renewal rate for somebody who does automatic recurring. Their renewal rate is 88%.

BRAD: Wow.

PIPPIN: Okay. Problem solved. That’s all you have to look at. One of the reasons that I’ve always been kind of opposed to doing recurring payments for things like that is they look at it and say, “Well, people are going to not realize that they’re renewing because people don’t read. And then they’re going to ask for a refund, and your refund rates are going to go up.” Who cares if your refund rate doubles?

BRAD: Yeah.

PIPPIN: Your renewal rate quadrupled.

BRAD: You’ll still be ahead. Yeah.

PIPPIN: Yeah, it’s still ahead, so it’s actually something that we’re going to be looking at implementing pretty soon.

BRAD: I think the thing I was most concerned about when I was first starting out and decided to just do what everybody else, because the business I had before that was recurring, and we did automatic billing. It was Web hosting, right?

PIPPIN: Mm-hmm.

BRAD: And so it was really odd to me that you wouldn’t do automatic billing, but I just kind of went with the flow and did what everyone else was doing. The main reason I was concerned was charge-backs. What can happen is if they see a charge on their card and they don’t realize that it’s for this plugin.

PIPPIN: Sure.

BRAD: Right? Because, like you said, people don’t read their emails sometimes, so they wouldn’t know that this was going to happen. They may call the credit card company and say, “I didn’t do this. This isn’t a charge that I authorized,” and so the credit card company, no questions asked, like they will not call us as business owners.

PIPPIN: Right.

BRAD: They’ll just charge it back.

PIPPIN: Very expensive.

BRAD: Oh, yeah. $75.

PIPPIN: Yep.

BRAD: The bank will charge you to process that or the credit card company. I can’t remember. Somebody charges us.

PIPPIN: That is definitely a negative. I think what you then have to try and figure out is does that cost you more?

BRAD: Yeah.

PIPPIN: Which one is better in the long run: higher refund rate, higher charge-back rate, or higher renewals? Do they balance out? Is it a moot point? Or is one still significantly better? Unfortunately, the only way to know is to actually do it.

BRAD: Yeah. I think I would like to see more of that being done, so not just blindly opting in people to automatic billing, but doing it right and having a checkbox maybe on your order form that opts them in or something.

PIPPIN: Right. What we’re thinking of doing here in the near future, I mean sometime within the next year because it takes a while to put in place, is we’re going to add. We’re going to make all purchases recurring, probably, and then on the checkout there will be an option to opt out of it. We will not require it, but it’ll be just like, “Look. Do you want to make your renewals easier? Go ahead and opt in to automatic renewals.”

BRAD: Yes. Yeah.

PIPPIN: Or opt out of automatic renewals.

BRAD: Yes.

PIPPIN: I think it’s better to opt out than opt in.

BRAD: Okay. It might be a bit awkward.

PIPPIN: Just from a conversion point, you’re going to get far more subscriptions if you have people opt out instead of opt in.

BRAD: Yeah, so basically the checkbox would be checked, and they’d have to uncheck it.

PIPPIN: That’s correct.

BRAD: Yes, okay. Yeah, that’s what I would do as well.

PIPPIN: Yeah, so I’m hoping to do it some time in the near future.

BRAD: Yeah.

PIPPIN: After talking to somebody who, they run a WordPress product, and having them tell me that their conversion rate, I mean their renewal rate, jumped to 88% was just mind-blowing.

BRAD: Yeah. Yeah, it just makes sense. I don’t know why it’s not more prevalent. We’re going to have to do a lot of work to get that running. I think that’s probably the reason most people don’t do it because it’s a bunch of changes to your systems, right?

PIPPIN: Yep.

BRAD: Yeah.

PIPPIN: We’ll probably do it on Affiliate WP first because it’s significantly easier to do when you have one product than when you have 200 products.

BRAD: Right.

PIPPIN: It gets a little bit difficult to do it on EDD. So, if we do it, our plan is to actually allow them to have a subscription for each individual product.

BRAD: Right.

PIPPIN: Which means that somebody might have 20 subscriptions on the site.

BRAD: Right.

PIPPIN: Which is kind of tricky.

BRAD: Another thing I would like to see more of, I think, in the WordPress space is monthly billing, like for higher plans, higher priced plans, ones that would be maybe $15 a month and up. I think a $200 package comes to around that if you break it down. Yeah, so if the product is $199, it would be about $16 per month. I mean, if you look at some of the SASS out there, like Help Scout, for example, they charge $15 per month per user. A lot of them have that same price point. Again, I don’t know why, in the WordPress space, no one is offering it as an option, or very, very few people.

PIPPIN: Right.

BRAD: I’d like to see that. But again, very complicated with regards to the billing system and upgrading and downgrading people between plans on monthly billing.

PIPPIN: It’s one of those where Stripe makes things very easy, but just because a Stripe API makes it easy does not mean that your e-commerce makes it very easy.

BRAD: Yeah, exactly. Again, yeah, a lot of work to the e-commerce system to get that working, I think.

PIPPIN: Yep. I like the idea. One of the reasons that I really like having three main products, so that’d be Restrict Content Pro, Affiliate WP, and EDD, is that each one has a slightly different model and allows me to kind of explore and play and see first-hand how each one performs. I will tell you right now my favorite model is the pro only with additional upgrades included for free at higher licenses.

BRAD: Right.

PIPPIN: That’d be the your model and Affiliate WP — your model minus the free version.

BRAD: Right, right. Why minus the free version?

PIPPIN: Well, honestly, I think it depends on your product. For Affiliate WP, I think it would actually hurt us if we did a free version.

BRAD: Really?

PIPPIN: Because I think there are a lot of people that would just be like, you know, the basic features are fine for me.

BRAD: Right.

PIPPIN: Now, the flipside of that is that it might give us a lot more traffic because it would be in WordPress.org, which has significant traffic, et cetera.

BRAD: But I guess you could argue there that, you know, how many people are actually searching for an affiliate software solution in the WordPress.org repo?

PIPPIN: I think there’s a lot.

BRAD: You think so? Okay.

PIPPIN: Yeah, there are a couple of affiliate programs in .org already.

BRAD: And they do well?

PIPPIN: And they have significant downloads, that’s for sure.

BRAD: Okay.

PIPPIN: But the reason why I think ours works really well without it is because the people that are looking for an affiliate program already have an e-commerce shop or already have a membership site. What they’re looking for instead is they’re looking for something that works with that product, so they’re going to Google, or they’re going to their product’s website, so like WooThemes.com, for example. We’re listed there, and so that’s how a lot of people are finding us is because they’re looking for something that already works with theirs.

Now, Migrate DB and DB Pro, for example, don’t work quite that way. You don’t have people coming to you from another product. You have people coming to you from a consultant or an agency or something like that. There are kind of some similarities there, but our customers are purchasing us because we integrate with their system already.

BRAD: Right. Gotcha. Okay.

PIPPIN: I kind of rambled there, but I think that made sense.

BRAD: One of your major leads is from integrations.

PIPPIN: Absolutely. Yeah.

BRAD: That would probably hurt you if you had a free version because it would just be too basic or the basic version would be enough for most people or a lot of people.

PIPPIN: Yeah, I think it would be enough for most people.

BRAD: Right. Yeah, that makes sense.

PIPPIN: And because we’re running an affiliate system, most people that are looking for an affiliate system don’t have a problem paying for a product because they’re running an e-commerce store. While there are a lot of people that are still iffy about spending money on a product if they can get it for free, there’s a higher percentage of people that are going to be okay paying for a product in the e-commerce and membership world than, say, in your customer base or your user base because they’re already using the system to try and make money.

BRAD: Right. Right. Interesting. Well, should we wrap it up?

PIPPIN: Yeah, I think so. I think this is a good opportunity, though, for anybody who has experimented with their own business models, has established one, or is trying to establish one, trying to decide on one, we’d love to hear feedback or questions or anything that you guys have.

BRAD: Some tricks about business validation would be cool too.

PIPPIN: Definitely.

BRAD: Like, have you researched a certain idea and decided on it being a good one or a bad one?

PIPPIN: I think it would be awesome to hear if anybody has a model that failed and then they used a different one and that one succeeded. Hearing that would be awesome.

BRAD: Yeah, that would be very interesting. Cool.

PIPPIN: Thanks for chiming in, everyone.

BRAD: Thanks, everybody.