2013 has, so far, been a great year for WooThemes. We turned 5 years old, surpassed 1 million WooCommerce downloads and have more than 100,000 paying customers. We’ve launched more than 80 products and added to our super talented team.
All in all, WooThemes is looking extremely healthy.
That said, we want to continue creating great products, providing even better support and work to surpass more milestones. We have a great hunger to deliver happiness in the most authentic & innovative way.
In order for us to do that, we’re going to be making a few bold, but important and well justified changes.
- We’re increasing the prices of all of our products (themes, plugins & WooCommerce extensions.)
- We’ve implemented a consolidated licensing system (the one we’ve been using for plugins & WooCommerce until now), which now includes themes too.
- We’re dropping our Unlimited pricing tiers in favour of a 25-site license tier.
- Support and updates will be capped to one year after purchase (with the ability for you to extend this).
Let’s look at each of these changes in a little more detail:
|Package||Current Price||New Price|
|Package||Current Price||New Price|
|Standard||$125 $20/month||$199 $29/month|
|Developer||$200 $25/month||$299 $39/month|
|*Current subscribers remain at the current price levels.|
|Tier||Single||5 Sites||25 sites|
Consolidated Licensing System
We’ve been using the WooThemes Plugin Updater along with our licenses for plugins & WooCommerce extensions since late-2012. We have now expanded on that and consolidated this usage to include themes as well.
What this means is that you will receive a license key whenever you purchase anything from us and you’ll need to authenticate your product with that to get access to both support & updates for said product.
No More Unlimited Licenses
In the past, we had 3 pricing tiers for plugins & extensions: single site, 5-site & unlimited. We’ve decided not to make the unlimited pricing tier available anymore and have instead replaced this with a 25-site license / tier.
Going forward, you can choose between a Single Site License, 5 Site License and a 25 Site License.
(What this means is that if you need to use a product on 50 sites, you’ll need to purchase 2 x 25 Site Licenses.)
1 Year of Support & Updates
For each license you purchase, you will be able to download your product, get updates and receive support for an entire year.
After a year, you will be required to renew your license in order to receive updates and support. We do plan to make significant discounts available for license renewals and you definitely won’t need to pay 100% of the initial purchase price again.
Within 60 days of your license expiring, you have the option to renew yor license at the discounted rate of 50% of the product’s price. Once the license has expired, you will need to pay the full price to re-actiavte the license. We will, as needed, change the discount rate depending on expected support or development required for the product.
What about my previous purchases?
Any purchase made before today will be grandfather-ed into the new system with access to support and updates for 2 years.
All theme purchases will also now have a license, which you’ll be able to use with the WooThemes Updater once all themes have been updated.
Why The Change?
Over the past 5+ years, we’ve matured as a company. We started out as 3 rookie entrepreneurs and web designers, and have since progress to running a business that serves more than 100,000 paying customers. We also help a team of 30 awesome individuals pay their bills and this WooTeam’s livelihood depends on our ongoing ability to be a profitable & sustainable business.
We’ve learnt a lot in this time and whilst the journey hasn’t been without its hiccups, we’re really happy with the way that we’ve grown up.
One of the things that we’ve learnt in the last 2 years is that our business model is unsustainable, mostly because we originally conceptualized it back in 2008. Since that time, everyone else in the WordPress ecosystem has followed our lead and that business model has become the standard. So the way that we (as a WP ecosystem) price / value our products, the way we provide support and how we maintain our products over time is all based on considerations & data from 2008.
Last year we started to address this when we introduced our tiered licensing for plugins & extensions. These new, additional changes to our business model is basically Phase 2 for the process that we started last year.
I would like to share our internal considerations & reasoning in making these changes:
- This is about money. There’s no way that we’d like to spin this in our favour. The truth is that these changes are designed to increase our profitability.
- We believe that increased profitability enables us to be a better and more sustainable company in the future. This means that we can ensure and almost guarantee with 99,9% certainty we won’t be going away any time soon. You can purchase our products today and know that we’ll be around in 5 & 10 years time supporting you / those products.
- The real question is what we can do with the increased profitability and improved operating margins. For us, there’s two areas of Woo that deserves greater investment: 1) creating innovative products; and 2) providing insanely accurate, fast and helpful support to the WooCommunity.
- To create innovative products, we need to hire the best product designers / developers, pay them well and give them enough time to experiment and learn. At the moment though, we simply don’t have the operating margins to do that, which means we need to be leaner. Many of the ideas we have for products never see the light of day, because we need to focus on the things that we know will pay the bills, instead of the things that could change the way you use WordPress.
- We’ve found that the only way to consistently answer all incoming support requests quickly and accurately is to hire a bigger support team. There’s a human scaling element involved with this and that requires money.
- These price increases are designed to earn us more money, so that we can reinvest it in the things that would be more valuable to you.
- We’ve gotten better at what we do and we’ve invested heavily in our personal development as individuals, along with the way that we’ve developed as a company & team. The pricing increases align with that in that our skills have become more valuable.
Canvas was released over 4 years ago, and has gone onto become our best selling product. We’ve poured thousands of developer hours into making it a great product, and we’ve answered loads of support tickets. This year alone, we’ve solved more than 5000 tickets related to Canvas.
If you had purchased Canvas when it was originally released in 2009, you would’ve paid $70. That purchase has allowed you to use Canvas on as many sites as you wish.
Say that you have implemented one Canvas-powered site for a client every month in those 4 years and you’ve charged $1000 for that work. That’s 48 client websites and $48 000 in revenue to you.
In that same time, you’ve submitted at least one support ticket per every client site you’ve worked on. We know that the average support ticket costs us $5, which means the 48 support tickets resulted in an expense of $240 for us.
And that’s where the math goes wrong: we’ve made a loss of $170 ($70 minus $240) on your purchase, and you’ve made $48k.
On top of that, we’ve also maintained and improved Canvas over the years without being paid directly for it. So the math potentially gets even worse from our viewpoint.
The biggest problem is that the model compounds the risks and expenditure over time. In our early days, we just didn’t notice it, but as we’ve seen our customer lifetime value and operating margins decrease (even though revenues are growing well), it’s impacting our business more significantly.
I’m sure you’ll agree with me that the above example of Canvas represents some serious threats to our business (if left unaddressed) going forward.
We’re trying to move away from absolute terms like forever and unlimited in the way that we price our products. Instead we’re focusing on aligning our benefits with yours and pricing our products based on the value that they provide.
If you are earning $1000 from a Canvas installation, it makes sense for us to earn a chunk of that, because Canvas has saved you a bucketload of time and effort. We’re also helping you earn that $1000 by answering any questions you have related to it. That same thinking applies when you then work on your next Canvas-powered client project. We’re saving you time again and providing you with more support, so surely we should get paid for that again.
Our hearts are in the right place and our ultimate vision and mission still remains: we want to help you be better designers, better developers and better entrepreneurs.
By improving on our business model, we believe that we can do this even better going forward. And more importantly, we can do it sustainably without the threat of eventually going out of business.
Feel free to use the comments below to talk to us about this, ask us to explain certain things in greater detail or just to share your opinions / concerns. Please be constructive though.
We’ve released a follow up post, you can read that here.
- All our products remain GPL compliant, the new licensing system does not change that at all.
- We are also in the process of updating our themes and subscriptions to include integration with the WooThemes Updater. We hope to have this completed for each theme by the 9th of August.
- Within 60 days of your license expiring, you have the option to renew yor license at the discounted rate of 50% of the product’s price. Once the license has expired, you will need to pay the full price to re-actiavte the license. We will, as needed, change the discount rate depending on expected support or development required for the product.
- There is no domain limit on our themes; you can install them on as many domains as you like.
- All current club subscribers stay on the same rate as when you signed up.
- Our theme club has ended, all customers have been grand-fathered into the All Themes Package.