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The WooCommerce Product Ecosystem: Product Pricing and Opportunities with Alex Denning

The WooCommerce Product Ecosystem: Product Pricing and Opportunities with Alex Denning
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Alex has been in the WordPress and WooCommerce community for several years, helping WooCommerce product builders through his company, Ellipsis Marketing. Alex has the pulse of this space and a lot of great insights to share.

A Chat with Alex

In episode 81, Jonathan and I talk with Alex about:

  • Starting in the early days with both WordPress and WooCommerce
  • What in Alex’s opinion has stood out in the product space during this last year
  • The level of maturity of the landscape of Woo product businesses
  • What is going well in the product ecosystem and where improvements can be made
  • Supporting the Woo product ecosystem
  • How products are moving toward either expanding features or narrowing down to more defined niches
  • The growth and what industries and markets play in in the vertical integration using WooCommerce
  • The risks in both the WordPress and WooCommerce business industry
  • How product builders in the space perceive Automattic
  • Social cause donations vs. giving discounts on Black Friday
  • Pricing and discounts and what Alex has experienced around discounting
  • Monthly vs. yearly subscription for extensions and plugins

A lot of questions are asked about pricing, discounting and the overall product space. Alex has firsthand experience with those businesses, and whether you are seasoned, have just started or thinking about the next product, you will get some great insights that will help you.

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The Conversation

Bob: Hey, everyone BobWP here, episode 81 Do the Woo. And I have my great co-host who was going to do a harmonica solo, but we decided against it. But we may just close out with that way if he gets the urge by the end of this. Jonathan, how are you doing?

Jonathan: Bob, I'm doing really well. It's taken a turn for the cold, which I like. There's snow outside, but I got the snow tires on just in time. So I'm in good shape.

Bob: We're getting a bit of a chill here too so, and then with the wind off the ocean it makes it for interesting times, but staying warm.

So thank you to our sponsors before we head on into the show, because we have a really good show coming up. PayPal yes, our sponsor Buy Now, Pay Later. A couple of great options, but I've been focusing a little bit on the Pay in 4.

Really it's very interesting, because I'm finding a lot of people in this space that are wow, I haven't even heard of this, and they are jumping on it right away. In fact, our other co-host Mendel already put it on his site. So once people are finding out about it, it's an option, especially if you have PayPal already installed. It's really easy and a no-brainer, So check that out.

And WooCommerce, yes, 4.7 did come out and a minor update. They didn't want to get everybody too freaked out about putting a big update in with Black Friday, and all that fun holiday stuff around the corner. So a minor update where everything should go smooth, unless you've got five billion plugins that you got from some guy in a basement. Other than that, I think you're good to go.

So we're going to dive into the show. I am excited to welcome Alex Denning. Hey, Alex, welcome to the show.

Alex: Hey, thanks for having me.

Meet Alex Denning

Bob: Now, Alex, you're a man of many talents, and I thought one of them has got to be ... You've done a little bit of Woo. So in a sense, how do you do the Woo in your business, and what do you do?

Alex: So I run a marketing agency called Ellipsis Marketing, and we help people who make WordPress and WooCommerce products do more of whatever they're trying to do. So recently my doing of the Woo is helping out WooCommerce product businesses with their marketing. But I've been involved in WordPress for a long time. I remember the post on Woo Themes when it was a thing, so we go back a little way.

Bob: How did you get into WordPress, but then how did Woo start to play into your space?

Alex: I got into WordPress because when I was in high school I had a website where I reviewed video games. This was a great hustle. It was early enough that making a website was difficult enough, but you could still call yourself press. So I got free video games. And obviously the site was built on WordPress, and I was trying to work out how to do stuff. And I remember finding about there were two or three WordPress tutorial websites at the time, and I remember finding one called Hack WordPress.

Jonathan: Obviously.

Alex: Which was the precursor to WPTavern. I remember staying up all night reading it, and I thought this is great, I'll do this. So I made my in store site. One thing led to another and I ended up running that for a couple of years. The story is the old terrible, and I didn't know what I was doing.

But I guess I was figuring things out as I went along. And that led to me finding more about WordPress. And at the time theme shops were the dominant forces in WordPress. I remember trying out WooCommerce shortly after it was released by then with themes, and one thing leads to another. And yes, these days it's an important part of my life.

What is standing out in the product business around WooCommerce

Jonathan: So one thing I'm really curious about you work in marketing, you specialize on marketing for WordPress product businesses, WooCommerce product businesses. So from my point of view, and you have a newsletter that you keep up to date, you did this black Friday post recently.

So you're in this special position of having a better than average pulse, if not one of the best pulses of what's happening across the space. And as you look at this past year, I'm curious, what insight standout? Are there anything that surprised you, as you look at what's happening? And this year in particular.

Alex: Sure. So the big thing obviously, is the pandemic. We saw a massive increase in people looking for our clients solutions around WooCommerce and that started March, April. In terms of searches, there was about a 50% increase in WordPress search terms, and a huge amount of that was driven by WooCommerce.

The searches for WooCommerce per month went up by hundreds of thousands and month on month. And also year on year, they were up a significant amount as well, so that was obviously a big thing. So people were looking to get there, but it seems like an acceleration of digital transformation. And people who had stores, which did not have a web presence rapidly wanted to get a web presence.

And we saw a very large number of people choosing WooCommerce to do that. For our clients who are selling functionality that lets both solutions that let people do things with whatever their site is set up to do, things scaled pretty nicely as you'd expect in a product business. And so that's driven a lot of growth within the ecosystem.

The maturity level of WooCommerce product businesses

Jonathan: So let's take WooCommerce product businesses, specifically people who build plugins, extensions, themes, SaaS connectors, whatever have you for Woo. When you take in the landscape as a whole, how would you describe its current maturity? Is it really young? Is it mid? What's the level of maturity that you're seeing across the space?

Alex: We're not quite the wild west of a couple of years ago. Say three to five years ago, you could build pretty much any functionality driven WooCommerce extension, and either sell it through woo.com or sell it through your own site, or a third party platform. You could pretty much make anything and make a lot of sales.

It's not the case that there are loads of things that should exist which don't exist at all these days, which is what happened there. And most of the time there is existing functionality, but there's certainly to the flip side a tiny bit of maturity. But we're probably five, 10 percent of the way there.

What is going well in the space

Jonathan: A couple more questions in this vein then, what's your sense when you take in the landscape as a whole of the WooCommerce product businesses? And there's some maturity there, still very little. What's going well? What do you see going well? And then where are the opportunities as a whole to improve? In terms of what you see how folks are approaching product businesses in the WordPress context.

Alex: So the product businesses are getting more sophisticated, because the obvious opportunities have gone. We need to work out how to add more value, that makes a lot of sense. We're going to continue to see that, and I think we will continue to see more niche solutions, more niche by higher value solutions, focusing on different industries. That will happen in the short term.

In the medium term, the huge opportunity is to look beyond the WooCommerce this label. Currently its just like you can do this, but it's also bolted on WooCommerce and that's what my product is. But as Woo becomes a more dominant player, I guess even more dominant player in the e-commerce space, and Woo itself becomes more material, Then suddenly it's not just hey, it's this WooCommerce plugin, it's an obvious part of your store in a much more SaaS like way. That's really exciting.

Jonathan: You mentioned Woo's maturity. I'm curious for your thoughts, so this year brings a lot of different things, Woo's growing like crazy. At Woo, earlier we shared some of the numbers it's a lot. Not quite double, but just based on what we can see its significant growth. You also have a lot of maturity happening around the product release cycle we're up to ... I'm going to butcher this you might know Bob, I should know this, seven releases so far this year with 4.7 and it's a lot.

Opportunities to support the Woo ecosystem

We're picking up a pace there, there's an overall confidence that's starting to permeate more about how it's being dealt with. So there's definitely maturity happening there. I'm curious from your perspective Alex, as you're working with WooCommerce product businesses and looking at what's happened in the Woo space you see the growth, you see how it's being managed. What's good? What's gives you confidence? Where some of the opportunities you see there from the Woo perspective, to support the ecosystem?

Alex: So in terms of things going well it's easier than ever to make your own e-commerce site, and that's great. Everything that's happening on the lines lap. I think the opportunity is to make it even easier. So a lot of the work that I do that we do is content marketing to help people get started with solve a problem with one of our clients products.

And we can do two types of that, we can go inside WooCommerce so people searching for how do I do this with WooCommerce? Or we can go outside, which is how do I do this with my e-commerce website? If we go outside, we have to cover 10 preliminary steps about here is how you spend half a day deciding on your hosting company and your domain name. You have to explain all of those things. It's not simple.

It probably should never be simple. There's always been a bit of friction there and that's probably fine and good. That's interesting. The marketplace for distributing extensions, reviews. Bob, you're saying in the intro line unless you installed 5 million plugins from someone in a basement. That's still possible, as a consumer you don't necessarily know is this good? Is this bad? That's a really interesting opportunity.

The niche and more features vs. doing one thing well

Bob: I was wondering when you talked about the niche, that's where we're going at. And I deal with a lot of people coming to me with their extensions. You can have so many extensions that do improve checkout, or so many extensions that do cart, whatever. With the niche, are you talking more about if somebody's got a product and you're looking at it, and they're thinking I've built this product, and I'm going to just keep adding things because nobody has all these things and all these features on the product.

On the other hand, I see others that are saying, I'm taking other people's products and pulling out one little thing, and I do one simple thing and I do it well with my plugin. And that's where a lot of times I gravitate towards, because it's like I had this one need, I didn't need these 20 other things. And that particular plugin does that. Is that what you're seeing, is that shift to that?

Alex: Yeah, I'm seeing a little bit of it. I don't see it enough to call it a trend, but I think that's where a lot of the opportunity is. It's like for this type of business, you've got your custom check out for things that need to be collected in person, or whatever it is.

The focus on particular industries and markets

Jonathan: What about do you see opportunity in just more vertical integration, where they say we're going to focus on farmers markets for instance, and provide a solution where this hybrid of offline online, et cetera. I just really do that. That's what I've been curious about interested in for a long time. I don't see as much of it as I'd expect to at this point. I'm curious, do you see that? Is that something that you see more of? Are people going to focus on particular industries and markets?

Alex: Yeah, so just going back to this inside outside perspective, that if you go inside you just have to focus on the WooCommerce stuff, you've got nowhere else to go. If you go outside though, you can go horizontal or vertical. And then suddenly, you can start opening up lots of more opportunities. So it's how to do this, how to manage your inventory for your farmers market, whatever it is.

Vertical integration

Jonathan: The opportunity that I see in vertical integration, when you take farmers markets for instance, or restaurants in a particular country, or whatever it might be, is that you can abstract away a lot of those getting started complexities, the domain name, registration, hosting, et cetera, et cetera.

You can either manage it all for them, or have very explicit guidance and recommendations on how to get those things started. There's pros and cons to those approaches but to me, it seems like as there's an opportunity here with e-commerce is growing in general for there to be more focused solutions that have the benefit of being built on an open source base, we're able to combine some of the positives of that SaaS focus.

And SaaS will tend to have more vertical integration or very clear horizontal. It's going to be interesting. I'm really interested to see. We've talked about this previously, on Do the Woo. This thing of COVID really just seems to be an accelerator of trends. And it's going to be interesting, we have this opportunity to almost look into the future, where is this? Where would this stuff have been going anyway? And now we're just getting there faster is what it seems like.

Alex: From the marketing point of view, definitely an acceleration. The way I'm seeing things, there's been a bit of change in direction, I think which comes with that base is the rockets mainly gone in a straight line, rather than ... This rocket analogy doesn't work.

Risks in the WordPress and WooCommerce business industry

Jonathan: If you think about the WordPress and the WooCommerce product business industry, what are some of the risks? What are the things that people need to be wary of I think just in general?

Alex: Great question. Love that. We don't talk about risk enough. Most of the initial work we do with clients covers existential risk, and no one's talked about it, so let's talk about it. So from the independent product creator point of view, the biggest risk of building your product around a platform is if the platform does something that doesn't let you work. If you build such a great feature that it comes into core.

Sorry, you're not going to make so many sales. And of course, in a WordPress context, that happens a lot. And oftentimes you find actually you've got a three year headstart, and you can just add on to that functionality anyway. So it works out. But that is a major risk and we have seen a lot of price competition recently.

I think people see it as a space to be in too to make money quickly. And so a lot of new Woo market entrants, some of whom are happy to compete on price. That is probably good for consumers, but is a risk for storing it for product makers. They have to find ways to differentiate, or to compete on price, or add values in other way. I think otherwise, it's in a pretty good situation.

How product makers view Automattic

Jonathan: I'm going to put you on the spot a little bit. I'm curious when you're talking to folks in this independent maker space, how do you tend to guide them as far as Automattic goes? When you think about automatic and the role that we tend to play in this space. And how do people think about Automattic? It's a bit of a potential elephant in the room, what if automatic gets into some things? We also have products and plugins that we're selling in the space. So how do you tend to think about that?

Alex: To be honest, for the average product maker, they don't think about Automattic and that's fine. They're focused on how do I get my next customer, rather than is my business going to be eaten by a competitor that I can't compete with? So I think at the smaller end, but small and medium size end, I don't think people are too worried.

There are so many things to be done around WooCommerce extensions that I think that the problems that your small or medium sized creator is going to solve, aren't problems that you would solve at the enterprise level.

If you're building a thing around payments, payment processing whatever, something like that you would worry about it. But that's not something that a company of 10 people can or maybe they can, certainly not with this attitude.

Jonathan: It's a delicate thread, because there's this work on how do we ... I think in an ideal world, the work that we do at Automattic and Woo is just sort of make the pie bigger. Work on some of the hardest problems. A lot of our motivation to get into payments for instance, is that its a hard problem to work on. And it's something we think can really move the needle on making Woo more accessible.

And in theory, if we do that well which is our intent, it opens up a lot more opportunity for the ecosystem as a whole. So I think that's when things go well. Obviously, we're dealing with humans, so we're imperfect and mistakes happen and people get misunderstood, et cetera. But I think it's something important to keep an eye on in general.

We thought of it. I tend to think of the work that Woo is doing as working on the operating system and continue to do that well. And sometimes you have to bring in something into core because it makes sense, but most of the times let's keep this as lean as possible, and then support people building the software if you will for the operating system.

And at least from my perspective, which I have the disadvantage of being fairly potentially insulated, it feels like that's going well overall. But then that's a question that's good to continue to ask, is do independent creators in the space feel supported, feel that there's opportunity where they can really carve out something for themselves?

Alex: I think that's where the market place opportunity is really interesting, because then you start to see aligned incentives financially.

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Black Friday, deals or social causes

Bob: This is a total flip. The only reason I'm flipping over to this is because Alex, you sent me an email about all this stuff about Black Friday. So I perused it and I know we're at a point where a lot of decisions can be made to twist and turn. You had a lot of good stuff in there, and I've been biting at the bit to play a devil's advocate here.

This is something that because I've dealt with nonprofits for decades and work with nonprofits, one other thing you mentioned in it, the social angle is really important this year. And that was as a result of one of the plugin there. Instead of doing Black Friday, they're going to give 50% to social cause. And I'm not talking social media, I'm talking social causes here, to clarify.

Now, as I look at that and I think back and in my days of working with them, and at this point that's a great thing. At this point, I feel like we also are inundated with needs. It's been a few months of this, where this is coming left and right. And then you're at a point also as somebody that can donate, where there's so many opportunities to donate.

So you can be really picky on what touches me, and maybe it's a specific area or a nonprofit specifically. So I'm looking at people also on the flip side, on the other side of thing, I'm looking at people right now that are biting at the bit, because it's time to get a discount there. It's tough, they're trying to get things going, they're trying to get to online whatever, all these different reasons.

This particular instance, is it really a more of a ... I don't want to say this, but not so much, I'm looking to really make a killing with this and give a lot of money to these nonprofits. But it's kind of a feel good thing on the side of the business to say, this is what I'm doing instead of this. It doesn't really matter what plays out in the end as far as sales, and how much I give is just more of a thing I want to do.

So it's not really a pump to get a lot more sales, because honestly I feel a lot of people at this point in time would. Personally, I've given a lot and I look at something like that, and I go unless I really need that, it wouldn't be an incentive for me to buy it. And I know it's a very convoluted thought process I'm going through here, but when I saw this and then I saw yours, I just wanted to hear your thoughts on it. And you can just rake me over the coals with that one.

Alex: So the specific instance you're referring to is a company called Weglot, which does multilingual WordPress and WooCommerce translations, websites, stores is on the Cyber Monday and the Black Friday, they're donating 50% of their revenue to a number of charities, which I think is a great thing for them to do. That's a big chunk of revenue. It's not profit, it's what you're paying them.

And I thought that was great and I thought it was bold of them, and I thought it was different, I haven't seen that before. You're right as an incentive to buy their product from a consumer point of view, this is not going to do it for me. And I'm sure they know that. There have been some other approaches I've seen people taking off on those increasingly, people want a social element to their sale. So it's for every purchase we're going to do this, which is a nice way of doing it.

You also see commitments like 1% for the planet, or something which is year round things where people are committing in some cases, 1% of their revenue to whatever causes. All those are good things from a branding point of view in 2020, that is a thing which is good. You're right there that without a discount as a consumer, that's not probably not going to influence my decision.

Jonathan: So if I'm looking at this externally, it's like if you have a pattern of doing discounts year after year. I've seen a lot of me too in the space, we struggle with this a bit of Woo. You'll notice that we're slowly not doing as many sales as we used to.

We're experimenting and exploring that because then you get people used to it. If you want to break that pattern, you can't just ignore it. We're just not doing anything at all this year. And so there's an opportunity to say hey, we value something differently here and we're not ignoring this.

So from my perspective, it's great to see people experimenting and trying different things. Some of it is going to work well and you have to know why it's working, because if you are trying to do an approach like that to drive more sales, you're probably not going to do it.

If you're doing that to stop a cycle of setting people's expectations to discount, I could see a message like that being a great way to do that. And then long term, it's probably a better at least in my point of view I'm not a big fan of discounts, period. I think that can end up hurting the brand's value in the longer term.

Sweet spots and dangers with discounts

Alex: You see companies like Kinsta who I'm sure hosts a lot of stores, don't discount, and they make it really clear, because they get asked we don't do it for this reason. I think that helps. I'm sure they will lose out on some sales to their competitors on that day in November, but they are going to get increased customer loyalty from that, because they're not offering new customers a better deal. They're not punishing their existing customers. And the one we're on, they're going to associate their brand with quality with higher prices, but value et cetera. And those are all good things. And certainly not everyone should do a discount.

Bob: On that same train of thought, one thing I wanted you to touch on a bit is I'd heard somebody talking about who will survive in this Black Friday? And I'm sure they were maybe looking at the bigger picture beyond WordPress and WooCommerce and extensions and plugins. But essentially probably still touching on that, their thoughts were that yes, people are going to need to do very deep discounts 50% or more.

Now, in your newsletter, you said lower discounts are in, and you had some reasons behind that which also makes very much sense. So why don't you touch on that a bit, and tell us a little bit more what your thoughts were around this idea that really the lower discounts are going to do the trick this time.

Alex: So this ties back to maturity in the space. And also what Jonathan said about people meeting. I think in the past people would run sales, in response to what the biggest person who'd run a sale the previous year had done, we're just starting to move away from that a little bit.

The earlier someone emailed me about their Black Friday sale, and how to do it this year was April, so more complexity going into it and which is good. I think a side effect of not thinking about your sale is just to go sure 50% is massive, the 30% I'm a big fan of. 30% is the biggest small discount you can do.

And anymore can be a fairly high margin space digital products. I love that represents the discount. If you discount at 50%, you have to make 40% more sales than if you discount at 30%. And so the question comes for people with extensions, am I going to make 40% more sales just to make the same revenue? Probably not.

Jonathan: To me, it seems the difference when you get into this world of discounts and all the hype around it. A big thing is are you focused on short term or long term thinking? And discounts can seem really good and attractive, but there's all these other things you mentioned support.

There's the whole renewal thing, there's the whole how do your other customers feel right now? Because it's like I bought two weeks ago, and now it's 50% off, and then some of those people will ask for a refund. There's this whole process, you'll go through a lot more consequences than just the short term burst.

Alex: I know you're a Seth Godin fan Jonathan, I have a great quote, cheap is the last refuge for the marketer who can't figure out how to live better.

Jonathan: And that's completely right.

Black Friday, should I buy or should I go (wait)

Bob: That's interesting, because I had to buy a plugin yesterday, there was a plugin that wasn't working on my site to do the Woo site. So I had to find another one and I found it, and at that moment it wasn't that much for the year it was 57 bucks, 58 bucks or something. So it wasn't a big, but I was looking at it and I thought for a moment I thought what if they have a sale here in a week maybe.

But the thing I really didn't want to wait a week and I went ahead and got it. And maybe I'm not the normal person, but also I was in the position where it was like, is it worth waiting a week on the per chance? And at that much are they really going to give a huge discount? And I thought all these things, is it really worth it? It was way too much thought I put into it, and I just finally just bought it.

Alex: You're probably right though, those decisions go on. And if you knew that, that store discounts every November without fail and there's a discount that you wanted, you would have waited. But that's why I like Black Friday overall, because it gives you a chance as a seller to pick up on those price sensitive customers who do care about the price.

And they may not buy from you without that. So you're quite happy you got the thing it was for work. It's an expense not worth waiting. All those people certainly in the past, but if I didn't need the thing or was on a budget, they are going to wait. And it's a good deal for everyone, or it can be a good deal for everyone.

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Jonathan: I'm curious Alex, so you see what's happening in the space, and you've been doing this black Friday post up, how long have you been doing this now?

Alex: Three years.

What should happen in the future when it comes to Black Friday

Jonathan: That's awesome. If you could wave a magic want and just improve how the product business space as a whole treats Black Friday, what are some of the things that you'd like to see happen more of or less of going forward?

Alex: I'd like more randomness about predicting sales, expecting sales, mix it up. Great way of breaking that cycle. I'd like that, but simultaneously I'd like more predictability week to make a purchasing decision is good. So you see all sorts of people, this is a thing that feels really important. So I think people put a lot of thought into it. But do I start my sale the month before, the day before, the Monday before? I love that and run until the end of the site Monday.

And it gives people enough time to make an informed purchasing decision, but also if I have a list of five plugins, which is a thing people do, make a list of here's what I want to buy, let's see what's on offer. You help the consumer do their little budgeting, and I think that's a good outcome.

I would love to see just more thought into the discount levels. Part of this post I did last year, it was every discount increment at 5% increments between 10 and 90%. People are just picking numbers out of the air from 10, 15, 20, all the way out to 90. If you're taking 90% off a plugin, then what are you selling? You got 90% margins on an e-commerce plugin, that feels disingenuous. So we could think about that a little bit more.

Bob: I think if I saw something at 90% off, I'd have to really think about this. What exactly I'm I getting? How much are they actually making off this thing in the first place? I'd start thinking all weird things.

Alex: No, you're quite right, those are the things you do not want your customers to be asking.

Products and underpricing

Jonathan: So my last question for now on this pricing thing, what's your take pricing as a whole across let's take just the WooCommerce product space? Obviously, you see some competition, but if you were to step back for a moment, how are we as a whole? Is the space under priced, is it overpriced? Is it about right?

Alex: Massively under priced. So whilst the range on any individual bit of functionality might be three to 10 times, those numbers start so small, but it might be from 30 to $300 for one year. It's fine. I'm sure a lot of people are getting a lot more value, especially at the higher end. There will be functionality that it makes sense to pay a lot of money for what doesn't exist yet.

Jonathan: Just a comment there on the enterprise Woo is growing in the enterprise, and that's a loose term. It can mean a lot of things, but basically you're seeing more big stores, especially folks coming over from Shopify world, where they're like we don't want to give this cut anymore. And I've seen this a few times where people are shocked at the price and not in a positive way, where it's like wait a minute, this is mission critical functionality for my business and you're telling me this is a $200 extension.

And so I think I would love to see more high end maybe productized services around some of these things. But the bottom line however it works, is that sometimes the price is a negative, where sometimes you're not doing folks a favor. And I see this a lot in the mid to upper end, where it's this is our business we're talking about here.

You're telling me that this critical plugin, the most that I can do with this developer is paying a small amount of money for a license, what if I need more. So it feels like there's a lot of opportunity there. And the more successful Woo becomes, and the more stores succeed, the higher the stakes go, and the more people are going to care about the infrastructure that they're using.

Alex: I think that point about the stakes is really important, because then it's not uncommon for functionality, which is critical to stores to be maintained by one to 10 people, which is not all of the people. And it would be really interesting to see what products could do with significantly more resources. And as the stakes get higher, QA is going to be increasingly important.

Jonathan: My instinct there would be to see folks do enterprise versions of their software, which could be a higher support tier, it could be some special functionality. I'm curious, do you have any thoughts on that? If you recognize that's a problem, the stakes are going to get higher.

And there's a difference between value alignment and accordingly incentive, because if you're selling a low end plugin, there's only so much you can do it's a volume game. How would you recommend folks approach that? How do you serve the higher stakes? Do you do it on features, do you do it on support?

Alex: People don't want to solve that problem, because it's a lot more difficult. And where there is volume opportunity, you can see how it doesn't necessarily make sense, but it's not attractive in the same way. You start needing relationships, sales, confidence to support service level agreements on whatever you're offering.

And I think unless you've got that experience, which is probably fair to say that the vast majority of people don't, exalts a daunting thing to tackle. Which means there's opportunity for someone to come in and do that. A spin off from my WooCommerce agency, we customize extensions for high volume stores.

Jonathan: So I'll leave it at that. I think the opportunity because it is tough, I see that. And I could see that the volume it's not as attractive because you are getting more into the productized service realm potential where, an enterprise we'll buy this thing we'll buy the enterprise version. And we want to know that we have someone on call if we need help, et cetera.

It can be very lucrative for those who are willing to set up the processes and systems and accept the responsibility. My only recommendation for anyone looking at that is you probably need to charge a lot higher than you're thinking. So it's something that you got to make sure that it's worth it. And for some of these businesses, it absolutely is worth it, because we're talking about a lot of payment volume going through these things. I guess it's worth than paying for.

Monthly vs. yearly subscriptions for extensions and plugins

Bob: I'm going to apologize to my listeners, because I was going to leave it at that, but I have one more question. And this is just going to turn into a long podcast sorry, but this is pricing. And there was a conversation somebody had on Twitter and just I can't say in a nutshell, because there's probably not such a thing for this particular topic.

But around the fact of questioning, why aren't more extensions and plugins monthly versus a yearly fee, because that helps people that can't afford that yearly fee? But I think I know the answers to this and I think understood it, even before I started hearing people reply to it. But just some quick thoughts on that as far as what you think there Alex?

Alex: So in the WordPress and WooCommerce product space, monthly pricing is a nightmare, it doesn't work right now. We have seen instances of when clients switch from monthly to annual pricing, and even kept the prices ballpark the same. They massively increased their revenue. So currently consumers are responding really badly to monthly pricing for our best products, and annual performs significantly better. It's very hard to do that. Not hard but it's rare to do the genuine SaaS component, which I think people feel justifies the monthly fee WooCommerce. I think that's the major blocker.

Jonathan: I think that happens each month, and if it's just the license, they're not seeing a thing come happen each month and it's really hard to like what am I paying for.

Alex: And sometimes if your extension is coded brilliantly, you don't need updates for it. But it's the thing that does import this, it doesn't need to change it just works.

Where to connect with Alex

Jonathan: Alex, thanks for joining us. It's been great having you. If folks want to learn more about what you're up to, where should we send them?

Alex: It's been a real pleasure. Thanks for having me. My professional life lives at getellipsis.com. We have a blog that covers some of the stuff we've talked about, and a monthly newsletter called press marketing, which is pretty good.

Jonathan: That's great.

Alex: That was the Black Friday stuff Bob mentioned. I also run a weekly newsletter, if monthly is not your thing. MasterWP It's a weekly newsletter for WordPress professionals. I'm on Twitter. It's just my name, Alex Denning.

Bob: We'll just give a quick shout out to our sponsor, before we close out PayPal, do check out Pay in 4, that's the numeral four. As I mentioned both in the ad roll and at the beginning, you know the benefits so there's really a no brainer to give it a try, see if that's what your customers are looking for.

And WooCommerce of course.com do update to the latest version, keep things all nice and secure. I think that's it. So we are good to go. Again, thank you Alex, for joining us. It was a total pleasure.

Alex: Thank you so much.