Prepare yourself. This is going to be a long one.
So today, WooThemes, who we have known for a while and have been around as long as iThemes, starting their shop back in 2008, announced some significant changes to their business model — namely that “support and updates will be capped to one year after purchase.”
Like Woo, when we made this decision back in 2009, we have heard the trickle of complaining from a few people each month since that they are encountering now all at once.
For the core, those who are our true customer community and who understand and appreciate what we provide for them, it hasn’t been an issue. For those who look at what we do as a commodity and thus devalue our daily work, they don’t like it very much.
But we pressed on with it because we knew each year we’d usher in more and more customers on top of the layer of previous customers … and eventually we’d have this huge snowball of burden on our support and infrastructure. And yes, support would suffer because we couldn’t keep up. And we’d have to eventually raise our prices to be able to add new support personnel (salaries are the biggest line item we have in our budget).
That’s called compounding debt. You don’t want it in your own life, and especially finances. No one wants it.
So if compounding debt sucks, why would you want the people who provide you with ongoing products and services to have it buried in their business models?
This type of model demonstrates short-term thinking, focused on profits by undercutting others who are focused on long-term sustainability … and guess what, all at the ultimate expense of the customer experience.
My questions for others with an “unlimited” business model are the same they were in 2009 when we looked at our own business model in regards to lifetime support and updates:
- How can we keep up the same level of support without adding more personnel?
- How will we pay to maintain the extra level of support personnel without increasing prices?
- How much is our customers’ experience going to suffer as a result?
Here are some principles to think about as you, as a CONSUMER, look at commercial software (aka WordPress themes and plugins):
1. You get what you pay for
If you invest in something that promises unending support … you’re going to get more for what you paid for (maybe) in the short-term, then see that value erode eventually. Maybe not tomorrow or a year from now, but at some point you’ll see the value tarnish. And maybe one day, they just close their doors, drastically change their model and you’re left alone.
Managing expectations in business is paramount. And this means your original expectations don’t last. See the comments on Woo’s post for more evidence.
Nothing lasts forever.
Free has no guarantee to show up.
And unlimited, which we’ll talk about in a minute, always has strings attached.
Remember that when you put your money down on something free and forever, without a great mechanism for supporting it.
(And yes, Exchange is free, but support isn’t. And we’re monetizing through add-ons, which has proven fairly successful in that space. Also, yes, WordPress is free, but supported by a for-profit business whose best interest is to keep it going.)
2. You have to spend money to make money
It’s cliche, but it’s true. Anything worthwhile requires some kind of investment in life (time, energy, money).
Relying on free stuff (or even borrowed time) is too often disappointing. If something you care about matters that much, be willing to spend the money on making it a success. This goes from hiring the RIGHT web designer for your ecommerce site, to buying hosting for that site.
And as web designers, just like craftsmen, you want the right, quality tools. Would a carpenter want the cheapest hammer on the market?
If you want a result or a benefit, be willing to pay well for the delivery of it. (And thus, be justified in demanding it deliver.)
3. The worker is worth his wage
Or said NLT version of the Bible: “The laborer deserves his wage.” (Yes, I just quoted the Bible.)
What this means to me is that … just like you highly value your time, talent and expertise, so do we. We might just package and deliver it differently.
But because of this core value, I stopped apologizing for making money a long time ago when I really embraced the value we provide for our community.
We must make money and we are entitled to make money.
If I do an awesome job for you, you should want to reward me, and handsomely.
Personally, I’ve paid lawyers, plumbers, electricians, and counselors (and a whole host of other people and companies) a lot of money. But I don’t begrudge them for it because I got the results I desired for it. I’m not jealous if they drive nicer cars than me, or live in fancier houses.
I got what I paid for and more. They deserved my money for saving me grief or time or energy or whatever.
Now, our challenge as entrepreneurs and business owners, or specifically at iThemes, is to demonstrate that our time, talent and expertise — packaged in product form through all we do — is worth the price attached to it.
If we do it well, then you’ll recognize what we’re saving you (time, energy, money, whatever) and quickly purchase it.
I remember talking with a developer in Texas about an undercover project we were working on at the time that would essentially save him $300 a site. He told me he was paying someone else to copy sandbox client sites (you know where you build the site to show the client without going live on their domain) over to live sites for his clients. I told him our project would let him do that — copying everything including settings, theme customizations, plugins, etc in probably 15 minutes.
His response was essentially: “When can I have it? And how much can I pay for it?”
He got that product — BackupBuddy — a month later when it was released. The top plan is $150 per year. And he gladly pays it.
That’s showcasing value, right? But again, that’s our job, not yours as the consumer.
But I do believe that if you undervalue other people’s work … your clients will devalue yours too. It’s a mindset, an attitude, a philosophy and a core value you should seek to change.
Changing that one thing will start to affect everything you do and everything you see. I know it did for me years ago as I slowly started to realize what I was worth to the world and vice versa.
And you should value what they provide to you. Then if they don’t, take your money elsewhere and thus, vote for someone else’s business model with your pocketbook.
But you should consider what it provides for you … just like you share with your clients about the value YOU provide to them.
You should buy products from people who want to be here for you. You should support those who want to be here for you in 1 year, 5 years, 10 years because they have created a sustainable business model FOR you.
4. Question anything with ‘Unlimited’ in it
Now … let’s talk about the word “unlimited.”
Unlimited isn’t a business model. It’s a marketing angle and pitch.
We all know there’s nothing truly unlimited in life. And nothing lasts forever, particular in business. Quality, availability, price … they change.
Saying you can have unlimited of anything forever has got to mean something else suffers. There’s got to be a catch. Fine print somewhere.
Hosting companies though are notorious for “overselling” and offering “unlimited” bandwidth and storage. They get around that by talking about “resource usage.”
Up until now, I’ve focused on unlimited support mainly in this post. But one of Woo’s moves has made me think about our own plans. Currently we offer a plan for “Unlimited” sites essentially. There is currently no cap for the number of sites you could use it on and get updates and support. Woo is capping theirs. This is something I honestly hadn’t thought about with our current plans and something we’ll be evaluating over the next month or two.
The reason we haven’t tweaked it or capped it is because updates aren’t as resource intensive as support. But still. It warrants some thought and evaluation from us.
So if you see the word “unlimited” attached to a product … investigate it further.
I’m not saying don’t buy it … I’m just suggesting you think about some of the issues weighing into anything “unlimited.”
Those are some of the things we should all consider when purchasing good or services from anyone, even outside of WordPress.
I believe businesses exist to make money … but also meaning.
If we don’t make money though, we can’t make meaning. At least through our organization. Money is foundational. It doesn’t supplant meaning, but it’s essential for making meaning happen through business.
One quick example … we started The Div, our nonprofit tech foundation, to make meaning. It costs us a lot of money to get off the ground and to run … and to continue to run even now. If we hadn’t made money via iThemes, we could not have done that. Period.
But it shows that making money and making meaning CAN go together.
(By the way, I’m stealing some thunder from an ebook I’m outlining right now on the New Rules of Entrepreneurship, vote for it here.)
Anyway … that’s my two cents worth on this recent topic in WordPressLand. Now I gotta get back to work, helping make people’s lives awesome through what we do at iThemes.