Just like “lifetime support & updates”, renewal discounts are becoming a thing of the past.
When we first started LearnDash there were no renewal discounts because, well, there were no renewals.
It’s hard to believe but that was where the WordPress industry was at the time. You paid once for your products and you had lifetime support & updates.
Today you will be hard pressed to find any business running this kind of pyramid-scheme pricing.
Unless of course the business is a pyramid scheme.
Renewals are now common in the WordPress plugin & theme space, but for many years it was normal to provide a discount on the renewal purchase.
I will admit that I have never really questioned why this was the case. If I were to guess, I think that renewal discounts were implemented because the WordPress folks pioneering the renewal pricing structure weren’t sure how people would react to having to renew a license. So, they tried to “soften the blow” a bit by offering a discount.
But just as the WordPress industry needed to evolve away from “forever” pricing, it must also evolve to eliminate discounted renewals.
Discounting renewals unfairly devalues your offering.
When you really think about it, offering discounted renewals doesn’t make business sense.
What we realized is that the discount on our renewals was essentially devaluing our future work. That wasn’t fair to our team who worked so hard on creating and supporting the new functionality.
Now, one argument is that the support burden decreases in year two. I completely disagree with this sentiment for two reasons:
- New features elicit new support inquiries, no matter when someone purchases.
- There are people who will always ask for support whether it’s year one, two, or five.
I only speak from our experience but I suspect those of you with software products can attest to a similar trend. I think this trend is part of why WordPress oriented theme & plugin providers are shifting to standard annual renewals.
Full-priced renewals are necessary for WordPress products.
Today we see so many WordPress products shifting to the SaaS sector. I’ll admit that I too have been tempted.
Because support is far more difficult for WordPress plugins and themes than SaaS offerings.
The number of possible plugin and theme configurations coupled with hosting specifications means that troubleshooting can take a terribly long time for a support rep (and possibly developers should it require deeper investigation).
Just consider this (very common) scenario: you push out an update to your software. Person A updates and is super excited about the improvements. Person B updates and suddenly their theme’s CSS is no longer rendering properly on certain pages. They are mad.
Same update. Two different experiences. Two different reactions. This is common place for WordPress and a reminder of what life is like when you don’t control the technical environment.
To bypass this headache plugin and theme shops have decided that they want to control the environment by SaaS’ing their functionality. While this can be good for both the business and the consumer, it also takes away one of the most attractive things about WordPress in the first place: feature flexibility.
Plugins and themes need to remain non-hosted in order to preserve the core value proposition of WordPress. However, this means higher support costs to the business. The logical conclusion is that the renewals need to be full-priced to offset this burden.
This is a major reason why we retired the discounted renewal program.
Who is doing full-priced renewals?
Actually WordPress businesses of all sizes no longer offer renewal discounts. If anything we are late to the game…
Off the top of my head:
- WP SimplePay Pro
- Restrict Content Pro
And many, many more.
If you are a plugin or theme provider then have a look around yourself and you may be surprised to see how many companies have shifted their policy. You won’t be alone. Quite the opposite. You will actually have some very visible company (see WooCommerce).
We experienced practically zero friction in this change. In our case the new policy doesn’t impact existing customers. We honor the contract they agreed to upon purchase as long as they remain with us. Should they end their business relationship, then their legacy pricing expires as well.
I can also put your mind at ease on one thing: removing renewal discounts has had zero negative impact on new customer acquisition.
Not so long from now I suspect that we will all look at renewal discounts in the same light as we look at lifetime support & updates, as an unsustainable policy that hurts both consumers and providers.