Hi everyone! Ben from Freemius here. Imagine this: you own a business for car speakers.
You sell speakers together with a lifetime warranty. One of your customers bought a new car that isn’t incompatible with your speaker’s software. Now you have no choice but to retrofit the speakers for the new car. What would you do? What will happen if you sold 10,000 speakers like that? What if a new person buys the car
with the speakers? Are you still obligated to deliver support and updates for them even though they didn’t pay for it? It seems that you have no choice but to
invest a lot of time and money due to those lifetime warranties. Now, after hearing this “made-up” story, tell me: why are there still unlimited site lifetime
licenses in the WordPress ecosystem? Don’t get me wrong, we here at Freemius are not against lifetime licenses, but we want to make you rethink the whole concept of unlimited. Putting the right limit and the right price on your lifetime licenses is one of the key ingredients for making your plugin or theme business more sustainable. Let’s plug-in! Before we get started, make sure you
subscribe to our YouTube channel for future videos. If you’re watching this directly on YouTube, you can click the alert icon for notifications about new releases. First of all, as plugin or theme business owner, you want to be able to create a steady stream of revenue that provides sustainable income. Unless you have a constant flow of new customers, providing a lifetime license is typically
the wrong way to create a successful business. Providing your product for unlimited sites in your lifetime license is even worse. Why? for a business to remain sustainable in an ever-changing digital world, offering an unlimited lifetime
license greatly raises the risk of not being properly compensated for all your hard
work. But as I said before not everything is bad about lifetime licenses. They can be of great value to you and your customers. Don’t give up on them, just
remove the un- from unlimited – in terms of the number of websites your product can be used in. WordPress businesses can still be sustainable while offering lifetime licenses, but they should have certain restrictions when it comes to what services are provided in the long term. One of the most important aspects
of a lifetime license is how you price it. Quick trivia question for you – do you
know the average lifespan of a web page? Any guesses? Well, according to a Washington Post research, In 1997, the average lifespan of
a web page was 44 days. In 2001 it grew to 75 days, and in 2003 the digital article on the Washington Post stated it around 100 days. Guess where that article is today? Unavailable of course… Today, the common conception of a web
page’s lifespan is around 4 to 5 years. Now, let’s think about subscription
renewal rate. Assuming that your users’ renewal rate is 50%,
the chance a user will renew for a second year is 25%, for the third year is 12.5%,
and only 6.25% for the fifth year. That means only 6 of 100 paying customers will renew a subscription for 4 years in a row! The chance that a customer keeps renewing year after year after year is very low, not to mention the very real chance that their business might not even last 4 years! That’s why a lifetime license can sometimes be the best deal for you. It is a promise from a customer to pay for all of their business’ existence maximizing dollars in advance! But what about the price? Simple. Just take your annual fee and multiply it by the average business lifespan. In this case, five years. This number can
obviously change over time so it’s important to stay up-to-date with
competitor products and pricing. A piece of advice from us – for customers that are willing to commit for such a long time, a small incentive in the form of a
discount can make the difference between thinking about it and doing it. Multiplying the annual fee by three or four instead of five can do the trick. Changing your terminology from sites to domains can be very beneficial for your business. Let’s say for example you sell a 25 site license. This means that customers or agencies can purchase your product and recycle licenses when
businesses and their domains close. If the license is locked to a domain, you’re
protected against recycling old licenses. To price licenses for multiple domains
properly there is a simple equation that takes into account the number of domains and includes a proportional discount. You take the annual fee, multiply it by 5 like before, then multiply by the number of domains, and then the total sum by 0.8. The proportional discount will be 20%. So, if customers have 10 domains, they’ll pay for 8, if they have 20, they’ll pay for 16 and so on – more domains equal more discounts –
everybody’s happy! The last thing I want to talk about is selling limited lifetime licenses for agencies. Generally speaking, selling plugins or themes to agencies is like finding gold in a river. Because they have many domains and projects they’re working on, agencies can be sometimes your best customers. Agencies are always are on the
lookout for new WordPress products. What if you could tell them that by using
your plugin they’ll not only be able to save money but also make money as
promoters of your products? It’s all about marketing psychology. Instead of giving them the same 20% discount we talked about before, convey the following message: “we’ll give all your customers an exclusive 10% discount for our product, and in addition you get 10% of the revenues for the first year if you
join us as an affiliate”. It’s exactly the same discount but this way the agency will be a hero for the customer by giving them an exclusive discount, and
you’ll be a hero for the agency by creating more profit for them for each
of their clients using the plugin. The bottom line is that everybody wins. When you offer an unlimited lifetime license, you immediately limit the maximum dollar
amount you can earn from an agency regardless of the number of sites they will use the product on and the budget they have to spend on it. The more sites an agency manages – the more money they have to spend, and the more sites your product will be installed by them- the higher chance for something to break or work unexpectedly which means a higher support load. If you don’t limit the number of sites, you are basically leaving money on the table. To sum things up: selling
lifetime licenses for your WordPress products can work great, but only if you
price it right and include the proper limitations. It’s really only fair – you will have to potentially provide more support for multiple website domains, and the value of your product goes up when customers implement it on multiple domains. Thanks for watching! the Freemius plugin and theme community is growing every day and we’d love to have you be a part of it! Join our Facebook group and subscribe to our blog and YouTube channel for more advice and best practices for selling WordPress plugins and themes. See you next time!

The Best Ways to Sell Lifetime Licenses for WordPress Plugins and Themes
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