6. Pricing—more and less

This note covers two aspects of pricing on WordPress.com:

Pricing plans for WordPress.com users
Fee structure for monetisation features on WordPress.com and Jetpack

There is an accompanying note on reorganising the WordPress.com new user sign-up flow for the suggested pricing system.

WordPress.com pricing plans

Free + 4 paid plans + the null option = too many plans!

Too many and too few

WordPress.com currently lists five pricing plans—a free tier and the four paid plans. There is also the hidden Blogger plan, and the ever-present null option — a user choosing none of these plans.

Six plan options for every user are way too many. They create confusion for users and trigger decision paralysis; improving the odds for the null option.

Six plans is also too few for the wide audience that WordPress.com addresses. Each type of user—Blogger, Personal, Freelancer, Small Business, and Online Store—has just one pertinent option. (See note at bottom for an analogy).

This SaaS pricing model works well when the audience is narrow or is segmented on just one axis—usually the ability to pay. A different approach is needed when the target audience is vast, and varies across multiple axes—features, control, affordability, support-requirements, integrations amongst many.

The telco-pricing alternative

A pertinent alternative to the SaaS pricing model is the pricing system followed by telecom operators.

Telcos—Verizon, Vodafone, Movistar—have an unlimited number of pricing plans. They have plans for pre-paid and post-paid users; with and without a bundled phone; for students, corporates, and families; with little data allowance or with only data packages; for each geography, and for each price segment.

Telcos understand that they serve a wide market and create a variety of plans for all segments. Then they filter the plans and show users only the relevant ones.

The wide range of plans helps the telcos to tailor a plan for each fractional segment.
The wide range combined with filtering helps the users pick from a small, relevant, comprehensible set.

My suggestion is for Automattic to adopt a telco-pricing system.

Next steps

To develop the new range of pricing plans, I suggest:

Start with the user personas from the product management and marketing teams
Develop a few (3-5) product-price tiers for each of the personas
Do cross-persona plan comparisons to reduce, but not eliminate, overlaps
Create add-on packages for all cross-persona features
E.g. Google Analytics is included in Business and eCommerce plans but may be available as an add-on to everyone else

Along with developing the new pricing plans, their presentation needs to change so users only see plans relevant to them. The presentation—pricing page and the sign-up flow—are covered in the accompanying opinion note.

Fees for monetisation features

In the Earn with WordPress.com note, I recommended moving to a progressive fee structure for all monetisation features—stores, content subscriptions, paywalls, and donations. Below are more details on that suggestion.

Current pricing: Cap & Restrict

Publisher plan based pricing (current)

The current fee structure for WordPress.com’s ‘Recurring payments button’ appears to be progressive and fractional. But a zero fee for the eCommerce plan means that this fee structure is really capped at USD 45 (See note at bottom for detail).

Current pricing—capped at USD 45/mo

A guaranteed plan fee and a hard cap on income from publisher revenues removes our incentive towards publishers’ success.

The high fees on lower plans, irrespective of transaction volume, also discourages users on lower plans.

Price for success with progressive fees

A better pricing plan would focus externally, on publishers. It would incentivise their success with a pay-when-you-earn fee instead of the current pay-to-earn model.

Three features of such a pricing plan for the Earn section:

Monetisation features available to all publishers, including free users
- Automattic earns money on transactions (publisher success) not for providing features
Progressive transaction fees: higher the publisher income, lower the Automattic fee rate
Charge one-time setup fees for advanced features that may require customisations or have an additional cost for Automattic

The progressive fee structure aligns the publishers and Automattic towards publisher success—higher the publisher’s income, more the fees Automattic earns.

Suggested fee structure for monetisation features

Publisher’s revenues (USD/mo)	Automattic fees¹
Up to 100	8%
101-500	5%
501-1500	3%
1501-5000	2%
> 5000	1%

This plan is structured to match the expected revenue from the current fee structure. Where it differs from the current fee structure is at either end of publisher revenue.

When the publisher is not earning any revenue from transactions despite creating subscriptions or a store, there will be no additional revenue to Automattic from the publisher.

At the other end, when the publisher is earning more than USD 1000/mo from transactions, Automattic will earn 1% of all incremental revenue instead of being capped at USD 45 under the current plan.

Suggested pricing—publisher success driven with no cap

A progressive fee structure allows us to open up monetisation features to all users, irrespective of their WordPress.com plan. It lets the publishers experiment, optimise, and succeed with monetisation without any additional upfront cost. And it allows Automattic to share in publisher success, incentivising us both to help them succeed. To quote a cliche, it’s a win-win-win.

Notes

A product offerings analogy: Drinks brand portfolio

A beverages company that offers a variety of drinks—soft drinks (sodas), energy drinks, coffees, alcoholic beverages, water, juices—will have a wide variety of offerings:

Sodas in multiple flavours, and in small-medium-large-unlimited sizes
Energy drinks in a few flavours and multiple sizes
Multiple types of coffee, including hot and cold, in 3 sizes each
Selections of beers, wines and whiskies
Free water cups, but also water bottles in multiple sizes
Selection of juices, including fruit combinations, aerated, with/out pulp, and in multiple sizes

They would also have add-ons. Say, a shot of whisky to turn a coffee Irish, or syrups to add to water.

The current WordPress.com pricing plans, applied to a beverages company’s portfolio would mean having just one soda, one energy drink, one coffee drink, one alcoholic beverage, one water option, and one juice drink. They would all be available in just one size, and would be priced solely based on the drink type.

Inferred pricing plans for recurrent payments

The best pricing plan for publishers—combining the fixed (WordPress.com plan) and variable (WordPress.com transaction fees) costs—varies based on their income from recurrent payments:

For publisher earnings of up to USD 83/mo, the Blogger plan is the most economical—costing up to USD 11.33/mo
From USD 83 to USD 850, the Premium plan is the most economical—up to USD 42/mo
From USD 850 to USD 1000, the Business plan is the most economical—up to USD 45/mo
Above USD 1,000 in monthly earnings, the eCommerce plan with its flat fee is the most economical—USD 45/mo
For the purpose of earning recurrent payments, the Personal plan is redundant

The ‘current pricing’ line in the expected revenue charts above reflects this ‘best plan’ at each price point.

All opinion notes:

The fee tiers are marginal.
E.g. For transactions worth USD 350 in a month, the first USD 100 is charged at 8%, and the next USD 250 at 5%
↩