WooThemes Raises Monthly Prices 33%, Backs It Up With Bad Math [update]

May 2, 1012: A late update that WooThemes eventually did understand my position which was shared by a few others and monthly prices for existing customers didn’t increase when new sign ups did at the beginning of this year. A big kudo to WooThemes for realizing the value in their long-supporting customers!

This is a classic example of how startups and growing businesses shouldn’t treat their existing customer base, especially for subscriber services. Companies like Netflix have taught us this lesson well. And, the dynamics of a community tell us that if you’re selling a subscription service with fixed goods, subscribers tend to use less of your service’s offerings over time (meaning, you make more of a profit from them over time).  These are all lessons WooThemes ignored, tore up, and pretended didn’t exist when they announced back in September they were raising their prices 33%.  WooThemes adds 2 themes per month, and, feels because of this the library has grown more and the higher monthly price tag makes sense.

While I’m sure this makes sense from a business standpoint (and, by business, I mean someone with a business major and no reality in sight), it doesn’t from a product or community standpoint. People paid WooThemes monthly expecting to get 2 new themes per month, and a one time setup fee for the rest. So, you pay $7.25 each month for a theme if you use it or not, and $100-200 to get started.

Increasing the monthly fee just means now you’re paying $10 a month for a theme, you’re not “gaining” anything.  If they wanted to sell that story, they should have raised their setup fee to account for all the available themes in their library for new users. Instead of just admitting they were raising prices in general, they did a corporate swan song on the size of their library and support options.  In the end, I wrote this comment on their original blog post:

I’m still irked that folks like me who have been club subscribers for a long time and /haven’t/ used your support (and, really only used a couple themes in the wild) are having our rates increased. We’re not “gaining” anything by it whatsoever. Increasing it for new members who are getting more up front makes sense, but, we’ve been “financing” and believing in you for a long time and we’re the ones being shafted. I still only pay $15/yr for Grooveshark, because I was an early subscriber. I pay less than half the monthly fee for Blinksale because I was “grandfathered” into their new plans. I pay $15 less per year for Skype’s calling plans because I got them when they first came out.

Other companies /respect/ the customers they were built on enough to let the older users who believed, held down the fort, and built their community to let them keep the subscriptions they always had. Heck, even most of the jerks at mobile phone carriers do. We’re the /vetrans/ of your community, and, if you aren’t able to respect us, we’re going to loose respect for you.

That is all,
/Robin

I’m still hopeful WooThemes will have a change of heart and make a more sensible change to their plans — all in all they are a pretty great service. But, if you need to raise prices to cover bad business decisions, say so. Don’t lie to your customers.