How iThemes Makes Money
If you have a WordPress website then you’ve probably heard of the good folk over at iThemes. They make kickass WordPress themes and plugins, plus they do a bunch of training stuff too. So they are a great example for us of earning passive income through multiple streams; ie software and info products.
Let me just focus on Backup Buddy for a second, their plugin that allows you to backup your WordPress site. Here is a software product that blows my mind. It’s easy to use, gets the job done super quick, and best of all, when you buy a developer’s license, you can use the plugin on multiple sites. No ongoing fees. I think this is a great case study in smart product picking AND bad pricing strategy!
The product cures a big ass pain (protecting your WP site without needing to be a tech guru) and the competition, like Vault Press, charge a monthly fee of something like $15 per site. So for me this product says if you offer something that provides users with utility month after month (as opposed to one off), then you should make it a small monthly fee, as opposed to one-off lump sum. People don’t even notice say $25 a month.
Anyways, I want to get back to iThemes more generally and pass on two crucial lessons Cory Miller (iThemes) shared when commenting on Think Traffic a while back. On selling software: Cory says this is where the big money has been, it’s the fastest growing, and he loves it…but it requires 5 full time support staff (this number by the way is not too high given how popular iThemes products are).
On selling info products: it’s easy to do when you partner up and doesn’t require much support (just 1 full timer). However, this is the thing that shook my inner core. This is the thing that made me completely rethink my own information product bias. I’m just gonna quote this puppy right here; “Although I highly value knowledge and training, I’ve heard that the advantage software has is “utility” in the mind of the consumer. If I buy software, I can download and use it to do something. If I learn something, I need to apply that. And application and doing the work is always an issue for people.” What Cory says is so true. Software gets used. Software gets results. Software doesn’t get returned (as easily). Software suits people’s natural laziness, time-pooredness (is that a word?) etc.
At the end of the day though I think it’s all about what you feel comfortable with and what you give a f**k about. Because if you go into any endeavor just to make money – because objectively it’s the best choice – you will fail miserably.