That makes sense, as long as you don’t have to pay salaries, income taxes, or payment gateway fees. In theory, you’re right – and we could probably sell each extension at $39/year, without any support though. That would have to be a separate cost.
Here’s a breakdown of our costs:
- Starting with a $39/year sale:
- Stripe fees: 2.5% – $0.975 + $0.25 = $37.75
- Income tax: 16% = $6.044 = $31.076
- Support ticket: $8.21 per conversation, on average = $23.5
- Development costs at $25/hour = -$1.5
On that -$1.5, we’d also have to pay a dividend tax (as I, the owner of the business, need to be able to take home a profit – it’s a business, after all) of 10%.
The above calculations assume that a developer has to work for just 1 hour on the product – fixing bugs, adding features, and making sure it works fine with the latest WordPress version, all the time.
This does not account for the initial development costs, my time, designer, tester, business development, or any acquisition costs (for what it’s worth – Download Monitor was a six-figure acquisition two years ago).
As long as we’d deliver each plugin “as-is”, then yes, the proposed pricing could work. Otherwise, unfortunately (and you can see this throughout the entire WP industry with many companies 2X-ing their prices) it’s not sustainable.
I hope this message will find you well!
Much love,
/Cristian.