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So you want to start selling your Magento extensions. You developed your own store, found a cool domain name, clarified all the legal stuff and you are theoretically good to go. But what is the right price for the extension? If it is too low, you will "lose" money, because people would pay more, but do not have to. If it is too high, you will also "lose" money, because people who would buy it do not do so. So how do you find an optimal price? Things that come into my mind are:

  • "A/B Test" Different Prices: Try different prices and see at which price the extension sells best. This approach is also outlined in the excellent post "Stop guessing! Use A/B testing to determine ideal price for your product". This may not work if you sell very few products in the beginning. You need enough data for it. Additionally, it does not look good if your customers find out.
  • Conduct Customer Surveys: Ask potential clients what they would be willing to pay for it. This should give you a feeling for the price range. Unfortunately, thinking about prices and actually paying the price are different things, so this may not be a good help.

Finding the right price for a (digital) product is a quite general question, so that this may not be 100% Magento-specific. However, I hope there are some good answers and hopefully also some Magento-specific experiences.

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Let people pay what they want by selecting the price from a specific range.

  • Interesting idea. Do you know a Magento extension which provides this feature? – Simon Jan 8 '15 at 9:40
  • I would imagine people would only ever pay the lowest price... – Jonathan Hussey Jan 8 '15 at 9:41
  • @JonathanHussey I would not bet on this one - pricing is highly irrational (have a look at e.g. decoy pricing, anchor pricing etc.)... – Simon Jan 8 '15 at 9:51
  • Yep you could be right - worth a test perhaps just to see what people actually do pay. – Jonathan Hussey Jan 8 '15 at 9:56
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This is highly subjective, but we tend to initially price our extensions based on functionality and price of competing/similar products (assuming there are any) but also considering the time spent to create the extension in the first place. Also consider how much you are planning to further develop it with new features (which is very likely to be considerably more than you probably think at the moment). From here you can use analytics to judge sales of the extension versus traffic/bounce rates etc and make a call on whether of not it's priced correctly. Sales are of course always going to be influenced by things like advertising (so you might want to get some adwords running), and allowing the customer to try the extension before they pay in the form of a free trial. I'm firmly of the opinion that giving the customer a free trial and them deciding not to purchase is highly preferable to forcing the customer to buy first then them requesting a refund.

Ultimately I don't think there is a right answer here or necessarily even a right price for an extension. Some store owners have less to spend on their store, some have more so you can't really say an across the board price is ever going to be right for everyone.

My suggestion is to set the initial price of the extension based on whatever you feel is the most relevant comparative data, and then judge whether it should perhaps be higher or lower based on sales, traffic and general interest, but bear in mind, more sales at a lower price is always going to be better than virtually no sales at a higher price, even if potentially some customers may have paid a higher price.

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    Thanks for your thoughts! There is definitely a right price - there is even an optimal one (the one where you make the most profit). Although this is nearly impossible to find :) – Simon Jan 8 '15 at 9:48
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    True in terms of profit to be made on the extension, but there is no price that is right for every customer, otherwise every customer who visited your store with interest in the extension would purchase it! – Jonathan Hussey Jan 8 '15 at 9:50
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Very interesting question and topic. Never thought about... I would ask other Magento Developers what they think your solution is worth. Don't think about development time or personal effort - just about value for the customer, when he will use your extension.

I think a survey in the community (or friendly devs, potential customers, ...) and using an average value of the results will give a great base. The problem with this approach is the number of customers you have to find before you get a expressive result.

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