Developer License and How You’re Leaving Money on the Table

Money on the Table

I love developer licenses for WordPress plugins because I can use the plugin across all of my websites without any additional cost. I’m also building a new house in West Palm Beach. You’re probably wondering how those two things are related.

Recently while discussing profit maximization with a WordPress developer, I used our interior designer as an example to show him how he was leaving money on the table.

When we met with the interior designer, she showed us several layouts and pictures of what she thinks would look good for our house. We picked the items, and she ordered it for us.

On the backend, she collected a commission from the vendor.

However in this developer’s case, when he built a website for his client, he would install premium plugins on their website under his developer license.

When the project needed a front-end submission form, he’d put in his Gravity forms developer license key. Need to have a gallery and album, he’d install Envira Gallery, and the list goes on.

So I asked him why? His response was I used the plugin to build this functionality, and the client may need to edit it later.

I was just baffled. The client isn’t paying you a retainer, so why are you going to pay for their license?

You also used Photoshop to customize their design. Do you also give them your Photoshop license? Probably NOT…

For some reason, people think that developers license = reseller license when they aren’t. You’re doing yourself and your client a disservice by using your developers license key on their site.

First you’re responsible to provide support. Should they contact the original plugin developer, they’d most likely leave frustrated.

Second, if you forgot to renew your license, now all of your clients will see an expired license notification in their dashboards (varies on plugin).

Lastly, the biggest disservice you’re doing is to yourself. Because you’re leaving money on the table.

Most clients would not have any problems buying the license if you explain to them why they need it. You can also build the license cost in your original proposal and purchase the license on their behalf which you can transfer upon completion of the project.

Not only do you get affiliate commission from the vendor, but you freed yourself from support / updates responsibility.

Think of it from the web hosting perspective. When your client comes to you, do you give them free web hosting? Or do you refer them to a company?
Probably the latter.

In most cases you should refer them to a WordPress hosting company like InMotion Hosting or WPEngine. Both of them have solid affiliate programs paying upwards of $200 for each sale that you refer.

Now if you start thinking in these terms, you can quickly see how you can maximize your profits on each project.

Below is a list of commissions you can earn by recommending these essential WordPress products:

WPEngine – $200
InMotion Hosting – $100
Gravity Forms – $39.80
OptinMonster – $39.80
SoliloquyWP – $19.80
BackupBuddy – $20
Envira Gallery – $19.80
MaxCDN – $20 – $12,500

That’s an additional $360 per client.

Now there are tons of other WordPress products that may be applicable for specific needs that I didn’t even list here.

Let’s say that you’re working with 20 clients a year, that’s an additional $7200.

You get the point.

Update: Some folks in the discussion pointed out why not mark-up the prices. You can definitely do that, and that may be even more profitable. The point of this post is to urge developers don’t just add your dev license key for free :)

Next time when you’re working on a client project, think about how you can maximize your profits.

On that note, we’re actually working on an Agency Dashboard for OptinMonster which would allow you to resell OptinMonster to your clients, and you can build that into your monthly retainer. If you want to be an early beta tester, send us an email through OptinMonster support and we’ll add you to our beta testing email list.

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Please note: I reserve the right to delete comments that are offensive or off-topic.

30 thoughts on “Developer License and How You’re Leaving Money on the Table

  1. Hiya Syed,

    Yup, this makes all the sense in the world and can be used in other genres as well.

    Thanks.
    Kerwin.

    • Agreed. Lawyers, accountants, and basically all other established contractors do it.

      However sometimes I find that developers are way too nice and don’t even think about earning the extra referral.

  2. Hey Syed, great minds think alike. This is exactly what I do.

    The only reason I ever get developers licenses for a plugin is the added features. Those alone are often worth it for me and my own sites.

    In some cases I will install my license to show them how it works. If they are happy with it, then I deactivate my license and encourage them to buy the plugin themselves. It’s a good situation for both sides…

    cheers and thanks for the great post!

    • Totally agreed Bob. A lot of times the extra features are totally worth the dev licenses. Perhaps plugin authors should take note and not call them developer licenses rather call it Pro / Business etc.

  3. This was a really fantastic and helpful post, and is one of the main reasons we decided to not do an unlimited domains or “developer” branded license at http://simmerwp.com. We also just launched our affiliate program so that commissions can immediately work their way into ours client’s, and client’s clients cashflow.

    “Not only do you get affiliate commission from the vendor, but you freed yourself from support / updates responsibility.”

    This is so important. As WordPress services start to become even more modularized, what this means is that it will be easier for agency owners and managers to compile the cost of licenses individually into their estimates and invoices, providing more transparent pricing for all and a healthier cashflow.

    Thank you for writing this!

  4. “You can also build the license cost in your original proposal and purchase the license on their behalf which you can transfer upon completion of the project.”

    How do you purchase items with your own affiliate url and then transfer the items? As I understand the affiliate programs I’ve seen, purchasing an item yourself with your own affiliate link is a no-no! :)

    • Jill, normally you can reach out to companies and they’ll give you an exclusive coupon code (that either equals to or greater than the affiliate commission).

  5. +1 on all this and more. I’m all for having clients buy their own licenses.

    But, I think missing from this discussion is that developers should charge their clients _more than the original license cost_ when they use their developer license on behalf of the client. ie. why not charge client X $200/year for using _my_ Gravity Forms license. It standard practice to markup products that pass through a business. Your interior decorator probably isn’t going to charge you “cost” for the sofa that they shopped for and delivered to your house. They’re going to mark it up. When using a dev license you manage your saving your client time and energy purchasing and updating it themselves, etc, charge an appropriate premium for that.

    • Great point Jon. Completely agree with you there. You can definitely mark up the products in your contract agreement :)

  6. “Not only do you get affiliate commission from the vendor, but you freed yourself from support / updates responsibility.”

    This only works if you operate a business that does not provide support or maintenance. In our business model we benefit substantially from clients that come to us on a regular basis for help with websites we developed sometimes years ago. Using Gravity forms for an example, why would I want to switch to a model where I get a one-time payment of $39.80 and then the client goes somewhere to get the support for free, instead of a model where I markup the cost of the plugin in the initial build (much more than $39.80) and then the client pays me for ongoing support and maintenance for the life of their website? In the long run I would much rather have the recurring revenue and a client who is happy because they think they got something “for free.”

    • Amber, if you have a thriving recurring model, then absolutely go for that.

      This post is intended for folks who do one-off builds (which a lot of new freelancers and developers do).

  7. Hey Syed, Thanks for the great post.

    We’ve been doing this for almost 10 years on a limited basis and had anticipated concentrating this year on refining and expanding this part of our business. Thanks for the great article and glad you gave us a different perspective.

  8. If you price your services correctly, you don’t need referral or affiliate fees.

    Clients hate software licenses.

    If you put in ten premium plugins on a client project do you really think that the client wants to have to deal with ten other vendors? You really want to try to make the case to the client? That’s a sale you are not going to make if I’m your competitor because I’ll beat you every time.

    Developer licenses make the life of the design firm and that of the client easier. Isn’t that the value-proposition that helps make your sale? It is for us.

    I’ve been self-employed for 35 years. I don’t know everything but I do know this: Put what is best for your client first, what is best for your business second and the money will follow.

    • I have to agree with this, one of the reasons that clients like to use our agency, is they have one person to deal with, their account manager.

    • The vast majority of professionals seem to leave the client after they’ve built the site. I suspect most people ordering a WordPress site want something with a relatively low cost so they’re not willing to pay a big monthly to have somebody take care of details like license renewal for them. Ideally every client would have a budget for someone like you.

    • I totally agree Al. I build the cost of developer licenses into the fees I charge.

      It just seems like an administrative headache for the client and for me to buy a separate license for each client on each project. Either I have to buy it myself, keep track of the license #, put it on the final invoice and mark it up, and send the client all the license # info which they will probably lose and contact me in a year saying “Gravity Forms is asking me for my license key, can you send that to me?” and then I have to go look it up and send it to them.

      Or I have to tell them to go buy it and send me the license key info, which half the time they will forget to do, or the activation email goes to their spam or they accidentally delete it. Or I can tell them to put the license key info in themselves and then I’ll be getting questions about where to put it, etc.

      Yes, I’m missing out on affiliate fees but the markup should at least partially make up for that.

  9. Nice article, Syed and congrats on the new house.

    A few years back I let clients “ride” on the back of my developer licenses, but I have turned that around last year orso.

    What I do now is to include the license only in one of the options of our Website Care Plan (http://so-wp.com/support/). For most clients it probably works out cheaper to get their own personal license, which is fine with me too.

    • Put what is best for your client first, what is best for your business second and the money will follow.

      Truer words were never spoken, Al (great name btw).

      I’m glad to hear someone talking real sense in these comments. Ten additional vendors, lots of hassle: doesn’t make any sense at all. We own a lot of developer licenses (some we use more, some we use less). That’s a lot of dosh going into the WordPress ecosphere. Hey didn’t we start off with simple free software and the GPL sometime…just selling services?

      What the heck happened to us, we pioneers of freedom?

      PS. Oh well, whatever happened to you happened to us too. We sell both a video plugin and a VAST/VPAID solution. Like Lara, we don’t offer an unlimited or developer licenses as our product (online video) is complex. Each sale entails a certain amount of support which we provide without fail. We do however offer nice multi-license packages for developers and publishers to simplify life.

      On the other hand, for simpler solutions which require less support (slider plugins or forms for instance), I think developer licenses are great.

  10. I’m glad you wrote this. I only see the point of a developer license if it’s for your own sites, but that model makes little sense to me for professionals who are building sites for clients.

    If somebody has 10 clients, they or the clients can buy 10 licenses at full price. We don’t offer developer licenses, just single site licenses and I can’t recall a single professional asking for a bulk discount. It’s the customer who should be in control of the license because in a few weeks the professional will be gone. The customer can use their license to handle renewals and support after that.

    We don’t allow professionals to use our affiliate program self-refer or to refer their clients. In either case, that’s basically a discount program for the professional instead of being what it actually is — an advertising program for qualified publishers. A project has a total cost and a theme or plugin is a small part of that cost so my view is that if a professional wants $20 more out of a project, they can simply add it to the project price and get it from the customer instead of from us.

    There’s too much copying with pricing and licensing going on. That’s the real problem. Sometimes that is common is not necessarily useful. I dare say those who are offering a developer license that does not restrict support and updates to sites owned by the buyer is probably leaving money on the table. At least wait and see if your customers actually demand a bulk discount before giving it away.

    Bad assumptions cost money.

  11. My developer’s license stays on plugins etc on my clients site as long as they stick with me for my full Monthly Maintenance Program. Otherwise, I remove my license and they are responsible to maintain. I like this because, it keeps me connected with my clients, it pays for my renewals on my licenses if they are not lifetime. Clients have to stay on the MM program, not just use it, go away and come back. Of course, all of my clients are on my MM. Which is an entirely different area so many are missing out on.

  12. Interesting idea, I suppose it would be client specific.

    Most of my clients want “a plate of spaghetti” and don’t want to be hassled with an bill that lists “8oz pasta, 6oz sauce, 2tbps cheese, 1 sprig parsley, 1 dash of pepper”

    Additionally they usually are not accustomed to “self service” as far as support and would never contact gravity forms, or whichever plugin dev direct…as support is baked in to a monthly upkeep fee (hosting, support, etc).

    Sure if it is a “turn key” project , I bake whatever license fees into the project cost and explain they are responsible for maintaining the licences. But I also explicitly layout a support fee as they bought a “product” (i.e. a ready to go website) and not a service (website with support)

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