Plugin business models


(Emili Castells) #1

What’s the best Plugin business model for you?

I’m in the transition from freelance WordPress developer to WordPress product (themes and plugins) maker.

I made some free plugins in the past and now I like to make a Premium plugin that it’s an extension of one I finished recently. Basically this Premium plugin adds more features to the free one.

I thought about making an Addon, so I will not have to work in two different versions of the plugin. The idea is to keep evolving the free version too.

What do you think about this business model?

Thanks in advance :slight_smile:


(Jordi Cabot) #2

We decided to move from a “plugin business model” to a “service business model” where users pay monthly (or yearly). We believe this is more sustainable and in the end better for both us and our customers. We tried to explain some of the reasons in this post “[Five reasons why WordPress services are better than commercial plugins][1]” (and yes, I´m pretty sure that quite a few of you would disagree :wink: )
[1]: http://neliosoftware.com/wordpress-plugins-vs-wordpress-services-economic-perspective/


(Emili Castells) #3

Hi Jordi, thanks for reply :slight_smile:

Yes, sure that a SaaS in the best choice for the long run. But in my case I’m just starting and I’m an ‘one man band’ right now, that means that I don’t have the infrastructe to support and maintain any kind of SaaS service.

Maybe in the future, but now my idea is just make a good plugin that extends the functionallity of one of my free plugins. So my question is about if it’s a good choice to make an Addon instead of two completelly separated plugins (the free one and the premium).

Thanks again!


(Leland Fiegel) #4

I think the free plugin + paid addon model makes sense. Businesses like Easy Digital Downloads and WooCommerce prove how successful it can be.

I believe for this to be successful, the free plugin should be functional/useful to a certain extent. For example with EDD, you can sell things with a PayPal check out for free. If you want things like recurring payments, content restriction, other payment gateways, you can buy those if you need them.

As for the sustainability factor, each of them do charge recurring fees for ongoing updates and support. This is a pretty common theme amongst most theme and plugin business models these days.

Here are my thoughts on other plugin business models:

The ACF Model

Advanced Custom Fields used to run the addon model like you described. Give away a very useful plugin for free. Then charge for individual addons.

Then, they switched to a “Pro” model in which they bundled every single one of their paid addons into one paid plugin, no separation. They continue to give away the free version, which is still wildly popular.

In my opinion, their Pro plugin can probably be sold for much more. But perhaps the low price point makes it an “impulse” purchase for many dev shops that rely on it for client site functionality.

I don’t really like the idea of maintaining two separated code bases that contain much of the same code. Maybe their workflow makes this more efficient than it sounds, unbeknownst to me.

##The Jetpack model

It’s unclear what Jetpack’s long-term monetization strategy at this point. Right now they probably make a bit of change on VaultPress and VideoPress upsells. There’s also a data play for those who have the enhanced distribution module activated.

Whatever revenue they make, it can’t nearly cover the cost it takes to employ the team of developers that run it, not to mention the infrastructure costs for many of their cloud-based modules.

I believe Jetpack could be a goldmine one day, just not for the foreseeable future. I wouldn’t recommend this unless you have a serious amount of funding, patience, and long-term vision, like Automattic has.

##The Akismet Model

This is an interesting example of a serviceware plugin. Basically, the plugin doesn’t actually block spam itself, but runs your comments through a series of checks on Akismet servers to determine whether it is spam or not.

From a business perspective, some may complain about the “Pay What You Want” model that many Akismet-powered sites are on. Although many of the sites on a free plan contribute to the treasure trove of data that is in the Akismet spam database. This in turn, benefits their paid clients.

A service like this also has the advantage of not being limited to WordPress-based sites. Everyone gets spammed.

##The Gravity Forms Model

This is the first one in the list that doesn’t give a version of their plugin away for free. Everything is paid.

This is an advantage in it of itself as Gravity Forms “wastes” no resources on supporting clients that aren’t paying.

This is sort of a variation of the “add on” model as well, although Gravity Forms doesn’t sell addons individually. They place them in groups. When you look at how they break them up, it’s kind of hard to not go with the most expensive plan.

Features like Stripe, user registration, Zapier integration, polls, quizzes, and more are all reserved for the $199 “Developer” plan.

##The OptinMonster Model

OptinMonster runs a similar model to Gravity Forms, although they don’t as clearly break up individual addons.

Everything is paid though, and the more expensive the plan, the more features and support levels you get.

It’s also unique as it’s the only one in the list to offer a “lifetime” support/upgrade option, albeit at a more expensive level.

Don’t completely write this off lifetime support if you price it at a high enough point. Support cost seems marginal over time (i.e. as customers get more familiar with your product, they need less support).

If your project the average customer will have a three year attrition rate, pricing your “lifetime” plan at around this could make some sense and bring in more cashflow than you would without the option.

I believe people still generally like the idea of “lifetime” support just as long as they trust the company behind it to honor it, although be careful with it. Some WordPress companies have seriously damaged their reputation and/or gone out of business because of it.

##The PMPro Model

This one is interesting because they give pretty much all their code away for free: the core plugin plus addons.

They charge a yearly membership of $97 for more advanced support, and may charge more for custom development.

This has all the advantages of open source, although with the “everything free” model it may lead to entitled freeloaders.

Final thoughts

If you can, I’d go serviceware. Whatever it is, make sure there’s a recurring fee to keep things sustainable over time. If you have a quality product, I don’t think you can go wrong with any of the above models.


Base plugin with optional addons vs. combined, singular products. Which do you prefer?
Yearly vs. monthly pricing
(Emili Castells) #5

awesome information! thanks for sharing it :slight_smile:


(Brian Ross) #6

I would tend to agree and prefer to see this type of model when looking for a “premium” plugin.


(Nate Wright) #7

That’s an awesome breakdown of business models from @leland. Keep in mind, @dinamiko, that the best business model will also depend on the nature of the product you’re offering.

The base/addon model is great for software which can be easily broken down into components, and where there are a lot of different potential addons.

The free/pro model works when there’s not likely to be a lot of differentiation in your customer base – they either need basic or advanced functionality and there’s not a lot of bloat being bundled into the pro offering.

Developers often like the base/addon model because they like to avoid bloat. End users tend to prefer free/pro models because the cognitive burden of choice and implementation is lower.

Keep in mind you can still do a free/pro business model, but structure it technically as a single base/addon pair. No need to duplicate code. I know WP Migrate DB Pro wrote a fairly complex build script so that they could merge the free/commercial code base but still ship them as independent plugins. If you can, though, it’s far better to use hooks to get you there.

Also, a free/pro or base/addon model will only work if the free/base plugin can actually drive traffic that will convert. My restaurant plugins are just about the most popular in their niches now, but they still drive only a handful of addon sales a month. What matters more than anything is making sure that the up-sell represents a compelling purchase and the free version is able to reach people who might be interested.

I’m really curious why you think Jetpack isn’t a goldmine today. Even if most of the components aren’t up-sells, the whole thing is a huge traffic funnel for wordpress.com services, with incredible positioning in the plugin repository, search interfaces and the wider WP talk-o-sphere.

@jcabot, you have a few decent points about the comparison between commercial plugins and services. But your negative portrayal of commercial plugin authors, and their commitment to their customers, certainly doesn’t represent me. Perhaps you were describing the way you ran your commercial plugin business?


(Jordi Cabot) #8

@NateWr I’m sure you and others are exceptions, still believe my description is a more frequent scenario


#9

@jcabot as user I really like this model and points what you mentioned in your post.
I prefer if developer take care about me as customer not only for short period when I purchase plugin, but if he continue to improve existing plugin/service.
I feel better if I m priority of developer instead of thousands free users in front me.
I enjoy ‘‘premium’’ plugin/service for long term with quality relationship with developer. Sure this model requires high quality of service … and that I like :wink:

I hope I will see more quality in this area instead of more discounts and more ‘‘pay extra’’. Always feel robbed if see 50% discount for new customers, I prefer 50% better service instead.


(Leland Fiegel) #10

I think it has goldmine potential, but this comment from Jetpack team lead, George Stephanis, pretty much confirms it’s not profitable today:

Do you honestly believe that the gains from those ‘upsells’ in any way covers the time investment that we make into building, maintaining, and supporting Jetpack?

I said “not for the foreseeable future” because it’s hard to imagine how Jetpack will evolve into a profitable branch of Automattic. I think even with the incredible reach it has already, it will prove to be a challenge. I trust it’ll happen one day though.


(Leland Fiegel) #11

Agreed. Like @NateWr said, I’d imagine most developers would too.


(Nate Wright) #12

I saw that comment. I wouldn’t take it at face value. Don’t get me wrong. I don’t think George is misleading us or anything. But I think you can’t measure the value of Jetpack for WordPress.com just based on a couple of direct up-sells. All those user signups at WordPress.com represent a huge marketing funnel for all the other selling that WordPress.com does. And the plugin occupies such a significant place in the ecosystem it picks up extraordinary traffic. Look at these stats!

Since there’s recently been some “earnest discussion” about Jetpack, I’ll just pre-emptively clarify that I’m not trying to attack Jetpack. I’m just pointing out that I think it’s a hugely lucrative endeavour for Automattic.

I’m in the same boat with my own plugins (albeit on a much, much – depressingly much – smaller scale :slight_smile: ). If I measured the value of my free plugins purely in the addons that were purchased they’d be almost worthless. But they give me major brand exposure in my target niche, lead to (a small but growing number of) indirect sales and help my marketing by providing social proof.


(Vova Feldman) #13

I couldn’t agree more! If you analyze the market based on public data, the average license renewal rates for products without auto-renewal in place are between 10%-30%, while products with recurring-revenues / auto-renewals have renewal rates between 60%-95%. I recently wrote a blog post about Why WordPress Plugin Developers Have to Start Thinking SaaS which extensively discuss the topic.


(Brad) #14

Can I jump in here and mention a few things… Pricing the business model is the heart of your question.

The “pay-something-monthly” thing is fine to ‘try’, but please don’t. Just don’t.
I’m finding that this isn’t just me…

Stop dinging my card every month! I’ll happily pay a Yearly License Fee (or however else you’d like to word it)! Behaviorally, psychologically, and marketing -ly speaking, you can even offer a (perceived) discount for paying for a year (again, however you want to word it is up to you). But stop telling folks that your _________ is ‘only $9 a month’, $14 a month, or whatever. Tell me it’s $100 for a full year’s license.

Then I (the buyer) will understand and have faith that

  1. You’ll be around for the next year.
  2. Devs are ACTIVELY committed to any and all updates for the next year
  3. I’m not going through monthly dings on my bank account. Instead I have just one :wink:

(Grant Palin) #15

I know it’s become common to have yearly pricing for plugins or themes. That benefits the developer in recurring revenue, yet may put off potential customers due to the continued costs. The opposite option is an unlimited/lifetime license, which on it’s face is great for customers but terrible for developers. As a user of numerous plugins, and a prospective author, I can see both sides of the issue. I wonder if there’s a middle ground that somewhat reduces the issue on both sides.

Software used to be (and still is in some cases) licensed by major versions, requiring a fee but then providing updates within the same major version free of charge. When a new major version turns over, the user can keep using the previous version, or pay an upgrade fee for the new features of the new major version (presumably bug & security fixes will continue for the previous version for a while yet). This supposes that the developer can gather enough significant changes to be worth a new major version, and that it won’t be abused. But this will continue revenue. For the user it may be a toss-up as to how long he will take to upgrade, or whether he will at all.

This major version cycle needn’t be a year long, though a shorter cycle will be unfair to users and a longer one will hurt the developer.


(Nate Wright) #16

I think this model only really works for technical customers. A lot of the theme and plugin marketplace serves a customer base with very low technical skills and little appetite or understanding about versioning and development.

Finding simple, clear ways to communicate recurring payments will probably be the most effective way to revenue and user interests.


(Leo) #17

OptinMonster just removed their lifetime renewals option while grandfathering old customers :slight_smile: I think having the lifetime option helped them build a longer runway, which is good for them.


(Grant Palin) #18

I tend to agree. One of the downsides of building for WordPress is its large non-technical user base.


#19

It is not downside, it can be taken as advantage. I think its easier and cheaper (maybe annoying) to support questions like “how I remove this button” than deep technical question about api … it also follows WP - decision instead of option - developer has to take decision instead of keeping this to customers.


(Leland Fiegel) #20

Yep, they can be safely moved under the “SaaS” business model now. Also the “not just WordPress” model, kinda like Akismet (except no free option). Interesting move!

Here’s an article about the SaaSing of OptinMonster on Post Status.