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.
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.