4 Business Models for Profitable WordPress Plugins

dollar signIf you’re in the business of making money from WordPress plugins, there’s not just one way to go about it. If you’ve gone through any videos, podcast interviews and posts on selling premium plugins you’ll see that revenue models vary quite a bit.

The Smashing Magazine article “How Commercial Plugin Developers Are Using The WordPress Repository” by Siobhan McKeown already covered some of these, but I wanted to dive in a bit more detail on some of them.

Freemium

The “freemium” model (also called “free + premium” or “lite + pro”) is popular not only among WordPress plugins but also themes, desktop software, mobile apps, and many SaaS (software as a service) web apps. In most cases the idea is to get a bunch of users signed up for the free version with hopes that a decent percentage of them will pay to upgrade to a more fully featured (and better supported) premium version.

For WordPress plugin shops, free plugins published to the WordPress.org plugin repository give them quite a bit of exposure. When WordPress users are searching for plugins in their dashboard or on wordpress.org, these free plugins will show up while paid plugins are not allowed. Doing a Google search for plugins will bring up both paid and free, but many times the free plugins on wordpress.org will rank equally or higher than the same-named paid plugins.

Examples plugins using the freemium model:

For all of these examples you’ll see a fair number of downloads. This volume is necessary in most freemium models where you’re usually converting only a single-digit percentage of these users to paid.

However, as a plugin shop you’re not required to publish a plugin in the WordPress repository. You could go after organic search (Google) by itself and skip the repository and a free version altogether. You could also publish paid-only plugins in a marketplace like Code Canyon. You’d miss out on the exposure the WordPress repository gives you, but it works well enough for some.

Free Base Plugin with Paid Add-Ons

Another business model is to have a free plugin “base” that works out of the box (and is listed in the WordPress repository), but then sell add-ons that extend the functionality of that plugin instead of replacing the entire thing (add-ons are sometimes referred to as “extensions” or “modules”).

An added benefit for the plugin add-on model is that users don’t get a large bloated base plugin. Instead they only purchase and install the add-ons needed for their specific site requirements.

Examples of plugins with paid add-ons:

Backed by SaaS

A WordPress plugin that requires a SaaS (software as a service) for full functionality is another possible revenue model in certain scenarios.

For example, many SaaS apps that run independently of WordPress require insertion of a JavaScript code snippet on your website to work. These SaaS companies can simply put a plugin in the WordPress repository that adds the snippet for the user without any HTML editing. It makes it easier for their non-technical WordPress users to use their service and gives them better exposure by being searchable in the repository.

Examples of plugins backed by SaaS include HitTail (plugin) and CrazyEgg (plugin). Even the built-in Akismet plugin has a paid SaaS service behind it.

Scribe is an SEO tool that used to be solely a SaaS-backed WordPress plugin. Now they’ve branched out to other platforms, but the Scribe plugin still exists in the repository. It allows a “test drive” for free but requires a monthly subscription for more features and usage.

The best thing about a SaaS-backed plugin is that it lends itself better to annual or even monthly recurring subscriptions. And recurring monthly revenue especially is one of the tougher things to do well as a WordPress plugin business.

Pay Only for Support

Some plugins offer their full-featured plugin for free (no freemium model), but then charge if you need support outside of a public forum or FAQ. The idea here is that many of their users will become dependent on the plugin and not be able to run their own business websites without it. When issues arise time is money, and most business owners will pay for reliable support. This is where a WordPress plugin shop can charge for support either on a recurring basis or even per request.

Once again the beauty of this model is that the plugin can gain the exposure in the WordPress repository like any other free plugin. However, this free plugin might receive more downloads and higher ratings than a comparable “lite” version of a paid plugin since they’re typically not going to put a limitation on features to entice an upgrade.

At the time of this post a great example of the paid support revenue model is Paid Memberships Pro. If you want to hear why the founder chose this model more in-depth, just check out this podcast interview on MattReport.com.

Update: PMP Pro founder Jason Coleman also wrote a detailed post on his reasons for a “paid support only” approach.

Combined Business Models

Sometimes revenue models are combined. Soliloquy is freemium (lite + pro versions), but you can buy paid add-ons to its paid plugin (and only with a developer license at that). There are no add-ons to the “lite” version.

Easy Digital Downloads is a free base plugin with paid add-ons, but you can purchase priority support that covers the base plugin and add-ons combined.

Gravity Forms is paid plugin only, but it provides free add-ons to business and developer license holders. Basically they provide add-ons as a part of your license, with the functionality being optional (not included in the base plugin), and available only when you upgrade to more expensive license.

Paid Memberships Pro and some others have a “white glove” offering. In this model customers can pay high premium for services such as installing, configuring and consultations related to the plugin.

Finally, some developers create free WordPress plugins just to boost their portfolio or as a lead generator for their consulting services. The focus isn’t product revenue but they benefit financially from their plugins nonetheless.

6 Responses to 4 Business Models for Profitable WordPress Plugins

  1. Jason Coleman November 17, 2013 at 9:01 am #

    Hi, Phil. It was good seeing you at Pressnomics again. I was just directed back to this post from WP Mayer. I thought I may have left a comment here before, but it may be useful for people reading this to also checkout my blog post where I go through the steps to reproduce the Paid Memberships Pro business model:

    http://www.paidmembershipspro.com/2013/02/the-paid-memberships-pro-business-model-copy-it/

    It’s a good business model for people who want to go after market share as well as profits and also for people who have a popular plugin already built and want an easy way to monetize it without building new features or complicated licensing systems.

    Cheers!

    • Phil Derksen November 19, 2013 at 10:21 am #

      Jason, that’s a fantastic detailed description of your business model. Not sure why I never ran across it before. I’ll update the post with the link.

      Great to chat with you at Pressnomics as well.

  2. Dane Morgan January 14, 2014 at 6:46 pm #

    Pay for support isn’t limited to plugins. Justin Tadlock’s Theme Hybrid http://themehybrid.com/ is a prime example of successfully applying this model to themes.

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