Examining Three WordPress Theme And Plugin Business Models
Hundreds of thousands of people make a living from the WordPress platform. This includes writers, affiliate marketers, localized website designers, theme developers, plugin developers, and more.
There are a number of ways that theme and plugin developers can make a living. One is to develop custom solutions for website owners, on a contract, part-time, or full-time basis.
When developers release their themes and plugins to the public, they generally use one of three business models: Free, Freemium, or Premium.
In today’s article, I would like to explore these business models and speak about the pros and cons of each one.
The Free Business Model
If you had to list all of the WordPress plugins that are available online, you would see that the vast majority can be downloaded free of charge. A quick check at WordPress.org shows that there are currently 31,536 plugins available in the official plugin repositary; while the leading premium plugin marketplace CodeCanyon hosts 2,649 plugins. If these were the only locations to download plugins, free plugins would represent just over 92% of all plugins available online.
There are a number of reasons why a developer would release a WordPress theme, or a WordPress plugin, free of charge.
The quality and functionality that a theme or plugin offers, varies greatly on WordPress.org. For the sake of argument, let us divide products into two categories:
- Basic themes and plugins
- Advanced themes and plugins
WordPress.org is full of plugins that help modify or extend WordPress in a small way. These are frequently developed by a website owner to address a small problem they had with their own website. And after creating a solution that resolved the issue, they have realised that other WordPress users will find the plugin useful and uploaded it to WordPress.org.
Many basic themes and plugins are also uploaded by developers who are learning their craft. By sharing their “experiments” with others, they can get feedback from a large number of people.
But why do developers release complex themes and plugins to the masses free of charge?
When someone spends weeks, or even months, developing a product, they do not release it free of charge on a whim. They will have undoubtedly reviewed all available options and have decided that releasing the product free of charge suits their agenda.
And the number one reason to release an advanced theme or plugin free or charge is exposure.
By placing a link or banner back to their website in the plugin settings area, and in the description area on WordPress.org, they can expose their company to tens of thousands of WordPress users. Possibly even hundreds of thousands or millions of WordPress users. This could bring them in a consistent stream of targeted traffic for many years to come.
Optin Forms is a great WordPress plugin that uses the free business model. The developer, Boris Beo, promotes his company website Codeleon though the plugin settings area. He also advertises his company’s Twitter, Facebook, and Google+ accounts.
Donations used to be popular with plugin developers, however they have largely proved to be ineffective at generating income. This is why many developers moved to a freemium business model. It may, however, still be worthwhile for developers of a basic plugin to add a donation button in order to generate
AVH First Defense Against Spam is a popular plugin that continues to ask users for donations.
From a user point of view, free themes and plugins remain the most popular amongst WordPress users. They are free to try and free to use indefinitely.
As any experienced website owner will tell you, FREE sometimes comes at a cost. There is no guarantee of support from the developers of free plugins (although many do offer great support). It can be costly to integrate the functionality of a free plugin into your website if there is no support or bug updates.
Would you want to launch your new membership website using a plugin that is not supported? Probably not.
Bear this in mind when choosing plugins that are vital to your website’s success.
The Freemium Business Model
Over the last few years, a large percentage of the developers of feature rich WordPress products have moved to a freemium business model.
In this business model, the developer continues to offer their theme or plugin free of charge; however some aspect of the product is limited. The user is then encouraged to upgrade to unlock all of the features the plugin or theme can offer.
There are many ways in which a theme or plugin can be restricted:
- The product has 100% functionality, however support and documentation is restricted to those who upgrade
- The product has 100% functionality, with the developer making money by selling extensions that enhance the theme or plugin or some way
- The product that is released free is limited – Users can only unlock all features of the plugin by upgrading from the lite version to the full version
The freemium model has proved to be popular with developers. It gives them the same exposure they would receive by releasing their product free. Yet it allows them to support themselves financially by earning money from users to do need additional support and features.
From a user’s perspective, the freemium model removes the risk that is involved with buying a premium theme or plugin. You can test the product out free of charge and see for yourself whether it is worth upgrading.
The level in which a plugin or theme is limited varies greatly. Some products are so close to the full version, that there is little need to upgrade. Unfortunately, many developers have limited the free version of their product so much, that it becomes unusable.
The free version of Restrict Content falls into this category. The free version cannot practically be used on a live website; whereas the pro version is one of the best membership related plugins available on the WordPress platform. It is pointless releasing a lite version of a plugin if it does not effectively promote the premium version.
Clearly, it is important for developers to get the balance right if they adopt the freemium model. The product has to have sufficient features so that users use the plugin on their website; however there has to be an incentive to upgrade.
The Premium Business Model
The premium business model is straightforward. The developer creates a product and then charges anyone who wants to download and use it. Support and updates may be restricted to one year, or provided indefinitely.
In theory, the money a company earns by charging for their products helps support themselves financially. This should help them devote more time and resources into supporting and improving their product.
Some developers allow you to use their product on as many websites as possible and will provide you with support with any website you own. Others, such as Gravity Forms, will only support you with a defined number of websites. If you need support for more websites, you need to upgrade. For example, their personal license retails at $39 per year and provides support for one website, while their business license retails at $99 per year and provides support up to three websites.
Companies restrict support to customers as, in order to adhere to the GNU General Public License that WordPress uses, they cannot restrict the usage of their products. They can, however, restrict support.
I fully support developers who charge more for support for additional websites, as providing support is extremely time consuming. If a company is overwhelmed with support queries, they have no time to address bugs or develop the product further. Therefore, it is fair to charge those who need support for more websites.
The premium business model allows developers to scale their business efficiently. Income received from customers can go towards hiring more staff so that they can continue to support customers and offer them a good product and a good service.
Unfortunately, purchasing a premium product is no guarantee that it will be bug free, or that you will receive good support.
This is particularly true in a marketplaces such as ThemeForest and CodeCanyon. If a company releases a product and it is successful, they will continue to update it and provide great support. If the product does not get many sales, they have less incentive to update the product and provide good support.
In my experience, the level of support you will receive from premium theme stores is normally better than what you would receive in marketplaces. I stress the word normally, as it comes down to the quality of the company that is selling the product.
I have purchased many themes and plugins from marketplaces and the developers have simply removed their product from the marketplace as it has not been selling well. When free WordPress themes and plugins are no longer developed, others can fork the project and continue developing it. That is unfortunately not possible with premium plugins if the plugin is removed. You can reduce the risk of a plugin being removed from a marketplace by only purchasing themes and plugins that have a lot of sales and a good level of support.
In general, I have been very happy with the premium purchases of WordPress products I have made. And I have no hesitation in spending money on a good theme or plugin if it offers the functionality I need.
Which Business Model is Best?
When it comes to WordPress themes, I tend to choose premium WordPress themes as they usually offer more functionality. With plugins, I use free, freemium, and premium solutions. The frequency of updates and level of support I receive from developers does not always correlate to what I spent on the plugin. Though my main concern is selecting the plugin that is best suited to the task at hand.
Your view on the pricing of themes and plugins will be influenced by your own budget and how important good support is to you and/or your company.
Ultimately, it is up to the developer to decide which model is best for them. If they want to release a product to the WordPress community, but do not have the time to give support; they will probably release it free of charge.
Those that want to build a business around their product will probably choose a freemium or premium business model. Some types of plugins work well under a freemium model, others do not. A lot depends on how much the developer limits the free version of the plugin.
If a product is too limited, few people will use it and even less will upgrade. If it is not limited, there is less incentive for users to upgrade. I am personally a fan of the extension model in which the main plugin or theme has lots of great features; but the product’s functionality can be extended by purchasing extensions (add ons).
I hope you have enjoyed this look at WordPress business models. If so, please subscribe to the Elegant Themes blog in order to get updates of our latest articles.
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