Two years ago, I started a WordPress plugin company. I thought if we made cool stuff people would like it, and therefore buy them and we’d have a bunch of money. I was a bit naive, to say the least. This was my first time selling anything online besides my development services.
However, our first month only brought in about $350, which was not exactly what I was expecting. It shouldn’t have shocked me because I wasn’t focusing on what problem my plugin could solve for people. I also didn’t know that Caldera Forms, not our Pods add-on would become our flagship product.
This was a problem because Caldera Forms was not the centerpiece of a freemium business. It was a really cool plugin with a ton of potential. Now it’s a really cool plugin that a lot of people love, but most of those people don’t need the paid add-ons for payments or list building.
It’s a great plugin for contact forms, and it’s awesome people use it for free. But putting a free plugin out there “for the good of the community” and hoping to cash in on it later isn’t a plan that is likely to lead to a sustainable business. Without cash-flow to support a plugin, it has a low chance of survival.
Caldera Forms, in a very crowded niche, has grown rapidly. We went from 10k to 40k active installs last year and are now at 50k active installs. But, while we make a decent amount of money, we are making a lot less than other plugins with a similar business model.
I want to share what we’ve learned by analyzing this and to share what I think you should think about in terms of features and product design of your next plugin if you want to have better success.
This kind of thought has helped us increase our revenue and better define our roadmap for Caldera Forms and other products in the Caldera platform.
I’ve said before that the rush to SaaS models or in WordPress is putting the company’s desire for recurring revenue before user needs. I stand by that, but creating steady revenue is essential to the life of a business. Also, a SaaS product is not the only way to create recurring revenue. Easy Digital Downloads, with their software licensing and recurring payments add-on or Freemius can be used to sell WordPress plugins or themes as a monthly.
Don’t set up your business to solve your problems, set it up to solve a market problem.
The Free Version Can’t Be Worthless
Obviously, you could just not have a free version of your plugin. That’s fine, but this article is about Freemium plugins. Having a free version of your plugin makes users more likely to give it a try and opens up the opportunity to become a paid customer in time. That said, you need to make sure your free version shows the value of the paid version.
A successful freemium model shouldn’t just offer a great free product, it should prove that the paid version is worth it.
To be honest, we didn’t think about any of this when we turned Caldera Forms into a product. People really do seem to love it, but does that convince them they need a MailChimp or Paypal add-on? No, if they don’t need to accept payments or build an email list.
Of course, not everyone is going to buy the paid version of your product. What’s important is finding the right balance, so people who don’t need to your product get a great experience using the free version and the people who can afford to pay for it are the people who need the paid features.
If the ratios work out there, you’re in good shape. But, I strongly suggest you think about this ratio and how to achieve it from day one. You can’t force it. If it’s off, then people will just move on. For example, if we had made email notifications or database saving a paid feature, probably no one would have used our plugin.
Some plugins are lovable without the paid features. That’s fine, but be honest with yourself and think about if that’s the kind of plugin you’re building, because if so you’ll need more users, much more than you might think.
So don’t think just about what features people would pay for, but who would pay for those features.
Work Backwards From The Goal
If you’re thinking about starting a business there is some simple math you need to do. First ask how much money it costs to run your business a year, how many people could buy your product and what percentage of those people will actually buy it. Take the first number and divide it by the second number times the first number. That’s your yearly price.
For example, if your first year, including development, costs 500,000 and there are 100,000 people who could buy your product then, you should charge $100 a year — 500,000 / (100,000 * .05) — if you think 5% of those 100k people will buy your product.
And yes, this is all guess work, but can be made into less of a guess by doing research as well as underestimating your audience and over-estimating your costs. But that’s not the point.
Figure out how much money revenue you need to not go broke and work backwards from there before you start. If this math isn’t set before you begin work, you’re setting yourself up to fail.
Don’t forget to factor in the cost of selling. Payment processing fees and taxes are serious expenses.
So don’t think about what product would sell, but think about how much you would need to sell to survive and what selling a product will cost you.
You’ve considered the cost of selling a product, now you need to think about support. The more users you have, the more time you’re going to spend supporting the product versus improving it.
Deciding how to handle the user expectation of unlimited free support that WordPress.org is designed to create is an important decision to make. If your free plugin is likely to have a high upsell rate — be honest with yourself about your features –then providing free support for is a worthwhile investment. And it’s a real investment.
Making that investment, when most of your free users are going to become happy and then that’s it, they have no need to upsell. On the other hand, using support as a way to convince people they can trust your product to power a vital part of their business might be what drives your sales.
Many big free plugins only offer paid support. We’ve tried very hard to follow the lead of those plugins like Yoast SEO. But it’s not easy. For a time we ignored WordPress.org support forums, which annoyed a lot of people. Then we tried replying to every support thread with a stock answer redirecting them to our paid support. That annoyed a lot of people, but at least some people understood. Now we answer easy questions there once a week, mainly with links to docs and redirect real support questions to our paid support form.
I honestly don’t know what the right balance is. But one thing to keep in mind is that WordPress.org support pages rank really well and if someone opens a thread about how to do something, that thread might outrank your documentation page. So, adding a link to your documentation and a quick explanation of why is good for those who Google into the thread later. Also, it seems to help Google understand that your documentation page is the right answer to the question.
For your real support, you can use ZenDesk or HelpScout. We use a Caldera Form for support that only works for logged in users that have a valid license for one of our plugins. I wrote a simple Caldera Forms and Easy Digital Downloads integration for that.
Make Something Awesome
For us, it’s been a long journey to the point that we are getting a good amount of revenue. It’s taken a lot of effort in marketing, improving our website, building and using our email list, and constantly adding value to the product line. With the right product, it’s possible, and it’s definitely working out for us now. Intentional planning around the product, when writing the code, could have helped get us there faster.
I don’t know what you should make, but whatever it is make it something SUPER AWESOME. Design the product so people will love it and they will gladly pay for the paid version. Just don’t think people will just buy it because it’s awesome. They will buy it because it’s awesome and it solves a problem.
So design for awesomeness, but also design for sales.