How do you make money when you give your product away for free? It sounds a bit ridiculous, but every WordPress plugin and theme (or any open source project for that matter) faces this exact problem.
It’s led to an epidemic of abandoned WordPress plugins and themes. That’s because they must be free, open-source, GPL software. But it takes real time and money to produce that software, so how can you cover your costs or even make a business of it?
There are lots of attempts to do this, each with a drawback of their own. Let’s survey them:
- Advertising for Consulting. Give the software away for free, just use it to build your reputation so you’ll get more consulting jobs. Contact Form Clean and Simple is an example of this. But this means the software will forever be a distraction from what actually brings in revenue: consulting. And if you become popular enough, you won’t need the software to build your reputation. So bye-bye software.
- Pay-to-download. Plugins like MagPress can’t be downloaded for free from WordPress.org, you need to pay to download them from their website. This mostly prevents the software from being used without paying, but it also prevents other developers from contributing to the software (it quickly gets expensive), and means it’s more likely to badly integrate with other plugins and themes. Adding this “pay wall” also slows the software’s adoption by regular users.
- Freemium. This is where you give away a free version of the software, but also have a “premium” version, or add-ons, that you charge for. We’ve found this to work quite well at Event Espresso. The free version always purposefully withholds some features customers are bound to want, which encourages them to purchase the premium version or add-ons. Sometimes, this leads to grumpy users of the free version because they know you’re withholding features they want purely to get them to pay, and it doesn’t cost you a dime for them to use those extra features. This also has some of the problems of advertising (ie, the free version isn’t your focus) and pay-to-download models (where the premium version or add-ons might not integrate so well with other plugins).
- Paid Hosted Option. The software is given away for free, like WordPress and Moodle, but there is also a paid hosted option, where you don’t need to install it or maintain it, that’s done for you. The free software gets contributions from its free users, which justifies its existence. But the needs of the self-hosted free users often diverge from the hosted users. Eg, optimizing for speed is always good, but it’s absolutely critical for the users hosted on WordPress.com which receives thousands of visitors every minute, whereas customizability may be a higher priority for self-hosted WordPress users. So the self-hosted and hosted users needs have diverged, and so might their software. This is why WordPress.com runs a significantly different version of WordPress than self-hosted sites do.
- Pay for Support Only. Download and use the software for free, but pay if you want help using it. This makes the most sense to me, because support is what takes time (and so money). But great software should be well-documented and work fine, and so it’s users shouldn’t need any support. Understandably, they’re grumpy when they need to pay because the software has bugs or the documentation needs work.
- Pay for Customizations. Like Advertising for Consulting, except you charge for custom code to make the software do something a particular customer wants. But that custom feature wasn’t made before, it’s probably because the majority of users don’t want it. So that work mostly benefits the individual paying for it. So, if it gets included in the next version, it’s actually a hindrance for the majority of users.
So they all have downsides, revolving around two main issues: either the income actually distracts from the main purpose of the software, or the software’s usefulness is purposefully limited.
Funding Through Sponshorships
Enter another idea: give everything away, and ask for sponsorships. A few open source projects are financed this way. If users really want the software to thrive, and know sponsoring it financially is the way to do that, they’ll likely sponsor. Organizations wanting extra exposure to your users are also inclined to sponsor it. This way:
- The software remains the focus, not unrelated consulting work.
- There is no pay-wall preventing users from trying the software, or developers from integrating with it.
- No features need to be purposefully removed in order to sell a premium version.
- Project maintainers aren’t distracted from the plugin by a hosted version.
- When there is a bug or someone needs support, you’re not pouring salt on the wound by making them pay extra to get help.
- The plugin doesn’t get derailed by the feature requests of a wealthy minority.
Does the Math Work?
Now, is supporting plugin development entirely through sponsorship feasible? Surely you will have a smaller percentage of users who pay. But you might have more visitors and users. How do those balance out?
Here are my guesses:
Say 1000 people see your pay-to-download plugin. Maybe 5% of those people will decide to use it, and 90% of those users pay (not 100% because the software is technically free, so users are free to distribute it). So 1000 people x 0.05 x 0.9 = 45 payers.
Let’s compare that to a free plugin. 1000 will probably also see it, and perhaps 40% will decide to use it if paying is optional, probably only 5% will pay it. So 1000 x 0.40 x 0.05 = 20 payers. So probably not great…
But, if the software is free, you’re bound to have a lot more users too. Rather than having users carefully evaluate the Plugin’s features before purchasing, they can just download it and try it. And they’ll probably be happier, because they know you’re not withholding features, or charging them for support in their most frustrating times. So they’re more likely to tell their friends,
So how many more users will there be because it’s free software? Maybe 2x more.
If that’s correct, the sponsorship model will have 40 payers. So one can imagine that it has the possibility of being successful. However, it requires getting a lot more users, because it’s guaranteed a very small percent will decide to pay, when given the option. So I can understand why an established business would be wary to switch.
So far, for my plugin Print My Blog, about 2% of users donating seems to be the trend. I haven’t given it great effort to increasing that percentage yet, so we’ll see if that can be improved. But that’s a baseline number.
It does seem tricky to make a sizable income through sponsorships, but it is easier to make an impact. So if your primarily goal is profit, it probably doesn’t make sense. Whereas if you’re mostly in it to spread the word and have happier users, it’s probably a better fit. I’ll try to share my progress with it.
If anyone has any real numbers they’d like to share from their experience, that would be helpful.
So, are the problems I’ve identified for charging for WordPress plugins accurate? And is funding through optional sponsorship viable?Comments welcome.