Mastermind.fm

The European investor's favorite podcast.

Episode 12: GPL Discussion with Special Guest Donnacha McGloinn

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In this show we welcome Donnacha McGloinn, one of the most prolific commenters across WordPress blogs. He has contributed to many discussions along the years and also helped WordPress product owners refine their marketing and products. In this particular episode we delve into the GPL, a topic which always stirs a lot of controversy and opposing views whenever it is discussed.

We not only define what the GPL stands for but also go into some practical issues surrounding it and what prospective WordPress product owners/developers should be aware of. For example, people like Pippin Williamson have taken advantage of the GPL to encourage 3rd party contributions and improvements by putting all premium addons of his plugin AffiliateWP up on GitHub. Others have probably been impacted in a negative way by the GPL, such as the e-commerce plugin Jigoshop, although that case can be debated either way. We also talk about our own plugins, Ninja Forms and WP RSS Aggregator, and our own experiences with people forking our plugins or reselling them, and how this has affected our businesses.

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Episode 11: Business Models for WordPress Products – Part 4

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Today we unpack a business model that perhaps has the most potential for your business, the SaaS business model. The SaaS, or Software as a Service, is full of all kinds of advantages and perhaps a few challenges, but you can’t deny it’s earning potential if done right. Join us as we discuss all of this in our final installment of Business Models for WordPress products.

SaaS Business Model

In the SaaS business model, the processing side of rendering the service is handled by you on your own server(s), and the customer or client accesses your service there. Sometimes the customer or client connects directly to the service, sometimes they install a product or plugin that connects, sometimes they build everything on your site then implement it on their website via a javascript snippet or similar for the service to work.

Examples:

  • Optimizely
  • Akismet
  • Optin Monster
  • WordFence
  • Manage WP
  • iTheme Sync

Advantages:

The key advantage to a SaaS model is that it is not confined to a single space in the market such as only WordPress sites; it can be implemented anywhere, meaning you have reach into 100% of the possible market.

With a SaaS model you have full control of your code base. Since WordPress plugins by nature are open source, anyone can take your code, relabel it, and sell it as a competing product. With the SaaS model your code is fully proprietary.

Also with a SaaS model, you retain full control of your server environment. With a plugin, you don’t control the environment that your plugin is installed on. With SaaS, you control your own server environment and can optimize that environment to your service’s needs.

FInally, gives you greater insight into how users are using your product: because everything is handled on your own site, you have full flexibility for A/B testing and observing how your product is being implemented.

Disadvantages:

Complexity, responsibility, and scalability. You need to maintain your own server infrastructure and ensure as close to 100% uptime as possible. Handling this task means you’re going to need a team behind it and likely a more expensive managed hosting plan.

Marketing. You must be able to market outside of your own community. You have to be a great marketer or willing to invest heavily into marketing.

Background: The SaaS model’s nature lends itself best to businesses with an already established team, knowledge base, support system, and hosting service. You can jump in new, but it is much harder than if you’re already established.

Which of These Models Should You Begin With?

There’s not a one-size-fits-all answer to that question, though it’s a question every fledgling business must answer. Jean and James have some good advice to help guide you into finding your own answer to that question:

  • Consider beginning by building for an existing product (like Ninja Forms or EDD) or marketplace (ThemeForest, CodeCanyon) to see if the product idea will be well received by consumers.
  • Be flexible and be ready to change models on the fly
  • What are your goals? What kind of lifestyle do you want? Ask yourself this and the select the business model that will support the lifestyle you want to lead.
  • What kind of initial funding do you have?

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Episode 10: Business Models for WordPress Products – Part 3

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Welcome to Episode 10 of Mastermind.fm! This week our intrepid masterminds Jean and James continue the series on business models for WordPress that began in Episode 8. This is part 3 of 4, so look for them to wrap this one up next week.

Episode 8 began this series with talk of free and premium business models. Episode 9 continued the conversation looking at the freemium model and productized services. This week we focus on a larger variety of models including monetizing through support alone, the Addon Model, the Addon Marketplace, addon development for core products other than your own, and the pure Marketplace model.  A brief rundown:

Business Models for WordPress Products Part 3

Paid support for a free core product and plugins

  • Examples: Paid Memberships Pro
  • Issue of note for this model: support usually is required mostly in beginning stages, but as customers become familiar with the product they tend to stop paying
    • Also user perspective is frequently that the product is buggy and they are resistant to wanting to pay for perceived bugginess
  • PMP has moved on from this model
  • They generally agree that this doesn’t seem like a very viable model, but they also concede that they don’t know all the different ways it may be put to use. They wrap this section up by stating that they’d love to hear from anyone that has this model working for them so that they can give it its due respect.

Addon model

  • Monetize by selling addons for a free core product
  • Examples: Ultimate Member, Advanced Custom Fields, WP RSS Aggregator
  • WP RSS Aggregator: Jean produced the core plugin, but then began receiving many feature requests
    • Built in feature requests as separate addons
    • “The goal in business is not to find more customers for your products, but to find more products for your customers” -Seth Godin
  • Improving revenue is made possible by:
    • Having tiers for site licensing based on the number of sites you want to install on
    • Selling bundles of addons
  • This model lends the added advantage of testing the marketability of the plugin in the WordPress repo first

Addon Marketplaces

  • Similar to Addon model in that you monetize by selling addons for a free core product
  • Different in that addons sold are in an open market in which developers outside the company can create and sell addons side by side with yours
  • Example: Ninja Forms
  • Important to establish a guide for collaborating developers
  • Recommend selling only in one place for a more unified customer experience. One place for official, supported addons that the customer can count on.
  • Support for all addons is handled by the company except in specific fringe cases that require developer modification
  • Revenue sharing with collaborating devs
  • Primary drawback is that it requires some amount of brand protection if collaborating dev is nonresponsive to customer requests for support when a ticket has to be passed along to them or something in their addon breaks

Addon Development for existing core product

  • You have no core product of your own, but you monetize by developing addons for existing products
  • Examples:
    • Skyverge dedicated to making addons for Woocommerce
    • Shop Plugins- EDD, Woo, primarily commerce related plugins in general

Marketplaces

  • Examples: Creative Market, Envato, Mojo
  • Monetize by providing an open market for developers to sell their products
  • This model provides a ready made audience for your content if you’re a developer, so it’s very lucrative to developers just entering the WordPress space
  • Downside to developers is giving up a larger portion of your revenue
  • Downside to the model is a reputation that many products sold in your marketplace may not be supported. Companies like Envato are moving to remedy this by featuring only authors who do offer support.

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Episode 9: Business Models for WordPress Products – Part 2

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Welcome to Episode 9 of Mastermind.fm! Last week Jean and James began a multi-part series discussing different WordPress business models. Episode 8 tackled  free and premium business models, and this week we continue with a discussion of licensing strategies, the freemium model, productized service model, and membership model.

Recurrent vs. Lifetime License Models

The topic of conversation turns first to recurrent versus lifetime license models. Recurrent licenses typically require annual renewal to continue receiving basics like product support and updates, whereas lifetime licenses are exactly what the name implies. Jean and James point out that WordPress plugins typically favor recurrent licensing while most themes choose lifetime licenses.

James parses the reasoning behind that split in fairly simple terms. If you have recurrent expenses that customers benefit from, a recurrent payment structure ensures that you always have the income to provide those benefits. It also establishes a sustainable business model for your company that can grow over time.

On the other hand, a lifetime license often makes better sense for theme providers as themes usually don’t require frequent support (assuming solid documentation) or updating. They are more static over time. Additionally, theme companies tend to be more diversified into other products or services and generally do not bring in the majority of their revenue from the themes themselves. StudioPress is one such example.

Freemium Model

Freemium is a licensed based model exemplified by the like of MailPoet, iThemes, Soliloquy, BeaverBuilder, Migrate WP Pro, Advanced Custom Fields, MailChimp, and others.

The basic idea of the freemium model is to offer a free or lite version that acts as a channel to a more robust, paid version of the product.There are 2 factors that Jean and James raise as points of consideration here:

  1. Support still has to be provided for the free or lite version of the product. The risk of not doing so is a ton of bad press and 1 star reviews surrounding your product. The question of how to provide support for a free product is something you have to tackle early.
  2. You must choose wisely in selecting features to be limited in the the free or lite version. There are good and bad ways to implement these artificial limitations. A good rule of thumb is to stick to features that require resources for you to support. Examples include the Slack plugin that limits messages sent, and MailPoet which limits emails sent. Both these things require resource expenditure on their part. Limits that are arbitrary or deny basic functionality expected from your product type should be avoided.

Our resident masterminds also direct our attention to the product’s codebase in this model. Even though you may be offering both a free/lite version and a paid version, splitting the codebase to differentiate the versions introduces challenges both for future development and user experience. License based products should be built from a single, highly extensible codebase, and it’s important to do this early on. The larger your customer base becomes, the harder it is to turn the ship and effect major change.

Product Services Model

Jean addresses Productized Services from his position of experience with WP Mayor. The idea behind this model is scalability. As a freelancer or agency you typically meet with a new client, discuss the project requirements, then provide them the service. Employing the productized service model cuts out initial inquiry and discussion phase and alternatively offers a select choice of predefined service packages; the customer selects the package they want and people can see price right away and order with minimal or no sales contact.

This model has the advantage of enabling you to work with a higher volume of clients than typical freelancing or per customer agency work. It is a great strategy when you don’t have a product per se, but you do have a service that you can bundle in the form of a product

Examples of this model include Woo Split (A/B testing for Woo Commerce), Audience Ops, Yoast’s review & assessment services, WP Curve (maintenance services), and WP Mayor (sponsored posts, review services aspects)

Membership Model

The idea of the membership model is to offer value to customers through exclusive content or products not available to non-members. Examples include:

  • Post Status. Blog. With membership to their blog you get Slack channels and groups, regular newsletters, and other perks.
  • Themes: memberships give access to more or all themes rather than purchasing a la carte
  • BobWP, WP101: memberships get product tutorials for a variety of products
  • WPMUDev: access to plugins and themes, support for WP websites

While the membership model is a perfectly acceptable model for legitimate businesses, there are controversial sites that use this model. Primarily these are sites cropping up that offer other company’s paid products for free or reduced prices. While this is technically potentially legal under GPL and open source, it is ethically controversial. Is thispractise good for the WordPress community or undercutting the work of others?

Jean and James will most likely tackle this question in a future episode all to its own, but they do raise a couple good ethical points here and now. Sites that abide by this practice are often misrepresenting themselves to customers (making people think they have a legitimate copy from the source when in fact they don’t), and many are a potential source of malware and website security breaches.

The conversation will turn back to this topic and more next week, so be sure to tune in to mastermind.fm!

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Episode 8: Business Models for WordPress Products – Part 1

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Welcome to Episode 8 of Mastermind.fm! This week James and Jean begin tackling different business models in WordPress. Right out of the gates, our resident masterminds are quick to point out an important distinction in the way we think about WordPress product models in general: the difference between a development model and a business model. Let’s unpack that a little bit before we jump into the heart of the conversation.

The development model refers to the concept of a core product with core functionality in which addons are developed to extend the functionality of the base product in a modular fashion. This model offers a core product that is lean and extensible, allows users to choose the functionality they need, and is easier to troubleshoot and support by isolating specific aspects of the product. A perfect example of this concept in action is the modular AffiliateWP by Pippin Williamson. On the flipside are plugins like Jetpack: a behemoth plugin that attempts to do all the things.

Conceptual distinction aside, we turn to the focus of this (and next) week’s podcast: WordPress business models. There are a few different strategies that fall under this umbrella that we’ll speak on:

  • Free
  • Premium
  • Freemium

It’s going to take a couple episodes to unpack all three. This week we’ll speak to the Free and Premium models, and next week we’ll open the Freemium can o’ worms.

Free as a business model can result from a few different approaches. You can be offering your plugin purely as a labor of love for the community, as a catalyst or channel into a paid service, or as a means of brand or reputation building within the community. Yoast SEO by Joost de Valk is a perfect example of the latter two approaches. The Yoast SEO plugin is, of course, completely free in the WordPress repo. This free offering, however, has set Mr. de Valk up over the years as an expert in his field and has given his company inroads to the inner circles of millions of different websites.

The Premium business model by contrast relies only on the proceeds of a paid product(s). Buyer beware: the word premium itself can be misleading; it implies quality but a consumer should not assume quality purely based on price tag.There are different ways for the Premium strategy to be approached. It can be a tiered model in which the customer pays based on the number of installs they need. It could also be presented as a tiered system in which the user pays for the features they need in the form of addons. It can also simply be a straightforward all in one product. How this model can thrive in the absence of a common marketplace like the WordPress repo wraps up the talk, and James and Jean look to successful ventures like WP Rocket and Surge WP, and alternate marketplaces like ThemeForest and Codecanyon.

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