When you first start out with your WordPress product business you will need to decide on your business model, Freemium or Premium? Do you start with the freemium model or launch with a premium model from day one. Building the product is the easy part, selling it much harder. The business model you choose will determine the path of your business and its success.
You should always aim to be building a sustainable business. This will allow you to ensure you can focus on customer support, marketing, product development and building out your team as you need to. The decision you make here will determine how and when you can act on various aspects of your business.
This article will outline the two business models that are available to you. There are advantages and disadvantages for both models and will show the differences. This should help you decide which one will work for you.
What is the freemium model?
A freemium WordPress product is where there is a free product, usually found on the WordPress.org repository, that also has premium additions. This can include add-ons, an extended premium version or paid services such as pro support. This is one of the oldest business models in the WordPress business space and how thousands of businesses have launched profitable sustainable businesses.
With WordPress products, you provide the core features of the product for free. Then you offer extended functionality within the premium version. By providing a compelling set of extended features will not only justify the upgrade but also allow you to sustain the business.
Advantages of freemium
As freemium is a tried and tested business model, there are a lot of resources available on how to get started. Successful WordPress businesses started this way such as Elementor, WC Vendors, WP Astra, WooCommerce. These businesses have all utilised the freemium model. As a known business model, you’re in good company.
Another huge advantage is being able to harness the power and ease of use of the WordPress.org repository. This provides an easy and accessible path to your products. Users can quickly install your product from within the WordPress admin. Best of all, your updates are all handled for you. With a well written ReadMe file, users can easily find your product via search. Tools such as PluginRank can help with tracking your position within the repository and provides a number of guides on how best to rank.
Disadvantages of freemium
When you’re not getting paid for your work, the motivation to provide the best possible product and support might not be there. One of the biggest disadvantages to the freemium model is that you will be giving some of your time away for free. This is also not very sustainable.
There can also be an expectation that the product should always be free and that you can’t charge for other services. If you do start to create a premium version, you may need to start maintaining multiple code bases.
Another common problem with freemium products, true and perceived, is the quality. If the product is free, it can’t be good, right? This can often be the case with so many quickly released, abandoned products that are available in the market today.
Customer support can be a large drain on your resources. If you’re spending a lot of time supporting free users it can be difficult for you to focus on building and marketing your product. It can be very discouraging when all your time is spent on customer support.
When to choose the freemium model
When you first start out, it can be hard to gain traction. By providing a free version of your product, there are multiple advantages. The first is that you can test the waters for your product to see if the problem you have solved really is a problem for others. It also allows you to gain some social proof before you start charging for add-ons and other services. The other key advantage here is that it helps you learn your customer’s needs and build out your support channels that best suit your business.
What is the Premium Model?
The premium model, unlike the freemium model, has no free component. You package and sell your product as is, in the channel you choose. This has been the standard model for most software ever since software was software. It’s how the Microsoft’s of the world made billions. This is an acceptable route as it provides you with a single focus for your product. With a WordPress product, you have a variety of options when selling your product. Sell on one of the popular marketplaces, or sell it directly from your own website.
In the WordPress space, premium only products were not the norm until more recently. Although the WordPress business space has been around a good 15+ years, selling premium only products was only popularised with the rise of marketplaces like CodeCanyon and ThemeForest or WooCommerce.
The biggest advantage of the premium model is that you’re getting paid for the work you have produced. This provides income required to build a sustainable business. Being able to focus not only on the product but also the other equally if not more important marketing and support parts of your business. This is what allows you to ensure you’re working towards a viable, sustainable balance that works.
With a premium product you are able to prioritise your customer support, marketing as you only have one channel to support. If you’re an established developer in the market, it also provides you the opportunity to own all aspects of your business with full control over your software licensing models, pricing strategies, marketing and most importantly, your customer support channels.
If you’re just starting out, it can be hard to get your initial customers as you are an unknown. Gaining traction in the beginning if you’re not an already well known developer can make your growth slow and possibly unsustainable. This will result in you needing to focus heavily on your marketing and sales channels to move the needle for your initial customers.
To get around these marketing challenges, you may decide to start selling your products on a marketplace instead. This will allow you to harness the traffic, brand and systems of those marketplaces. Selling on marketplaces also have disadvantages as your pricing point has to compete within what is the acceptable price points. Your software licensing and updates can also be drastically different on these marketplaces.
Not having control over your software licensing model can have drastic consequences when your product becomes popular, and why some developers choose not to go down this route. Your licensing model can make or break your business. That’s not to say that it can’t work, it is just another piece in the puzzle that needs to be determined and decided on.
When to choose Premium Model
The premium model makes sense when you’re an already established developer or well known name in the WordPress space. If you’re new, it can be a little more difficult. Starting from scratch on your own site takes time, a lot of time. You will have to focus on all aspects of the business from day one. That includes not only your product but also the licensing systems, customer support, marketing, content and everything else. It’s a slow road, but in the long run can be more advantageous.
Final Thoughts on Freemium or Premium
Depending on where you are in your journey of your WordPress product business will depend on if freemium or premium will best suit your particular use case and needs. Having started multiple WordPress product businesses myself over the years, I have tried both models. Freemium for WC Vendors as well as Premium for my first ever WordPress plugin. Both models suited their purposes and created sustainable businesses. The models themselves aren’t the only part of the business, but they do play a big part in your decision process and when you will be able to scale.
If you’re starting out and you’re in a niche that is semi saturated then I would suggest that you start with the freemium model. However if your in an under served or completely untouched niche, you could have great success with starting out with the premium model. Just remember no matter the model you choose, your entire business plan should be figured out so that you know and can track how you’re going.