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Welcome to Press This, the WordPress community podcast from WMR. Here host David Vogelpohl sits down with guests from around the community to talk about the biggest issues facing WordPress developers. The following is a transcription of the original recording.

David Vogelpohl: Hello everyone and welcome to Press This the WordPress community podcasts on WMR. This is your host, David Vogelpohl, I support the WordPress community through my role at WP Engine, and I love to bring the best of the community to you hear every week on press this as a reminder, you can find me on Twitter @wpdavidv, or you can subscribe to press this on iTunes, iHeartRadio, Spotify, or download the latest episodes at wmr.fm. In this episode really looking forward to this we’re gonna be talking about the ultimate checklist for starting a plugin or theme business. And joining us for this conversation as someone who knows a little bit about this from the popular plugin and theme business platform by the way, I guess maybe I describe it but I’d like to welcome to the show Vova Feldman. Welcome to Press This.

Vova Feldman: Thank you so much, David. I’m really excited to be here.

DV: So glad to have you here. This is a really interesting topic and I know a lot of individuals, developers, agencies, freelancers you know, think about getting into the plugin team business or have this is an incredibly popular path for people to add a product lead revenue to their business, or just to start a plug in business to do just that. And so really excited to have you here today. Vova to kind of talk through the common business models, how people think about licensing options for billing and kind of distributing your software. And then also I know you kind of get deep into the kind of tracking and marketing side as well so really looking to unpack this, but I’ll kick us off with the first question Vova Could you briefly tell me your WordPress origin story? When did you first use WordPress?

VF: Sure. So I think the first occurrence when I heard about WordPress was around 2012. In 2010, I started the site project, which was actually a whole widget that I maintain as a fashion thing on the side. And people started to, you know, provide me feedback and ask questions and features, and many of them told me you know, like, we don’t know how to take that JavaScript and put it into WordPress, maybe it’ll build a plugin for WordPress. And after, you know, I heard like dozens of those I realized, okay, let’s check but warm fuzzies and that’s how I got exposed to this, you know, massive lat form and community and since then I you know, out of it.

DV: I like it. So sitting there in 2010 with your widget business and then in 2012, kind of the demand swelling around WordPress event. So sounds like you’ve had this kind of product journey in the web since was it did that good before 2010? Or is 2010 when you started your first kind of web based product?

VF: Well, I wouldn’t even call that as a product. It was literally some widget that I needed for myself, and I couldn’t find any alternative online. So I just built something and created a website for others to use it. I did build otter SAS solutions before my entrepreneurial journey that I was the first one the title in the CMS existence plugins, extensions.

DV: Cool. So now you’re operating for years, which I kind of loosely described earlier as a business platform for blogging. How would you describe it like tell us about Freemius?

VF: Sure, so Freemius is something that we started you know, scratching our own itch. Basically, in 2013 I decided to take that side project and monetize it took us about a year me and another two guys and what we discovered is that the core product didn’t really change. It was the same thing that I built in two weekends with my spare time. But commercializing the solution, you know, two or three people for a year or so, kind of realize there’s a huge disproportion between the time it takes for developers especially an open source ecosystem like WordPress to build products. Versus the commercial part of things. This how we embarked into Freemius basically, so Freemius is an ecommerce platform, specifically for selling plugins and themes. Our mission is to democratize software. monetization. And as part of our platform, we provide the entire stack business side of the business components that you need starting from the lower level which is things like payments, subscriptions, software licensing, etc. And getting to the higher level or the application layer if we compared it to the internet with more advanced things that related to marketing and marketing automation, affiliate platform, etc. So basically, you get a one stop shop solution, where you can take your code of your plugin or theme rabbits, and in the matter of minutes, you can turn it into business. And in addition to the platform itself, we also do a lot of education, and proactive health, to the partners that we work with, because we understand that developers are not necessarily you know, have the right business background and they do need some guidance and you know, leading them to the right path when it comes to pricing, business models, etc. So yeah, that’s a nutshell.

DV: Okay, you put that analogy around how it took three people what was it like a year something to build the systems to sell and distribute the software you’ve made in a weekend or a couple of weekends? Yeah. It’s something you know, I think a lot of people build good software and then stumble at that next step around monetization and distribution for all the kind of reasons you listed. So obviously, like you’re really close to this in a lot of ways, like you’re having to think about, like what models to support with freemium and what’s working and not working, but from the high level. What are the typical business models that plugging in the businesses follow? In other words, how do authors using your platform or otherwise typically charge for their software?

VF: Yeah, sure. So I think like the way we look at that, it took us some time to to define that terminology. But there is the business model and there is the code architecture, and many people kind of mix up between those two things in terms of business models, there are two options or three you can fall with. One of them is not really a business model, you just have a free product, right? So that’s one option. The other two that are you know, commonly used but Freemius is a paid only product or premium. So you just you know, if you want to get a product, you need to pay for it. And our option is freemium, which means you’d have a free offering and then if someone needs extra features, they can find more and it can be and now we’re moving to the architecture which is the like the common ways to sell, you know, plugins or themes in our ecosystem into selling plans. Ide so you buy a pro version with more features, or you can sell add ons, which is like you do buy Pro features, but it’s like small, little extra logins that you buy, and you can buy it or per feature or you were many developers also sell bundles, which is like collection of features or add ons in the same price. So this is kind of the most common things that we’re seeing. Obviously there are also what we called in a community service where plugins where it’s basically a service that is wrapped within a plugin to simplify the configuration and you know, bring the experience into WordPress, and simplify life for the admins and that this is more like the business models there are more like SAS. And even though today for looking on the ecosystem, we see more and more you know, companies selling subscription, it’s still not so frequent to see like monthly for example, while when you have SAS for as you see more companies selling monthly and you know, annual together.

DV: It’s funny when you first started this up, I can see where you commented that you had to spend a lot of time thinking through this because people talk about this I feel like they go straight to the architecture discussion like are these two plugins or one plugin is it paid only or free only is it as facilitated or facilitated within the context of the software plugin itself. But from the business perspective, it’s really this notion of like, Is my arm is my product free? Is it paid only is it freemium? And then then from from there, and I’m guessing it also probably implicates like what kind of model business model or pricing model might choose. But also the architecture component around things like SAS, weather, weather plugin and so forth. So I kind of want to unpack that part a little bit because I think like the licensing approaches also kind of trip people up, you know, when they think about like, Well, how am I going to launch and what do I have to do? What can I do can I do? And so I think it’s important for folks to kind of get a feel for that, at least from your point of view. But we’re going to take our quick or first break and we’ll be right back.

DV: Everyone welcome back to Press This the WordPress community podcast on WMR. This is your host David Vogelpohl and interviewing Vova Feldman from Freemius about starting a plugin or in business. Vova right before the break he talked about the breakdown of business models this notion of free paid only freemium as well as kind of the separate notions around architecture right, having one plug in two plugins or using SAS or not. And so this kind of brings up the notion of like licensing or bridges with plugins and themes themselves and so like what are some of these common licensing approaches that people will take and they’re plugging in business?

VF: Yeah. So historically, you know, due to the need the open source nature for press and just kind of limits in the market in terms of what the solutions that were offered to handle licensing. Typically, what we’re seeing in the market is that the license component is buying directly with delivering automatic updates and providing support so that’s kind of was the the default model before. What we offer for example, with freemium is more granular, granular control, where you can also it’s really up to the developer to choose how they want to restrict that but you we basically by using the SDK that we provide with free muse, you can control the execution of the product, the plugin or the theme, based on the state of the user that it’s using it based on their license, etc. So it’s really up to you how you manipulate the logic, but it gives you much more control in terms of what you can do. So you can provide the same plug in and sell three different gears to that. So if someone is on one tear you can only neighbor parts of the code if someone is on a different tear other parts of the code you can choose what happens if the license expires, in addition to whether you want to you know, look the updates and support so you can literally decide that let’s say if someone you know, subscribe to a monthly plan, have your plugin or maybe started a trial of your plugin. It makes sense for both sides that if you don’t really extend the trial that you know you won’t be able to access to the paid logic because it didn’t pay anything. So it will be just a fair deal. No. So it gives much more flexibility. But I still saying in terms of because of the limitations of the other solutions that are out there for licensing and I can mention a few of them. This is typically what happens. It’s more about binding the updates and support. So in terms of the solutions that are out there, there are not many solutions that are you know, only focused specifically on the licensing part. Typically its licensing combined with more things. And the most popular ones in our ecosystem are WooCommerce, Edd and Freemius our solution so WooCommerce or add, they have their own kind of licensing extensions that you can use. And that way you kind of deliver updates as I mentioned, and with our licensing is the same concept, plus the ability to kind of control you know what is the execution of your code looks like?

DV: Now, can I ask you a question? Because like, when I think of licensing, I often think of like, quote, software licensing, like I’m gonna have a GPL license on my code. And so you’re talking about like distribution, right? I’m gonna, I’m gonna download your premium like plugin. And then I’m gonna get automatic updates and support and it says automatic updates and support that I think people are kind of anchoring around when they sell it in that way. And then you have these capabilities within Freemius and other tools which disable features within the GPL software. As well as maybe even sassi being built within the software context. You’re disabling features, but it’s, of course, still open source code in that way for people following that pattern. Is that correct?

VF: It’s exactly correct. I mean, because we’re in the WordPress space. You know, all plugins and themes, please parts of them has to be GPL by definition. So in terms of the license of the software, the vast majority of the you know, the inventory that we’re seeing in the market is 100% GPL, especially products that are leveraging the workers authority repository, for example, that if you want to have a free version of your co workers authority, you have you like your eight offering has to be 100% GPL two, it’s it’s still part of the GPL. But it’s kind of an extra requirement by the WordPress authority. So the license is GPL. But when we’re talking about you know, when we say licensing in the scope of plugins and themes, we usually talk about software licensing, and that’s exactly what you mentioned.

DV: Okay. Excellent. Excellent. Thanks for talking through that as a really great points. So, we talked, you said you mentioned a second ago that you’ve you felt like the three main options for people in this context are for billing anyways, we’re Freemius EDD blue. Are there other approaches people take? Are they like hand coding their systems? Or like what are the options for people and you mentioned the other various companies that have platforms in that way, but like, what, what are some of their options outside of this?

VF: Sure. So the free I mentioned there was a lot of focus on licensing, but there are other solutions. So we kind of segment the optional solutions into three. The first one is self hosted solutions, which is a plugin or theme or something that you install on your own server and you need to maintain that ecommerce platform that’s in that category you have WooCommerce and indeed, in add are the most popular have marketplaces too, which is, you know, a fair option, especially if you’re just starting out and you just want to throw something and see how it goes without thinking about traffic and like place Mojo marketplace core theme for us. Exactly. So there are pros and coals to selling and you know, we’ve written a lot about it, but it’s it’s a viable option. And there are businesses that making money there and making good money. It is harder to build a real business there is phase and there are assessed solutions, which are kind of a hybrid. So they do take care of a lot of the hassle when it comes to the payment, Billing payments, fulfillment and all of that. But you still need to be responsible for the distribution, like the marketing side of things is still on you. So Freemius is one of them. Gumroad is another example fastspring etc. So there are a bunch of different solutions. And you can also go to the to the most lower level which is you know, using Stripe directly but then you you’re the one that need to build it from the ground up. While the solution like Freemius already comes with this, you know, handy SDK that does all the heavy lifting and integration with API for you out of the box. So again, the three categories are self hosted solutions, marketplaces, and SAS solutions.

DV: Awesome. Thank you for writing that down. One other question here before our next break, and one of the things that really has stood out to me about what Freemius offers is your analytics capabilities. I was wondering if you could unpack what Freemius does there. And then I want to cut and pack some more strategic questions around analytics. But can you could you tell us what Freemius is Analytics does?

VF: Sure. So we believe that if you want to build a sustainable business, you need to understand, you know, your ecosystem, or your users, how they use your product, where they use your products, etc. So one of the things that we build in this part of the system and SDK is a mechanism where people can obtain voluntarily to share some information, including, you know, who is the user, what is the website? What is the status of the product that is running on the website? What is the version etc. And I’d really helps you as a product developer designer, to to to get real data and understand you know, the usage and get that picture of how your product is used in the in the wild in comparison to just relying on data. Let’s see from something like wordpress.org So yeah, maybe you see 100,000 active websites using your product, but what else do you know about it? Not much, and it’s really hard to to build and prioritize and you know, think about the feedback loop practice, which is, you know, something pretty essential in product development. When you when you don’t have actual data and you need to kind of rely on interaction through support, which many times are biased.

DV: I really this notion of like product level analytics is almost like a foregone conclusion for firms and when they get into this notion of like.org, plugins and other ways that we’re tracking might not be as clear or as detailed or as control. They feel kind of lost like I don’t know what to do to your point, like going through support channels to get feedback only as a mechanism which can be very limiting. I want to talk to you a little bit more though around this notion of proc analytics and strategy. We’re going to take our last break and we’ll be right back.

DV: Hello everyone. Welcome back to Press This request out the ultimate checklist for starting a plugin or theme business. Right before the break our guests Vova Feldman was telling us all about Freemius his analytics capabilities or product analytics capabilities, and we wanted to kind of now that fell into some of the strategic parts behind this. So Vova I know that like when you add a plugin on wordpress.org that it requires the opt in for tracking if that’s part of the plugin. The concern I think a lot of people have when they think about adding that into their plugin is that’s going to depress the adoption rate download rates, if you will. from.org I’m just curious. If you feel like that trade off is worth it is it not even there and it’s something people are being fearful of for a reason? Like how do you think about that?

VF: I think that it does impact a little, but it’s very little. We don’t have accurate data because we can really Chuck before getting the permission to track you know, but we do set have some heuristics because through other mechanisms of feedback, so we have some sort of, you know, estimations on that we did a big experiment. When we deployed Freemius with next gen gallery which has, you know, many active installs and it had no impact on the active installs growth. Of course, you know, in order to change the needle there because of the size of the plugin. It has to have a major impact, but we ran that experiment for three four months and we didn’t see any differences on the active installs. So I do think it bothers some people. But I think it’s the percentage is very little and what you gain, you know, in exchange, I think worth much more. Of course, it really depends on generalizing here. So it really depends on the product and many other criteria. If you know that your target audience are people specifically the very concerned with our price, privacy and don’t like to share things. Maybe it won’t make sense you know, to add they’re all in there.

DV: So if you’re making if you’re making a plugin that’s like the ultimate privacy protector for WordPress, you might want to think twice about the the tracking app and their CRM.

VF: Theoretically yes, but I can tell you we have you know, in our partners lives, we have many like security plugins and privacy related stuff. And they do add dopamine. Yeah, so it does work for them. Because if you think about it, like usually, the typical user or buyer is someone that just want to use the product, you know, they they care and the option to skip this there you know, so so it’s not like it’s something sneaky and people who are more suspicious by their nature and maybe more tech savvy coming from like different backgrounds. Or were burned by someone by some practices, maybe are more concerned, but usually, you know, people don’t really care about and people are used to connect their accounts, you know, connect to different services, with their Google account or wherever. So we designed that experience in a way that it looked very kind of familiar already. So yeah, and I think again, there’s a lot to gain there. Because based on the numbers that we have, on average for new users that installing your product the opt in rate is about 55 to 60%. So you can get exposure to you know, 55 to 60% of your users which is huge compared to being blind.

DV: That’s critical for building quality products. I’m guessing,

VF: for building quality products for building your mailing list, you know, even if it’s only a free product right now, and you would want to market the paid functionality to this users. If you don’t do that, right. Even if you have million active installs. You’re still starting kind of from zero.

DV: Because without that intelligence to inform your product roadmap, but also your go to market right now. You don’t have the leverage of your base to do that. It’s a good summary,

VF: right? Yeah, correct. Because you don’t have that base. You don’t have a way to communicate with your people. I mean, you can push updates without any notices. That’s another way but it’s not very scalable, and it’s not the way to do that. All right.

DV: Well, I like it. I think in this interview, you’ve walked us all the way from like ideation around a product like choosing a platform. We’ve been thinking about our software licensing, for billing and distribution, thinking about analytics, thinking about it through the context of our product roadmaps and then also through marketing and targeting around upgrades and our premium funnels. That was awesome. Thank you for that. I really enjoyed it. Awesome. If you’d like to learn more about what vote is up to you, please visit freemius.com Thanks, everyone for listening to press this WordPress community podcast on WMR. Again, this has been your host, David Vogelpohl. I support the WordPress community through my role at WP Engine. And I love to bring the best of the community to you here every week on Press This.