Even though WordPress-related businesses have never been sexy (in the mainstream sense of the word) - WordPress has created and monetized an incredible ecosystem around the platform.

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I gave this talk at last week's WordCamp Cape Town and thought that I'd post some of the details here (a video of my talk should be up soon).

As an introduction to my talk... I've been making money with WordPress for many years now and WooThemes is almost 4 years old with 45k paying customers. And lately I've been thinking a lot about how WordPress mimics other industries worldwide and how it has thus become ripe for the picking for entrepreneurs

Here's some of the highlights from my talk:

• Slides 6 - 18: I believe that WordPress as a community, should instead be seen as an ecosystem with its own economic principles applied. And within this ecosystem we currently have many money-making opportunities (custom services, themes, plugins etc.)
• Slide 15: I think we're going to see more hosted, SaaS-like apps appearing for WordPress in the very near future. See my previous post - WordPress + SaaS - for elaboration on this.
• Slide 19: There are so many opportunities left for entrepreneurs to fill the gaps and monetize their proposed solutions. Considering that the latest stats reveal that WordPress powers something like 15% of the whole web, there are millions of users out there looking for specific solutions.
• Slide 20 - 22: I also see an alternative view to this WordPress ecosystem. There are multiple companies that have built loyal customer bases comprising of thousands of users, which in their own right becomes a niche market. Take WooThemes as an example: we've got 45k-odd customers, which is a pretty considerable niche opportunity. Could you develop something that specifically targets these 45k WordPress & WooThemes users? I think there's a bunch of very attractive opportunities out there for this.

In the WordPress world, there's been a trend of simply bundling as many features and as much functionality into a single theme as possible. Because more features equals more sales. Neither right or wrong...

I believe - and this is something we try implement at WooThemes - that there is always a balance in anything that we do and thus include into our themes. Some things that we could be including for example would look fantastic on paper, but could perhaps be counter-productive in how that affects the usability of the theme and subsequently the user experience.

So I drew a little graph (Photoshopped it actually, since Excel was too complicated) to explain:

[caption id="attachment_1157530265" align="aligncenter" width="300" caption="Measuring the effect of theme features against usability & user experience"][/caption]

The graph above basically shows that usability & user experience increases steadily with more theme features until it reaches it peak and then decreases thereafter at the same rate (as more features is added). This creates a pretty average-looking bell-shaped curve (for the statistics whiz kids, you can read this). 

The Analysis & Considerations

The above is obviously just an opinion, but from experience these are the considerations I included in suggesting the above graph:

• More theme features means greater flexibility in terms of what a theme can or can't do. Greater flexibility increases the usability and thus the user's experience working with the theme.
• More theme features also generally means that the codebase is extended, meaning potential code bloat which in turn impacts flexibility.
• The shape of the curve above totally depends on the audience. I suspect that for an advanced developer the curve will be flatter i.e. they'll reach the peak much quicker (developers prefer less code). For end-users though, the curve may be substantially taller, as those users prefer more features / options for greater flexibility.
• Requiring an user to install a plugin to activate or add certain features to a theme, decreases usability / user experience. Again, end-users would prefer a solution that is more out-of-box, whilst developers wouldn't flinch when tasked with an additional plugin installation.
• The implementation & execution of any feature is important: if it's done badly it will decrease usability / user experience regardless of the fact that the theme has an extra feature / option.
• A badly executed feature / option also creates a greater demand on support resources. Rather half a theme, than a half-assed theme (h/t 37Signals).
• More features / options requires an initial learning curve and the setup of a theme. I however don't think that this is contradictory to improved usability and a better user experience, as long as the process is properly documented and the UI isn't confusing. I think users would rather spend 5 minutes setting up a theme that offers them greater flexibility / functionality, than activate a limited theme which requires no setup.
• Fallbacks & defaults should be implemented i.e. if an user doesn't go through the complete setup, a minimal viable version of the theme should still be active. The setup then serves as "extra reward" by activating the rest of the functionality. This isn't a half-bad compromise between having something that basically degrades gracefully to still work out-of-box.

I don't think there's a right or wrong answer here. I don't even think that it is possible to determine where the peak on this graph would be, as there are too many non-measurable consideration that would influence it. If anything, I'd advocate caution and a balance when deciding what should go into your themes (this is also true for non-WP products).

I definitely believe that a WordPress theme shouldn't simply include any imaginable feature out there. Every WP theme shouldn't do everything. I also think the developers that potentially miss the balance do so for the supposed marketing value thereof (more features = more sales).

Opinions?

 

Following up on my post from yesterday, I've been thinking quite a bit about the lack of premium plugins that are available for WordPress. Compared to the revelation & success that premium themes have been, I would've imagined that there'd be more premium plugins available.

Instead there's only a handful of premium plugins available that I would deem to be worthy options. Most plugins (and themes for that matter) are horribly coded and those developers should be taken out back & shot. :) IMO, these are the only premium plugins that I'd consider using myself at present if I had a need for it:

• Gravity Forms (I just don't have enough compliments for Gravity Forms; on most of my WP installations, it is the only plugin - except for Akismet - that I have installed.)
• BackupBuddy
• Wishlist Member
• WP Ecommerce & Cart66

Not many, right?

I think the main reason for this is that there are so many amazing free plugins that are available. At the moment there are almost 15k plugins available on the WordPress.org repository, many of which are really well coded & solves a mainstream user problem (and is thus valuable).

Coupled with that, I think that (valuable) plugins are really hard to develop (skills-wise) and are much harder than themes. The barrier to entry is thus higher, which means an ambitious WP developer looking to make earn a passive revenue is more likely to go the theme route than the plugin route.

But this has left a major gap in the WP ecosystem... 

Premium Plugins: A Lucrative Opportunity

I think that the above-linked plugins have shown that there is most definitely an opportunity for premium offerings to step in and offer a different type of value proposition compared to free plugins.

Premium plugins can succeed for the following reasons:

1. Solve a real problem. I think this is the most important point to make: there are still many "gaps" in the WordPress experience - especially as more and more people are using it in different environments & across industries - which means that plugins should address these niches (as they will never be covered in core). Gravity Forms solved WP forms forever and I doubt that we'll ever need another plugin to do that. That's how well they managed to solve a real problem. People are willing to pay - and pay well - to have their problems solved, especially considering the cost of hiring a proper WP developer for a custom project.
2. Support is premium in itself. I have a lot of respect for the plugin authors that are supporting their free plugins, which thousands and  thousands of people are using. But this doesn't scale well, so most plugin authors offer limited support at best, which doesn't work well with your more serious WP user. Instead they want a plugin that works well out-of-box, they want support on custom integration thereof and they want their bugs to be fixed immediately. This would be easy and part of the business model when selling premium plugins.
3. Quality over quantity. If you manage to solve a real problem and you offer the premium support to go with it, you don't need thousands of users. Instead you can sell your plugin for $100 for example (if the value proposition makes sense at that price), which means a 1000 customers would equal $100k in revenue. Not bad. I'd also highly recommend using a tiered-pricing & licensing approach in this regard, so that you can basically charge per WP install where your plugin is used (use GravityForms' pricing model as reference).

This is a real opportunity for those that are willing to work hard & release quality code. Fact is that every WP-powered website potentially needs a plugin, but not every WP-powered website needs a theme (most WP users would eventually end up with a custom design, whilst still running the same old plugins). So if you compare the demand for quality plugins to that of themes, you'll find that the demand is so much bigger.

Early movers in this space will be greatly rewarded too (as GravityForms, Wishlist, BackupBuddy & the others have), because there's very little out there at the moment. Your plugin could thus realistically close off a whole section of the potential plugin space and make it your own.

What's stopping you?

Recently I've been doing a lot of thinking about revenue / business models related to WordPress (especially after my post about stagnation and a lack of innovation in the WP community). On an evaluation of the different models out there, I've made it my personal mission to somehow replicate the success that Automattic has had with VaultPress as a SaaS-like product that plugs into the WordPress dashboard via a plugin.

Premium plugins have been a notoriously difficult space to crack (Gravity Forms is one example of a plugin that has done this very well) and whilst I believe that this is possible (I'll explain this in a separate, follow-up post), in my head a SaaS-like model is probably easier to execute.

Having a free plugin that is available via the WP.org repository, means that marketing (distribution too) and traction is relatively easy to engineer initially. Thereafter the plugin simply links into your hosted infrastructure and provides all the goodies from there. With subscription-based revenue models being the holy grail amongst online entrepreneurs, this model would make loads of sense for WP users too. VaultPress' success has proven that emphatically.

I can even see this working incredibly well with a freemium model as well, whereas a plugin author can offer some free, basic functionality via the free version of the plugin and once the user decides to subscribe to the service, they'll unlock all the major goodies. This is something that I think iPhone & iPad apps are doing really well and if I could find accurate data on app sales versus in-app purchases, I'm sure we'll see you a growing trend where in-app purchases will soon be much more than single app sales. I think this works well, because you tap into customer loyalty and longer term relationships, since repeated purchases are made incredibly easy.

On that note, I also think that Automattic have laid the foundation to do some interesting things with Jetpack in future. From where I'm sitting, they'd love for everyone to install Jetpack because it obviously extends the WP dashboard experience. But instead of simply bundling it into the WP core, they've released this as a separate plugin which they control and I'm sure that they will soon start pushing VaultPress via Jetpack. This would be easy, because the user - who has installed the plugin - has essentially given them permission to push further additions / functionality to them via Jetpack; regardless of whether that functionality is free / paid (would still require opt-in, so wouldn't be spammy or forced).

The implication of this is that they can simply roll out new services with similar SaaS-like models and corner a big part of the "premium plugins" space. Brilliant business IMO. Jetpack has essentially secured Automattic a very premium distribution channel and I'm keenly awaiting their next move.

I do however also believe that whilst Automattic has the headstart over any of us that would like to do something similar (this is if I'm correct in my guesses / assumptions about what they're planning with Jetpack), it won't be impossible for anyone else to replicate this. Ultimately it would come down to creating something that is super-valuable and something that WP users are willing to pay for; replicating this model is the easy bit after you've stumbled upon the right idea.

What do you think?