{"id":2460,"date":"2022-07-27T23:51:09","date_gmt":"2022-07-28T05:51:09","guid":{"rendered":"https:\/\/jonathanwold.com\/?p=2460"},"modified":"2022-08-12T14:53:57","modified_gmt":"2022-08-12T20:53:57","slug":"monetizing-an-ecosystem-plugin","status":"publish","type":"post","link":"https:\/\/bf0cd40f-7ebb-43c9-a4ea-50b260f6ecbb.express.conves.io\/monetizing-an-ecosystem-plugin\/","title":{"rendered":"Monetizing an Ecosystem Plugin"},"content":{"rendered":"\n<p>I continue to see ecosystem plugins as<a href=\"https:\/\/growinwp.com\/ecosystem-plugins\/\"> big opportunities in WordPress<\/a>.<\/p>\n\n\n\n<p>An ecosystem plugin is an extension (i.e. plugin) of WordPress that:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Introduces a suite of functionality for a specific audience (more than just a &#8220;feature&#8221;)<\/li><li>Provides an integration layer (i.e. API) for additional functionality (e.g. via third-party extensions and integrations)<\/li><li>Influences and shapes its own ecosystem over time through aligned economic incentives with each participant <\/li><\/ul>\n\n\n\n<p>Examples include:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/woocommerce.com\">WooCommerce<\/a><\/li><li><a href=\"https:\/\/www.gravityforms.com\">Gravity Forms<\/a><\/li><li><a href=\"https:\/\/lifterlms.com\">Pods<\/a><\/li><li><a href=\"https:\/\/lifterlms.com\">LifterLMS<\/a><\/li><li><a href=\"http:\/\/codesnippets.pro\">Code Snippets<\/a><\/li><li><a href=\"https:\/\/www.paidmembershipspro.com\">Paid Memberships Pro<\/a><\/li><\/ul>\n\n\n\n<p>A few things I&#8217;m curious about and still exploring:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Origin <\/strong>&#8211; When does a plugin become an ecosystem plugin? Many, for instance, start as features without direct extension capability.<\/li><li><strong>Lifecycle<\/strong> &#8211; What are the stages of an ecosystem plugin? How do we assess health within the lifecycle?<\/li><li><strong>Market Support<\/strong> &#8211; How many mature ecosystem plugins can the WordPress economy support? <\/li><\/ul>\n\n\n\n<p>What I&#8217;m intrigued about most right now, though, is how you effectively monetize an ecosystem plugin.<\/p>\n\n\n\n<p>My hypothesis is that <mark style=\"background-color:#fffde5\" class=\"has-inline-color\">ecosystem plugins within WordPress are undervalued and underdeveloped as value-based businesses and, accordingly, are <em>far <\/em>from achieving their economic potential<\/mark>.<\/p>\n\n\n\n<p>I&#8217;d argue that WooCommerce, for instance, with as much financial success as the business has enjoyed, is still short of the economic potential it is capable of as an ecosystem plugin.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Growth Strategy<\/h3>\n\n\n\n<p>Ecosystem plugins in WordPress are possible because of the <em>size <\/em>and <em>shape <\/em>of the WordPress ecosystem. There isn&#8217;t anything quite like it and once you embrace <a href=\"https:\/\/blog.jonathanwold.com\/the-benefits-and-tradeoffs-of-decentralization\/\">the benefits and tradeoffs of decentralization<\/a> you can set yourself up for significant growth as you work towards ubiquity within your addressable market.<\/p>\n\n\n\n<p>The key to growth in the WordPress ecosystem is figuring out distribution and for most ecosystem plugins the clearest path to doing so is through strategic partnerships (<a href=\"https:\/\/blog.jonathanwold.com\/partnerships-in-portugal\/\">I offered guidance on partnerships at WordCamp Europe<\/a>).<\/p>\n\n\n\n<p>To support that growth, though, you need financial resources. And that&#8217;s where I see an opportunity to improve how ecosystem plugins are monetized.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Monetization Problems<\/h3>\n\n\n\n<p>Considering today&#8217;s WordPress product business landscape, a few problems stand out to me as worth considering:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Confusion about what&#8217;s being sold<\/strong> &#8211; What do users think they&#8217;re buying? What do most product businesses think they&#8217;re really selling? Places like <a href=\"http:\/\/gplvault.com\">GPLVault<\/a> existing are symptoms, to me, of confusion on the part of business owners about the nature of what they&#8217;re selling. In a GPL environment, selling &#8220;code&#8221; doesn&#8217;t work and while many folks accept this intellectually, it feels like our business practices haven&#8217;t caught up. A clear test of this, in my mind, is does the business model work if you include a link, right on the &#8220;buy&#8221; page, to download the plugin for free? <ul><li><em><a href=\"https:\/\/woocommerce.com\">WooCommerce&#8217; current onboarding flow<\/a> is a good example of a GPL-friendly model in practice. Clicking &#8220;Start a new store&#8221; guides you through options and gives you the option, among others, to download WooCommerce directly. <\/em><\/li><\/ul><\/li><li><strong>Misaligned incentives with free riders<\/strong> &#8211; <a href=\"https:\/\/blog.jonathanwold.com\/hosts-and-the-free-rider-problem\/\">Free riders, the most obvious of which are hosting providers<\/a>, are an essential part of the WordPress ecosystem and for most ecosystem plugins are the missing ingredient for distribution. You can&#8217;t just get distribution, though, your business incentives need to be aligned and in today&#8217;s landscape I don&#8217;t see a lot of folks doing this well &#8211; yet.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Monetization Guidance<\/h3>\n\n\n\n<p>Here&#8217;s my current guidance for successfully monetizing an ecosystem plugin:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Minimize barrier to ubiquity<\/strong> &#8211; Create a great product with a free version that provides value for the majority of your addressable market. I suggest you target 80%.<\/li><li><strong>Focus on indirect monetization for the majority<\/strong> &#8211; Monetize the ecosystem itself, rather than the core plugin. Explore, for instance, offering advertising and\/or referral relationships to extensions, integrations, and service providers within your ecosystem.<\/li><li><strong>Prioritize distribution through hosting partners <\/strong>&#8211; Grow the reach of the ecosystem plugin by solving problems and creating value for hosting providers.<\/li><li><strong>Offer monetization for a subset of users<\/strong> &#8211; Offer a &#8220;Pro&#8221; version that serves as an anchor and supports the needs of a subset of users. For most, I suggest the ideal is to target monetizing around 5% of your addressable market. Going for more and you risk slowing your growth and hurting indirect monetization.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Revenue Streams<\/h3>\n\n\n\n<p>For an ecosystem plugin in WordPress, I see three key revenue streams:<\/p>\n\n\n\n<ul class=\"is-style-default wp-block-list\"><li><strong>Software-as-a-Service<\/strong> &#8211; Provide a self-hosted updates and support license or guide users to hosting partners for a hosted version, where updates and support are provided through the hosting partner. <ul><li>For most ecosystem plugins, I suggest the &#8220;Pro&#8221; version should start at $50-100\/month and users &#8220;get it free&#8221; or as an upsell through a hosting partner.<\/li><\/ul><\/li><li><strong>Specialized Support<\/strong> &#8211; Provide a &#8220;high end&#8221; support option for folks who want to work with the plugin authors directly (typically, this is positioned as an &#8220;enterprise&#8221; offering).<ul><li>I recommend that this typically start at $1,000+ per month (at least in the B2B space) and serve primarily as an anchor and upsell for hosting partners. <\/li><\/ul><\/li><li><strong>Core Sponsorship <\/strong>&#8211; Accept sponsorship and volunteers for the &#8220;core&#8221; of the plugin, following a similar model used by WordPress core. <ul><li>Work with the businesses who have the most to benefit from the success of your ecosystem plugin and create engagements that are clear mutual wins. <\/li><\/ul><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>We&#8217;re in the early days of ecosystem plugins in WordPress and my hope and focus is to see them become <em>much <\/em>stronger businesses that make WordPress better and the Open Web stronger. <\/p>\n\n\n\n<p>Improving monetization is a key first step. Have questions, suggestions, or ideas? These concepts are a work in progress and <a href=\"https:\/\/blog.jonathanwold.com\/contact\/\">I&#8217;d love to hear from you<\/a>.<\/p>\n\n\n\n<p>Thanks to Joshua Wold for the illustration (<a href=\"https:\/\/joshillustrates.com\">he&#8217;s available for hire!<\/a>) and to Joshua Wold (again)<em>,<\/em> Anna Maria Radu, Spencer Forman, Adam Weeks, Ran Regev, Matt Geri, Bob Dunn, Luke Carbis, and Kelley Muro for early feedback.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What I&#8217;m intrigued about most right now is how you effectively monetize an ecosystem plugin. My hypothesis is that ecosystem plugins within WordPress are undervalued and underdeveloped as value-based businesses and, accordingly, are far from achieving their economic potential.<\/p>\n","protected":false},"author":17,"featured_media":2527,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"iawp_total_views":51,"footnotes":""},"categories":[325863],"tags":[],"class_list":["post-2460","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wordpress"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Monetizing an Ecosystem Plugin - Jonathan Wold<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/bf0cd40f-7ebb-43c9-a4ea-50b260f6ecbb.express.conves.io\/monetizing-an-ecosystem-plugin\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Monetizing an Ecosystem Plugin - Jonathan Wold\" \/>\n<meta property=\"og:description\" content=\"What I&#039;m intrigued about most right now is how you effectively monetize an ecosystem plugin. 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