How big is the market for your premium plugin in 2021?

Want to enter the world of WordPress premium plugins?

Think that it's too late to create a premium plugin? Most people in the space might agree with you. After all, there's a plugin for everything. Right? Well, hold on a second. If you've been paying attention to the world of WordPress, you have likely seen someone mention that last year's growth was incredible. They're not lying. From just over 34% to almost 40% of all the websites on the planet – that's 5% growth in a single year.

There's never been a better time to bring a premium plugin to the market. But to do that, you likely need to do a bit of research. Let's dig into the several questions you need to think about, and wrap up with the big one – how do you size the available market for your new idea.

Where do you find ideas for your new premium plugin?

As I was starting this post, Derrick Reimer – the founder of SavvyCal (I wrote about this awesome scheduling software the other day) – tweeted about market opportunities. Such great questions that I'm going to start with his and then go from there.

You can read his tweet storm here. But to make it faster, I'm going to drop his questions directly here.

  1. What established companies are resting on their laurels?
  2. What products have gone so far up-market that a broad base of customers can no longer afford them?
  3. What successful products have critical flaws for a subset of users?
  4. What products are people using for a different purpose than originally intended?
  5. What popular products are extensible and could be augmented to work even better for a particular niche?
  6. What inefficiencies can be solved by borrowing new technology and applying it to an older space?
  7. What areas have a bunch of new people looking to join who are willing to spend money to succeed faster?
  8. What popular products have been acquired and shut down, leaving a void of demand?
  9. What companies have stopped listening to their customers?
  10. What companies are unable to keep up with feature demands because of legacy?

These are great questions. And again, to give him credit, they're all from Derrick.

If you've spent any time talking about product strategy with me, you've likely heard me talk about the upmarket climb. That's where people keep adding more and more features to their products to serve customers up-market (because they pay better).

But the consequence of that upmarket climb is that they leave customers dangling who didn't make the climb with them. Also, there's a clear tendency to embrace feature-itis, where you keep adding more and more features (long past what the broad market needs), and your increased pricing is no longer accepted by large parts of the market.

That's all at the core of question #2 – one of the most important areas to investigate if you're thinking about introducing a new premium plugin to the WordPress ecosystem.

Multiple business models will work for your plugin

The other day I mentioned that I wasn't a fan of the freemium business model. But my opinion isn't important, at all. What matters is what you can make work. And there are a lot of options you have available to you.

Freemium Model – In this model, you'll create a free (lite) version of the plugin, and another version that is premium (Pro). You use the WordPress repository to gather attention and allow people to use the lite product until they have additional needs – driving them to buy the Pro edition.

Beaver Builder follows this model and uses it well.

Premium Only Model – In this model you skip the free version and simply sell a premium product. The obvious benefit is that you only end up supporting customers who have actually paid you. And that's a big deal.

Gravity Forms, WPForms and AffiliateWP all have followed this model with success.

Add-On Model – This is a bit like the freemium model, with a twist. The core product is offered for free and then a bunch of additional features are available as premium add-ons. It can work great. But it can also create blow back as people can feel frustrated if add-ons are tiny and multiple are required.

WooCommerce started it. But Ninja Forms, and Easy Digital Downloads also follow the model.

Membership / Support Only – This is a bit different because you rarely see folks do this. But the folks at Paid Memberships Pro have modeled the approach for years. Their plugin is free. Their add-ons are available to anyone with a membership plan. What they sell, via that membership, is support.

Paid Membership Pro is the best known case of this model.

SaaS Model – You likely know, if you're a reader of this blog, that I'm a huge fan of SaaS products. It's where I grew up. So of course I need to mention it. Plus, one of the earliest plugins you ever saw, Akismet, models this for everyone. You create software in the cloud, but connect to it via a free plugin.

OptinMonster is the most well known in the space, after Akismet.

The biggest mistake most premium plugin companies make

Before we get into sizing the market, I have to pause for a second to highlight the most common mistake most premium plugin companies make. Because if you follow this dynamic, you won't notice it initially, especially if you're popular. But eventually it will hurt you.

The biggest mistake premium plugin vendors make is that they don't immediately setup recurring annual plans.

As a customer you may hate me for even bringing it up. But selling a premium plugin for $99 or $199 won't mean anything if they have to spend 3x that over the lifetime of the customer who is calling in for support.

You don't see it initially because you sell a lot of licenses and don't get a ton of support requests. But in the later part of the first year, and in the second and third (yes, customers will often use the plugin they purchased for 2-3 years) the support costs will eliminate any profit you made from that customer.

So make sure you bill monthly or yearly. Just not a one-time purchase price.

What's the second biggest mistake premium plugin providers make?

That's an easy one. Visit any one of them and you're likely to find 2 plans, or 4 plans. I don't know why this is, after a decade of articulating the benefits of 3 plans. People still do it. And it still bites them in the butt.

If you want to learn more about optimizing your pricing page, here's one of my favorite articles on the subject – not research but a list of things to consider. Here's my second favorite, from Hubspot.

Which growth strategy is better? Bundling or integrations?

We're getting ready to talk about sizing the market, but there's one more component to think about as you think about building a new plugin for the WordPress ecosystem. And it's one of those that requires you to potentially “count the cost” as you think about things.

The first strategy for driving growth is the lite/pro approach we already talked about. A bundling strategy takes that to a new level. Because instead of just putting the lite version in the WordPress catalog of plugins, it also has you bundle them with tons of other products (like themes).

This bundling strategy makes your lite product ubiquitous. And if it's already deployed because of partnerships you've developed with theme providers or hosting companies, then you're already positioned to drive those customers to a Pro version.

But that requires that you have partnership development (or business development) chops. If that's not you, you may want to go another approach. It may be easier for you, as someone who may be more inclined to code instead of market, but it will cost you more.

The second strategy doesn't require the freemium model. It can work with any model you choose. What it does is focus on you building even more. Building integrations with known solutions that your customers are already likely using.

Imagine you want to build a new premium plugin for coupon analysis. You likely would need to create integrations with every eCommerce plugin people might use. Initially you think WooCommerce and Easy Digital Downloads. But people are also using membership plugins, LMS plugins, even form plugins with payment gateway extensions.

Suddenly you have a lot of work to do. But the benefit is that the big players who you integrate with can now tell their customers about you. And that can do as much as the bundling strategy.

This is why I say it's important to know which approach you're choosing, because it will help you understand what you're getting into.

Sizing the market for your new premium plugin

With all of that said, I guess it's time to size the market and see if this is really worth doing. But one second, I need to say three more things to you, real quick.

  1. You cannot use the excuse that someone is already doing it. Markets love competition.
  2. You cannot use the excuse that you don't code. Lots of people do & you can hire them.
  3. You cannot use the excuse that you don't have time unless you watch zero television.

Ok, now with those last words, let's get into how big your market could be.

First, I should note that there are two things you could look at – first is the market size (how big is the WordPress ecosystem) and second is the total addressable market (TAM) for your premium plugin.

But to do that, we need some basic assumptions that we can work with. If you want to tweak these, you can. It's up to you.

  • BuiltWith tells us that there are 28 million live WordPress sites.
  • Let's assume that 2/3 of those are housed on hosts that support premium plugins.
  • My own data (I work for a host) says the average site runs 30 plugins.
  • Let's further assume that 60% of the sites have budget for premium plugins.
  • And let's further assume that only 5% of the plugins have premium versions.

What does that give us?

  • 28 million sites, but only 2/3 support premium plugins means the count is now 18.5 million.
  • 18.5 million sites but only 60% are funded projects, means 11 million sites.
  • 11 million sites with an average of 30 plugins means 332 million deployed plugins.
  • But only 5% are premium – that means 16.6 million deployed premium plugins.

Now, let's assume that the premium fee is $99 a year. What does that mean for the TAM?

That's $1.6 billion. With a B. Every year!

But that's not all going into your pocket. Because you're not offering every single version of every premium plugin available.

So you have to answer another question, which is what percentage of those sites that could deploy a premium plugin, and which had budget, would deploy your plugin?

I'm going to leave that question to you. But can we agree that there is a very large opportunity still out there?

When you take away hosts from the WordPress ecosystem, the largest premium plugins are making millions, some even tens of millions. But not hundreds of millions. Which means there's still a lot of money on the table.

Go get some!

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Chris Lema
Chris Lema has been working with WordPress since 2005. Over the years he's been a blogger, a speaker at WordCamps, a coach for WordPress product companies, and the founder of the conference for WordPress business owners, called CaboPress. Today he's the VP of Products at Liquid Web, where he manages the world's first managed platform for WooCommerce stores.

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