SaaS as a Business-Model for Selling WordPress Plugins and Themes With Subscriptions

SaaS as a Business-Model for Selling WordPress Plugins and Themes With Subscriptions


Hi! I’m Ben from Freemius. Today, we’re going to talk about the importance of subscriptions and automatic renewals of your plugins and themes and about the simple fact that all of that is worth money to you! At least 50% more than you make now. Incredible? Unbelievable??
Let’s plug-in! Before we get started, make sure you
subscribe to our YouTube channel for future videos. If you’re watching this
directly on YouTube, you can click the alert icon for notifications about new
releases. Many of us developers, typically sell our products with unlimited updates and support for a year, and assume that our customers will renew each year. In fact, what we are really selling, are licenses in exchange for recurring payments – just without automating the license renewals. Today, everybody’s talking about SaaS as a great business model: customers choose their preferred subscription and everything else is pretty much automated. Why not leverage this model for our products as well? We also sell software and provide service
for it… Think about it. Why make the customer
work hard for a renewal? Why risk a high churn rate on your subscriptions? Why not be more “SaaSy”? Imagine a bucket. It is filled with water and the water is all
of your users. The water is pouring in from all kinds of sources: social media, SEO, the wordpress.org repository or through affiliate marketing. Now, imagine that the bucket is filled with holes. This is your churn rate and users are
flushing out fast! My goal, until the end of this video, is
to show you that the best way to stitch the holes in the bucket is by creating
an automated subscription system. So, what’s in it for you? One of the most important advantages of a subscription-based structure, is contained in one word: data, data, data! When you have recurring revenues, you are able to estimate more precisely how much money you are going to make at the end of each month. while considering your conversion and churn rates, it is much easier to plan your company’s budget and overall growth. This leads to a more scalable and sustainable business model, and it is good for everyone! Let’s say for example, that most of your new users are generated through the dot org repository, and that you are selling your premium
plugins in a one-time purchase. What will happen if all of a sudden wordpress.org changes their search algorithm? BOOM! Just like that, you can potentially lose 50% of
your monthly sales or even more! With subscribers renewing their subscriptions automatically, all of that would matter much less. Your income remains steady and
continues to grow as you get new customers – no more holes in your bucket! I can hear some of the skeptics among you saying:
“but customers don’t like automated renewals” – and I cannot blame you. Nobody likes chasing after service providers disputing unauthorized payments. However, that is a small problem compared to dripping your customer base. If you design your monetization process in a clear and smart way, you’ll hear few if any complaints. How you do that? One, be transparent during the checkout process and highlight the fact that there are
automated renewals involved. And two, send a notification email a week before the next payment with a very simple link to cancel the subscription if needed. Actually, this kind of emails are our specialty here at Freemius. We’ve built in tons of these automated features into our platform. Now, let’s talk about introducing monthly payments. I know, it is not easy when you first starting selling your WordPress product since the payment amounts are much smaller. But, when you look at it from the customer’s side it has its advantages – and a happy customer means a happy seller, right? It feels a lot less risky when you pay a
small amount upfront for a product. 10 dollars per month feels better than 120 dollars per year, especially for first-time customers. Monthly payments also allow customers to use premium features for a short period, for use cases like one-time events. And finally, by making the whole process automated, there is one less thing your customers need to worry about. After all, they are usually small and medium-sized business owners themselves, and the last thing they want to deal with is searching for their license key, password to log in to manage their account, or filling out the checkout form again. If you are still unsure of the benefits of setting up automatic renewing subscriptions for your WordPress business, here’s a few stats for you: surveys show that the average license renewal rate for products without automatic renewals is between 10 to 30 percent. While products with automatic renewals have renewal rates between 60 and 95 percent! Even though Auto-renewal means dealing
with more refunds than without auto-renewal, the numbers don’t lie!
it is still a huge difference in the long run. So, in summary – start thinking SaaS and focus on getting automated recurring subscribers for your WordPress product! Following this strategy will help you build a sustainable business While being able to offer new features and ongoing support for your customers. And in short, it will fill your bucket! Thanks for watching, see you next time!

1 Comment

  1. Al Canton says:

    Not much in the way of new or necessary content here. It's just an advertisement for the company. I think automated renewals or monthly payments is a security risk as the vendor has to keep my credit card in their database. What could possibly go wrong with that?

Leave a Reply

Your email address will not be published. Required fields are marked *