WPblab EP149 – Pros and Cons of Business Models in Open Source

We’ve all heard, “free as in beer,” but what does it even mean? You know you have a valuable solution, product, or service, but how should it be priced? What is your product business model? Is it all free, freemium, or premium only? Do you finance with the equity in your home, an SBA loan, or exposure?

Business models are Jason Coleman‘s favorite topic. We are lucky enough to be joined by him for 45 minutes on this episode. Remember, the last 15 are the Tool or Tip of the Week.

Don’t miss this episode if you want to continue the conversation on what really funds open source. (Hint: it’s not open source fairies.) There were so many quotables, you just have to watch!

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Jason Coleman – Entrepreneur, Husband, Author

Jason and Kim Coleman were high school sweethearts and formed their businesses together. Currently, Jason is the CEO of Stranger Studios and Paid Memberships Pro. He’s also a published author. They both have college degrees and knew that business building was their path. You can read Jason’s blog here.

(Side note: Jessalyn interviewed Kim Coleman at WCUS in 2017.)

Jason Coleman worked in the 2.0 app area and built quite a bit of proprietary software. Soon after he found WordPress. He had an eCommerce plugin that he didn’t license under GPL and saw that as a missed opportunity. Around 2011, 2012 Jason niched in the membership website market. Because the work was repeatable, he started charging more.

“Don’t combat the big guys in the space they’re winning.” Jason Coleman

So many of us in WordPress are accidental freelancers or hobbyists or employees. Jason’s passion is not only to help his local community, but to help WordPress developers set themselves up for success at Day 1. Be on the lookout for his presentation at WordCamp Orlando in 2019 on WordPress.tv. (His slides and spreadsheet resources are here.)

What are the WordPress Product Business Models?

It feels like there are many business models. But with WordPress products you have three: premium, freemium, and free. You can also have a free product and charge only for support. That’s the way PMP went for quite a while. But it’s important to set goals. Make sure your goals are achievable and realistic.

Premium-only plugins don’t have the competitive advantage of being listed in the WordPress Plugin Directory. This was the opening in the market that Jason Coleman saw as a huge opportunity. There were many premium plugins for membership, but none in the free/freemium space.

Currently, PMP has a freemium model. Check it out in the directory; don’t forget to check out their add-ons, too.

Supporting Open Source with Agency Work

Much like the story of LifterLMS, PMP was subsidized and supported by agency work. You have to plan in order for your WordPress product to become self-sustaining. That plan must include profit. Make projections with a percentage and stick to it. He believes 30% profit is reasonable.

Freelancers have an advantage. When doing client work, WordPress developers are used to building something and standing by it. Not many people stand by something they have built. It’s the pride in craftsmanship that is an advantage.

“A lot of freelancers move into products because they have the skill to [support something they built].” Jason Coleman

How Long Before PMP Was Profitable?

Like most businesses, Paid Memberships Pro was self-sufficient and in the black by year three (2015). They reached a point where their forecasts (huge fans of spreadsheets) required they dive in to PMP 100%. To do this they paused their agency work for three months.

When Should You Raise Your Prices?

Using your goals, decide when it makes sense. This is one of the reasons why Jason Coleman loves spreadsheets so much. You can tweak prices to see when you meet revenue and growth goals. Don’t worry about the people who will be upset. They will always be upset.

“There will be backlash no matter what you charge.” Jason Coleman

Instead of focusing on current customers in your projections, focus on the future customer. Mature businesses worry about churn, where most startups need to focus on future customers. Don’t forget about your current customers. Be sure to grandfather in their pricing. Loyalty, after all, is very important.

Tool or Tip of the Week

This Tool or Tip of the week is brought to you by Fat Dog Creatives. If you’re a service-based business serious about growth, Rhonda Negard is your rebranding and web design thinker, a strategic design specialist. Check out her website at FatDogCreatives.com

Jason Coleman recommends the distributor plugin by 10up. This allows you to syndicate content to one central site. This is good for people who publish all over the place.

Jason Tucker recommends the Peak-a-View app. This tool allows you to safely hand your phone to a kid or client and allow them to only view one album. There was a big write up on it at 9to5mac.com.

Bridget recommends Sarah Beth Yoga on YouTube. It’s organized by focus (bedtime yoga, morning yoga), type, and by minutes (10 minute, 15 minute, etc.). Bridget is finally doing 20 minute yoga.

Weekly Watercooler Discussions about WordPress and it’s community.

3 responses to “WPblab EP149 – Pros and Cons of Business Models in Open Source”

  1. I am excited to be talking about Open Source business models on @WPblab tomorrow at 9am PST/12PM EST.


  2. I’m going to be on @WPBlab today at noon ET (2 hours 20 minutes from now) to talk about OSS Business Models. Please stream it live so the hosts think I’m popular.


  3. Haha. To hear more of the things I “realize with my brain”, watch me on @WPblab in 30m.



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