A Brief History of the WordPress Product Business

In January of 1848, James W. Marshall discovered a shiny piece of metal in his Sacramento lumber mill. He showed the metal to his boss John Sutter, and the two discovered that it was gold.
Sutter tried to keep the discovery a secret in order to avoid endangering his agriculture business. He failed.
In the coming years about 300,000 forty niners came to California with high hopes of finding gold in the American River. One of the places they came was a small settlement called San Francisco, which at the time had less than 1,000 residents. Within 2 years it would have 25 times that.
Fast forward 150 years or so, and that small settlement now has over 830,000 residents. One of those residents is named Matt Mullenweg.
In 2003, this San Francisco resident, along with Mike Little, forked a piece of software called b2. In doing so, they created their own little nugget of gold that would be called WordPress. Little did they know they were laying the foundations for another gold rush, a digital, open-source kind of gold rush.

When WordPress first started gaining traction, the only people making money from it were in consulting work. Custom websites, and general web related services.
By 2005, Mullenweg formed Automattic, but it wasn’t until 2007 that other developers started recognizing the potential for products in the space.
Premium Themes
Premium themes started arising from authors like Brian Gardner (Revolution), Magnus Jepson, Nathan Rice, and others. After a rocky start regarding licenses and theme marketplaces, companies like WooThemes and StudioPress began to take shape. The theme gold rush started gaining momentum as hundreds (if not thousands) of other premium theme authors began to enter the market in the following years.
For several years themes were seen as the best way to make money. Plugin developers found it difficult to charge for their products, because everyone saw plugins as something that extended WordPress core, and should therefore be free.
Premium Plugins
It wasn’t until a few years later (2009-2010) that premium plugins began to gain traction. Some early premium plugins include All in one SEO, Gravity Forms, and Wishlist Member. Some developers saw the potential early on, but the money wasn’t rolling in for everyone yet.
In 2010, Cory Miller penned this blog post, asserting the need for premium plugins. Shortly after, his company iThemes would release BackupBuddy, their most successful product for many years.
A major milestone was when WooThemes released WooCommerce in September of 2011, and it exploded in popularity. It became their most successful product by far, making up the majority of their revenue. It would then be acquired by Automattic in 2015 for a rumored 30 million dollars.
Today there are dozens of companies making 6 and 7 figures in revenue from a single plugin, and most are growing year over year. Plugin developers have had success with a variety of models, including distributing a free version on wordpress.org and then upselling a pro version, or selling a premium only version. Plugin sales are strong across the board, although competition is getting stronger.
There are now very few categories of products that do not already have 1 or 2 strong players, that has not always been the case. Today if you create a WordPress product, you will immediately have competition from established players. There is still room for new entrants into the marketplace, but it is more important than ever to differentiate your product.
WordPress as a platform continues its strong growth in the web software market, now taking up almost 60% of the top 10 million websites on the internet, with no close competitors. There is no doubt that this growth will continue over the short term, but what does the future hold for WordPress products?
Some companies such as AppPresser and Optin Monster have moved from a plugin model to a Software as a Service, or SaaS. This trend is sure to continue for the more popular plugins, as product authors realize the benefits of SaaS over traditional plugin sales.
Benefits of the SaaS model include recurring revenue, more control over the customer experience, a proprietary asset that is “sellable,” and expansion beyond a single platform (WordPress). There are also new challenges that come with the SaaS model, including user churn and infrastructure, but for many the pros outweigh the cons.
There is no doubt that many more SaaS offerings will appear from plugin authors, but what impact will this have on the plugin economy? There may be a vacuum that is created at the “bottom” of the market that can be filled with new entrants, to serve those that are resistant to the SaaS revolution. There may be very little effect as plugins and SaaS products thrive side by side.
One thing is sure, the WordPress product economy is always moving, and products that don’t move with it, die.