This post was created in partnership with Freemius.

There are a wide variety of options available to sell WordPress plugins and themes, and making an informed decision about the best choice for your business can take a lot of time and research. Some of the most common methods of selling WordPress products include marketplaces like CodeCanyon and ThemeForest and self-hosted solutions like WooCommerce and Easy Digital Downloads. However, there is also the option of a managed eCommerce platform like Freemius.

Why should you choose one option over the other to sell your WordPress plugins or themes? What are the benefits and costs of each?

This article will focus on how Freemius differs from other options using a SaaS (Software as a Service) approach to selling WordPress products.

Who can use Freemius?

Freemius provides a simple, pay-as-you-go solution for WordPress theme and plugin businesses. Freemius handles all aspects of the sales process on your behalf, including payments, software licensing, subscriptions, marketing automation, and much more.

Anyone seeking to sell a WordPress plugin or theme can open a full-featured shop using Freemius with little investment in setup costs or ongoing maintenance.

Developer dashboard

Once you sign up, you’ll begin the Freemius SDK integration process from your Freemius Developer Dashboard to add Freemius to your product. Once integrated, you can immediately begin selling. As the entire platform is self-contained and focused on selling WordPress software, you won’t need to install add-ons or ensure compatibility between different plugins.

Even if you offer your product for free, integrating with Freemius can provide useful data like user email addresses, usage analytics, and deactivation feedback when users uninstall your plugin or theme. This data can be helpful to learn how users use your product, or market a premium offering to them later (adopting the freemium business model).

Freemius developer dashboard.

Who is Freemius right for?

There are pros and cons to every solution, so let’s weigh the benefits and costs.

A hosted solution for WordPress software

Freemius is a hosted sales solution, which means that all the heavy lifting happens on their servers. Order fulfillment, distribution, and licensing your software are all managed on their platform. You retain control over your website, pricing page, and marketing, and Freemius handles the checkout and licensing process.

Freemius offers a full-featured API (with a PHP SDK) and webhooks for you to access and manipulate your store’s data and integrate with 3rd party solutions. The PHP SDK will assist with integrating Freemius into your plugins or themes, while the REST API and webhooks can allow you integrate Freemius with your own site or other services.

While the REST API and webhooks help you build your own customizations or integrations, using hosted software does mean you can’t customize everything. If you want to do something that Freemius doesn’t offer, you can either request the feature from Freemius and hope it makes it to their roadmap or rely on customizing your own self-hosted solution.

A reseller approach

In a self-hosted eCommerce store, you’re responsible for the entire sales process for your software. Freemius acts as a reseller of your products, which means that they handle the entire payment process. There’s no need to register your own Stripe or Paypal gateways when using Freemius. Freemius handles everything from receiving payments to distributing them to you. Transactions will be combined into one monthly invoice and paid out monthly. This also means you don’t have to deal with chargebacks or setting up your own payment integrations.

While this can drastically streamline the setup process for your store, there are significant tradeoffs to using a reseller platform.

  • Commissions are paid out monthly, so you’ll need to be cognizant of cashflow since you won’t have access to funds from your sales immediately.
  • When a reseller is used, you don’t own the billing relationship with your customer. This means that, should you seek to migrate solutions in the future, you may run into issues in migrating ongoing billing to a new platform. For example, if you want to move to a new platform, you’ll need to create new billing agreements with your customers, as their saved payment profiles will not be tied to your own merchant account. (Note that if you choose to use Stripe, migrating tokens is possible, though you’ll still need to recreate all subscriptions.)
  • Likewise, you don’t own the licensing data for your customers. If you choose to migrate systems, you’ll need to retrieve all customer and licensing data via API to migrate yourself.
  • If anything happens to the reseller’s relationship with their payment processor, your business may be unable to transact or take payment while their account is unavailable.
  • Your relationship with your customers also depends on a third party — should that third party (Freemius) need to remove you (for example, if you suffer a burst of fraudulent transactions), you can be left without an option to collect payments from customers.

There are hundreds of WordPress software companies using Freemius, which helps to mitigate your risk, but you should always weigh the consequences of leveraging a reseller for your primary revenue stream.

In-dashboard upgrading

One of the most useful features Freemius offers is the ability sell in-dashboard upgrades (similar to the experience you encounter with in-app purchases in the mobile world).

The Freemius SDK can help you integrate a pricing page directly into the settings of your WordPress product, allowing users to view your premium options from within the WP admin dashboard and upgrade with just a few clicks, making the upgrade as friction-free as possible.

In dashboard upgrades

EU-VAT

If you sell any digital products to European Union customers you should collect, manage, and pay EU VAT in Europe. Since Freemius is a reseller, it handles all EU VAT collection and payment on behalf of your EU customers and combines them into one monthly invoice for you. There’s no need to be concerned about tax collection or writing individual invoices for each EU customer.

With a self-hosted platform, you’ll need to collect VAT or other taxes yourself, often requiring the help of a separate tax automation service like AvaTax.

Lifecycle emails

Freemius automatically sends emails to your customers for expiring licenses, failed renewal payments, cart abandonment, and other aspects of the sales process. There are plenty of other, far more customizable eCommerce email marketing solutions, such as Jilt, that provide these features and can be integrated with many eCommerce platforms, but Freemius has much of it built right into their platform so you don’t need to set up a third party tool for lifecycle emails.

Freemius cart abandonment recovery email.

Affiliate system

The Freemius platform supports affiliate onboarding and referral tracking, so you can see all of your affiliates and their earnings in one simple dashboard. Affiliate marketing is often a substantial marketing channel for WordPress plugins and themes, so having this built into your Freemius dashboard makes it easy to track referrals for your sales without setting up third party plugins.

Currently, Freemius doesn’t process pay outs for affiliates automatically — so that’s something you’ll need to take care of yourself each month after your Freemius payout processes.

Freemius affiliate system.

A niche platform

Serving a very specific niche often allows a product or app to address needs that other platforms ignore. By focusing on WordPress software, Freemius is able to offer features for WordPress developers that other platforms may not, such as their set of dashboard tips on pricing structure. This also means that their support team is very familiar with your needs as a WordPress developer, and that they’re invested in the same ecosystem as you.

Affordability

You can integrate Freemius for free, as there are no up-front fees to use the service. Their pricing model is based on a revenue share on your software sales. The model is tiered, so that the platform fees decrease as your revenue increases. Once your business hits $5,000 in sales (lifetime), your fees will decrease to 7% of revenue.

up to $1k in gross salesup to $5k in gross salesover $5k in gross sales
Platform fees27% of revenue
($270)
17% of revenue
($680)
7% of revenue
(no cap)
Gateway fees30¢ + ~3% per successful charge30¢ + ~3% per successful charge30¢ + ~3% per successful charge

Notice that you’ll also pay for payment processing fees in addition to the platform revenue share.

If you are already making money, the 7% revenue-share can be quite high. Other solutions, like EDD and WooCommerce, have an upfront cost and ongoing renewal fee for add-ons, but their cost does not increase based on your revenue. That said, Freemius does have a lot of features that make a meaningful impact on revenues, like their cart abandonment recovery, so you’ll need to compare your current cost for plugin and subscriptions to compare it to the Freemius revenue share.

Getting started with Freemius

If you’re considering a transition to Freemius from another eCommerce solution, I’d recommend reaching out to their team, as they offer to handle the migration for you. If you’re moving to Freemius from a marketplace, you could transition to Freemius for all new purchases while grandfathering in old licenses for future upgrades. This article by WP Security Audit Log is helpful to get an idea of the migration process.

Conclusions

Using Freemius is a hybrid eCommerce approach that combines the flexibility of selling WordPress products through your own store with many of the benefits of using a hosted eCommerce solution. Freemius provides all the features for payments, subscriptions, and licensing out-of-the-box, while you retain the freedom to choose your business model and pricing, along with where you sell and how you market your product.

With the ease of setup and maintenance come a few tradeoffs. Since the platform is hosted, it’s not open for customization. You’ll also be subject to a reseller arrangement for your customer billing, and fees scale with your revenue (whereas at a larger scale, self-hosted software fees may be a smaller portion of your revenue).

Given the built-in marketing and analytics tools, Freemius is a great option to consider when you’re starting to sell WordPress plugins and themes, especially since you can get set up without initial investment, and Freemius’ revenue share decreases as you hit certain benchmarks.

Check out the Freemius website for their complete features list and pricing structure.


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Posted by SWWP Team

SellwithWP is a leading resource for eCommerce stores built on WordPress.

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