How Does WordPress Make Money? Business Model of WordPress


How Does Wordpress Make Money

WordPress is the world’s most popular content management system and website creation tool. It allows novices to create professional-looking websites with prebuilt templates and themes.

WordPress.com primarily makes money via subscription fees. The company also makes money through VIP hosting, ads, and premium plugins.

Founded in 2003 by Matt Mullenweg and Mike Little, WordPress was created as a fork of an existing blogging tool called B2/cafelog. In 2004, WordPress obtained the GNU General Public License (GPL) and took its first step toward becoming an open-source content management platform. Initially, it was utilized primarily for blogs and travel sites.

Over time, new elements were added to the core of WordPress that transformed into a much more versatile system. Today, it is the most popular content management system, with the average US WordPress developer earning $56,000 per year.[1]

Many developers are dedicated just to the craft of developing plugins for WordPress, with some plugins like Avada making over $25 million in sales.[2]

What is WordPress & How Does It Work?

WordPress is an open-source website builder and content management system (CMS) that is written in PHP and distributed under the General Public License v2 (GPLv2). Because of its design, WordPress is a very popular website creation tool among individuals who don’t have coding experience.

By using WordPress templates, themes, and plugins, any novice can easily create a professional-looking site. Knowledge of HTML, CSS, and JavaScript isn’t required. WordPress is used to create blogs, eCommerce sites, forums, business sites, and more.

Currently, WordPress is used by 64.3% of all websites whose content management systems are known, which is 43% of all websites on the internet. The next most popular CMS is Shopify, and it is used by just 4.1% of all websites.[3]

WordPress is available in two versions. There is WordPress.org, which is the self-hosted version. To use this, users need must arrange their own domain and hosting service.

Then, there is WordPress.com which combines WordPress software with a domain and hosting. WordPress.com is a paid service, but users don’t have to worry about finding a separate domain and hosting service. Currently, WordPress.com offers four different paid plans and a free plan.

The free plan is limited to just 1GB of storage space and uses a subdomain. It also contains ads and cannot use advanced design customization or premium themes. Payments aren’t allowed either, so this plan is not a good choice for eCommerce and business sites.

For most users, the Personal plan is a good fit. It comes with 6GB of storage and support for payment integration into the website. The Personal plan also allows site owners to create subscriber-exclusive content, in a manner similar to Patreon.

Premium is one step up from Personal and allows users to earn ad revenue on their site. It also supports video uploads and Google analytics integration. Premium themes can also be accessed through this plan.

The Business plan is one step above Premium and grants access to over 50,000 plugins. It also includes advanced Search Engine Optimization (SEO) tools to improve website rankings and popularity. Automated site backups and improved security features make it a good choice for professional sites.

Finally, there is the eCommerce plan which is the most expensive one. It allows site owners to accept payments in multiple countries and integrate their service with a variety of shipping carriers. Users get 200GB of storage and can upload custom themes.

The eCommerce plan also removes the wordpress.com branding, which gives site owners a higher degree of personalization. Automated backups are kept. And the site can be rewound to a previous state with just one click.

To use WordPress.com, users must first sign up on the site using an email and password. Then, they can choose to continue with the default free plan. Or they can select one of the several paid plans.

After this, they will be asked to choose a domain name that acts as the address of a site on the internet. Once the site has been created, users can modify various options through the dashboard and upload content. Depending on the subscription plan, they can also access themes and plugins.

Working with WordPress.org is a more open process. Users must buy their own domain and hosting service from a third-party provider. Once that is arranged, they can visit the WordPress.org site and download the software.

WordPress.org provides more freedom with regard to plugins and themes. However, it lacks the 24/7 customer support and exclusive themes provided by WordPress.com with its premium subscription plans. Automated backups are also not present by default on a WordPress.org site, so users have to add the feature manually through a plugin.

Plugins can be browsed through the Plugin menu found in the WordPress dashboard. These work similarly to browser extensions for Chrome or Firefox. The most popular plugins on WordPress are related to security, backup, and SEO.

After choosing the necessary plugins, users can pick themes for their website. Themes give style and personality to a webpage. They work similarly to themes on a computer or mobile phone. Colors, fonts, content layout, menu design, widgets, and various other aspects of a website can be changed with themes.

WordPress.com has a Learn section where new users can get familiar with all the basics of configuring their site. These tutorials cover everything from plugins and themes to content creation and community management.

 

Business Model of WordPress

While the open-source project called WordPress isn’t owned by anyone, WordPress.com is a for-profit project run by Automattic. It offers a customized version of the original software integrated with a hosting solution.

WordPress.com operates on a freemium business model.

The company allows users to host a site for free using their lowest membership tier. However, this free plan is limited to just 1GB of storage space and can’t be monetized. It also contains ads.

Users who want a better experience with scope for monetization and customizability will choose a paid subscription plan. Currently, WordPress.com offers a multitude of paid plans. Each covers a different market segment and offers unique benefits.

The customizability and mature community of WordPress separates it from alternatives like Squarespace and Shopify. WordPress can be used to create any type of website, whereas its rivals are limited primarily to eCommerce and blogging platforms. On top of offering nearly unlimited customization, WordPress is also opensource.

Hence, it is constantly being updated by a global community and getting new features. The platform’s open-source nature allows anyone to download and modify the source code. This drives community engagement and adds value through the form of new plugins.

WordPress.com uses many of these plugins and community-created themes. Hence it is able to add functionality and diversity to the platform without investing in the development of these items. In comparison, closed source or proprietary software platforms like Shopify have to spend more resources in order to create a similar amount of plugins and themes.

Owing to its popularity, WordPress attracts more developers and customers who find out about the platform through organic channels. These users create their own websites on WordPress, often for free. Then they generate further engagement within the community by participating in forum discussions and events.

Because of its design, WordPress can constantly evolve to keep up with a changing internet ecosystem. It is used by everyone from bloggers to business owners. WordPress.com also allows its users to import their existing blogs or businesses from another site to WordPress.

By doing so, it removes the friction that’s normally involved with transitioning from one content management system to another. And it converts even more users, who create content on the platform and keep the cycle going. WordPress sites get over 15 billion page views and 60 million comments each month, which makes the platform very lucrative for businesses.[4]

WordPress.com offers integrated payment management and ad services to paid members. This allows small eCommerce sites to quickly set up their revenue streams without spending too much time on development. The platform also has Google analytics integration which provides growing businesses with valuable information on market trends and user demographics.

WordPress’ largest rival is Shopify, as they offer similar services. Shopify is an eCommerce platform that provides market analytics, business management tools, and brand growth services to businesses of all sizes. For users who want a purely eCommerce-focused content management system, Shopify is a better choice.

However, it doesn’t have the depth or customizability of WordPress. While many of the built-in analytics and logistics management tools are excellent on Shopify, the platform doesn’t offer much value to professional web developers. Experts who wish to create a tailor-made site with unique features that separate it from the competition will be better off using WordPress.

It is unclear how much Automattic makes off of WordPress.com since the parent company doesn’t publish data on revenue streams, but WordPress.com is likely profitable. The site doesn’t have significant expenses since it doesn’t have to maintain inventory or employ a large workforce. Its main expenses are technology development costs, hosting, and advertising.

 

How Does WordPress Make Money?

WordPress.com makes money from four different revenue streams. These are subscriptions, VIP hosting, ads, and premium plugins.

WordPress.com is owned by Automattic. The parent company doesn’t explicitly list how much it makes from WordPress.com. Hence, data on how much money WordPress.com makes from each revenue stream is also unavailable.

Subscriptions

WordPress follows a freemium pricing model. Its free membership plan only requires an email address and password. However, users only enjoy this for the first year. They are also restricted to using a subdomain address for their website with zero monetization.

Users who desire more functionality and storage space will almost certainly go for a paid membership. And paid memberships come in many tiers. They are segmented based on storage space and how many professional features they offer.

 

VIP Hosting

WordPress offers its special VIP hosting plan for large businesses that get hundreds of thousands of visitors each month. The minimum cost of this plan is $25,000 per month. It offers the highest server bandwidth to ensure short loading times irrespective of traffic.

VIP members also get integrated application performance monitoring (APM) and a content delivery network (CDN). Automated health checks and priority technical support ensure consistent performance, data safety, and 100% uptime.

WordPress VIP services are used by popular companies like the New York Post, Capgemini, VentureBeat, and USA Today Sports.

 

Ads

WordPress has its own advertising network that sources ads from external sources like Google Ads, Facebook, AOL, and many other services. Users can choose to monetize their sites by using ads provided through WordPress. The company makes money through a revenue-sharing contract with publishers.

Free members don’t make any money off the ads that are displayed on their web pages. They also have no control over the ads.

 

Premium Plugins

Paid members get access to premium plugins and themes that are developed by Automattic. Some of these plugins handle SEO, while others deal with marketing and language translations for business sites.

Since Automattic spends resources on updating and maintaining these premium plugins, they only offer them to paid members who have a premium or higher tier plan.

 

WordPress Funding, Valuation & Revenue

WordPress.com is owned by Automattic, a private company that doesn’t publish its financial data. Therefore, there is no information on its annual revenue or valuation.

However, Automattic raised $985.9 million in funding over 12 rounds between 2008 and 2021. Notable investors include Avant Global, BlackRock, Schonfeld Strategic Advisors, ICONIQ Capital, and Wellington Partners. The company’s latest funding round was a venture round in February 2021, which raised $288 million.[5]

During a venture funding round in 2021 that raised $228 million, Automattic was estimated to have a valuation of $7.5 billion.[6] Since 2021, the company hasn’t had any more funding rounds, which indicates that it has sufficient capital to continue operations and growth.

Annual revenue for Automattic is estimated to be around $780 million.[7] But there is no official report to verify this. Given the recent increase in the number of eCommerce sites, it is possible that Automattic could be making more than this figure.

 

Is WordPress Profitable?

WordPress is likely profitable. It is the world’s most popular content management system and has a reliable subscription-based revenue stream. In addition, it offers VIP hosting services to large companies with a minimum monthly fee of $25,000.

WordPress’ parent company Automattic more than doubled its valuation in 2021 compared to 2019, when the company was valued at $3 billion after a $300 million funding round.[8]

The platform has potential for further growth in the future as it adds value to existing services and creates new monetization streams from its massive user base.

 

Conclusion

We hope you enjoyed learning about how WordPress makes money, and we encourage you to keep an eye on the platform as it continues to grow.

We believe WordPress has a solid business model and is well-positioned for future growth. We are confident that the company’s revenue streams will continue to expand, which should help it grow its bottom line.

If you’re thinking about starting a blog, consider using WordPress for your content management system. You’ll save yourself some time and money by not having to spend hours building out a custom site from scratch!

Contact us via email if you have any questions or want more information about the business model of WordPress. We’d be happy to chat with you!

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Sources

  1. Payscale
  2. Envato
  3. W3techs
  4. WordPress
  5. Crunchbase
  6. Matt Mullenweg
  7. Growjo
  8. Bluehost