Freemius 2022 Year in Review (+ Numbers) and What’s to Come in 2023

Wow! What a year 😅 We’ve been sending annual transparency report emails to our selling partners since 2018. This time, I decided to open it to the public to let others get a glimpse of the happenings at Freemius and what we have planned for 2023.

Plus, with thousands of products selling through Freemius in almost every vertical you can think of, many interesting data points can be used as benchmarks. So, throughout the article, I’ll be weaving various data points, metrics, and analytics into the text to keep you engaged 😉

Let’s start with a quick warm-up that I think you’ll be amazed to hear about…

Benchmark #1
How much can you charge for a WordPress plugin?

Stop 🤚 Before you keep reading, take your wildest guess!

Have a number in mind? Great.

The most expensive lifetime license sold through Freemius in 2022 was for $4,400 in a single transaction. The year before, the number was even higher – a staggering $5,000 🤯

Not far off, the most expensive annual subscription was sold for $3,360. So yes, you can sell enterprise-level licenses in WordPress too.

2022 Highlights

Partners & Inventory Growth

In 2022, we welcomed more than 3,000 new developers to the platform and grew our Slack community to almost 1,200 members.

A large number of new developers joined Freemius to gather growth analytics for their WordPress.org plugins and themes. This is especially critical due to the recent removal of the Active Install Growth Chart from WordPress.org, where many developers have found themselves in almost complete darkness without the ability to measure if and how their efforts impact users. If you are looking for a temporary solution to measure your growth until WordPress.org brings the charts back, you can sign-up for free here.

We are committed to keep supporting free, open-source projects with our free analytics offering — it is our way of giving back to the WordPress community. If you are looking for a temporary solution to measure your WordPress.org growth, you can sign up for free here.

498 of the newly added products made their first sale in 2022, an average of ~40 new actively selling products per month. Shout out to some of the amazing products we partnered with in 2022 – Shortcodes Ultimate (700k+ active installs), Autoptimize (1M+ active installs), TablePress (800k+ active installs).

Benchmark #2
ASP (Average Sale Price)

The ASP on Freemius during 2022 was $71.5. In comparison, the ASP in 2020 was $64.3. Clearly, WordPress plugin and theme prices have increased in the last 2 years (by 11.2%), which correlates to the market’s inflation.

Team Growth

In 2022, I finally passed over the engineering driver keys 🔑 It was a long and challenging process that took about 2 years. Our Head of Content, Scott Murcott, wrote an excellent piece about the thought process and learnings based on our experience.

I couldn’t be happier finding these two amazing talents – Dror Yaakov (CTO) and Swashata Ghosh (VP of Engineering). With their leadership and energy in 2022, they’ve already pushed Freemius to its next level.

Dror’s background is in enterprise-level software and he brings decades of experience from companies like Philips and Intel. Dror and I grew up in the same village in northern Israel (next to the Sea of Galilee) and studied CS simultaneously at the Technion, which is considered the best engineering university in Israel.

To complement Dror, Swas is a full-stack dev and a front-end expert with strong roots in the WordPress plugins ecosystem. He’s built a plugin business on CodeCanyon and moved to sell with Freemius about two years before joining the team. Swas has a hacker mindset and is the fastest learner I’ve ever seen. While watching him during interviews, it was hard for me to keep up with how fast windows were “flying” all over his screen. Remember the scene in The Matrix when Neo starts to learn martial arts? If I could describe him in a few words, Swas is the Neo of code 🥷 🙂

Our creative team has also grown. Emiliano Pioli joined the content team as a Video Editor. You can already see some of the fruits of his labor in the video excerpts we share on social media. Just recently, Johan Schroeder came onboard to lead our Social Media efforts and step up our social game. We are also in the final stages of adding an SEO Expert to help the team increase the reach of our content.

Reducing Time to Resolution for Technical Support

Based on 221 ratings, we preserved the same 93% rate of ‘Great Support’ from 2021 (up from 88% in 2020).

The team also resolved 3,209 technical tickets, which is down by almost 40%! This is a great testament to the growing stability of the platform and the constant efforts we put into resolving issues programmatically and via contextual doc referencing. For example, instead of returning a “naked” error message from the API, we now offer guidance on how to resolve the issue (either right in the message or by linking to a relevant knowledge base document). It saves time for users, developers, and our support team.

We’ve also reduced the Time to First Response from 9 hours to 5 🏃‍♂️ and the average time to resolution is down from 3 days to 25 hours ⌚️ W00t! W00t!

The support efforts are almost exclusively led by our Technical Support Lead, Leo Fajardo, who has been doing a phenomenal job. Kudos Leo 👏

Benchmark #3
Refunds Rate

In 2022, the refund rate for subscription renewals was 2.25% and 4.4% for the first payment (either a lifetime purchase or the initial subscription payment). The higher refund rate for first payments is attributed to the flexible refund policies that many developers offer.

Sharing Our Knowledge Through Content

The content team published 22 blog articles, including educational content, opinion and productivity pieces, and release notes. Here are some of the notable ones:

Educational

Opinion

And I shared my personal growth journey of pursuing happiness and productivity.

The most noteworthy project the video team produced in 2022 was The Gamechangers. Covering WordPress acquisitions, the video series features names like Marieke van de Rakt (Yoast), Syed Balkhi (Awesome Motive), and Chris Lema (Liquid Web). IMO it’s a cornerstone video series that every WordPress entrepreneur must watch! It includes 8 interviews with community members who have been involved firsthand in M&A deals as buyers, sellers, brokers, and facilitators. We are also incrementally distilling the insights from those interviews and releasing them as written articles on the blog (not to mention bitesized video snippets on our social channels).

We also revamped Freemius’s Explainer Video, giving it a fresh look and soundtrack:

Plus, we produced a video animation explaining the Freemius opt-in and our data practices:

This incredible video involved ½ of the team, in one capacity or another 😅 and took many months of work. Huge kudos to Zee Hazan for leading and directing the Freemius video team. Vitalii Romaniuk, our lead designer, and Nicasio Garcia, our lead animator, who brought to life these mind-blowing animations. It wouldn’t be possible without you guys.

While we are proud of the content quality — which is getting better every year — we need to do better with quantity. I’ll share more when I get to the 2023 plans.

Upgrading Infrastructure for Scale

  • We’ve upgraded our servers’ infrastructure with newer and stronger servers, the latest OS, newer PHP, etc.
  • Backups are no longer slowing down the system and are handled in the background on a standalone server.
  • Finally, we’ve introduced an automated testing framework to our backend, allowing us to ship much faster and with more confidence.

Benchmark #4
Dispute & Chargeback Rate

The dispute rate for subscription renewals was 0.44% and only 0.27% for first payments. It makes sense, since it’s not always trivial to recognize a charge on a credit card statement, and people forget about their active subscriptions.

After mastering how to win disputes, we won 50.7% of the disputed renewal cases and 43.7% of the initial payments. Unfortunately, the chance of winning “unacceptable product” cases — which are often used for disputing initial payments — is much lower.

New State of the Art Real-Time Analytics

  • At the end of the year, we deployed our new dashboard with custom-developed, in-house infrastructure that allows for reports delivery in real-time, for any date range. Bye-bye, API timeouts!
  • The dashboard comes with advanced filtering so that you can slice & dice the data to analyze your performance, pricing, and business model from any angle. There’s no other eCommerce platform on the market that offers this level of analytics, and we are incredibly proud of that.
  • Based on seven years of learning, we designed it specifically for the needs of subscription-first software companies. With the new analytics, you won’t need to use a third-party solution like Baremetrics, saving you hundreds (for some, thousands) of dollars per month. You get it all for free!
  • We will add more metrics as we go (CLTV is one) and leverage the layer to introduce analytics for affiliate marketers.
  • As acquisitions are part of a software company’s journey (we’ve seen many of those in the past three years), we envision introducing a one-click export option for you to easily send a financial report to potential buyers, saving you the hassle of the manual work.

Fixing Product Development Communication

As a mature company, many of the significant capabilities were already developed. Since we typically focus on the “sexy” features when publishing release notes on the blog, we came to realize that developers lack clarity about what we are working on in-between. So, to give visibility of our ongoing product development, you can now easily follow our weekly updates on changelog.freemius.com.

Reducing Email Deliverability Frustrations

There are many reasons why emails can fail delivery. So inevitably, some customers won’t get their after-purchase email and will contact support or initiate a dispute as the worst case. To mitigate that, we’ve integrated with SendGrid’s webhooks mechanism to notify the developer’s support when a critical email bounces, defers, or drops.

Supporting Companies with Multiple Stores

As part of the new dashboard release, we added the ability to:

  • Manage multiple stores in the same account
  • Configure things, like coupons, for an entire store (vs. per product)
  • Browse data for the entire store (e.g., search a user that uses any of a store’s products)

Improving FTUE

We’ve also spent quite some time improving the FTUE (First-time User Experience) by adding a new Setup Checklist section where developers can easily track their setup progress, as well as get recommendations on actions that can help them grow their business.

Freemius Developer Dashboard New Setup Page

Users Are Key to Our Success!

Going forward, one of our main priorities is to pay close attention to the user community’s feedback so that Freemius becomes as amazing a platform for users as it is for our partner developers.

In 2022, around 30% of our team-wide resources were allocated to user-facing activities. A few notable highlights:

  • We’ve revamped the UI of the opt-in and license activation screens, improved copy, and added clear explanations for every non-trivial permission.
  • We improved the UX of the Deactivation Feedback Form, including a new snoozing option.
  • Users can now activate a license anonymously by only sharing the website’s URL, plugin version, SDK version, and whether the product is active.
  • The latest SDK introduces granular opt-out permissions management, allowing users to choose what they want to share (or opt out altogether).
  • We introduced a new integration between the User Dashboard and Help Scout Docs, surfacing answers to already documented questions from when users fill out support requests through the User Dashboard.
  • Users can now easily download previous product versions, including Beta and Staged releases.

Freemius Opt-In Screen Version 2.0

You can learn more about these features (and more) in our previous release notes.

Benchmark #5
Annual Churn Rate

The average annual churn rate of annual subscriptions in 2022 was:

  • 29% for plugins
  • 30.2% for add-ons
  • 29.3% for themes
  • 31.1% for bundles

Fighting Credit Card Testing Fraud

If you sell online, it’s just a matter of time until attackers try to abuse your checkout, especially if you don’t require registration as a preliminary step.

As the Freemius checkout is highly optimized for conversion rate, it doesn’t require registration. Because of this, fighting credit card testing fraud has been an ongoing battle for us for years. Every year we improve our anti-fraud security layer and think to ourselves, “That’s it!”, and then six months later, we witness a more sophisticated attack that proves this is a neverending war.

Last year, we discovered CAPTCHAs are not secure 🤦‍♂️ Not only are there AI-based bot solutions that can resolve CAPTCHAs with relatively high success rates, but there are CAPTCHA farms with real humans that cybersecurity attackers can employ when needed. To mitigate these attacks, we’ve introduced a new 2FA layer and will soon release a significant improvement to the entire security layer.

Benchmark #6
Monthly Churn Rate

The average monthly churn rate of monthly subscriptions in 2022 was:

  • 10.32% for plugins
  • 10.46% for add-ons
  • 13.16% for themes
  • 9.03% for bundles

Noticeably, monthly churn rates are much higher than annual, especially for themes, as typically, people set up their theme at the beginning of a project, and that’s it. So, if you offer a monthly billing cycle, ensure the monthly price is high enough to compensate for the difference. How much higher, exactly? At least 2.5 x (annual_price / 12). We’ll publish an article covering the exact math you need to run to calculate it.

 

Improving Release Management & Software Updates Consumption

We added protection for mistakenly overriding existing releases, as we found it happens pretty often when developers forget to bump the version number before deployment.

In addition, the deployment process now automatically adds the Update URI header, so you don’t need to worry about it.

We’ve also added support for the minimum required PHP version readme.txt header, which will show a corresponding warning message in the WP Admin when the website runs an older PHP version.

Last, but not least, the Freemius paid products Composer repository now supports Composer 2.0.

2023 Goals

We utilize OKRs to plan the year ahead by listing our objectives and all the things we want to achieve (key results). While we’ve been doing it for years, I realized that my overachieving personality causes me to set unrealistic goals. I want the team to do 100 things, and we end up with only a fraction of that. Following Jason Cohen’s article about task prioritization and the importance of strategic “rocks”, this year I’ve taken a slightly different approach where we aim for less but with a higher strategic impact.

Here are some of our plans for 2023:

Hiring

We are always scouting for talented people to expand our globally distributed team 🌍 It’s always a pleasure to hire our community members and their friends, who are already familiar with the product and relate to our mission. In 2023, we are looking to fulfill the following roles:

If you, or anyone you know, fits the bill and can work during 9-6 CET (Central European Time), drop me a DM on Twitter or email us at [email protected] We offer a $1,000 referral bonus. Here’s our careers page, where you can learn about our values and more.

Making It Fresh!

As our primary mission is to help developers build prosperous subscription-first businesses, we tend to prioritize features & functionality that maximize our partners’ financial potential.

This year, we will focus more on “looks” and experience (UI & UX) and modernize some of our primary touchpoints. We are going to revamp a bunch of assets, including the:

  • Developer Dashboard
  • Checkout
  • Blog

Freemius Revamped Developer Dashboard - Dark Skin

Checkout Localization

We’ve been trying to pull checkout localization for several years, but it was pushed down in priorities for a million reasons. So finally, this year, it’s one of our most significant anchors! Customers will now be able to view the checkout page in the language geolocation, which will remove a lot of unnecessary friction from the buyer’s journey.

Affiliates Marketplace

In an effort to help developers connect with more affiliate marketers and help affiliate marketers find exciting products to promote, we will introduce a discovery section in the User Dashboard that lists products with affiliate programs. On the flip side, this ‘two-sides marketplace’ also allows affiliates to declare themselves as “open for invites” and to display a discovery section in the Developer Dashboard, enabling developers to invite affiliates to join their program.

Team Retreat + WordCamp Asia + Makers’ Meetup

Many of our team members will be attending WordCamp Asia this year. It will be the first time many of us will meet face to face after working for years together. Crazy! We plan to arrive several days before the conference to meet up and have a team mini-retreat. I’m so excited and looking forward to it!

If you plan on attending WordCamp Asia, don’t be a stranger and come say hi 🤝 we are friendly and usually don’t bite 😁

Also, if you are a product maker (plugins, themes, templates, add-ons, SaaS), we will have our famous Makers’ Meetup and would love for you to join us! We are still working on the details, but if you are keen on joining for free drinks and food while networking with other makers, please email [email protected] with your name and a short description of your product, and we’ll add you to the list (FYI the event is limited to 50 people).

Here’s a short teaser of the meetup we hosted in Berlin:

Getting Into Podcasting

I’m excited to share that we’ve found an amazing host and have already recorded a pilot episode for our podcast. plugin.fm is a non-promotional, unbiased, value-first, business and product marketing-oriented podcast that strives to inspire, entertain, and educate “lifestyle” product makers, with a higher focus on the WordPress plugins and themes ecosystem.

We plan to interview product entrepreneurs and indie-hackers, mostly from design and development backgrounds, who have first-hand, unique experiences that have helped them grow their businesses (which you can apply to yours too).

We’ll share more details once we launch plugin.fm officially.

WordPress SDK

Following the last iteration of the SDK changes, there are still several things that we’d like to address in the following months concerning users’ feedback. In addition, there’s a growing demand for a lite-SDK that we’ll attempt to tackle in 2023.

Increasing Content Frequency and Exposure

If you’ve been following our content, you’ve probably noticed why our pieces have become known for being “notoriously” in-depth, actionable, and data-driven. We spend weeks (weeks!) on every article, doing research, briefs, interviews, polishing, and reviews.

But the truth is that most people don’t have time to read such lengthy articles, regardless of the value they provide. Plus, we are not rewarded for it from an SEO perspective either. So, we end up with amazing business content that gets very little attention.

Also, I must admit that our content topics prioritization wasn’t strategically intelligent. We selected topics based on relevancy and audience interest without evaluating potential reach. This meant that we mainly ended up covering advanced topics that are relevant to a tiny audience.

Same with video. Yes, watching a 10-minute educational video is easier than reading a 7,000-word article. But still, attention span is so short these days that we have to cut content to keep viewers engaged and entertained, even if it comes at the cost of removing some level of depth.

This year, we plan to increase frequency, cut length significantly, and approach topic selection more methodically – keeping in mind impact and exposure.

There are many more things that we plan to “cook” in 2023. But to keep up with the “keeping things shorter” theme, I feel you have a good idea of where we’re heading.

Happy New Year!

That’s it for my 2022 round-up — here’s to a New Year of growth, happiness, and fulfillment in all facets of your life! May we all find the strength and resilience to overcome any challenges that come our way and the time to appreciate the little moments of happiness along the way.

Please remember that Your Success Is Our Success. Cheers to a healthy and prosperous 2023 🥂

See you soon at WordCamp Asia! 🌴🥥

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