The usual explanation is that WordPress is getting old, or that AI is eating the market. Both play a role. Neither is the main problem. The main problem is math.
The Equation Every WordPress Product Depends On
If you want to live from a WordPress product, your revenue depends on three numbers. How many people download it. How many of them convert to paying customers. And the price you can charge.
Conversion is close to fixed. Some companies convert better than others, of course, but among reasonably successful products, nobody converts ten times better than the competition. In practice, you live from maybe one percent of your users.
Price is the second problem. Most WordPress products are far too cheap, and many were sold as lifetime licenses. Even the free versions could be used for commercial projects. Look at it from the customer’s side: if I pay $300 a year for a tool and build 100 websites with it, each sold for $5,000, I turn $300 into half a million. The product is nothing but a dime compared to the money it makes.
That leaves one variable. Downloads. The whole business model hangs on volume.
Growth Hid the Problem for a Decade
For years, volume was not an issue. Since around 2015, digitalization pushed more and more businesses online. Then COVID accelerated everything. Suddenly every insurance agent was also a coach, every coach needed a website, and a lot of freelancers specialized in building exactly those websites.
In a market growing that fast, low conversion and low prices don’t matter much. Enough new people arrive every month to make the math work.
About three years ago, the first discussions started that Google Trends showed less interest in WordPress. For people who understood their own business model, this was the warning sign. When interest flattens, downloads flatten. When downloads flatten, revenue flattens.
The Expensive Customer Is the Last One, Not the First
Software for building websites is not like cars or apartments. Every year, a new generation turns 18 and some of them buy a car. Every person needs a place to live. There is a steady flow of new buyers.
The pool of people who build websites doesn’t refill like that. It grows for a while, and then it’s mostly there.
WordPress already holds more than 60% of the CMS market. What many people don’t understand: the expensive customer is not the first one, it’s the last one. Microsoft had 90 to 95% of the market in the 90s. Getting the last 5% was practically impossible. That’s not a WordPress problem. That’s how monopoly math works.
So even without AI and without COVID, the potential for WordPress to win more of the CMS market is dropping sharply. And every product inside WordPress inherits that ceiling.
We have seen this outside of software. A few years ago, online furniture stores launched in Germany and elsewhere, and several went public. Good examples are Home24 (comparable to Crate & Barrel) and Westwing (comparable to Wayfair). The assumption was simple: young people buy everything online, so the share will keep growing. What actually happened is that the share of people willing to buy furniture online, up to a certain price, was reached much earlier than expected. Look at what happened to their share prices after the IPO.
If your financial planning assumes the market share keeps growing, you have a plan that only works under said conditions.
Lifetime Licenses Gave Away the Most Valuable Thing
Acquiring a customer is expensive. So you want to keep them. But if keeping a customer doesn’t earn you money, that logic stops working.
This is why car manufacturers don’t really want to sell you a car. They want to lease it to you. BMW sells the car to the BMW Bank, which leases it to you. They make money on the car, money on the interest, and every three years you need a new one. They don’t want you to come back every ten years. With factories to run, that would be an expensive business model.
And they keep going. My car costs six figures, and the dynamic traffic data in the navigation was included for 12 months. After that, it’s a subscription. Some manufacturers even tried to sell seat heating as a subscription. The hardware is already in the car. You just pay monthly to switch it on.
You can find that annoying as a customer. As a business decision, it’s very clear: recurring revenue is the most valuable thing you can have. Lifetime licenses gave it away.
When the Market Stops Growing, You Can Only Take Customers From Someone Else
Now imagine you have a product with huge market coverage. Elementor, for example. The market doesn’t grow anymore, so your revenue can’t grow with it. The only option left is to take customers from competitors.
That is very expensive. It’s very expensive for BMW to convince a Mercedes driver to buy a BMW next time. It’s very expensive to convince an Apple user to switch to Google.
This is the moment many WordPress companies are in. Their pricing and their product are set up in a way that leaves almost no room to move. They look at their statistics and see that they earn money with renewals, not with new customers. Then AI arrives on top of that. For this business model, that’s close to a disaster.
A Red Ocean Doesn’t Pay for Innovation
There’s a well-known concept for this: red ocean versus blue ocean markets. A red ocean is a (saturated) market with tough competition. Page builders are a good example. There are ten of them, they barely differ in features anymore, and they have divided the market between them.
In a market like that, you have two options. Price more aggressively, or add more features. Neither works anymore. Nobody moves from Divi to Elementor because Elementor has one feature more.
Now new products come into this market, built for Full Site Editing, often genuinely innovative. They enter a market that is already a massacre. Innovative products should be more expensive. You need an above-average return to pay for the innovation. In software, nobody pays for brand, so innovation is the only thing you can get paid for. But you are in a market where everyone competes on price. People don’t switch to you, you don’t get the downloads, and your prices stay too low.
Developers often believe the answer is a product so good that people simply switch. In this market, that doesn’t happen anymore. Maybe AI changes it, if the gain is big enough to justify the effort of switching. A slightly better builder won’t.
Penetration pricing doesn’t save you either. The idea is to start cheap and raise prices later. In practice, nobody raises prices. With a lifetime license, you can’t. And seriously, how do you plan to undercut Elementor with a three-person team?
To win customers in a market like this, you would have to spend real money on acquisition. You would need real salespeople. Real salespeople need an expensive product. These products are not expensive. I don’t want to call them disposable, but $300 a year is a disposable item. That’s dinner out for three people. Not four.
There Is No Race to the Bottom You Can Win From a High-Wage Economy
The agencies and freelancers building on these products face the same pressure. Two years ago, many of them sold websites for $5,000. Because of AI and everything around it, the same clients now want $2,000 websites. There aren’t more websites to sell. There are only cheaper ones.
A better economy next year might help a little. But a good year doesn’t create a hundred times more coaches who need a website. If your strategy is to follow the price down, you are in a race to the bottom.
In developed economies with high labor costs, and that’s true across the West, nobody survives a race to the bottom. Other regions can run that race against us. We can’t run it against them.
Germany learned this the hard way. The Ruhr area was coal and steel. The last hard coal mine there closed in 2018. The mass production moved to China. The steel mills that survived don’t produce mass steel anymore. They produce highly specialized steel for very specific customers. That is the pattern. You can’t sit in Munich and build cheap software forever.
Unless your name is Elementor and you have been in the market for a long time, you won’t establish a new product in these broad markets anymore. That’s exactly why there are almost no new WordPress products that really grow.
Some people at conferences suggest adding Drupal or TYPO3. These markets are smaller and have the same problem. Others suggest building for Shopify. The Shopify market may still grow, but it’s probably an even harder red ocean than WordPress.
This Was Never About WordPress
None of this is specific to WordPress. Flattening growth curves are normal market effects. They happen in every market, sooner or later.
If you don’t build your business around these principles, you have exactly one chance. The market has to grow like crazy, you need a good place in it, and you need luck to carry you upward. When growth slows down, you are in trouble. That’s what is happening right now.
It’s the economy, stupid.
The way out is not the next feature. It’s a business decision about who you are for and which problems you solve for them. That’s going to be my next article.
