Donations are not a business model. Its putting out a tip cup and hoping money falls into it. Tip cups do not have a curious property in physics that causes money to be attracted to them.

I do downloadable software, of the "makes people substantially less money than Wordpress" variety. Roughly 1.8% of downloads result in people paying me money. The average paid me is, I say without fear of contradiction, far above the average donation any Wordpress developer with a significant amount of donations has received. (Edit to add: here's a point of reference. Back when MoveableType was donationware, the average donation was 38. Cents.)

When you offer something for donations, you're saying "It would be REALLY NICE if you could put ANY money into this here tip cup because, as you know, almost nobody will. That $1 there, that makes you a better person than 99.9% of the public." This is a cruddy frame of mind to put your I-can't-believe-its-not-a-customer into from the perspective of separating them from their money.

When you offer stuff for sale, you say "It would be TOTALLY MANDATORY that you pay me exact what it says on the sticker for this here thing. Everybody pays for it, except thieves. [In point of fact 98.2% of people do not pay for it, but I don't clobber my users over the head with that fact, now do I.] Offering to pay me $1 for it doesn't make you nice, it makes you a cheapskate and parasite on society." (And the best part is you never have to tell people this because they already know.)

There are people who do well with donations. Rick Brewster of Paint.NET is the only one who springs readily to mind for me. He pushes the donations fairly aggressively (+) and distributes a program which is probably competitive with some of Adobe's low-end consumer offerings.

+ Another problem with donations: they fail quite frequently because people are embarrassed to ask for money, like they feel they are doing something wrong. So they bury the tip cup out of the way and don't aggressively promote it within the application, for fear of being thought poorly of by cheapskates who think $1 is too much to pay for $APP. People with this philosophy will never be mollified, and charging money from the getgo means you never have to worry about what they think of you.

Joost de Valk seems to be pushing donations pretty hard yet his donation rate is 0.1%.

Do you know what kind of donate rate Rick Brewster is able to achieve?

Previously, in a comment on my blog, he mentioned that Bingo Card Creator has a higher conversion rate by "more than an order of magnitude" from him, which would imply his donation rate was at the time below .2%

He prefers to be circumspect with regards to exactly how much money he makes. As I respect his privacy, I will not elaborate further on my earlier comment that he does quite well with donations.

There is a difference between what people want, and what the legalities are. Premium plugins doesn't have a sustainable foundation since they have to be GPL. What's to stop me from buying a so-called premium plugin, and then re-selling it to someone else, or giving it away for free? The GPL explicitly allows me this freedom.

Correct me if I'm wrong, but as I see it, it doesn't matter how many people believe premium plugins are the way to go. The GPL license will still undermine it. Unless WordPress is re-released under a non-GPL license. I'm not sure this is doable though.

This reminds me the recent HN news item saying "Non profits kill the innovation". But this article makes me think that things are even worse than that. Wordpress should do something to change this I guess.

Yes, it definitely seems unfair for the plugin developers to do all the work and receive very little compensation for all their time.

I disagree- it just reflects what the market value of a wordpress plugin is. Anyone who feels they're not fairly rewarded can just stop doing it. Nobody is forcing them to do the work.

Besides, they most likely have motivations other than money- there's no way anyone starts making wordpress plugins thinking they're going to get rich (at least I hope not!)

It doesn't reflect the value of a wordpress plugin, since the value of an item is the most the market will pay for it before going for an alternative.

The only thing this price means is that it is difficult to make money by giving away stuff for free.

Maybe not rich but there are several plugin developers that make a decent amount of revenue by selling plugins. For example check out Dan Grossman and his review plugin: http://wpreviewsite.com

While I'd love to make more money from the Wordpress plugins I've worked on, so far I've been content w/ the $10 I've received over the last two years because I did it to gain experience and have fun doing something I enjoy. Fortunately, I've been able to take that knowledge and apply it to my day job and it's paid off far more than any donations ever could have.

I think that's how most people start. The problem becomes apparent when you don't have time to maintain and support the plugin.

What, you think they thought they would make a business out of it? Open-source software is notoriously hard for third-party developers to monetize.

I think that's the challenge. That is, that because WordPress isn't supporting premium plugins and the market is reaching critical mass.