Making your first dollar from a SaaS project
indiehackers.com
indiehackers.com
That looked like failure to me at the time - "that's a trickle of money - extrapolating maybe $25,000 per year? Not enough to pay my bills. I need to get a job".
Today that sort of start looks like a whopping success.
I've been trying to replicate that start ever since.
The upside is that I did go and get a job, and through that job met the woman who I had kids with..... if that's that path to getting my fabulous kids then I don't regret it.
What type of software product did you make back then that warranted $100 sales?
Car expense tracker for Palm - $19.95. Today if you even want to charge $1.99, you'll be competing with several free (ad-supported) ones.
A more spiritual approach to the decades is how I am hoping to live in the future - that and still plenty of coding.
Some thoughts: internally we consider the "V" in MVP to encompass not just what is the minimum you need to do to solve a problem but the minimum to solve a problem (worth solving) at a level someone is willing to pay you for the solution. That often is more extensive than a traditional MVP which is why SAAS solutions require so much up front development. Consumers are not fond of subscribing to services and businesses don't like beta products.
A couple additional thoughts as we now actively sell 4 SAAS services:
- to be successful in SAAS you need to build something people need. They say there are two types of businesses: painkillers and vitamins. If you're a vitamin you are 20x more likely to fail than a pain killer. The value prop is just too hard to communicate and people's attention spans are too limited - the more you understand the user / workflow / domain the better. I realize this may sound obvious but I do my best to pay forward the mentorship I received and I am shocked at how often I come across people trying to solve other people's problems as an outsider.
- with the exception of notable billion dollar startups we all love and read about daily, I believe the dream of "build it and they will come (register, put in their credit card and bam you're done) is just that, a dream. Yes organic growth is real but all my buddies who have successful SAAS companies spent a ton of time and effort selling them before that organic growth kicked off. This could be an east coast vs west coast thing as my network is hitting niche workflows but worth sharing regardless.
I'm currently doing customer development on such a product. I've burned my fingers previously building nice-to-have products and don't intend to repeat my mistake. With this one, I'm validating the market before I build anything.
There are ways people do this thing (inefficiently and poorly IMO) today. Their business isn't likely to suffer if they don't adopt my product but I'm hoping to prove a factor of efficiency improvement if they adopt it.
What would your advice to me be (aside from don't do it)?
Assessing a service as a painkiller vs a vitamin is not totally black and white - generally I would say a service qualifies as a vitamin if there is no immediate perceived benefit to its use (ie it doesn't meaningfully save me time in aggregate, does not enable me to do something else that I can directly ascribe value to, doesn't reduce a painpoint I feel at this moment). A mental test I use is if someone goes from using my service for two months to immediately not using my service, how will their workflow change? If it doesn't change meaningfully, you are likely a vitamin. Note that I recognize that by this definition Facebook is a vitamin. Vitamins can make money.
So back to you. If your service does improve work/life or actually provide a "factor of efficiency improvement" over whatever their alternative is (e.g. Doing nothing) you may have a painkiller on your hands instead of a vitamin. The problem is you aren't the ultimate judge of what is a painkiller or a vitamin (you are operating on a hunch) until you go out there and try to sell it. The market will tell you.
So my advice is to spend as much time thinking about how you will package and sell this service as you are designing the service. Create a few marketing materials, hone the pitch and sit down face-to-face with as many people as makes sense and pitch them. In fact, I am 100% happy to genuinely consider purchasing this from you so you can try it on me. At the end of the day, the customer decides if you are adding value by voting with their time and dollars so developing a sales strategy early is important. You may discover you have a great service for a specific type of buyer profile but finding that buyer profile is too expensive. It happens.
I often remind myself of Ali-G's pitch to Donald Trump of a glove to prevent ice cream from getting on your hands (if you haven't seen it please watch - hilarious). Anyone who loves ice cream has this problem and the potential market of people who eat ice cream is huge. You could probably find someone willing to pay $1 for it but there is no way anyone can build a real business off this. Of course, you never know.
I will take you up and reach out to you. I'm not selling anything yet but would love to get feedback from you on my hypothesis.
Facebook started its life as an immediate painkiller. They solved several problems for the most hyper-active of social groups: college students. The facebook-equivalent products at colleges at the time were either non-existent at most schools or atrocious. Then to amplify the Facebook benefit, the connectivity between the primitive school products was basically non-existent (that is, to the extent they existed, there tended to be no wider connection school to school). Circa ~2004-2007, Once students acquired the benefits of having Facebook as a social booster, leaving it would have left them worse off.
There are people who can know where a market is and confidently blaze straight into it without any validation. I think I'm just not that genius or lucky.
I built a mobile game called Roaring Racers where you had to use your voice to make your car move (roar louder, go faster).
I built a stickers app for iOS stickers launch that allowed you to import anything. This one wasn't a total dud, but the way Apple positioned the store, the traction wasn't at a scale that made it worth my time.
And then of course there's the laundry list of companies that I've been employed by and built products for where months into it I discovered nobody in the company had really done any market testing, but they got clearance to build something for $XXX,XXX anyways.
9/10 startups fail, so just by nature of that fact, most of us spend our time working on building tech that never really "makes it".
There have been great successes too, but you asked about the failures.
I forgot one that is fairly recent too. I built a Windows app that allowed you to watch Twitch picture in picture while playing a game. Sold one copy before shutting it down.
- What sort of demo do you have on the website? Or is it just a basic description of the product and a list of features?
- Does this mean you get payment processing setup before development every time?
- How do you manage returning money if you decide not to do it?
I never take any money I just log the actions people took on the site. If it's a buy button, then you can just say, "Thanks for your interest. We are launching soon."
It probably depends on the audience, but people are more understanding than you'd think about the need to look before you leap, especially when they know you're just a solo entrepreneur.
Now the dev can go build a working version putting in 200-500 hours into the MVP and find the next set of 20 people who are ready to use that software, with validation at hand.
However, I agree that better messaging can be used instead of straight up misleading people. Since if it does become widely practiced, people will generally become mistrustful (again, the odds of that happening is low).
~ 2 cents
I'm not denying that poor behaviour can net more customers -- on the contrary, it's by far the easiest way of doing so. My response was in the domain of ethical, not commercial, calculus.
Your "I think it's much more likely" is a bit odd considering what you know about me (ie. almost nothing). "Outrage" is also pretty exaggerated. There are millions of commercial outfits out there in the world, the vast majority of which I'll never have anything to do with. There's a low bar for me to exclude just one more from consideration.
I would have validated the viability at the cost of losing one customer. I think most would be willing to take that loss.
The demo can be extremely simple, a sentence describing the concept and a (fake) screenshot.
Be aware that presenting the same product in different ways to different people lead to very different results, so you can run multiple tests like this to find the approach that has the better chances of working.
There was a post a while ago on Reddit where someone built this little project:
Basically lets you add a fake buy button easily and emails you when someone attempts to buy.
I think it's an excellent model as long as you live up to your promise and deliver above and beyond expectations.
It's how I started my software developer course selling business and validated the idea (spending hundreds of hours making a course is no different than a SAAS MVP).
I wrote all about this process recently in an Indie Hackers interview: https://www.indiehackers.com/businesses/nick-janetakis.
In our case we're an infrastructure service that charges customers based on their usage level. This required collecting the right metrics, consolidating them durably, making the metrics visual somewhere so customers understand how they are being charged, implementing notions of billing cycles, syncing with the payment provider (in our case Stripe), UI elements to indicate if the account is paid or not, ability to cancel paid service, etc.
All in all it took us a good two months from when we wanted to charge people to when we could actually charge people. Of course every service will have different technical needs. Congrats on the first buck. :)
I agree it's way too many steps and am trying to figure out how to make it easier and more seamless without delivering people something they don't actually want.
From my experience people fear more of success than failure therefore overdo the product to survive an imagined scale explosion. But there wouldn't be much outrage from users that once flooded you have just raised the prices or temporary suspended the service. I guess queue with bucks in front of the door would boost your motivation to finish up the process implementation in half of the time.
It might have been a conscious not to do it though, which is of course fine. But if it wasn't, I'd look into it.
At the time we were making 40k we only had one product. As such, growth could only come from either: a) winning new clients with the service we had as is ("sell what you have to more people") b) adding new functionality we knew our clients would be willing to pay more for ("figure out a way to upsell what you currently have") or C) create a new service altogether that you could cross sell ("find something else to sell them")
We did a combination of a and c.
Strategy A is clear-cut. If you want to make more money go find more people to buy what you have. Of course, this is easier said than done. Is your solution any good? Is the problem worth solving? Is the lifetime customer value sufficiently higher than your customer acqusition cost? All of these things play a roll here. For us, I think all of the above were true. Our biggest challenge is we sell to enterprise and financial services at that which requires a robust outbound sales process (in other words, no one is going to sign up for our tools because of a twitter post or mention in a news paper). The key takeaway about this is that to grow a SAAS solution, you need to be thinking about how you are going to sell it from day one. Internally we are constantly asking ourselves "how do we merchandise this?" (I realize that is not the best word but it captures a lot of things you need to be thinking about). We don't initiate development of any feature or product without seriously considering and designing a sales strategy around it.
Strategy C (cross sell) is worth highlighting here. I believe people mentally don't like paying more for the same service once they have been anchored to a price point regardless of how much value they get from it. As such, I spend a lot of my time pondering services or tools that I can cross sell. People like vendor consolidation and once they know like and trust you it's easy to get them to open up about other solutions. Because they are distinct solutions you can start the pricing discussion from scratch and command higher fees. Another huge benefit is bundling always improves attrition and can become a major barrier to entry to the extent you are in a competitive space.
That's not to say B isn't important, we are constantly innovating. I find pricing to be a bit more sticky in the SAAS space so improving a product is more about creating moats, reducing attrition, building brand etc.
Not sure this answer will help as there are a lot of "it depends on what you are doing for who imbedded in my answer".
Edit:
I get the point others are making about celebrating a milestone and your first sale being the stepping stone to the next, but I don't think it addresses mine:
Is $1 that you made just yesterday really enough data to demonstrate to others what to expect? Is there really any conclusion that can be drawn from such a small experiment? Maybe it's just me, but I feel like there would be much more interesting insights to discuss after waiting more time or when more sales occurred.
Honestly this looks more like an SEO piece given the keyword rich external links in the article from a high PR domain and boost from HN. The author has mostly just submitted his own articles on HN to boot.
The next step is to get to 10 customers, then 100...
Regardless, it would be much more interesting to hear why the customer took out their credit card and entered their payment information. Unfortunately, that's not what this article is about.
Is this enough data to produce a valid scientific experiment? No, but that's a high bar that would disqualify pretty much every conversation anyone is having anywhere about anything :-D
- How do I come up with a decent idea? What should I work on?
- Where can I get the motivation to even start thinking of ideas? Are there inspirational stories of people like me doing this stuff?
- How do I validate my idea to ensure it's good?
- Do I need to learn how to code? If so, how can I do that?
- I have a full-time job, a family, etc. Is it possible for me to work around this? What are some tips?
- I keep starting but never finishing. What are other people doing that allow them to get to the finish line?
- Nobody is using what I've built. How to I get my first customers?
The list goes on and on. There are hundreds of questions like this, and millions of people asking them, and they're all pre-revenue. They come before the metaphorical first dollar.