I'm pretty happy with my own SaaS application, but because I provide a telephone service I have pretty low margins. This is by far the most annoying thing about my business (it affects me more than taxes), especially considering that it would have been just as much work to make a SaaS with negligible marginal costs.
The lesson is, if you have the choice and don't want hypergrowth + venture funding, provide a service that costs you next to nothing to provide. Another disadvantage of providing a service that has high marginal costs is that your bigger competitors will usually be able to outprice you. If all you need is a few servers, you can differentiate based on product alone and charge accordingly.
Where are you buying your DIDs and Routes? What switch are you using?
I'd love to help, I literally eat sleep and breathe this stuff. There's no way your margins should be skinny unless you're playing LCR games, in which case you make it up on volume.
Source: I work at 2600hz, the bootstrapped open source telecom cloud company. We've bootstrapped to 30+ employees on a pure telecom business so I have some experience here.
I'm currently on Twilio's first tier volume discount (I assume there's further volume discounts that aren't on the website), paying .8 cents/min IIRC.
I looked into buying voice minutes and DIDs and running my own freeswitch boxes. Any provider that had listed prices charged upwards of .4 cents/min or had unlimited minutes per DID with a $4 or something fee per channel. A lot of them also limited the number of channels on a DID.
Another reason I have low margins though is because my free plan and free trials also cost me real money. There is no way I can get around that.
While we're at it: Another reason I looked into self-hosting was because I'd like to host conference calls with up to 5000 participants (think earnings calls, public forums, classes etc), most of which are mute. THAT is a high margin business, with companies charging up to 20 cents/minute/caller for those kinds of calls. I read this may be possible with freeswitch on beefy hardware. What do you think? Do you know any way I could get around hosting my own freeswitch servers, load balancer, redundant backups etc?
Do you know how easy/hard it is to start a "international calling card" service?
I see lots of random ones popping up every day and they mostly look unprofessional so they remind me of email/web-hosting resellers.
I was wondering if reselling "international calling card" is a thing? or do you actually need your own infrastructure?
I was hoping that I can resell these services and make some passive income that way (I can directly market to low-competition markets in my home country).
Your lowest plan also feels too inexpensive to me, especially since those customers are probably responsible for a disproportionate number of support requests.
Those plans are far too lean.
Also, I don't understand what a "local line" is when I go directly to your pricing page. I also don't understand what a "toll free line" is. Specifically I don't know why I need 5 lines.
I don't run a pure SaaS (http://gridspy.com) but $9 / mo? These people are not employees. They have profits. We had to fight the same tendancy to offer unrealistically low prices.
Your typical "professional" will bill $80-$200 / hr while on the conference call. They'd swallow $40 +
You probably don't need a free plan, though you might want to consider a prepaid one. Bill on minutes or something. I'd consider eliminating it entirely.
Team should be about $200 and business you should be thinking $1000 / month plus.
I also think that segmenting based on max people per conference makes a lot of sense. It would also be simpler to bill based on "number of conferences" rather than "number of minutes" and trigger a new "conference" when a call extends beyond 1 hour.
Higher prices should support more marketing work. You'd be surprised - higher prices will make your clients think that your product is more valuable and thus more likely to try it out.
You've also got a viral element. Your users are telling others about you (to invite them to the conference). Ask them to put each person's phone number and email addresses into the system so you can send reminders to each participant before the meeting.
In those reminders, I suggest you offer a "coupon" for 1-5 free conference calls to that guest. You might only want to do so if the guest has an email from a different domain. Monitor for abuse. This will help you get natural viral marketing underway.
Another alternative is to build a followup email after the conference ends that has details on who joined the meeting, how long they talked, a downloadable recording (?) and their contact details.
I hope this helps. It looks like you have a nice product.
There are significant fixed costs associated with the development they did so far. I doubt $5,000/month would break them even considering just the salaries and office expenses such as rent.
- Fees to receive payments
- Hosting
- Support services (github, zendesk, etc.)
- Your own salary
I'll bet that not much of that $5k is profit.
> The best part about their $5,000 is that most of it will be profit.
Wanted to see what statuspage.io was all about. Clicked logo and wouldn't you know it..they only blog.
There are some proxying shenanigans you can do with mod_rewrite but I'd certainly not want a PHP-based blog anywhere near my main site/app if I could get away with it due to the security risks.
I always roll my eyes when that happens. And then there is a 50/50 chance I search for the actual link - if I'm REALLY interested I edit the URL manually.
But for a team of 3 people, you can do much better than $5k just selling your time in consulting.
It's not clear how you'll get from $5k/mo (nice side-job income) to $50k/mo (Good bootstrapping income for team of 3) to $500k/mo (ok, now you have a business that scales).
I'm not being critical here -- It's just that SaaS math has me scratching my head wondering if all that work for all those customers with such small amounts to show for it is worth it.
Would you rather service 200 people for a total of $5k a month with 3 bodies to support or one solid consulting customer @ $5k+/month with just yourself to support?
I'd imagine that you'd want more revenue so you can have a business and not just lifestyle income to support one person. Going from 0 to $5k is one thing -- the advice here is good for that. But getting from $5k to $50k, where you need to be to have sustainable business for 3 people, will require much more substantial effort that's not clear you can achieve with these methods. Indeed, it is not even clear what your margins are at the $5k/mo revenue point and whether that will even be sustainable given the amount you'll need to spend on Customer Acquisition, Customer Support, and slaying the Customer Churn demons to retain your necessary high monthly subscription rates. This is where most SaaS companies die -- trying to achieve this necessary transition.
Just because they've decided to share their story so far, doesn't mean they think they've hit the jackpot already and are finished.
Depending on what you decide to do, it can mean any of the following:
- Paying the rent/mortgage and good food on the table. Nothing fancy but you'll survive even in the Bay Area as long as you live together.
- Ability to be picky with consulting clients or invest in longer sales cycles.
- Living in luxury on a beach in SE Asia while you figure out how to bootstrap the business.
All of the above are pretty fantastic imo. Not a finish line by any means but way more optionality than 98+% of the population.
What I'd be curious to learn is your margins, customer acquisition cost, support cost, and churn rate. And how this changes as you go from $5k to more than $5k/mo. This is where most SaaS companies falter.
If you can, you should talk about how you plan to market to reach the larger required revenue rates. This will necessarily require higher customer acquisition costs as your lowest hanging fruit will be quickly exhausted.
These needs for high acquisition rate drives up high customer acquisition costs, which eats at the margins. $5k in revenues is good, but the profits are not mentioned. Going from $5k to $50k will not scale margins linearly. Indeed, the need to multiply customers by 10 will necessarily increase customer acquisition costs (low hanging fruit will no longer be available) and increase overall churn (the "natural" churn rate applies).
If you wanted to make money in consulting, it certainly would be easier to just offer consulting services, and both margins and sustainable revenues would be higher. Perhaps you can use your SaaS app as a consulting marketing tool, but I don't see this app being used that way.
1. Find a problem.
2. Get to hacking.
3. Soft launch.
4. Synthesize feedback, build more.
5. Expand the funnel (user acquisition).
6. Aha/Win/Rich/Yay
...That's the formula for any startup/technology service. It's literally those steps, a little individual secret sauce, and you win or you die (figuratively speaking). I know it worked for you, but things like
>"In our minds, there is no better way to build a product that people want than to be the customer you plan to sell to."
...aren't very helpful. It's a broad characterization of how to put yourself in that mindset.
But in any case, good explanation of what you did for your own project :)
I have to admit that I am actually little annoyed when I see title like '5 Steps to $5,000 in Monthly Recurring Revenue' because to me it seems a bit misleading. These are not really steps to $5,000/month... if they told me _how_ to find problem worth 5k than maybe that could be useful.
But this is like, ehm... do you want to be successful with the ladies? Here is one simple step... be awesome!
There's never going to be a do x,y,z and you'll make $5k since every business is different, but instead tips like ours from what we've seen work for us.
Agreed on the title, a better one could have been, 'Our 5 Steps to $5k in MRR' to clarify.
Is anyone here intentionally trying to solve problem that is not worth solving?
There are so many variables that this will never be the case.
You can only read these types of guides and hope to pick out something that might inspire you or help you realise something that you're doing that you could do better.
If you can solve the problem, then I can copy your solution, and solve it too.
But if your job is to take up an existing solution, and significantly improve upon it, I will find it very hard to catch up.
After 30 days of launch, I managed to get 7000+ active users, about 100 paying users and $6129 in revenues.
My learnings : 1. Build your first main feature really well
2. Dont launch with 100s of features, keep the product simple
3. Make sure to have some influencers on your board as users from day one and make them super happy
4. Use tweet button very smartly - this is make or break up for your side project
5. Dont hurry up into making money, let your users ask you for more feature and then roll out paid features.
Shared here : https://news.ycombinator.com/item?id=5600281
Could you explain this a bit more?
Viral Factor, K = No. of invites X Conversion rate
As long as, K >1, your app is growing. And best way I figured out to do that was to make people tweet and make that tweet provoking enough to let her users click on that tweet. Example, I encourage people to boast about number of repins or followers they got because of Pinwoot and tweet reads something like : 1) I got 954 repins on #Pinterest using @Pinwoot. Add your pin here https://pinwoot.com
2) Try @Pinwoot.com to get free followers on #Pinterest https://pinwoot.com
Tweet Copy 1 performed 267% better than Tweet Copy 2 in getting new users.
1. This is revenue, not profit.
2. 3 guys. So $1600/person.
3. Seems like they don't have jobs (means taking this full time, probably with consulting).
Still a pretty good job, and I'll be interested to see their growth.
So it's simply a note to Passive income dreamers.
I appreciate that companies don't want to build everything, nor should they, but pushing every piece of non-core functionality onto a SaaS is just insane. The worrisome thing for many but not all of the SaaS startups primarily targeting other startups is that when the next downturn arrives, the number of companies eager to spend hundreds/thousands of dollars a month on a portfolio of SaaS services for just about every function will likely decrease substantially.
This is their area of expertise, their passion and their business. They'll make a better status page than I would.
Kudos on this achievement, for taking the time to share it, and for the hard work behind it.
Wishing you guys the best of success in getting to the next milestone.
On first take, I was surprised you were able to pick up 20 paying users just from an HN post.
But then I went back and read the first part:
> First, being in the community, we had a bunch of friends that were great customer candidates.
It would be interesting to know the breakdown for those first 20 customers: how many came from personal connections?
When did you guys actually started working on this and how did you transition from a day-to-day consultancy mode (no doubt bringing in a multitude of that $5000 revenue) into working on this full-time. Your blog posts don't seem to contain a creation date :)
Did you fund the initial development with your own savings or did you get angel investors on board early on ?
I can imagine that after taxes and deducting costs there is little or no profit left but it's a great psychological barrier to cross !
I wish you guys the best of luck ! Great idea and great to see people using it (and paying for it)
What barriers do you have to competition from a one or two person company w/ lower costs?
This is an excellent talk about what it takes to get out there and find the set of customers outside this bubble that will get you to $50k/mo.
http://businessofsoftware.org/2013/02/gail-goodman-constant-...
That's my pain point.. trying to find a pain point to start developing!