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The Business of SaaS

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Re: The Business of SaaS

#41

Do software products like adobe photoshop for $20/month count as SaaS, or merely a subscription based software product?

From a business perspective, I would say Adobe is squarely in the SaaS business.

Creative Cloud is mostly light touch product with an few large companies and agencies requiring high touch.

Re: The Business of SaaS

#42

Do software products like adobe photoshop for $20/month count as SaaS, or merely a subscription based software product?

Technically, if its an app which runs in your browser, and in the cloud only, it would be SaaS, regardless of function. But it also qualifies as a software subscription. So, yes.

The lines are blurry. For example there are apps that can run in something like Citrix Connector, VNC, even ssh etc. that are not running in a browser but also are running "in the cloud" (whether private or public).

Re: The Business of SaaS

#43

Do software products like adobe photoshop for $20/month count as SaaS, or merely a subscription based software product?

I'm surprised everybody else is saying it doesn't count.

SaaS stands for Software as a Service, which means begging customers to make a one-time decision to start a predictable subscription in exchange for regular new features and bug fixes.

The alternative is begging customers to make decisions to upgrade to the latest release multiple times, even after they purchased the older software. Customers on older versions spend a lot of time downloading updates to security issues, comparing to competitors, and deciding if this is the right time to upgrade or to wait for a sale.

Re: The Business of SaaS

#44
post #40
post #31

Earlier quoted context omitted.

Hi, Course author here. Thanks a lot for posting this (and for signing up). But, it's worth noting that if you buy the course on my platform at https://buildasaasappwithflask.com/ there are additional perks you won't get on Udemy. For example I'm in the process of adding a new bonus section to the course that goes over building RESTful APIs with Flask. I've already released the source code and 1 video for it on my ow…

Yeah, I've read your blog post recently why you are quitting Udemy and am sorry about it as I enjoyed your course very much! I guess Udemy's only way to stay afloat is to push the price as low as possible to attract more paying customers all around the world (given they have competition). It's tricky to figure out a good business model for both platform and course providers; probably you could consider keeping simple…

Yep, my long term goal is to not use Udemy, but in the short term, something like you mentioned is how I plan to move forward.

It's going to be tricky to find a good balance (the bare-bones Udemy version still needs to have high value), but it's doable.

I have a lot of ideas this year for new content and I'm going to experiment with paid courses, free courses and even not putting some courses on Udemy just to see what happens.

Re: The Business of SaaS

#45

Great read! The "Churn rates" section was super interesting. Our SaaS has hovered around 4-5% churn rate. Glad to see that's doing pretty OK! Interestingly enough in December we increased our prices by quite a lot (percentage wise, $2/month to $6/month). That month we saw an 8% churn rate, and January 6%, and this month looking like a bit less. It's going to be really interesting to see what happens in the future. Th…

> The jury is not in yet, but it feels that the voluntary churn is a lot less for the customers paying more, compared to the lower price point.

I noticed the same. Our $29.90 plan churn is 3x higher than our more expensive plans.

Re: The Business of SaaS

#47
post #30

The free trial section gave me an idea. I have a product (a course) which can be used in 2-4 weeks. This isn't exactly SAAS, but there's some overlap. Has anyone ever seen (or tried) a full free trial which lasts 2-3 days? I currently just have some demo videos, but it occurs to me I might increase conversion if I just let people into the full thing, let them have a taste, and then ask them to pay if they want to kee…

Full-featured time/use-limited trials are pretty common. Netflix, Spotify, Audible, all offer the first month, for example. Specific to your area, Coursera and Lynda both have them.

Re: The Business of SaaS

#48
post #28

patio11 refers to subscription based software as a "financialization" of it, but I'd argue it runs deeper: it turns software from a single, large "opt-in" transaction, to a small "opt-in" transaction followed by a series of "opt-out" decision points for customers, putting more of the burden on the customer to disengage vs the business to sell the customer on the latest version every couple of months. This runs into s…

In my experience it's best to focus on new user on-boarding and the needs of the most engaged "in love" users. Reasons for focusing on smooth on-board are obvious. Reasons for focusing on your engaged users:

- It's easier to get direct and indirect (metrics) feedback that you need to actually improve their experience.

- These are the users who push your product in areas you possibly hadn't considered or prioritized and can often have sub-optimal experiences.

- Large teams using your product is one of the few viral channels available to B2B saas. People change jobs and say "you know, at my last place we used..."

- You can probably grow their ARPU.

You should definitely track people who deactivate or never log-in, but it's a hard thing to optimize.

Re: The Business of SaaS

#49
post #28

patio11 refers to subscription based software as a "financialization" of it, but I'd argue it runs deeper: it turns software from a single, large "opt-in" transaction, to a small "opt-in" transaction followed by a series of "opt-out" decision points for customers, putting more of the burden on the customer to disengage vs the business to sell the customer on the latest version every couple of months. This runs into s…

Slack does this via their Fair Billing Policy [0] and it’s completely automatic. You only pay for active users, so those who go inactive are free.

[0] https://get.slack.help/hc/en-us/articles/218915077-Fair-Bill...

Re: The Business of SaaS

#50
Fantastic article patio11. I work with a lot of SaaS companies on a daily basis (designing their product with our team [1]) and get to see the thought process of the founders. The part about product market fit is super crucial. I can clearly see that the founders that keep an ongoing feedback loop between customers and product always end up building a more successful business. Will def. share this insightful post. Tnx for the writeup.

[1] http://fairpixels.pro

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