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The Business of SaaS

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Re: The Business of SaaS

#111

Post by lists »

k__ wrote: post #104
old-gregg wrote: post #102

> Businesses and investors love SaaS because the economics > of SaaS are impossibly attractive relative to selling > software licenses. I would be careful and not over-generalize. The statement above is opposite of what many late stage investors think of SaaS companies. Their gross margins tend to be horrible. Some are basically in the business of being an intermediary mailbox for transferring money from their custom…

Isn't this more a problem of billing than of SaaS in general? But yes, I recently read that games make more money in general than even movies, books and music and most of them don't have subscriptions but one time payments.

All AAA games have either micro-transactions, additional purchasable content, or both

Re: The Business of SaaS

#112

Post by jcadam »

a13n wrote: post #74

Yikes, that was the best article on SaaS that I've read all year. So much great information. A few things jumped out to me as off: > Conversion rates of low-touch SaaS trials with credit card not required: > 2%+: extremely good Really? 2% seems awful. If a company signs up for your trial, they must have a problem they're trying to solve. If you don't solve 98% of peoples' problems, it seems like you have a problem ge…

Well, I've had my little SaaS up and running for about 6 weeks.

- The landing page gets about 30-70 hits per day (excepting the occasional spike) -- how many of those are bots and crawlers, I wonder?

- I've had a grand total of FIVE (5) trial sign ups.

- No buyers yet

- My linode bill is currently about ~$120/month.

- Still within the free tier on S3 and Mailgun.

- You know, when I'm the only one using the app, I don't place much stress on the infrastructure.

Now, I can't really say one way or another if I'm getting to that 2% because I'm just not getting enough trial sign-ups :)

EDIT: Oh, yea, link for the curious: https://www.contabulo.com

Bah, I've posted it here before.

Re: The Business of SaaS

#113

Post by old-gregg »

k__ wrote: post #104
old-gregg wrote: post #102

> Businesses and investors love SaaS because the economics > of SaaS are impossibly attractive relative to selling > software licenses. I would be careful and not over-generalize. The statement above is opposite of what many late stage investors think of SaaS companies. Their gross margins tend to be horrible. Some are basically in the business of being an intermediary mailbox for transferring money from their custom…

Isn't this more a problem of billing than of SaaS in general? But yes, I recently read that games make more money in general than even movies, books and music and most of them don't have subscriptions but one time payments.

It has nothing to do with billing. I was just pointing out that the second 'S' in 'SaaS' means "service" and once you get into services your margins often go down, that's why I (and other folks I know who've done SaaS at scale) disagree with Patrick on "economics of SaaS are impossibly attractive". I am willing to bet that Splunk's margins are way better than Loggly's.

Moreover, if you're smart & lucky and you manage to find a large niche with good margins running SaaS on AWS, Amazon will launch it as a service. Mr. Bezos is around & watching you :)

[EDIT] Besos -> Bezos :)

Re: The Business of SaaS

#114

Post by trjordan »

curuinor wrote: post #25
statictype wrote: post #13

What are some examples Of high touch SaaS (besides Salesforce)? And any that have successfully deployed both low touch and high touch?

High touch SaaS sees much... much.... much... less benefit from marketing. So many don't market themselves as often, or market in specialty places. Salesforce isn't even that much of a household name.

The benefit enormously from marketing, but they don't benefit from high-visibility brand marketing.

Trade shows, performance marketing, affiliates, content marketing, retargeting, account-based ads ... those all work well.

Re: The Business of SaaS

#115

Post by runevault »

lists wrote: post #111
k__ wrote: post #104

Earlier quoted context omitted.

Isn't this more a problem of billing than of SaaS in general? But yes, I recently read that games make more money in general than even movies, books and music and most of them don't have subscriptions but one time payments.

All AAA games have either micro-transactions, additional purchasable content, or both

I seem to recall seeing a report recently that Activision-Blizzard made more money from micro transactions than non-MTX revenue last year.

Re: The Business of SaaS

#116

Post by robodale »

jcadam wrote: post #112
a13n wrote: post #74

Yikes, that was the best article on SaaS that I've read all year. So much great information. A few things jumped out to me as off: > Conversion rates of low-touch SaaS trials with credit card not required: > 2%+: extremely good Really? 2% seems awful. If a company signs up for your trial, they must have a problem they're trying to solve. If you don't solve 98% of peoples' problems, it seems like you have a problem ge…

Well, I've had my little SaaS up and running for about 6 weeks. - The landing page gets about 30-70 hits per day (excepting the occasional spike) -- how many of those are bots and crawlers, I wonder? - I've had a grand total of FIVE (5) trial sign ups. - No buyers yet - My linode bill is currently about ~$120/month. - Still within the free tier on S3 and Mailgun. - You know, when I'm the only one using the app, I don…

Why is your linode bill so high with so few users? I see a 32GB plan is $120/month. Do you really need that?

Re: The Business of SaaS

#117

Post by encoderer »

old-gregg wrote: post #102

> Businesses and investors love SaaS because the economics > of SaaS are impossibly attractive relative to selling > software licenses. I would be careful and not over-generalize. The statement above is opposite of what many late stage investors think of SaaS companies. Their gross margins tend to be horrible. Some are basically in the business of being an intermediary mailbox for transferring money from their custom…

I don't disagree on a lot of this but I'm willing to give businesses like Workday, Twilio and Salesforce more time to develop their business before saying the market has decided.

I had to look it up, but Twilio gross margins are healthy -- 55%. AWS expenses are not really a problem for a company like Twilio, their well publicized arrangement of relying on other large tech companies is a bigger threat.

Re: The Business of SaaS

#118

Post by pjc50 »

old-gregg wrote: post #102

> Businesses and investors love SaaS because the economics > of SaaS are impossibly attractive relative to selling > software licenses. I would be careful and not over-generalize. The statement above is opposite of what many late stage investors think of SaaS companies. Their gross margins tend to be horrible. Some are basically in the business of being an intermediary mailbox for transferring money from their custom…

Selling recurring subscriptions for software requires continual updates, and lots of customers are still put off by that model. Yes, there are a few megaliths with untouchably huge products that are sold as regular software; but how many of them is there room for in this world?

Re: The Business of SaaS

#119

Post by jcadam »

robodale wrote: post #116
jcadam wrote: post #112

Earlier quoted context omitted.

Well, I've had my little SaaS up and running for about 6 weeks. - The landing page gets about 30-70 hits per day (excepting the occasional spike) -- how many of those are bots and crawlers, I wonder? - I've had a grand total of FIVE (5) trial sign ups. - No buyers yet - My linode bill is currently about ~$120/month. - Still within the free tier on S3 and Mailgun. - You know, when I'm the only one using the app, I don…

Why is your linode bill so high with so few users? I see a 32GB plan is $120/month. Do you really need that?

1. App Server (all my Clojure services... and the one transient service written in golang)

2. Postgres (Master)

3. Postgres (Standby)

4. Elasticsearch server (yea, only one right now, you know, few users)

5. One linode running RabbitMQ

6. The linode running NGINX that sits in front of the app server and does all of the reverse proxying

Also,

7. The linode running the marketing site (wordpress).

I know, I know, I'm a nerd and just couldn't help myself with the architecture. Hey, at least it should be fairly scalable.

Re: The Business of SaaS

#120

Post by lettergram »

Sir_Cmpwn wrote: post #89
lettergram wrote: post #53

Well.. after reading those conversion rates - I feel pretty happy with my conversions :D I've been using Stripe and Stripe Atlas since 2016, and it's helped me grow my business well. Slowly iterating. My particular tactic is to give users a full refund - every month - they give me feedback via a survey: https://projectpiglet.com/ It's actually been super nice because people are super willing to pay after I build out…

>My particular tactic is to give users a full refund - every month - they give me feedback via a survey Nice, I'm gonna steal this idea!

By all means! It's also nice because often people forget so one month I'll get feedback, the next I'll get $X, then the following I'll get feedback again.

Customers tend to blame themselves for forgetting the feedback and eventually some users are like, "Hell, this is exactly what I wanted" and they'll pay full rate.

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