I just exchanged tweets with them this afternoon saying it would be interesting to see how this change affects their revenues (maybe if/when they IPO).
The unprofitable SaaS business model trap
11–20 of 99 posts
Re: The unprofitable SaaS business model trap
#12It doesn't matter what business you are in, if you aren't turning a profit on each sale, you won't make it up in volume. In fact, volume will kill you fast. I remember when Sony was selling the PS3 at like a $200+ loss at launch. I was surprised that Microsoft didn't take a couple billion dollars and buy PS3's. It would have cost Sony hundreds of millions of dollars and would have made the PS3 a money sink hole for e…
The idea is that once you get your console in peoples' homes, you can make money off of the accessories and games.
Re: The unprofitable SaaS business model trap
#13It doesn't matter what business you are in, if you aren't turning a profit on each sale, you won't make it up in volume. In fact, volume will kill you fast. I remember when Sony was selling the PS3 at like a $200+ loss at launch. I was surprised that Microsoft didn't take a couple billion dollars and buy PS3's. It would have cost Sony hundreds of millions of dollars and would have made the PS3 a money sink hole for e…
You can sell razors at a loss if people buy your razorblades at a substantial profit.
Re: The unprofitable SaaS business model trap
#14Interesting given Get Satisfaction's recent approx. 10x price increase: http://blog.getsatisfaction.com/2013/07/16/the-latest-about-... I just exchanged tweets with them this afternoon saying it would be interesting to see how this change affects their revenues (maybe if/when they IPO).
Re: The unprofitable SaaS business model trap
#15It doesn't matter what business you are in, if you aren't turning a profit on each sale, you won't make it up in volume. In fact, volume will kill you fast. I remember when Sony was selling the PS3 at like a $200+ loss at launch. I was surprised that Microsoft didn't take a couple billion dollars and buy PS3's. It would have cost Sony hundreds of millions of dollars and would have made the PS3 a money sink hole for e…
Re: The unprofitable SaaS business model trap
#16It doesn't matter what business you are in, if you aren't turning a profit on each sale, you won't make it up in volume. In fact, volume will kill you fast. I remember when Sony was selling the PS3 at like a $200+ loss at launch. I was surprised that Microsoft didn't take a couple billion dollars and buy PS3's. It would have cost Sony hundreds of millions of dollars and would have made the PS3 a money sink hole for e…
You can sell razors at a loss if people buy your razorblades at a substantial profit.
Re: The unprofitable SaaS business model trap
#17It doesn't matter what business you are in, if you aren't turning a profit on each sale, you won't make it up in volume. In fact, volume will kill you fast. I remember when Sony was selling the PS3 at like a $200+ loss at launch. I was surprised that Microsoft didn't take a couple billion dollars and buy PS3's. It would have cost Sony hundreds of millions of dollars and would have made the PS3 a money sink hole for e…
What are you talking about? This is standard practice. Microsoft also sells its consoles at a loss: http://www.neowin.net/news/report-microsofts-xbox-division-h... The idea is that once you get your console in peoples' homes, you can make money off of the accessories and games.
> Undo the effect of cancellations through up-sells/upgrades. Salesforce.com and ZenDesk charge more for every person you add, and more per person when you increase the features in your plan. Their customers grow (on average). Thus, their revenue over four years is not 4R, but rather it might be R on the first year, 1.5R on the second, 2R on the third, etc., so perhaps 7R in four years.
MS, Sony, and Nintendo hope that once you have the console, you will continue to buy games. And the console maker will collect a license fee from each game sold. If MS bought a ton of PS3 consoles, then the general public would have to buy a lot more games to make up for the loss. So the strategy does work, but it would work against any of the companies, not just Sony. But I think the PS3 had one of the biggest losses of any console at $240 - $300 depending on the version of the console purchased.
Re: The unprofitable SaaS business model trap
#18There is a seemingly sudden rush of SaaS companies at IPO / major growth levels in the B2B marketplace - how do people track them, or know about them? Is there a news outlet I am missing?
Add to that, the underlying sell for SaaS companies is either ease of implementation (which is a non-differentiator) or it is a genuine new activity (cross enterprise, co-ordinated 3rd party cookie tracking to massively increase campaign targeting / feedback) - so is there a discussion area on what these guys are doing underneath?
Basically - what am I missing?
My original for posterity:
I have never even heard of these two companies - where on earth does one find all these suddenly growing companies?
And frankly, is there a wiki page on what they are really doing under the skin (marketo / eloqua look like glorified dashboards for third party cookie tracking)
(Not that there is anything wrong with a glorified dashboard, I just like to know what people are really doing)
Re: The unprofitable SaaS business model trap
#19Re: The unprofitable SaaS business model trap
#20Also, the press seems to only want to talk about their revenue growth.