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The Business of SaaS

stripe.com

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Re: The Business of SaaS

#171

Post by lugg »

runevault wrote: post #115
lists wrote: post #111

Earlier quoted context omitted.

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.

I suspect that will include game time tokens for WoW that can be then sold for ingame currency or used for gametime.

They also basically converted a big chunk of their subscribers to pure mtx players with that move further muddying the signal.

Re: The Business of SaaS

#173

Post by marcosdumay »

danenania wrote: post #133
pfarnsworth wrote: post #128

Earlier quoted context omitted.

Consolidate that all down to a single server and save your configurations in case you ever do get customers. There’s no need to be wasting $120/month when you literally have no customers at this point.

I'd disagree. Optimizing infrastructure costs is the last thing you should be worried about at the start. Your time is far, far more valuable. If it works, leave it alone and spend your time on product/sales/marketing.

- Infrastructure size correlates with labor required to keep everything running. It's not a perfect correlation, but keeping things small at the beginning usually saves a lot of time.

- Maintenance costs will be a limitation on how many different experiments you can keep running at the same time. If you consolidate everything on the same machine, and still has 98% of the machine for the next experiment, you will keep your first one running even if it has low profitability. If you need $120/month just to keep it running, you will be tempted to close it down after any new idea appear.

- You are assuming that the OP lives in a developed country and has a well paying job there. You are also assuming he has no risk of being unemployed for a couple of months.

- All that is probably dwarfed by taking a couple of hours a day for reading HN. So I should go back to my project and stop thinking about unasked advice :)

Re: The Business of SaaS

#174

Post by newbuser »

raiyu wrote: post #159
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…

True which is why one of the more mature (timeline) SaaS companies, Dropbox, decided to in-house their infrastructure to bring costs down. While this was a massive undertaking that took many years, they were able to achieve it and are reporting various levels of profitability (free cash flow). Also if you dig in further to most SaaS companies P&L you'll see that infrastructure by and large isn't the biggest driver of…

How would you avoid blending the cost to acquire paying, non-paying, etc.?

Re: The Business of SaaS

#175

Post by intrasight »

I've been plugging away at my SaaS app for many years. Have bounced around on the "low-touch" vs "high-touch" spectrum as well as on pricing. I am in agreement with most of the article. If I could do it over again, I'd focus on finding a good niche of "low-touch,high-price". Sure you say "that's obvious", but if so, why are there so many people trying SaaS companies that are not? If you are considering Stripe, you are already off the mark. You should be having Quickbooks send quarterly or annual invoices for at least $10K. Companies will happily pay if you are solving some problem that is costing them $50K per year.

There are still so many opportunities to reduce IT costs through SaaS. I've been in software a LONG time, and I think this is a golden age, with things like AWS and Azure and third-party horizontal services for pretty much everything. Just find your niche of companies that have issues that nobody is addressing. Help them automate tedious and time-consuming things like reporting and dataflow. Help them with regulatory compliance. Think of it as consulting where they also pay for platform services.

I also take issue with "investors love SaaS". The margins just aren't high enough to make it worth the risk. You might find an investor willing to do a deal for cash flow. But I think this is like Stripe - if your thinking VC capital, you're already off the mark. Your customers need a solution and they will be your investors.

Re: The Business of SaaS

#176

Post by weisser »

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…

My two cents: make it easier for people to see know what it is.

I'm not entirely sure from a brief scan - is it team wiki software? Is it sorta like trello cards but for archival/searchable org information?

As someone who is actually looking at team wiki software for a couple startups and nonprofits I'm helping I can tell you that my threshhold for signing up for a trial (even no CC required) is pretty high so don't let that discourage you.

Re: The Business of SaaS

#178

Post by MarkMc »

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…

> Conversion rates of low-touch SaaS trials with credit card not required:

> 2%+: extremely good

I think that is the percentage of website visitors who eventually become paying subscribers. Eg. 10% of visitors sign up for a trial and 20% of those trial users pay for a subscription at the end of their trial period.

Patrick - can you confirm this?

Re: The Business of SaaS

#179

Post by jcadam »

weisser wrote: post #176
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…

My two cents: make it easier for people to see know what it is. I'm not entirely sure from a brief scan - is it team wiki software? Is it sorta like trello cards but for archival/searchable org information? As someone who is actually looking at team wiki software for a couple startups and nonprofits I'm helping I can tell you that my threshhold for signing up for a trial (even no CC required) is pretty high so don't…

> is it team wiki software? Is it sorta like trello cards but for archival/searchable org information?

That's basically it. The idea came to me after I had become frustrated with enterprise wiki/KM software. At the time I was being forced to use Liferay, though I've also had to use Confluence, MediaWiki, and Sharepoint (the worst thing in the universe) in a corporate setting, none of which I particularly liked.

Re: The Business of SaaS

#180

Post by laverick »

intrasight wrote: post #175

I've been plugging away at my SaaS app for many years. Have bounced around on the "low-touch" vs "high-touch" spectrum as well as on pricing. I am in agreement with most of the article. If I could do it over again, I'd focus on finding a good niche of "low-touch,high-price". Sure you say "that's obvious", but if so, why are there so many people trying SaaS companies that are not? If you are considering Stripe, you ar…

I'd expect $10+k/quarter to require high touch sales & account management in most cases.
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