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The Business of SaaS

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Re: The Business of SaaS

#181

Post by woolvalley »

gnode wrote: post #70
jacquesm wrote: post #36

Earlier quoted context omitted.

> Given the difference between "existential risk" and "profitable enterprise" is a 5% change in churn rate, these customers may make all the difference! That's exactly how it works. > How does a company balance reducing churn with ensuring that customers who (perhaps temporarily) have dis-engaged can easily turn off the software? The ideal model in my opinion (but that one is obviously not going to maximize profits/r…

I can imagine this driving providers to work around that, structuring their service such that they can argue the user is still engaging with the service passively. For example, having data stored on their servers is use (as I may later want to use it, and incurs them a cost to store it). Or, perhaps being emailed updates about my credit score could be regarded as engagement as they can't necessarily tell whether I am…

For some SaaS businesses although, such as dropbox & google drive, their most of their business is storage. It would be hard to blame those kinds of services to keep on billing you even if you don't look at the data most of the time.

Re: The Business of SaaS

#182

Post by jcadam »

marcosdumay wrote: post #173
danenania wrote: post #133

Earlier quoted context omitted.

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…

I use this app myself. Worst case, if it fails as a business I open source it and continue to use it myself (after consolidating onto a single host just for myself).

And I'm in the US and not going to run out of money assuming I can keep my day job :)

Re: The Business of SaaS

#183

Post by jcadam »

japhyr wrote: post #136
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…

I'm not in your market, but your product looks pretty interesting. The free trial is fairly prominent on your home page. On your pricing page, all of the free trial links are below the fold for me: https://imgur.com/a/4qsaf You might want to move the free trial buttons higher, maybe right below "How much does Contabulo cost?" Also, you can put cost in lowercase.

Gotcha, thanks.

Re: The Business of SaaS

#184

Post by a13n »

MarkMc wrote: post #178
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?

Then how come for credit-card-required he says 40-60%? That must be trial to paid.

Re: The Business of SaaS

#185

Post by a13n »

BWStearns wrote: post #153
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…

> 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 getting people engaged with your product. Also think about how many of those signups are for "products" that never get delivered. Some side project that is thinking about charging and the dev never bothers implementing, some sta…

The article isn't talking about super-early-stage SaaS, it's about SaaS in general. While 2% might be good for a just-implemented product, it comes off as poor for a mature one.

Re: The Business of SaaS

#187

Post by jmacd »

old-gregg wrote: post #113
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.

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 manag…

Let's just go with Besos from now on.

Re: The Business of SaaS

#188

Post by dothis9 »

graeme wrote: post #57
nomel wrote: post #51

Earlier quoted context omitted.

2-3 days probably means your'e a sales company, and it will continue to be a hostile relationship. I much prefer buying from product companies, trying to show me why I need their software. It's just downright ridiculous/shady. Ridiculous since there's no way I'll be able to make an informed decision in 2-3 days, especially since there's no chance I'll dedicate 100% of my time to those 2-3 days. When I'm done looking…

Please actually read comments before replying. I sell 5-24 hour long online courses. A two week trial would let someone see everything , and would leave the user with no reason to purchase. This is why I haven't done full free trial yet. Because 2-3 days seems short. But I'm wondering if it counterintuively might be optimal, by removing friction to trying the course.

There are many merchants who have found that increasing the generosity of their refund policy leads to decreased refund rates.

I.e. a 6 month refund window may have a lower overall refund rate than a 1 month window.

It gives users who are on the fence about the value of a product more time to see how they've gotten value out of it. It also gives people longer to forget to ask for the refund.

The only reason some companies have a "1 year" refund policy instead of "lifetime/anytime" is because of issues like credit card merchant processors being uncomfortable with the credit risk that creates.

Re: The Business of SaaS

#189

Post by g10r »

Flavius wrote: post #138
alex_hitchins wrote: post #107

Earlier quoted context omitted.

Ditto - be interested in this side too. If you don't want to post to all my details are in my bio. Fascinating to hear how this area is conducted.

I would be interested to learn more about this, though I suspect that this approach is actually harder. From my experience companies will not even bother to try your product unless you're already selling to consumers or other companies. You really need some deep connections in order to get anything started with a company before you have a product.

Connections certainly help but aren't required. You need grit and a solution (or an idea of a solution) that's solving a pain point worth paying to alleviate. Ideally 10x better and cheaper than what's currently in the market. At first, you will be the salesperson and you have to realize that comes with a lot of rejection.

Re: The Business of SaaS

#190

Post by Androider »

threeseed wrote: post #86
gfodor wrote: 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…

> Should we expect them to do this given that doing so may kill their entire business? Absolutely. Don't forget that these customers may just file a chargeback through their bank. I did this with a service called Classpass which misleadingly kept you signed up without any notice. I and my partner both filed chargebacks and overturned 6 months of subscriptions. That sort of thing can really harm a SaaS on a number of…

How is it not absolutely obvious on the Classpass pricing page that it's a monthly subscription?

Chargebacks are a real dick move, and should be used as a last resort if the company gives you any trouble when cancelling. Otherwise you're literally stealing from the service, for example your patronage cost the company 15*6=$90 in just chargeback fees (Stripe) because you couldn't be bothered to cancel your plan online in a minute. I think most SaaS companies would be happy to not have you as a customer.

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