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How we’re spending $55,930.08 a year on SaaS products

blog.sawhorsemedia.com

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Re: How we’re spending $55,930.08 a year on SaaS products

#21

Post by Alupis »

There's a lot of unnecessary costs listed. For example, they spend $165.00 on dropbox for the team, but also use Gmail services (meaning they have Google accounts which come with a free 10GB of storage).

The tier of MailChimp they use implies their list is in excess of 110,000 subscribers, and since I do a lot of email marketing for my company, I can guess their open rate is probably somewhere in the 10-20% range, so they are throwing money away on emails that go to spam boxes or never get opened/engaged.

They use a 3rd party team chat service instead of hosting their own local XMPP service (this is a non-critical service I would wager, and could afford some downtime if the server needed maintenance).

All in all, they are spending a lot on things that aren't really necessary. They could bring some of those things in-house and probably save a lot per year as well (low-critical things that would require minimal maintenance).

This is not even mentioning the lack of flexibility they get locked into by using only 3rd party solutions. I've seen this at my company for the few external things we do depend on -- you end up building business practices around the 3rd party service, which may or may not be optimal or how you would normally do things. Having that flexibility, and assurance that service X doesn't go away tomorrow really can improve work-flows and peace of mind.

Seems their business is based entirely around other 3rd parties ... something that would make my company very nervous to say the least.

Re: How we’re spending $55,930.08 a year on SaaS products

#22

Post by Argorak »

Jonovono wrote: post #10

Interesting. Cheaper than the salary for an employee and probably together are able to help you do more than a single person.

Also, if the services are important for you and need to run 24/7, you need to calculate at least 3 employees (sick leave, holidays, 24/7 pager duty...).

Re: How we’re spending $55,930.08 a year on SaaS products

#23

Post by cm2012 »

Alupis wrote: post #21

There's a lot of unnecessary costs listed. For example, they spend $165.00 on dropbox for the team, but also use Gmail services (meaning they have Google accounts which come with a free 10GB of storage). The tier of MailChimp they use implies their list is in excess of 110,000 subscribers, and since I do a lot of email marketing for my company, I can guess their open rate is probably somewhere in the 10-20% range, so…

Paying someone to micromanage the services to get cost savings would cost at least $60,000 a year and make the company lose focus. There's no way digging into the details of the Mailchimp spend structure, for instance, is worth the time.

Re: How we’re spending $55,930.08 a year on SaaS products

#24

Post by chatmasta »

I'm more certain every day that there is a place in the market for a company offering "subscription management" service. Manage all SaaS for a business (or personal as well!), keeping costs low and utilization high. Provide one central billing endpoint.

I would definitely use a service like that, both personally and professionally. The number of subscriptions I have is growing, and it's frustrating to keep up with all of them. I would love to have them all in one accessible place.

Re: How we’re spending $55,930.08 a year on SaaS products

#25

Post by Argorak »

Alupis wrote: post #21

There's a lot of unnecessary costs listed. For example, they spend $165.00 on dropbox for the team, but also use Gmail services (meaning they have Google accounts which come with a free 10GB of storage). The tier of MailChimp they use implies their list is in excess of 110,000 subscribers, and since I do a lot of email marketing for my company, I can guess their open rate is probably somewhere in the 10-20% range, so…

For many companies, the chat is critical. Also, if one person has to fix the chat for 1 hour a month, you are easily paying more for that person then for the external service.

I would question that hosting in-house would be cheaper. As stated in other threads: that's less then the cost of an employee qualified to run all those services.

Re: How we’re spending $55,930.08 a year on SaaS products

#26

Post by Alupis »

cm2012 wrote: post #23
Alupis wrote: post #21

There's a lot of unnecessary costs listed. For example, they spend $165.00 on dropbox for the team, but also use Gmail services (meaning they have Google accounts which come with a free 10GB of storage). The tier of MailChimp they use implies their list is in excess of 110,000 subscribers, and since I do a lot of email marketing for my company, I can guess their open rate is probably somewhere in the 10-20% range, so…

Paying someone to micromanage the services to get cost savings would cost at least $60,000 a year and make the company lose focus. There's no way digging into the details of the Mailchimp spend structure, for instance, is worth the time.

> There's no way digging into the details of the Mailchimp spend structure, for instance, is worth the time.

Actually that's one point where you are not correct. For a good email campaign, it's imperative that you manage your list. You need to be looking at stats from the previous campaigns and making changes for future campaigns. If you have a lot of low-engaged/no-engaged emails, you need to try to re-engage them and/or drop them from your list. If you send 1 email a week to an address for 5 years that never opens, you are literally throwing money away. MailChimp (which we use too) has a lot of very good tools to help prune your list and glean a lot of insights into your engagement rates.

> Paying someone to micromanage the services to get cost savings would cost at least $60,000

Not necessarily. Download a copy of Openfire XMPP server, stick it on one of your spare windows/*nix boxes in the corner, and it will run un-maintained for years. Just cron/schedule the OS updates automatically and it takes no more effort/skill than logging into a website to manage user accounts.

And nobody says they need an expensive seasoned SysAdmin to manage these services. Hire a college student for $15-$18 per hour part time to come in and tidy things up.

There are other opportunities to be had with their list of services, such as taking advantage of the drastically lower cost BitBucket (if they must have their source code repo's external).

There's certainly a lot of waste listed here.

Re: How we’re spending $55,930.08 a year on SaaS products

#27

Post by Argorak »

teacup50 wrote: post #15
vv wrote: post #4

Earlier quoted context omitted.

Since we run two products (both Muck Rack and the Shorty Awards), we end up paying twice for some services like Github.

I don't understand why you would host your source code externally? You can buy Atlassian Stash, once, for $1800/25 users, and use it forever: https://www.atlassian.com/software/stash/pricing

Plus the hidden cost of setting it up. Example: Backing up Stash - while being relatively straight-forward - comes with some amount of scripting and testing (you do test your backup, do you?).

Not saying Stash is bad (the contrary), but when evaluating cost, evaluate all cost.

Re: How we’re spending $55,930.08 a year on SaaS products

#28

Post by mmahemoff »

It's significant this is a SaaS company using these services. Some of the services have a cost based on team size, while others have a cost based on user base (and usage volume).

Services whose cost is f(team size): CircleCI, Trello, Github

Services whose cost is f(user base): MixPanel, Moz, Shopify

I mention this distinction because the f(team size) services generally offer solid value to any team, being useful and less expensive than paying someone to build the same thing in-house. OTOH the f(user base) products are a lot harder for consumer apps to justify than business apps. They do occasionally offer enterprisey premium features like platinum support, but the main pricing scheme is based on X whatever's per month, and a SaaS company charging lawyers $100/user/month is a lot more likely to afford it than a casual gaming website with a million users and a some ads.

Re: How we’re spending $55,930.08 a year on SaaS products

#29

Post by eitally »

mmahemoff wrote: post #28

It's significant this is a SaaS company using these services. Some of the services have a cost based on team size, while others have a cost based on user base (and usage volume). Services whose cost is f(team size): CircleCI, Trello, Github Services whose cost is f(user base): MixPanel, Moz, Shopify I mention this distinction because the f(team size) services generally offer solid value to any team, being useful and…

And this is precisely why many large enterprises build things in house rather than license commercial tools. It's a lot more palatable to buy 3-5 full time developers to build and support and internal helpdesk than license ServiceNow, etc, for tens of thousands of users.
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