Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Business of SaaS

stripe.com

Post reply on HN
Print view View original

231–240 of 252 posts

Re: The Business of SaaS

#231

Post by jcadam »

jakobegger wrote: post #229
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 currently looking for a team wiki solution (team of 3), but I wasn’t sold by your landing page. Here are some things that went through my head: - I don’t like the graphic design - evaluating if this is good will take us more than a month - I’m worried about lock-in. If, after a few months I discover this isn’t for us, do I need to keep paying not to lose my data?

> - I don’t like the graphic design

Of the landing page or the product itself? The landing page is an easier fix :)

> - evaluating if this is good will take us more than a month

That's quite possibly true. Wikis take time to populate and only become useful if people commit to doing so. The problem is how to balance:

- Giving users time to evaluate the product

- Revenue

> - I’m worried about lock-in. If, after a few months I discover this isn’t for us, do I need to keep paying not to lose my data?

Valid point. I do plan to add a data export feature at some point. I'm wondering what the most useful format for such a thing might be. CSV? XML? JSON? SQL?

Conversely, I still haven't thought of a sane way to allow for a mass data import... but I'd like to.

Re: The Business of SaaS

#232

Post by acct1771 »

antaviana wrote: post #226
acct1771 wrote: post #204

Earlier quoted context omitted.

As someone building a company with the model you speak of: do you think communicating to potential purchasers via website copy that others in my industry have essentially abandoned their platforms because of lack of incentive to continue updating post-purchase would perhaps soothe some of that?

We also use this model (software subscription). One thing that is very important is that never, under no circumstance be tempted to sell perpetual licenses even if there is demand for them. If you do subscriptions you should do only subscriptions.

Thanks, that's advice you're probably giving for a good reason you've experienced, I'm assuming!

Any other insight into your experiences/troubles? How you decided on pricing, whether it had any impact on sales/sales efforts, what you had to do to support such a model?

Thanks very much for your time!

Re: The Business of SaaS

#233

Post by runevault »

lugg wrote: post #171
runevault wrote: post #115

Earlier quoted context omitted.

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.

They also own... King was it? One of the big mobile companies, and I think over $1 billion in MTX revenue was just their products.

Re: The Business of SaaS

#234

Post by jacquesm »

woolvalley wrote: post #181
gnode wrote: post #70

Earlier quoted context omitted.

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.

That's different. Storage is 'in use' when you're using it, period. But when you have a dropbox subscription and you don't use your storage then that should not be charged imo.

Re: The Business of SaaS

#235

Post by jakobegger »

jcadam wrote: post #231
jakobegger wrote: post #229

Earlier quoted context omitted.

I’m currently looking for a team wiki solution (team of 3), but I wasn’t sold by your landing page. Here are some things that went through my head: - I don’t like the graphic design - evaluating if this is good will take us more than a month - I’m worried about lock-in. If, after a few months I discover this isn’t for us, do I need to keep paying not to lose my data?

> - I don’t like the graphic design Of the landing page or the product itself? The landing page is an easier fix :) > - evaluating if this is good will take us more than a month That's quite possibly true. Wikis take time to populate and only become useful if people commit to doing so. The problem is how to balance: - Giving users time to evaluate the product - Revenue > - I’m worried about lock-in. If, after a few m…

I was talking about the graphic design of the product screenshots.

I'm personally not a fan of time limited trials -- I think feature or usage limits are better, especially when you don't have any users yet, and you need people to use the app and give feedback...

Re: The Business of SaaS

#236

Post by jcadam »

jakobegger wrote: post #235
jcadam wrote: post #231

Earlier quoted context omitted.

> - I don’t like the graphic design Of the landing page or the product itself? The landing page is an easier fix :) > - evaluating if this is good will take us more than a month That's quite possibly true. Wikis take time to populate and only become useful if people commit to doing so. The problem is how to balance: - Giving users time to evaluate the product - Revenue > - I’m worried about lock-in. If, after a few m…

I was talking about the graphic design of the product screenshots. I'm personally not a fan of time limited trials -- I think feature or usage limits are better, especially when you don't have any users yet, and you need people to use the app and give feedback...

Currently the trial is limited to 5 users and something like 100MB of file storage. I was actually more worried offering a free-tier would result in people abusing the service (i.e., using it to store/share illegal stuff).

However, just between you, me, and the internet, I actually haven't enabled the logic to lock trial accounts out at 30 days. Because I'm still unsure about it.

Re: The Business of SaaS

#237

Post by tomnipotent »

lquist wrote: post #150
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 think that's because too many SaaS CEOs think something else mentioned in the article: "Margins, to a first approximation, don’t matter...If they’re quickly growing, the company can ignore every expense that doesn’t scale directly with the number of customers" It makes sense in theory, but businesses don't grow to infinite size so fixed costs do matter. Ignorance of this fact drives the lower than anticipated gross…

> Ignorance of this fact drives the lower than anticipated gross margins of many SaaS businesses.

It's intentional. Great margins don't matter if you don't have customers, and no VC is going to get excited about a few extra margin points on OpEx when should be focusing on growing.

Re: The Business of SaaS

#238

Post by HeyLaughingBoy »

acct1771 wrote: post #204
pjc50 wrote: post #118

Earlier quoted context omitted.

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?

As someone building a company with the model you speak of: do you think communicating to potential purchasers via website copy that others in my industry have essentially abandoned their platforms because of lack of incentive to continue updating post-purchase would perhaps soothe some of that?

No, they just won't care.

I was on a non-software forum last week where a dev was gathering pain-point information because he intended to produce software for that niche. The main feedback I remember was "just let me buy it. No f'ing subscriptions."

Re: The Business of SaaS

#239

Post by antaviana »

acct1771 wrote: post #232
antaviana wrote: post #226

Earlier quoted context omitted.

We also use this model (software subscription). One thing that is very important is that never, under no circumstance be tempted to sell perpetual licenses even if there is demand for them. If you do subscriptions you should do only subscriptions.

Thanks, that's advice you're probably giving for a good reason you've experienced, I'm assuming! Any other insight into your experiences/troubles? How you decided on pricing, whether it had any impact on sales/sales efforts, what you had to do to support such a model? Thanks very much for your time!

We transitioned from freeware to subscription (it's B2B), a subscription model shares a lot with freeware logistics, for example most users are in the last version. Another advantage has been to be able to add features any time it was fit, no need to save them for the big upgrade. We decided a price at the beginning (EUR 99/year) that we thought would allow us to expand our offering under the same subscription umbrella. We run several promotions to experiment with pricing (in particular a Dutch action which was very successful at EUR 29/year, that brought a big revenue spike and also many new paying customers). But even after experimenting with good results we always stuck with our EUR 99/year price point. Due to the rather low price pint, we chose not do any type of customer segmentation (all customers pay the same per user, regardless of quantity of users). We do not do promotions anymore to avoid confusing users with pricing (since it is a subscription, we want to avoid that users wait for the next promotion to renew). Curiously very few potential customers ever asked for a permanent license. We have a extremely generous trial 30 days of actual use, not calendar days. Conversion at the end of trial is high, about 30%, probably because by the end of trial, users probably found a few use cases that somehow justify the price.

Re: The Business of SaaS

#240

Post by raiyu »

newbuser wrote: post #174
raiyu wrote: post #159

Earlier quoted context omitted.

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.?

For starters I would separate them out.

Paid I would consider traditional forms of advertising and marketing such as TV, FB, Google, ads, etc.

Organic or community driven advertising has it's costs as well but I would separate that out to a different section. This would include budgets like meetups, some conferences (though many I would actually lump into traditional ad spend), t-shirts, stickers, credits to customers, community expenses and so forth.

Then for non-tracked customers I would assume that percentages work well. Meaning if 25% of my customers come from community, then 25% of my non-tracked organic customers are from community. If 5% are from paid, I would say 5% of my organic non tracked are paid.

If you do the break out this way you will see that old-gaurd paid advertising is 80% of the cost of the entire sales and marketing function, but brings in an overall 5-10% of net new sales.

Now if you are profitable, or near profitability go for it, but if you are losing a sizable portion of yearly revenue, say 50% or more due to sales and marketing and you see it broken out this way you will immediately realize how false this spend is.

Just because something is done a certain way and accepted, doesn't mean that it's correct.

Post reply on HN