11 ms·

Failed SaaS post-mortem: validate your pricing model like I didn't

123 points by elliotbnvl 6y ago

elliotbnvl 6y ago
tl;dr: I didn't run the numbers to understand how to price my bootstrapped SaaS as a solo founder, and after building an awesome tool, I had to throw it out. Key learnings: - You need to include pricing as a critical failure point from the very beginning when vetting your startup ideas. - You should be charging somewhere between $50 to $100/mo per user as a bootstrapped startup founder. - Don't bother trying to bootstrap / self-fund enterprise software.
- vermorel 6y ago
  Disclaimer: CEO of a midsize enterprise software company. Frankly, I just disagree: * Pricing is mostly irrelevant at the beginning. Even Google didn't figure out its business model and pricing long after they were created. The only thing that matter initially is to gradually converge toward something the market want (it's a journey). * Charging per user is only one of the many many options. It does not have to be that way. Many very successful software businesses don't charge that way. * Enterprise software is (comparatively) the easiest to self-fund. Most companies in this area are bootstrapped. It takes a single client to achieve ramen profitability for a team of 2 or 3.
  - elliotbnvl 6y ago
    Yeah, that makes sense. I don't think I have the enterprise experience to land an enterprise client, though, and the iteration length on closing a successful sale where I could learn which tactics work and which ones don't is super long. I imagine it would take many more years of experience than I have to pull that off. Response to edit: I think you make some great points, but I'm not sure how applicable they are to a self-funded solo bootstrapper... how did you launch your company? My goal is to reach $2k/mrr in the next two months so that I can go full-time on the startup and apply all of my time to making it better / marketing it better, in order to hit escape velocity where my books are completely in the black without having to work a day job.
    - vermorel 6y ago
      I launched my company as a self-funded solo bootstrapper straight out of university. I took some love money, that I mostly didn't use, and bought half of those shares back at ~4x the original price a decade down the road. 2k USD per month is nothing to a large company. Forget about the per month part, just charge a flat 100k USD package with 2 or 3 payment milestones over a quarter or two. You can give away IP too. You don't really care, you're not going to build your end-game software product on top of a rushed prototype anyway. However, you have to meet with prospects (executives). Lots of them. It's tough to even get one call, but once you get there, the one question to ask is: what's your biggest problem? and then improvise. After many meetings, you will see patterns emerge, both in types of problems and potential solutions.
manishsharan 6y ago
As a solo founder, what if I were to flip the pricing model on its head. Let us assume I need $100 per month to survive, my Google adwords budget is $40, my AWS /bill is expected to be $45, my overheads are $50 -- how do I price my product ?
- elliotbnvl 6y ago
  I think the $50-$100 figure is a rule-of-thumb, and Jason goes into some great detail on how he arrives at those numbers in the video. Something else which might seem more appropriate in that case is to determine your price based on the value you deliver rather than the cost it takes you to deliver that value. If your value delivered is less than what it costs you to deliver that value, you have a broken pricing model and there's no way to make it work.
  - manishsharan 6y ago
    >> If your value delivered is less than what it costs you to deliver that value, you have a broken pricing model and there's no way to make it work. You raise a good point. The challenge is how do you quantify the value. Should I be using the cost of alternatives or substitutes ? Or do you evaluate the actual value delivered by improved efficiency or revenue etc. This could turn into a very deep rabbit hole.
corkill 6y ago
Do they pay for other software to solve this problem? What are the painful problems of the people with purchasing power in that market? At the initial stage I would be looking for them to pay you anything or agree to pay and optimize the pricing model later.
soneca 6y ago
> "I just spent about three weeks bootstrapping a SaaS as a solo founder" > "Plus, my goal is to hit $2k MRR in the next two months" Why that fast? Is that the right pace? I wonder what's the right balance between validating things fast and persisting until you make it work. I am more inclined to the position that he should/I would have worked to make his $20/month product grows into the value of a $100/month product. People are never keen to spend $75 a month, unless is an investment in something that will make them, for example, earn $500 more a month. At the same time, there were signs that it could be an idea that he would keep trying for an year and a half, and end up in the same place (I've been there). How to make this decision?
- elliotbnvl 6y ago
  > Why that fast? Is that the right pace? My timeline is determined by my wife's due date currently. I have no idea if it's the right pace, but I also have no idea that it's not. Unless somebody comes along and points out why I should spend more time in a really convincing way, I'm going to set an unreasonable and if I hit it, great! If not, I'm probably still progressing more quickly than other people with more modest goals. > People are never keen to spend $75 a month, unless is an investment in something that will make them, for example, earn $500 more a month. Very true. I'm just not sure the value I can deliver with this product was ever going to be sellable at $75/mo, given the pricing the rest of the market exhibits... > At the same time, there were signs that it could be an idea that he would keep trying for an year and a half, and end up in the same place (I've been there). I've been here too (3 years on one startup, never got off the ground). I'm trying to land in the other extreme now -- moving TOO quickly. Hopefully doing this will help me find some middle ground that's not where my preconceptions paint it to be.
cl42 6y ago
> I just spent about three weeks bootstrapping a SaaS as a solo founder. For context, you can read my description of it here, and I’ve talked about the inspiration behind it and motivations here and here. ... wow, that's crazy fast. I'd argue you didn't validate anything with that time frame. It takes months to build a reputation or awareness around a product to give people time to make a decision. As SaaStr says, give your product/startup TWO YEARS.[1] Three weeks isn't enough time to even pretend you're bootstrapping. That's a vacation from work... > The basic concept was solid: provide an insanely simple way for business intelligence consultants to manage project data. ... ESPECIALLY IN B2B. --- [1] https://www.saastr.com/if-youre-going-to-do-a-saas-start-up-you-have-to-give-it-24-months/ https://www.saastr.com/if-youre-going-to-do-a-saas-start-up-...
- elliotbnvl 6y ago
  Hmm, not sure on this. If the problem is solving is big enough, I would think people would bite as soon as they're able to validate the software solves their problem. Check out how Jason Cohen founded WP Engine as a counterpoint. I mean, perhaps ALL of software is so saturated there are no places where this can happen, but I'd rather spend a couple of years discovering that then spend a couple of years learning that one solution I tried to sell isn't valid.
  - cl42 6y ago
    I'm not saying it's impossible; just because it might have worked for Jason Cohen doesn't mean you should expect such a short timeframe to work for you. That was also his 4th startup, I believe... As Jason says in his interviews, if it were that easy, then we'd all have 1000 customers and bootstrapped startups.
    - elliotbnvl 6y ago
      Conversely, because it probably won't work, is that a good reason not to try? Given the asymmetrical nature of the risk (three weeks is not a huge chunk out of my life, unlike three years I spent on a previous startup), it seems like a reasonable investment. If it does work, the payoff is worth the risk imo. Or at least, it was in this case -- which is why I took the risk.
codegeek 6y ago
" just spent about three weeks bootstrapping " Great share but please don't call it "Failed SAAS". I respect what you did but calling an experiment of 3 weeks a failed SAAS is unfair to real SAAS businesses that actually fail. 3 weeks is not enough. You can call it "I tried an experiment for 3 weeks and moving on".
- elliotbnvl 6y ago
  Hmm, what do you think the cutoff that determines a "real" SaaS is?
  - duxup 6y ago
    6 months, a year? At least before you can say you were out there long enough to learn anything / people to even find you... I work on a SaaS product and most of our customers take more than 3 weeks to even make a decision. Now maybe there are those that are far more spur of the moment, but I'd again come back to the discovery problem... there could be hordes of people who want the thing but weren't even looking at that time.
  - didip 6y ago
    You need to at least try several failed viral campaigns or B2B sales cycles. Three weeks is nowhere enough for both.
  - garydevenay 6y ago
    At least long enough to be indexed on Google.
  - codegeek 6y ago
    My point is that 3 weeks is not enough time to actually do the hard things: marketing, sales and most important: listening to potential customers. Not to mention all the other stuff that comes with running any business and not just SAAS which are operational, customer support etc etc. You will only know if the business was a failure until you have done all of that and that takes at least 2 years in my humble opinion. What you did was an idea validation that you tried for 3 weeks which btw has a great summary in your writing but I would not call it a failed SAAS. You haven't done the actual grinding. I say this as a bootstrapped SAAS guy who has been grinding for 6 years :)
nakodari 6y ago
As a fellow bootstrapped founder, you don't have to worry about drowning in support requests. Simply offer two pricing models, a $10-20/month without support (just work once on a good FAQ that answers the majority of questions), and a bigger $49-$69/month plan that comes with email support. Just because you're offering email support does not mean you're going to get lots of emails, you will be surprised how much a good FAQ reduces support emails.
- elliotbnvl 6y ago
  Great point! I've dealt with customer support for a SaaS in the past and a good FAQ definitely helps. I think I placed too much emphasis on the pain of dealing with support in my article. The other motivation was really just that, having thought about pricing, the whole idea of charging more and dealing with support less sounds more appealing than the opposite, and given that I could elect to follow a path that leads to that with little latent cost incurred, why not do it?
ygffuuhgftyujo7 6y ago
why would anyone pay 5-10 netflix subscriptions for a spreadsheet editor?
brainflake 6y ago
Good post - pricing is so very critical (although I do agree with others here that three weeks is such a _very_ short timeframe). It's interesting to think about pricing from a "what's my per-user cost so I can reasonably bootstrap this myself", but it's usually more reasonable (and profitable) to think about it the other way around - "what value am i providing to my user?". The book "The Strategy and Tactics of Pricing" was a real eye opener for me as I don't come from a business background. The crux is that don't think about it in terms of costs, but how much value (e.g., time saved, leads generated, etc) you are providing and if the price is worth it from the user's perspective.
PaulWaldman 6y ago
It's challenging to develop a product without having first-hand domain knowledge. Kudos for taking on the challenge.
ryanwaggoner 6y ago
Amazing job on building something, but you're giving up way too soon. With respect to Jason, there's no guarantee that every SaaS charging less than $50 / month is going to drown in support costs. Let's do the math, shall we? Suppose you want to make $10k MRR with this. You need 500 monthly users, right? Realistically, a good chunk of them aren't going to even use the product very often, despite paying for it. This is even more true since it's cheap. You could easily end up with fewer than 100 of the 500 logging in and using the product on any given day. Of those, maybe 5-10 are going to actually need support, and you could easily cover half of that with an FAQ, training videos, etc. So on any given day, you might get 2-5 emails from your 500 customers. Even if it's 10x that, you could probably churn through 20-30 support emails in 1-2 hours just by yourself, or you could hire someone for $500 / month to do it for you. And support requests are going to drop over time as you improve the product, fix bugs, etc. For the record, none of this is theoretical. I've run multiple profitable saas / recurring revenue projects and I've never had to deal with "drowning" in ongoing support requests. Supporting free users is a different question, and freemium can genuinely be challenging in terms of support requests, but even there it's not that difficult to handle larger volumes of support requests with automated methods to cut down 90% of it. And if you have a handful of problematic customers who are a constant source of stress, you can fire them. They're not worth your sanity, especially for $20 / month. A better question might be: why are you giving up so quickly? Is it really that you think it's not possible? Or maybe something else going on here?
arthurofbabylon 6y ago
This is... bullshit. The insights are forced – the rules for new businesses aren't so fixed that the advice from an internet persona and a brief questioning of the business model would kill a business. And to call it a post-mortem? Forgive me, but post-mortem analyses are valuable when slow – these insights come too quick, without enough chewing going on.
- fatnoah 6y ago
  For some reason, this article really aggravated me. The conclusion about the pricing model feels the most forced to me. What he's really saying is that he wanted to limit the number of customers to 25 or so and achieve a $2k MRR within 2 months. The reason for this was to have more time for other pursuits, such as homeschooling the imminent child or other pursuits. Implied there is some amount of time required that is << 40 hours/week. Reading his initial blog post, he doesn't mention the pricing model at all. He does mention taking a week to build a POC that his dad can show to his co-workers as well as contacting a few hundred BI folks via LinkedIn. That doesn't seem like a terrible approach. Build something, see what resonates, etc. Reading the article, what really seems to have happened is that he spent a week creating a UI POC, shopped it to 30 BI folks on LinkedIn over two weeks, and didn't get traction. I'm not sure what happened to the 20-30 reach outs per day. The real reason for the failure wasn't the pricing model, it was that the developer wanted something that would earn $2k/month with little to no effort on his part. The main reason the project failed was because he did no research in building it, and then decided not to continue it. The "pricing model" comes in when he decides what # of customers he can support in whatever amount of time he was willing the spend. He then extrapolated a number from that to get $2k MRR. Then, and only then, did he actually look at what comparable products on the market charge. The more I think about it, I'm pretty sure the whole exercise, including the "pricing model" conclusion, was simply an exercise in content generation. If so, well played, sir.
  - elliotbnvl 6y ago
    Hey -- very interesting that this article aggravates you. I'd really like to know more about what resonated with you personally, even if that resonation was negative. You've given me a lot to chew on, and I really appreciate the unbiased, perhaps even adversarial, response. > The conclusion about the pricing model feels the most forced to me. What he's really saying is that he wanted to limit the number of customers to 25 or so and achieve a $2k MRR within 2 months. I think this is an incorrect assumption. The idea going in is if I can get to $2k MRR within two months, that'll free me up to quit my day job by extending my runway significantly. Then I can spend all my time working on the SaaS, working on the more time-consuming parts like marketing, organic content generation and outreach, etc. > Reading the article, what really seems to have happened is that he spent a week creating a UI POC, shopped it to 30 BI folks on LinkedIn over two weeks, and didn't get traction. I'm not sure what happened to the 20-30 reach outs per day. Well, I had started doing those 20-30 reach outs per day, but on like day two I found Jason's video and it blew my mind enough to disrupt me from that course of action immediately. I stopped doing outreach to think about it (why would I want to bother people about something I may not even ship?). After spending some time thinking about it and discussing whether or not I should continue with a couple of my mentors and my dad, we all agreed that my time could be better spent elsewhere. > The real reason for the failure wasn't the pricing model, it was that the developer wanted something that would earn $2k/month with little to no effort on his part. I hesitate to call this "failure" anymore after reading the other comments on this post, which have been really helpful in shaping how I think about this whole story. Instead, it's a thought-through decision to put my effort in elsewhere. If I can spend the same amount of time building a POC and getting 25 paying users, with all else being equal, why would I want to spend that time building a POC for which I can charge less? Isn't it natural to build a startup where I can charge more, if that's within the realm of possibility? Given the fact that I was only three weeks in, I wasn't suffering from sunk cost fallacy of "well, I've come this far -- might as well keep going now!". > The "pricing model" comes in when he decides what # of customers he can support in whatever amount of time he was willing the spend. He then extrapolated a number from that to get $2k MRR. Actually, the $2k MRR comes from picking a somewhat arbitrary goal that I thought was slightly out of reach, and significant enough. I think there were a couple of people that mentioned hitting $2k MRR within 6 - 12 months in Indie Hacker podcasts, so I thought -- if they can do it that fast, is there any reason I can't do it faster? My thinking here comes from that quote Tim Ferriss likes to share, "why not six months instead of ten years?" So... why not give it a shot, ya know? > Then, and only then, did he actually look at what comparable products on the market charge. Actually, those numbers came up in conversations I was having with the people I reached out to on LinkedIn. They started talking about price, and I watched Jason's video, at around the same time. The reason I didn't mention anything about price in my first article was simply because I legit hadn't even thought of it at all. Once I did think of it -- well, I'll end with asking this rhetorical question again: if I could build something and sell it to 25 people for either X or 2X, why would I build something I can only sell for X? It makes sense to go for the 2X, right? Cheers, and thanks again for taking the time to write up that comment. It's been helpful to me in thinking about how I went about this and what I will do differently next time. > The more I think about it, I'm pretty sure the whole exercise, including the "pricing model" conclusion, was simply an exercise in content generation. If so, well played, sir. Welllllll... about that. The articles I've been writing about this process are definitely an exercise in content generation. The process itself, though, is just me fumbling my way through this with few mentors and little experience.
fourseventy 6y ago
You gave up after 3 weeks dude? You will never succeed at founding a startup with that attitude. I've been bootstrapping my startup for 2+ years and after several pivots we are just now finding our stride with ~$10k MRR. I also completely disagree on the assumption that pricing had anything to do with your failure. Your startup didn't fail because of the economics, it failed because your product didn't provide enough value to customers.
- elliotbnvl 6y ago
  > You gave up after 3 weeks dude? You will never succeed at founding a startup with that attitude. Well, I've also done it the other way where I spent three years at a startup and couldn't find traction. I'm just trying to hit the other extreme as well, and so hopefully land somewhere in the sweet spot in the middle. > you failed because your product didn't provide enough value to customers. Hmm, this is another great way of putting it -- value translates into pricing pretty directly, so if you can't charge enough there's probably not enough value. I think that's another way of saying the same thing.
  - blobbers 6y ago
    You might want to try filtering a bit better. Joining an early stage Sequoia or A16Z company might help you see what success looks like. Not guaranteed but a decent filtering function if you're looking for a post Series-A company to join.
  - bredren 6y ago
    There is no success or failure in the first three weeks of a “startup.”
  - carlosdp 6y ago
    > Well, I've also done it the other way where I spent three years at a startup and couldn't find traction. There is a massive space in-between those timeframes =P In this case, it doesn't seem you even actually built out a real MVP (not just the front-end) and tried to sell to customers. You hadn't actually validated whether people actually wanted the product for real, and just killed it because of one person's experience delivered in a talk? If you're taking PG's essays to heart, your only concern at the beginning should be building the thing and finding customers that really want it. The pricing stuff is the easiest thing by far to change (checkout patio11's stuff on this, if you haven't). Maybe this one really would have been a bust. But if your goal is to reach $2k MRR in 2 months, there's little chance you're gunna get there by building 3 week projects and gaming it out in your head instead of just selling to people. Choose 1 thing that you have a customer lined up for that really really wants it, and spend those two months building that out and making them happy.
blobbers 6y ago
It seems like maybe you gave up a little early. Also, 150 users seems like a ridiculously small number for any type of company doing custom software (non F500). ...but perhaps I'm just not very learned?
- zomglings 6y ago
  I agree that it sounds like he gave up too early, but I just wanted to say: It is difficult for any early-stage product to get even 1 paying user, let alone 150.
optymizer 6y ago
I get the impression that you're rushing - rushing to build it, rushing to get a customer, rushing to get to some MRR. Why? Why the 90 hour weeks? Why make critical business decisions without any metrics after hearing some guy on the internet talk about $50/user? Because he's famous? Most experienced people know to have patience: patience to find the right solution, patience to find the right users and patience to make the right connections. It all takes time and you only gave it 3 weeks? Sorry but you sound like you want to make a quick buck and retire early, or maybe you need the money now. Nothing wrong with that, but it's not really a "SaaS post-mortem", it's more of a "I don't have the time or patience to invest in this SaaS". All I can say is, have more patience, don't rush into things and don't throw your hands up in the air and give up when it's not going as well as you imagined in your mind. You have to persevere if you're going to run a startup. Good luck!
- jlbnjmn 6y ago
  Well said. I saved this for future reflection. Thanks!
- satvikpendem 6y ago
  In the article they say they want to make 2k MRR in 2 months so it seems like there's some external pressure present.
polote 6y ago
Hum, that's not really why you failed in my opinion. I feel like you think building a company is only about following the good rules. This is wrong, there is best rules to follow to create a successful company, you need to take risks and do new things. Following the 'best practices' is the best way to no be successful. Regarding your pricing, you are selling to individual developers, so, to people who never buy any professional products, and as other have said, after 3 weeks you can only say that you have not waited long enough to know if you are failing or not. Also you are too sure about what you are doing. If things are that obvious for you, it means you are very likely missing something My advice to you, forget about money, build something which satisfies your target users for free an when you will have several of them you will understand what they are willing to pay for. Startup life is long, you need to be patient and persistent, you have not failed, this is only the beginning ;), good luck
bckygldstn 6y ago
> you needed to be charging at least $50, closer to $100, per month, per user, in order to make it as a bootstrapped solo SaaS founder Here's the lowest monthly price plan for the TinySeed 2020 batch companies currently on the front page [1]: 950, 250, 159, 149, 49, 49, 29, 27, 25, 10, 9 [1] https://news.ycombinator.com/item?id=23033623 https://news.ycombinator.com/item?id=23033623
- elliotbnvl 6y ago
  Very interesting! Thanks for taking the time to pull those numbers.
pier25 6y ago
I'm working on my SaaS solo and I expect to work on it at least 1 year before releasing a beta. And after that I don't expect making some profit for at least another year, probably two. Working 3 weeks on something and expecting it to have some value is totally unrealistic. Yeah, maybe someone somewhere pulled that off, but it's one in a million chance and the lowest hanging fruit has already been taken years ago.
- elliotbnvl 6y ago
  Why did you decide to spend a year building something before releasing it? Wouldn't you want to validate the value your product brings to the table before spending that long on it? > Working 3 weeks on something and expecting it to have some value is totally unrealistic. Agreed -- the conversations I was having based on that were more about projected value it might offer rather than the current value. I wanted to see if I could people invested in the idea and my capabilities to deliver it, more so than the actual product as it existed at that time.
  - pier25 6y ago
    > Why did you decide to spend a year building something before releasing it? Wouldn't you want to validate the value your product brings to the table before spending that long on it? One year is not that much for a one man band but a) I believe I know the value it brings and b) even with a valuable idea you're still very far away from a successful product/company.
  - pier25 6y ago
    See this tweet by the founder of Gumroad: https://twitter.com/shl/status/1256258780427194368 https://twitter.com/shl/status/1256258780427194368
rmason 6y ago
Your objective was to close a sale. If you closed a sale you could keep learning. If you close a sale it validates you're solving a problem people are willing to pay to solve. At that point you're already ahead of 30% of startups. Jason Cohen's essays are a major influence on me and I've been doing this SaaS stuff for over twenty years. But you can always raise your price, especially after doing a lot of learning with a handful of early customers. But it's very difficult to lower your price after losing the sale the first time, I've got first hand experience here. Three weeks is a ridiculous amount of time to judge success of a startup, you need to invest a minimum of two years and at times during that period it will be an absolute grind. That's why you need to be absolutely in love with your idea or you won't have the energy to continue.
ricardobeat 6y ago
My opinion is that you don't really have a product here, hence it can't have failed. Your site doesn't even have a landing page explaining what the product is, why you'd use it, how much it costs, or user accounts (it's free access?). It barely qualifies as an MVP. That means you didn't even had a chance to capture any leads, which in turn means you can't take any conclusions about anything, especially pricing. > you won’t find many BI developers who are keen on trying to expense a monthly $75 bill You really won't, because $75 is way too low to bother with the expense process in any medium sized business. Maybe start at $750 instead? If you don't feel like you could charge that, is the product really offering value?
throw20200501 6y ago
I am a solo founder with over 900 customers, and I get bored because they have very few issues or support requests. You should at least give it a try... I have a public slack where people help each others most of the time, and I also handle all support requests on the chat.
davidgh 6y ago
> At that rate, I’d need to get between 500 and 1,000 users in order to reach an MRR that would let me go full-time. With that many users, as a solo bootstrapper, I’d be spending all of my time on support. Sure, maybe initially as you work out the bugs and missing features. But you don’t go from zero users to a thousand overnight, so users 1-10 will probably have more support requests than 990-1000 because you’ve worked the kinks out as you go. Also, if you’re able to find people that are willing to open their wallet for any amount then you have very engaged users. As they fully integrate your product into their workflows, you can find ways to increase the value you provide to them with upgraded, higher-priced plans, pushing your average monthly revenue per customer up.
bronson 6y ago
> My goal is to hit $2k MRR in the next two months, before my first child is born in July. You're about to go through a crazy experience. Instead of choosing startup life, consider making your wife and child the most important things in your life right now. You can spend 90 hours prototyping a startup idea any time but you only get one chance at this.

123 points by elliotbnvl 6y ago

tl;dr: I didn't run the numbers to understand how to price my bootstrapped SaaS as a solo founder, and after building an awesome tool, I had to throw it out. Key learnings: - You need to include pricing as a critical failure point from the very beginning when vetting your startup ideas. - You should be charging somewhere between $50 to $100/mo per user as a bootstrapped startup founder. - Don't bother trying to bootstrap / self-fund enterprise software.

vermorel 6y ago
Disclaimer: CEO of a midsize enterprise software company. Frankly, I just disagree: * Pricing is mostly irrelevant at the beginning. Even Google didn't figure out its business model and pricing long after they were created. The only thing that matter initially is to gradually converge toward something the market want (it's a journey). * Charging per user is only one of the many many options. It does not have to be that way. Many very successful software businesses don't charge that way. * Enterprise software is (comparatively) the easiest to self-fund. Most companies in this area are bootstrapped. It takes a single client to achieve ramen profitability for a team of 2 or 3.
- elliotbnvl 6y ago
  Yeah, that makes sense. I don't think I have the enterprise experience to land an enterprise client, though, and the iteration length on closing a successful sale where I could learn which tactics work and which ones don't is super long. I imagine it would take many more years of experience than I have to pull that off. Response to edit: I think you make some great points, but I'm not sure how applicable they are to a self-funded solo bootstrapper... how did you launch your company? My goal is to reach $2k/mrr in the next two months so that I can go full-time on the startup and apply all of my time to making it better / marketing it better, in order to hit escape velocity where my books are completely in the black without having to work a day job.
  - vermorel 6y ago
    I launched my company as a self-funded solo bootstrapper straight out of university. I took some love money, that I mostly didn't use, and bought half of those shares back at ~4x the original price a decade down the road. 2k USD per month is nothing to a large company. Forget about the per month part, just charge a flat 100k USD package with 2 or 3 payment milestones over a quarter or two. You can give away IP too. You don't really care, you're not going to build your end-game software product on top of a rushed prototype anyway. However, you have to meet with prospects (executives). Lots of them. It's tough to even get one call, but once you get there, the one question to ask is: what's your biggest problem? and then improvise. After many meetings, you will see patterns emerge, both in types of problems and potential solutions.

manishsharan 6y ago

As a solo founder, what if I were to flip the pricing model on its head. Let us assume I need $100 per month to survive, my Google adwords budget is $40, my AWS /bill is expected to be $45, my overheads are $50 -- how do I price my product ?

elliotbnvl 6y ago
I think the $50-$100 figure is a rule-of-thumb, and Jason goes into some great detail on how he arrives at those numbers in the video. Something else which might seem more appropriate in that case is to determine your price based on the value you deliver rather than the cost it takes you to deliver that value. If your value delivered is less than what it costs you to deliver that value, you have a broken pricing model and there's no way to make it work.
- manishsharan 6y ago
  >> If your value delivered is less than what it costs you to deliver that value, you have a broken pricing model and there's no way to make it work. You raise a good point. The challenge is how do you quantify the value. Should I be using the cost of alternatives or substitutes ? Or do you evaluate the actual value delivered by improved efficiency or revenue etc. This could turn into a very deep rabbit hole.

corkill 6y ago

Do they pay for other software to solve this problem? What are the painful problems of the people with purchasing power in that market? At the initial stage I would be looking for them to pay you anything or agree to pay and optimize the pricing model later.

soneca 6y ago

> "I just spent about three weeks bootstrapping a SaaS as a solo founder" > "Plus, my goal is to hit $2k MRR in the next two months" Why that fast? Is that the right pace? I wonder what's the right balance between validating things fast and persisting until you make it work. I am more inclined to the position that he should/I would have worked to make his $20/month product grows into the value of a $100/month product. People are never keen to spend $75 a month, unless is an investment in something that will make them, for example, earn $500 more a month. At the same time, there were signs that it could be an idea that he would keep trying for an year and a half, and end up in the same place (I've been there). How to make this decision?

elliotbnvl 6y ago
> Why that fast? Is that the right pace? My timeline is determined by my wife's due date currently. I have no idea if it's the right pace, but I also have no idea that it's not. Unless somebody comes along and points out why I should spend more time in a really convincing way, I'm going to set an unreasonable and if I hit it, great! If not, I'm probably still progressing more quickly than other people with more modest goals. > People are never keen to spend $75 a month, unless is an investment in something that will make them, for example, earn $500 more a month. Very true. I'm just not sure the value I can deliver with this product was ever going to be sellable at $75/mo, given the pricing the rest of the market exhibits... > At the same time, there were signs that it could be an idea that he would keep trying for an year and a half, and end up in the same place (I've been there). I've been here too (3 years on one startup, never got off the ground). I'm trying to land in the other extreme now -- moving TOO quickly. Hopefully doing this will help me find some middle ground that's not where my preconceptions paint it to be.

cl42 6y ago

> I just spent about three weeks bootstrapping a SaaS as a solo founder. For context, you can read my description of it here, and I’ve talked about the inspiration behind it and motivations here and here. ... wow, that's crazy fast. I'd argue you didn't validate anything with that time frame. It takes months to build a reputation or awareness around a product to give people time to make a decision. As SaaStr says, give your product/startup TWO YEARS.[1] Three weeks isn't enough time to even pretend you're bootstrapping. That's a vacation from work... > The basic concept was solid: provide an insanely simple way for business intelligence consultants to manage project data. ... ESPECIALLY IN B2B. --- [1] https://www.saastr.com/if-youre-going-to-do-a-saas-start-up-you-have-to-give-it-24-months/ https://www.saastr.com/if-youre-going-to-do-a-saas-start-up-...

elliotbnvl 6y ago
Hmm, not sure on this. If the problem is solving is big enough, I would think people would bite as soon as they're able to validate the software solves their problem. Check out how Jason Cohen founded WP Engine as a counterpoint. I mean, perhaps ALL of software is so saturated there are no places where this can happen, but I'd rather spend a couple of years discovering that then spend a couple of years learning that one solution I tried to sell isn't valid.
- cl42 6y ago
  I'm not saying it's impossible; just because it might have worked for Jason Cohen doesn't mean you should expect such a short timeframe to work for you. That was also his 4th startup, I believe... As Jason says in his interviews, if it were that easy, then we'd all have 1000 customers and bootstrapped startups.
  - elliotbnvl 6y ago
    Conversely, because it probably won't work, is that a good reason not to try? Given the asymmetrical nature of the risk (three weeks is not a huge chunk out of my life, unlike three years I spent on a previous startup), it seems like a reasonable investment. If it does work, the payoff is worth the risk imo. Or at least, it was in this case -- which is why I took the risk.

codegeek 6y ago

" just spent about three weeks bootstrapping " Great share but please don't call it "Failed SAAS". I respect what you did but calling an experiment of 3 weeks a failed SAAS is unfair to real SAAS businesses that actually fail. 3 weeks is not enough. You can call it "I tried an experiment for 3 weeks and moving on".

elliotbnvl 6y ago
Hmm, what do you think the cutoff that determines a "real" SaaS is?
- duxup 6y ago
  6 months, a year? At least before you can say you were out there long enough to learn anything / people to even find you... I work on a SaaS product and most of our customers take more than 3 weeks to even make a decision. Now maybe there are those that are far more spur of the moment, but I'd again come back to the discovery problem... there could be hordes of people who want the thing but weren't even looking at that time.
- didip 6y ago
  You need to at least try several failed viral campaigns or B2B sales cycles. Three weeks is nowhere enough for both.
- garydevenay 6y ago
  At least long enough to be indexed on Google.
- codegeek 6y ago
  My point is that 3 weeks is not enough time to actually do the hard things: marketing, sales and most important: listening to potential customers. Not to mention all the other stuff that comes with running any business and not just SAAS which are operational, customer support etc etc. You will only know if the business was a failure until you have done all of that and that takes at least 2 years in my humble opinion. What you did was an idea validation that you tried for 3 weeks which btw has a great summary in your writing but I would not call it a failed SAAS. You haven't done the actual grinding. I say this as a bootstrapped SAAS guy who has been grinding for 6 years :)

nakodari 6y ago

As a fellow bootstrapped founder, you don't have to worry about drowning in support requests. Simply offer two pricing models, a $10-20/month without support (just work once on a good FAQ that answers the majority of questions), and a bigger $49-$69/month plan that comes with email support. Just because you're offering email support does not mean you're going to get lots of emails, you will be surprised how much a good FAQ reduces support emails.

elliotbnvl 6y ago
Great point! I've dealt with customer support for a SaaS in the past and a good FAQ definitely helps. I think I placed too much emphasis on the pain of dealing with support in my article. The other motivation was really just that, having thought about pricing, the whole idea of charging more and dealing with support less sounds more appealing than the opposite, and given that I could elect to follow a path that leads to that with little latent cost incurred, why not do it?

ygffuuhgftyujo7 6y ago

why would anyone pay 5-10 netflix subscriptions for a spreadsheet editor?

brainflake 6y ago

Good post - pricing is so very critical (although I do agree with others here that three weeks is such a _very_ short timeframe). It's interesting to think about pricing from a "what's my per-user cost so I can reasonably bootstrap this myself", but it's usually more reasonable (and profitable) to think about it the other way around - "what value am i providing to my user?". The book "The Strategy and Tactics of Pricing" was a real eye opener for me as I don't come from a business background. The crux is that don't think about it in terms of costs, but how much value (e.g., time saved, leads generated, etc) you are providing and if the price is worth it from the user's perspective.

PaulWaldman 6y ago

It's challenging to develop a product without having first-hand domain knowledge. Kudos for taking on the challenge.

ryanwaggoner 6y ago

Amazing job on building something, but you're giving up way too soon. With respect to Jason, there's no guarantee that every SaaS charging less than $50 / month is going to drown in support costs. Let's do the math, shall we? Suppose you want to make $10k MRR with this. You need 500 monthly users, right? Realistically, a good chunk of them aren't going to even use the product very often, despite paying for it. This is even more true since it's cheap. You could easily end up with fewer than 100 of the 500 logging in and using the product on any given day. Of those, maybe 5-10 are going to actually need support, and you could easily cover half of that with an FAQ, training videos, etc. So on any given day, you might get 2-5 emails from your 500 customers. Even if it's 10x that, you could probably churn through 20-30 support emails in 1-2 hours just by yourself, or you could hire someone for $500 / month to do it for you. And support requests are going to drop over time as you improve the product, fix bugs, etc. For the record, none of this is theoretical. I've run multiple profitable saas / recurring revenue projects and I've never had to deal with "drowning" in ongoing support requests. Supporting free users is a different question, and freemium can genuinely be challenging in terms of support requests, but even there it's not that difficult to handle larger volumes of support requests with automated methods to cut down 90% of it. And if you have a handful of problematic customers who are a constant source of stress, you can fire them. They're not worth your sanity, especially for $20 / month. A better question might be: why are you giving up so quickly? Is it really that you think it's not possible? Or maybe something else going on here?

arthurofbabylon 6y ago

This is... bullshit. The insights are forced – the rules for new businesses aren't so fixed that the advice from an internet persona and a brief questioning of the business model would kill a business. And to call it a post-mortem? Forgive me, but post-mortem analyses are valuable when slow – these insights come too quick, without enough chewing going on.

fatnoah 6y ago
For some reason, this article really aggravated me. The conclusion about the pricing model feels the most forced to me. What he's really saying is that he wanted to limit the number of customers to 25 or so and achieve a $2k MRR within 2 months. The reason for this was to have more time for other pursuits, such as homeschooling the imminent child or other pursuits. Implied there is some amount of time required that is << 40 hours/week. Reading his initial blog post, he doesn't mention the pricing model at all. He does mention taking a week to build a POC that his dad can show to his co-workers as well as contacting a few hundred BI folks via LinkedIn. That doesn't seem like a terrible approach. Build something, see what resonates, etc. Reading the article, what really seems to have happened is that he spent a week creating a UI POC, shopped it to 30 BI folks on LinkedIn over two weeks, and didn't get traction. I'm not sure what happened to the 20-30 reach outs per day. The real reason for the failure wasn't the pricing model, it was that the developer wanted something that would earn $2k/month with little to no effort on his part. The main reason the project failed was because he did no research in building it, and then decided not to continue it. The "pricing model" comes in when he decides what # of customers he can support in whatever amount of time he was willing the spend. He then extrapolated a number from that to get $2k MRR. Then, and only then, did he actually look at what comparable products on the market charge. The more I think about it, I'm pretty sure the whole exercise, including the "pricing model" conclusion, was simply an exercise in content generation. If so, well played, sir.
- elliotbnvl 6y ago
  Hey -- very interesting that this article aggravates you. I'd really like to know more about what resonated with you personally, even if that resonation was negative. You've given me a lot to chew on, and I really appreciate the unbiased, perhaps even adversarial, response. > The conclusion about the pricing model feels the most forced to me. What he's really saying is that he wanted to limit the number of customers to 25 or so and achieve a $2k MRR within 2 months. I think this is an incorrect assumption. The idea going in is if I can get to $2k MRR within two months, that'll free me up to quit my day job by extending my runway significantly. Then I can spend all my time working on the SaaS, working on the more time-consuming parts like marketing, organic content generation and outreach, etc. > Reading the article, what really seems to have happened is that he spent a week creating a UI POC, shopped it to 30 BI folks on LinkedIn over two weeks, and didn't get traction. I'm not sure what happened to the 20-30 reach outs per day. Well, I had started doing those 20-30 reach outs per day, but on like day two I found Jason's video and it blew my mind enough to disrupt me from that course of action immediately. I stopped doing outreach to think about it (why would I want to bother people about something I may not even ship?). After spending some time thinking about it and discussing whether or not I should continue with a couple of my mentors and my dad, we all agreed that my time could be better spent elsewhere. > The real reason for the failure wasn't the pricing model, it was that the developer wanted something that would earn $2k/month with little to no effort on his part. I hesitate to call this "failure" anymore after reading the other comments on this post, which have been really helpful in shaping how I think about this whole story. Instead, it's a thought-through decision to put my effort in elsewhere. If I can spend the same amount of time building a POC and getting 25 paying users, with all else being equal, why would I want to spend that time building a POC for which I can charge less? Isn't it natural to build a startup where I can charge more, if that's within the realm of possibility? Given the fact that I was only three weeks in, I wasn't suffering from sunk cost fallacy of "well, I've come this far -- might as well keep going now!". > The "pricing model" comes in when he decides what # of customers he can support in whatever amount of time he was willing the spend. He then extrapolated a number from that to get $2k MRR. Actually, the $2k MRR comes from picking a somewhat arbitrary goal that I thought was slightly out of reach, and significant enough. I think there were a couple of people that mentioned hitting $2k MRR within 6 - 12 months in Indie Hacker podcasts, so I thought -- if they can do it that fast, is there any reason I can't do it faster? My thinking here comes from that quote Tim Ferriss likes to share, "why not six months instead of ten years?" So... why not give it a shot, ya know? > Then, and only then, did he actually look at what comparable products on the market charge. Actually, those numbers came up in conversations I was having with the people I reached out to on LinkedIn. They started talking about price, and I watched Jason's video, at around the same time. The reason I didn't mention anything about price in my first article was simply because I legit hadn't even thought of it at all. Once I did think of it -- well, I'll end with asking this rhetorical question again: if I could build something and sell it to 25 people for either X or 2X, why would I build something I can only sell for X? It makes sense to go for the 2X, right? Cheers, and thanks again for taking the time to write up that comment. It's been helpful to me in thinking about how I went about this and what I will do differently next time. > The more I think about it, I'm pretty sure the whole exercise, including the "pricing model" conclusion, was simply an exercise in content generation. If so, well played, sir. Welllllll... about that. The articles I've been writing about this process are definitely an exercise in content generation. The process itself, though, is just me fumbling my way through this with few mentors and little experience.

fourseventy 6y ago

You gave up after 3 weeks dude? You will never succeed at founding a startup with that attitude. I've been bootstrapping my startup for 2+ years and after several pivots we are just now finding our stride with ~$10k MRR. I also completely disagree on the assumption that pricing had anything to do with your failure. Your startup didn't fail because of the economics, it failed because your product didn't provide enough value to customers.

elliotbnvl 6y ago
> You gave up after 3 weeks dude? You will never succeed at founding a startup with that attitude. Well, I've also done it the other way where I spent three years at a startup and couldn't find traction. I'm just trying to hit the other extreme as well, and so hopefully land somewhere in the sweet spot in the middle. > you failed because your product didn't provide enough value to customers. Hmm, this is another great way of putting it -- value translates into pricing pretty directly, so if you can't charge enough there's probably not enough value. I think that's another way of saying the same thing.
- blobbers 6y ago
  You might want to try filtering a bit better. Joining an early stage Sequoia or A16Z company might help you see what success looks like. Not guaranteed but a decent filtering function if you're looking for a post Series-A company to join.
- bredren 6y ago
  There is no success or failure in the first three weeks of a “startup.”
- carlosdp 6y ago
  > Well, I've also done it the other way where I spent three years at a startup and couldn't find traction. There is a massive space in-between those timeframes =P In this case, it doesn't seem you even actually built out a real MVP (not just the front-end) and tried to sell to customers. You hadn't actually validated whether people actually wanted the product for real, and just killed it because of one person's experience delivered in a talk? If you're taking PG's essays to heart, your only concern at the beginning should be building the thing and finding customers that really want it. The pricing stuff is the easiest thing by far to change (checkout patio11's stuff on this, if you haven't). Maybe this one really would have been a bust. But if your goal is to reach $2k MRR in 2 months, there's little chance you're gunna get there by building 3 week projects and gaming it out in your head instead of just selling to people. Choose 1 thing that you have a customer lined up for that really really wants it, and spend those two months building that out and making them happy.

blobbers 6y ago

It seems like maybe you gave up a little early. Also, 150 users seems like a ridiculously small number for any type of company doing custom software (non F500). ...but perhaps I'm just not very learned?

zomglings 6y ago
I agree that it sounds like he gave up too early, but I just wanted to say: It is difficult for any early-stage product to get even 1 paying user, let alone 150.

optymizer 6y ago

I get the impression that you're rushing - rushing to build it, rushing to get a customer, rushing to get to some MRR. Why? Why the 90 hour weeks? Why make critical business decisions without any metrics after hearing some guy on the internet talk about $50/user? Because he's famous? Most experienced people know to have patience: patience to find the right solution, patience to find the right users and patience to make the right connections. It all takes time and you only gave it 3 weeks? Sorry but you sound like you want to make a quick buck and retire early, or maybe you need the money now. Nothing wrong with that, but it's not really a "SaaS post-mortem", it's more of a "I don't have the time or patience to invest in this SaaS". All I can say is, have more patience, don't rush into things and don't throw your hands up in the air and give up when it's not going as well as you imagined in your mind. You have to persevere if you're going to run a startup. Good luck!

jlbnjmn 6y ago
Well said. I saved this for future reflection. Thanks!
satvikpendem 6y ago
In the article they say they want to make 2k MRR in 2 months so it seems like there's some external pressure present.

polote 6y ago

Hum, that's not really why you failed in my opinion. I feel like you think building a company is only about following the good rules. This is wrong, there is best rules to follow to create a successful company, you need to take risks and do new things. Following the 'best practices' is the best way to no be successful. Regarding your pricing, you are selling to individual developers, so, to people who never buy any professional products, and as other have said, after 3 weeks you can only say that you have not waited long enough to know if you are failing or not. Also you are too sure about what you are doing. If things are that obvious for you, it means you are very likely missing something My advice to you, forget about money, build something which satisfies your target users for free an when you will have several of them you will understand what they are willing to pay for. Startup life is long, you need to be patient and persistent, you have not failed, this is only the beginning ;), good luck

bckygldstn 6y ago

> you needed to be charging at least $50, closer to $100, per month, per user, in order to make it as a bootstrapped solo SaaS founder Here's the lowest monthly price plan for the TinySeed 2020 batch companies currently on the front page [1]: 950, 250, 159, 149, 49, 49, 29, 27, 25, 10, 9 [1] https://news.ycombinator.com/item?id=23033623 https://news.ycombinator.com/item?id=23033623

elliotbnvl 6y ago
Very interesting! Thanks for taking the time to pull those numbers.

pier25 6y ago

I'm working on my SaaS solo and I expect to work on it at least 1 year before releasing a beta. And after that I don't expect making some profit for at least another year, probably two. Working 3 weeks on something and expecting it to have some value is totally unrealistic. Yeah, maybe someone somewhere pulled that off, but it's one in a million chance and the lowest hanging fruit has already been taken years ago.

elliotbnvl 6y ago
Why did you decide to spend a year building something before releasing it? Wouldn't you want to validate the value your product brings to the table before spending that long on it? > Working 3 weeks on something and expecting it to have some value is totally unrealistic. Agreed -- the conversations I was having based on that were more about projected value it might offer rather than the current value. I wanted to see if I could people invested in the idea and my capabilities to deliver it, more so than the actual product as it existed at that time.
- pier25 6y ago
  > Why did you decide to spend a year building something before releasing it? Wouldn't you want to validate the value your product brings to the table before spending that long on it? One year is not that much for a one man band but a) I believe I know the value it brings and b) even with a valuable idea you're still very far away from a successful product/company.
- pier25 6y ago
  See this tweet by the founder of Gumroad: https://twitter.com/shl/status/1256258780427194368 https://twitter.com/shl/status/1256258780427194368

rmason 6y ago

Your objective was to close a sale. If you closed a sale you could keep learning. If you close a sale it validates you're solving a problem people are willing to pay to solve. At that point you're already ahead of 30% of startups. Jason Cohen's essays are a major influence on me and I've been doing this SaaS stuff for over twenty years. But you can always raise your price, especially after doing a lot of learning with a handful of early customers. But it's very difficult to lower your price after losing the sale the first time, I've got first hand experience here. Three weeks is a ridiculous amount of time to judge success of a startup, you need to invest a minimum of two years and at times during that period it will be an absolute grind. That's why you need to be absolutely in love with your idea or you won't have the energy to continue.

ricardobeat 6y ago

My opinion is that you don't really have a product here, hence it can't have failed. Your site doesn't even have a landing page explaining what the product is, why you'd use it, how much it costs, or user accounts (it's free access?). It barely qualifies as an MVP. That means you didn't even had a chance to capture any leads, which in turn means you can't take any conclusions about anything, especially pricing. > you won’t find many BI developers who are keen on trying to expense a monthly $75 bill You really won't, because $75 is way too low to bother with the expense process in any medium sized business. Maybe start at $750 instead? If you don't feel like you could charge that, is the product really offering value?

throw20200501 6y ago

I am a solo founder with over 900 customers, and I get bored because they have very few issues or support requests. You should at least give it a try... I have a public slack where people help each others most of the time, and I also handle all support requests on the chat.

davidgh 6y ago

> At that rate, I’d need to get between 500 and 1,000 users in order to reach an MRR that would let me go full-time. With that many users, as a solo bootstrapper, I’d be spending all of my time on support. Sure, maybe initially as you work out the bugs and missing features. But you don’t go from zero users to a thousand overnight, so users 1-10 will probably have more support requests than 990-1000 because you’ve worked the kinks out as you go. Also, if you’re able to find people that are willing to open their wallet for any amount then you have very engaged users. As they fully integrate your product into their workflows, you can find ways to increase the value you provide to them with upgraded, higher-priced plans, pushing your average monthly revenue per customer up.

bronson 6y ago

> My goal is to hit $2k MRR in the next two months, before my first child is born in July. You're about to go through a crazy experience. Instead of choosing startup life, consider making your wife and child the most important things in your life right now. You can spend 90 hours prototyping a startup idea any time but you only get one chance at this.