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Building a business around a software is no simple task. You need a lot of 20$ customer to make a leaving and despite the low marginal cost for a user, it's ver

Building a business around a software is no simple task. You need a lot of 20$ customer to make a leaving and despite the low marginal cost for a user, it's very hard to make people to open their wallet to buy software whereas those same people will go buy expensive servers all the time and won't blink an eye for hardware. Any chance you could give more info on the size of enterprise customer you were looking at? I've had many people coming to me and only very rarely the rate per hour once you consider everything is more interesting than getting a 9to5 anywhere else. source: 20% of my income come from sales that relates to my OSS software and I hope one day to get to 100% so I can focus 100% of my time on it

figassis 3y ago
I'm one of the users that is averse to paying even a $10 subscription. The reason is it would be one of the 10-20 subscriptions that are all supposed to be really useful and worth it. For a small startup, this adds up, especially the $10/user one, where now you have to consider all your subscriptions when checking if you have the budget to hire someone new. I with there was a service where I could define a budget, say $500-$1000/month, and pick the services I need from those available on the platform, specify the size of my team, and vendors would bid for this. This service could then provide some form of SSO to these services. You might not get $20/user, but you might get 5%-10% of all the users on this service.
- bryanrasmussen 3y ago
  So how much would you be willing to pay for that service?
  - komadori 3y ago
    Well that service probably could charge $20 per user off the top because there would only be one of them :-).
  - worksonmine 3y ago
    Percentage of the total budget obviously. I'd like the same but for streaming, I don't watch enough to keep a monthly subscription on all the services. And hopping is getting tedious. Give me one place where I can watch anything wholesale, and the networks/services bidding for a cut of my subscription. If it works for music why not TV?
    - lotsofpulp 3y ago
      One reason is that the risk of investing in creating video media is orders of magnitude higher than audio media, due to the costs being orders of magnitude higher. >And hopping is getting tedious. I think life is pretty good if all I have to do is set a reminder to click a few buttons.
  - figassis 3y ago
    They'd take a fee from vendors.
- dustingetz 3y ago
  a saas is three orders of magnitudes cheaper than a human, in terms of %runway your entire saas budget is like 5 days per year of runway for a 4 person startup. That developer you just hired doesn’t work out? boom in one instant you’re out $50k plus the cumulative time anyone spent spent talking to them. companies will spend huge amounts of money on saas just to get leverage on their 100x higher payroll costs.
- type0 3y ago
  Another problem is that there no way of safeguarding that your SaaS provider won't raise your prices overnight, and migration also costs money and time
  - fragmede 3y ago
    Multi-year business contracts have lengthy renewal negotiations. Your saas provider can change rates, but it won't be overnight if you're a business.
    - figassis 3y ago
      US VC backed startup colored glasses: multiyear SaaS contracts. Some people are bootstrapping. And I thought the appeal of SaaS is pay for what you use, and pay as you grow? So now the selling point is buy in bulk?
      - otteromkram 3y ago
        The selling point is to buy what works for you. If you know what size user base you have and can estimate usage, buying ahead of time makes sense. If you're smaller or can't afford a multi-year contract or don't want to get locked into one service, then "pay as you go" makes sense.
        figassis 3y ago
        That's my point. Capital rich startups are not the subject of this comment. The reason Placemark is failing is not because it could not get one FAANG contract, it's because many small startups/smbs/single person businesses could not pay $20 for it. The comment was to give one reason I believe many SaaS startups today fail to grow, it's because the $20 is a fee for the small guy (otherwise it would be $500 or a contact us button), but the small guy has 100 other $20 subscriptions x employees, so another $20 is more like $1500+20 a month, and maybe the reason they can only afford 2 employees vs 3.
  - dustingetz 3y ago
- Closi 3y ago
  If you aren’t willing to pay $10 a month for this, frankly you aren’t the customer. I’m in a small business that pays much more per person for mapping software :) (10 person team, probably £8k per year spend)
  - lost_tourist 3y ago
    yep, anyone making money off software would be more than happy to pay $10-20 a month.
- irjustin 3y ago
  > I'm one of the users that is averse to paying even a $10 subscription. You're not a target customer. I'm surprised this software is only $20/user-mth. This isn't "general" software. It solves a specific problem for a specific set of customers - it should be charging way more and going the enterprise route.
Terretta 3y ago
Vast majority of subscription pricing is far out of line to software/SaaS cost (not counting venture costs), so apps and web apps have to compete on things other than utility. You mention a $20 customer. Look at pricing of Google workspaces or Office. https://workspace.google.com/pricing.html https://workspace.google.com/pricing.html https://www.microsoft.com/en-us/microsoft-365/buy/compare-all-microsoft-365-products https://www.microsoft.com/en-us/microsoft-365/buy/compare-al... Version pricing was beneficial to indie builders because users didn't consider the source. (Office still offers that $149 level version pricing.) Subscription pricing indies try to charge more, often multiples, relative to enterprise incumbents, so anyone who can ship at scale, can make the market unfeasible for indie entrants. What happens is boutique buyers of indie subs, but not the mass market scale because it's too much to get all the users.
- runako 3y ago
  > Look at pricing of Google workspaces or Office. This is a common mistake in understanding pricing. The reason Office (or consumer apps like Spotify & Netflix) are able to be relatively cheaper is because their addressable market is vastly larger. Larger markets support lower prices, where the winners still end up earning more revenue. By contrast, smaller niche markets have fewer potential customers over which to amortize their wares. This means that all things equal, those applications will tend to cost more. As a reductio thought experiment, consider that anyone can buy Microsoft's newest OS, the product of many tens of billions of dollars of R&D, for less than the cost of a tailored suit. But suppose you needed to buy an OS that would only ever run on 50 devices worldwide, how much do you think that would cost?
  - Terretta 3y ago
    And yet, your theory is clearly falsified when priced as a one time sale. The larger companies' software costs more, across the board. Your explanation ought to be true either way, but it isn't. And it doesn't have to be a thought experiment, there remains just enough single purchase software around to check. That's because except for "artisanal", "boutique", or "Veblen" products, the user doesn't care about your costs, they care about their utility (and for Veblen, the cost is its utility). Goes back to my initial comment: there are a misleading number of buyers willing to pay too much to "support the artist", as I do in software. But that is a very small addressable market relative to those who will pay for their utility, but not for your failure to scale.

figassis 3y ago

I'm one of the users that is averse to paying even a $10 subscription. The reason is it would be one of the 10-20 subscriptions that are all supposed to be really useful and worth it. For a small startup, this adds up, especially the $10/user one, where now you have to consider all your subscriptions when checking if you have the budget to hire someone new. I with there was a service where I could define a budget, say $500-$1000/month, and pick the services I need from those available on the platform, specify the size of my team, and vendors would bid for this. This service could then provide some form of SSO to these services. You might not get $20/user, but you might get 5%-10% of all the users on this service.

bryanrasmussen 3y ago
So how much would you be willing to pay for that service?
- komadori 3y ago
  Well that service probably could charge $20 per user off the top because there would only be one of them :-).
- worksonmine 3y ago
  Percentage of the total budget obviously. I'd like the same but for streaming, I don't watch enough to keep a monthly subscription on all the services. And hopping is getting tedious. Give me one place where I can watch anything wholesale, and the networks/services bidding for a cut of my subscription. If it works for music why not TV?
  - lotsofpulp 3y ago
    One reason is that the risk of investing in creating video media is orders of magnitude higher than audio media, due to the costs being orders of magnitude higher. >And hopping is getting tedious. I think life is pretty good if all I have to do is set a reminder to click a few buttons.
- figassis 3y ago
  They'd take a fee from vendors.
dustingetz 3y ago
a saas is three orders of magnitudes cheaper than a human, in terms of %runway your entire saas budget is like 5 days per year of runway for a 4 person startup. That developer you just hired doesn’t work out? boom in one instant you’re out $50k plus the cumulative time anyone spent spent talking to them. companies will spend huge amounts of money on saas just to get leverage on their 100x higher payroll costs.
type0 3y ago
Another problem is that there no way of safeguarding that your SaaS provider won't raise your prices overnight, and migration also costs money and time
- fragmede 3y ago
  Multi-year business contracts have lengthy renewal negotiations. Your saas provider can change rates, but it won't be overnight if you're a business.
  - figassis 3y ago
    US VC backed startup colored glasses: multiyear SaaS contracts. Some people are bootstrapping. And I thought the appeal of SaaS is pay for what you use, and pay as you grow? So now the selling point is buy in bulk?
    - otteromkram 3y ago
      The selling point is to buy what works for you. If you know what size user base you have and can estimate usage, buying ahead of time makes sense. If you're smaller or can't afford a multi-year contract or don't want to get locked into one service, then "pay as you go" makes sense.
      - figassis 3y ago
        That's my point. Capital rich startups are not the subject of this comment. The reason Placemark is failing is not because it could not get one FAANG contract, it's because many small startups/smbs/single person businesses could not pay $20 for it. The comment was to give one reason I believe many SaaS startups today fail to grow, it's because the $20 is a fee for the small guy (otherwise it would be $500 or a contact us button), but the small guy has 100 other $20 subscriptions x employees, so another $20 is more like $1500+20 a month, and maybe the reason they can only afford 2 employees vs 3.
- dustingetz 3y ago
Closi 3y ago
If you aren’t willing to pay $10 a month for this, frankly you aren’t the customer. I’m in a small business that pays much more per person for mapping software :) (10 person team, probably £8k per year spend)
- lost_tourist 3y ago
  yep, anyone making money off software would be more than happy to pay $10-20 a month.
irjustin 3y ago
> I'm one of the users that is averse to paying even a $10 subscription. You're not a target customer. I'm surprised this software is only $20/user-mth. This isn't "general" software. It solves a specific problem for a specific set of customers - it should be charging way more and going the enterprise route.

Terretta 3y ago

Vast majority of subscription pricing is far out of line to software/SaaS cost (not counting venture costs), so apps and web apps have to compete on things other than utility. You mention a $20 customer. Look at pricing of Google workspaces or Office. https://workspace.google.com/pricing.html https://workspace.google.com/pricing.html https://www.microsoft.com/en-us/microsoft-365/buy/compare-all-microsoft-365-products https://www.microsoft.com/en-us/microsoft-365/buy/compare-al... Version pricing was beneficial to indie builders because users didn't consider the source. (Office still offers that $149 level version pricing.) Subscription pricing indies try to charge more, often multiples, relative to enterprise incumbents, so anyone who can ship at scale, can make the market unfeasible for indie entrants. What happens is boutique buyers of indie subs, but not the mass market scale because it's too much to get all the users.

runako 3y ago
> Look at pricing of Google workspaces or Office. This is a common mistake in understanding pricing. The reason Office (or consumer apps like Spotify & Netflix) are able to be relatively cheaper is because their addressable market is vastly larger. Larger markets support lower prices, where the winners still end up earning more revenue. By contrast, smaller niche markets have fewer potential customers over which to amortize their wares. This means that all things equal, those applications will tend to cost more. As a reductio thought experiment, consider that anyone can buy Microsoft's newest OS, the product of many tens of billions of dollars of R&D, for less than the cost of a tailored suit. But suppose you needed to buy an OS that would only ever run on 50 devices worldwide, how much do you think that would cost?
- Terretta 3y ago
  And yet, your theory is clearly falsified when priced as a one time sale. The larger companies' software costs more, across the board. Your explanation ought to be true either way, but it isn't. And it doesn't have to be a thought experiment, there remains just enough single purchase software around to check. That's because except for "artisanal", "boutique", or "Veblen" products, the user doesn't care about your costs, they care about their utility (and for Veblen, the cost is its utility). Goes back to my initial comment: there are a misleading number of buyers willing to pay too much to "support the artist", as I do in software. But that is a very small addressable market relative to those who will pay for their utility, but not for your failure to scale.