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The main thing SaaS companies do is navigate the politics of selling into businesses. The software is an implementation detail. So you can replicate the product
by toasterlovin 3y ago
The main thing SaaS companies do is navigate the politics of selling into businesses. The software is an implementation detail. So you can replicate the product, but you still have to do the (much harder) work of selling.
- Solvency 3y agoIs that unique to SaaS? Doesn't a sprocket company have to do that? What about hand dryers in corporate office bathrooms? What about light fixtures? Or HVAC systems? Aren't all companies mostly just dealing with the meatspace dynamics of sales?
- ethbr1 3y agoConsumers (in OP's apps example) don't have to justify an expense to anyone, except maybe their partner. Hence B2C sales cycles below a certain dollar amount are compressed to: "I want this" + "Can I afford it?" + "I've bought this" That lowers costs of switching, creating a more competitive marketplace, leading to price as the primary differentiator, leading to the bottom. B2B differs in a lot of aspects.
- mcmoor 3y agoNone of those have race to the bottom to the $1 right? Unlike mobile games in OP example
- loxias 3y agoThis. The older and more experienced I get at building things and solving hard problems, the more convinced I am that the "magic" part is in the selling, the convincing, the communicating, the getting someone to pay money for this stuff. (and if anyone reading this now or in the future is good at that second half, email me, let's be friends and make money)
- joshuanapoli 3y agoI think that you do see more price pressure where there is an organized market. For example, software sold on app stores.
- ozim 3y agoWell not really because figuring out any physical product economics is hard and hvac or whatever has bad margins. With software at least for me I can say give me $100k/year and let me work for 2 years and I will have 80-90% of Atlassian jira. I don’t think anyone at this point in time can make dozen or so F500 companies to use what I did. But atlassian has them as customers.
- toasterlovin 3y agoOther types of B2B companies also have to sell, but SaaS companies are pretty unique due to their zero marginal cost of sales. Physical product companies have to sell AND buy inventory in order to be able to sell more. Services companies have to sell AND hire and train more billable employees in order to sell more.
- billyfcksalot 3y agoBoggled that you think the sales cost for a SaaS company is 0 - it's typically close to the first year's billing total. To grow revenue, a SaaS company will hire more salespeople, among other things. Let's not spread pure nonsense
- creamyhorror 3y agoThey mean near-0 marginal cost of goods sold (software service), presumably.
- toasterlovin 3y agoSorry, I meant cost of goods sold, as the other commenter noted. We're in agreement: basically the entire cost to grow revenue is selling expenses because the main function of a B2B SaaS is sales.