9 ms·

The best part about their $5,000 is that most of it will be profit. I'm pretty happy with my own SaaS application, but because I provide a telephone service I

• ChuckMcM 13y ago
  > The best part about their $5,000 is that most of it will be profit. How do you reason to that statement?
• thesis 13y ago
  There are lots of telephony services out there with great margins.
• josh2600 13y ago
  Telecom geek here: why do you have low margins? Where are you buying your DIDs and Routes? What switch are you using? I'd love to help, I literally eat sleep and breathe this stuff. There's no way your margins should be skinny unless you're playing LCR games, in which case you make it up on volume. Source: I work at 2600hz, the bootstrapped open source telecom cloud company. We've bootstrapped to 30+ employees on a pure telecom business so I have some experience here.
  • sologoub 13y ago
    What margin range would you consider healthy?
    • josh2600 13y ago
      It depends on the business. $MAJORWIRELESSOPERATOR on accessory sales has obscene margins (like 1000%). Things like minutes are skinny with gross margins of 60-100%. There are costs so if you're playing the LCR game you're likely making 4-10% net margin. It all depends on volume and cost to deliver. Some of the biggest providers have the highest costs to deliver service. Does that help? Edit: for example, a hosted PBX provider, pricing at $35 all inclusive per seat, should have gross margins north of 150% and net margins above 40%, assuming at least 10,000 seats. There are, of course, huge variations because of management style, frugality and a myriad of other factors, but there's money to be made. The easiest money in telecom, with the highest margins, are the Analytics, billing and operations tools (of which there are many but finding quality ones is a YMMV proposition).
  • jhuckestein 13y ago
    Nice, I'm a big fan of 2600hz! I'm currently on Twilio's first tier volume discount (I assume there's further volume discounts that aren't on the website), paying .8 cents/min IIRC. I looked into buying voice minutes and DIDs and running my own freeswitch boxes. Any provider that had listed prices charged upwards of .4 cents/min or had unlimited minutes per DID with a $4 or something fee per channel. A lot of them also limited the number of channels on a DID. Another reason I have low margins though is because my free plan and free trials also cost me real money. There is no way I can get around that. While we're at it: Another reason I looked into self-hosting was because I'd like to host conference calls with up to 5000 participants (think earnings calls, public forums, classes etc), most of which are mute. THAT is a high margin business, with companies charging up to 20 cents/minute/caller for those kinds of calls. I read this may be possible with freeswitch on beefy hardware. What do you think? Do you know any way I could get around hosting my own freeswitch servers, load balancer, redundant backups etc?
    • patio11 13y ago
      Another reason I have low margins though is because my free plan and free trials also cost me real money. There is no way I can get around that. Have you considered rolling back or sharply limiting your free trials? With the exception of people you've made commitments to, if they aren't accomplishing a business goal for you, you don't owe the world them. There is nothing intrinsic about SaaS that says there has to be a free plan. (Additional options: aggressively using the free plan as a viral spread mechanism. Your free competitors do this, as I learned the other day when on a sales call organized by somebody who would have happily dropped $50 to remove the external branding for that single phone call if they were aware of your option existing.) We also run on Twilio, and have a 30 day free trial with CC required upfront. While we still have marginal expenses to service free trials in a way that many SaaSes do not, the costs are not terrible and easy to justify as a cost of customer acquisition. (We shoot for, and mostly get, 80%+ margins on the paid plans.) If you're ever in the mood to chitchat about this, drop me an email. I'd be happy to share about how e.g. moving a bit upmarket and doing a bit of enterprise sales has worked for us.
      • josh2600 13y ago
  • pc86 13y ago
    I was just thinking about 2600hz the other day! I've recently started learning Erlang and you're one of the few startups I can think of that uses it (I'm sure there are some others, though).
    • josh2600 13y ago
      We <3 Erlang. Lots of startups use it including what's app, Goldman Sachs and even the big FB. Erlang was basically built for telecom so it made sense for us to build kazoo on top. Keep your eyes open over the next 60 days, we've got some fireworks coming out.
  • borplk 13y ago
    Hey since you mentioned you ear sleep and breathe this stuff I thought I'd ask a question. Do you know how easy/hard it is to start a "international calling card" service? I see lots of random ones popping up every day and they mostly look unprofessional so they remind me of email/web-hosting resellers. I was wondering if reselling "international calling card" is a thing? or do you actually need your own infrastructure? I was hoping that I can resell these services and make some passive income that way (I can directly market to low-competition markets in my home country).
    • josh2600 13y ago
      International calling card services are cheap to implement. The main issue people run into is fraud. I think that after DNS reflection, SIP attacks have to be one of the most common assaults. In addition, I've never seen a prepaid calling company that didn't get defrauded, you just build the losses into your margins. The typical way this is is done is to get a carrier route to a specific country and then arbitrage between that rate and the expected rate from say AT&T. There's usually a lot of margin when you compare it to AT&T costs, but you'll find the business is ultra competitive. We call voice the race to zero.
• vladd 13y ago
  > The best part about their $5,000 is that most of it will be profit. There are significant fixed costs associated with the development they did so far. I doubt $5,000/month would break them even considering just the salaries and office expenses such as rent.
  • beat 13y ago
    $5000/mo won't pay salary for one mid-grade programmer in flyover country. The important thing isn't the current value, it's the rate of growth (and the increase in the rate of growth).
    • jusben1369 13y ago
      Just FYI "flyover" is a really horrible patronizing elitist term and should be avoided at all costs.
      • beat 13y ago
        Believe me, I know. I've lived in flyover country my entire life (central Illinois, Iowa, and now Minnesota).
      • sheraz 13y ago
        C'mon -- flyover not that bad. Irksome perhaps, but not offensive.
      • aaronbrethorst 13y ago
        I grew up in Minnesota, and lived there for 21 years, and I refer to the Midwest as such all the time.
• jhuckestein 13y ago
  To clarify: My point is about the marginal cost of providing a customer with service. It's not useful to talk about a certain amount of recurring revenue if you have terrible margins. I could start a business that gives you two dollars for every dollar you pay me and reach $5,000 in monthly revenue in no time at all!
  • rexreed 13y ago
    Exactly. You could also make $1M tomorrow by selling gas for $1 a gallon. You'd have more customers than you'd know what to do with. But you'd lose $2M in the process. Many entrepreneurs confuse revenue with income. Positive revenue does not mean positive income. There was a good article on this regarding Ecomom's demise as a company because, in their case, getting more revenue meant necessarily incurring more losses. They didn't realize it until it was too late. They were better off not selling anything at all rather than selling something that increased their losses. In many ways, it wasn't a business. It was basically a charity where they subsidized the cost of a product for their customers without any upside for them.
• agwa 13y ago
  I'm a bit of a telecom geek (though josh2600 undoubtedly knows more than me, as he works in the industry), so I decided to check out your startup. I agree you should have nice, fat margins. Remember, you should be setting pricing based on how much your customers are willing to pay, not how much it costs you. For that reason, I think you should segment your plans based on max number of participants, even though this probably costs you nothing. I would think that this would be the best way to segment out customers willing to pay more: if I'm a small business or a freelancer, I'm not going to have many people on my conference calls, but if I'm a larger business with deeper pocketbooks, I'm going to have large conference calls and thus be driven to the more expensive plans. Even if your software isn't ready to enforce the limit, consider adding it to the pricing grid anyways to see if you get more signups on the bigger plans. Your lowest plan also feels too inexpensive to me, especially since those customers are probably responsible for a disproportionate number of support requests.
  • gridspy 13y ago
    The grandparent runs (https://www.hipdial.com/ https://www.hipdial.com/) about which the parent and I are talking. Those plans are far too lean. Also, I don't understand what a "local line" is when I go directly to your pricing page. I also don't understand what a "toll free line" is. Specifically I don't know why I need 5 lines. I don't run a pure SaaS (http://gridspy.com http://gridspy.com) but $9 / mo? These people are not employees. They have profits. We had to fight the same tendancy to offer unrealistically low prices. Your typical "professional" will bill $80-$200 / hr while on the conference call. They'd swallow $40 + You probably don't need a free plan, though you might want to consider a prepaid one. Bill on minutes or something. I'd consider eliminating it entirely. Team should be about $200 and business you should be thinking $1000 / month plus. I also think that segmenting based on max people per conference makes a lot of sense. It would also be simpler to bill based on "number of conferences" rather than "number of minutes" and trigger a new "conference" when a call extends beyond 1 hour. Higher prices should support more marketing work. You'd be surprised - higher prices will make your clients think that your product is more valuable and thus more likely to try it out. You've also got a viral element. Your users are telling others about you (to invite them to the conference). Ask them to put each person's phone number and email addresses into the system so you can send reminders to each participant before the meeting. In those reminders, I suggest you offer a "coupon" for 1-5 free conference calls to that guest. You might only want to do so if the guest has an email from a different domain. Monitor for abuse. This will help you get natural viral marketing underway. Another alternative is to build a followup email after the conference ends that has details on who joined the meeting, how long they talked, a downloadable recording (?) and their contact details. I hope this helps. It looks like you have a nice product.
• redguava 13y ago
  Don't underestimate the costs of running any SaaS application. You'll still have decent expenses for: - Fees to receive payments - Hosting - Support services (github, zendesk, etc.) - Your own salary I'll bet that not much of that $5k is profit.