

SAAS or Self Hosted? - abhisekumar

We are building life cycle email &amp; customer success software for SaaS &amp; e-commerce startup, we are confused about pricing  model either sell as one time fees self hosted solutions or sell  as monthly recurring billing as SaaS, would love to get your thoughts on this.
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patio11
a) I wouldn't confuse your pricing model with the delivery model here. You can
certainly charge monthly for downloadable self-hosted software or charge once
for SaaS hosted in the cloud.

b) If you're in email, and you're not working with clients at the very, very
top of the sophistication chain, you should not expect them to host their own
email servers because their deliverability will be terrible. I suppose you
could theoretically let them use your product with a bring-your-own-MSA, but
that should probably be in-scope for your product. (You'd also be crazy to do
this yourself, but you can use an MSA on the backend, like substantially every
company providing UI and logic on top of email does.)

c) The operational difficulties of doing release cycles and maintenance for
client-hosted software, particularly hosted software which has to play well
with client-provided infrastructure, strongly, strongly, strongly suggest you
host things yourself.

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abhisekumar
Thank you for your details response,

1\. Yes for email delivery they can always bring their own smtp like sendgrid
or mandril, in that case may be they may not have to think about delivery? 2\.
Don’t you think customers can save money on self hosted if we sell for onetime
payment (let say price at 6 or 8 months subscription cost) like whmcs. 3\.
What do you think about customer acquisition cost for both options will it be
equal or any one will have any advantage over other?

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chton
Just a note on 2.: If your onetime price is equal to just 6 month subscription
time, you're going to lose money. Either you're lowballing your onetime
payment, or making a subscription too costly. Consider a case where you offer
both at the same time: Unless the costs associated with self-hosting are
incredibly high, very few people would choose the SaaS option if they can save
6 months of budget on the first year. In this case, I would increase your
price to at least a year of SaaS subscription.

As to your original question: Unless your software is special in some way that
you don't want anyone to find out about, you can offer both SaaS and self-
hosting at the same time. My advice would be to do that, but use a yearly-
license model for the self-hosting. Calculate the costs a self-hosted version
would cost in total to a client (license, hardware, maintenance etc.), and
make the SaaS version slightly cheaper than that.

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philjr
Quite simply, The saas model is a much easier support model and for that
reason and that reason alone I'd vote for it. All code lives on machines and
infrastructure you control and there's tremendous power that comes from that
particularly in the early days.

The recurring subscription model fits nicely with saas software also and your
growth over time starts to compound.

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thenomad
Having worked on a self-hosted product recently:

DON'T.

SAAS is a great deal easier - it's easier on you support-wise and it's also
much easier to sell to most clients. I'd expect your cost of customer
acquisition to be lower by far with the SAAS version.

Patio11's point about deliverability is also very important given your sector.

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antaviana
With SaaS you will be able to reproduce your customer issues much more easily.
Also, by reducing purchasing options you avoid the effect of paralysis by
options.

