

Ask HN: Just want to make $1,000/mo from my SaaS, competing on price? - abba_fishhead

I aspire to be an actor, and I need a flexible job so I can audition anytime. I decided to start an SaaS startup. I&#x27;m currently a server at a restaurant, and the scheduling process is terrible -- excel sheets, manual paper schedules, etc. So I believe I can build a scheduling app that works and that restaurants actually use.<p>The market seems pretty saturated&#x2F;crowded with little to no differentiation. In fact, it seems almost as if they&#x27;re just competing on who has more features. As a solo founder who&#x27;s just building a lifestyle startup, I don&#x27;t want to go down the features route.<p>I plan to differentiate based mainly on ease of use (intuitive design, less irrelevant features that just simply don&#x27;t apply to smaller restaurants) and price. Competitors now average $30&#x2F;mo. I&#x27;d undercut them and take $20&#x2F;mo for a simpler, no-bells-and-whistles solution.<p>There has to be an underserved market segment of really small restaurants (&lt;10 employees) that would use my site instead, I believe. Or is this wishful thinking?<p>PS I once started an SaaS site that made about $1,300&#x2F;mo at its peak, way less now though due to my disinterest (I took a year-long road trip, did loads of random stuff, had a YouTube career, wrote a book, etc. etc.).
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onion2k
_the scheduling process is terrible -- excel sheets, manual paper schedules,
etc_

Excel and paper might be terrible to you, but you're a tech minded
entreprenuer so what it feels like to you is essentially irrelevant. The
person who needs to think Excel and paper are terrible is _your customer_. The
two important things are: Do Excel and paper have a fundamental disadvantage
compared to a SaaS solution that people would be willing to pay for, and would
people be willing to pay $<price> in order to get that advantage? It's
definitely possible that the answer to those questions is a resounding 'YES!'
_to you_ , but you need to ask people who would pay for your product those
questions rather than believing you already know the answer. Research your
market.

As for competing on price, I wouldn't. You competitors will just discount
their products if you take any significant market share. They've picked a
price they believe people will pay, really there's (probably) nothing stopping
them charging $1/month.

(Note: My startup competed with Excel. What we built was definitely better
than Excel for the problem we were tackling. But ultimately most of our
potential customers thought the pain was quite trivial (despite losing
$thousands on projects due to it) so no one bought in. Excel was _good enough_
and effectively free because everyone already has it. $20/month is a heck of a
lot more than $0/month.)

~~~
abba_fishhead
I certainly cannot compete on features, and saying that I'll compete on
"design"/"ease-of-use" is trivial; it's the execution that's hard. I could
target only restaurants, and customize my entire software for it to serve it
better, but there are already solutions out there doing it to appeal more to
the restaurateurs.

In other words, I don't know what my competitive advantage will be should I
decide to enter this market, yet I know this market pretty well based on my
first-hand experiences.

~~~
trcollinson
First, a quick anecdotal story. Recently, an entrepreneur came to me and said
he had a solution for a particular market he had worked in for years,
inventory management software. His daughter had recently started a small
business and was using spreadsheets and paper to keep track of inventory. He
started looking around and many other small businesses were doing the same.
There were solutions that were out there, everything from spreadsheet
templates, to iPhone apps, to access databases that could help these small
business owners but they didn't use them. It was obvious that these solutions
weren't easy to use, weren't what the small business owners wanted, and
weren't working. So he built an amazing, simple, attractive solution using his
decades of industry experience. I am not sarcastic when I say his solution
was, honestly, pretty nice, and better than the rest of the market.

He came to me because it wasn't selling. In fact, he decided after some time
to put it on a freemium model. Even the basic, absolutely free edition had
almost no users. Why? Was it not working as intended? Did he have bugs? Was it
slow?

Well, no. It was a great piece of software. The market didn't want it though.
It turns out that spreadsheets and paper work well for small businesses
looking to track a certain amount of inventory. If they get big enough to need
more than they want something more than this guy was offering. There was
literally no market for the software he built. He had no competitive advantage
because the market didn't see a need for a solution. Some lower level
employees of small businesses might have wanted his software, but the owners,
the people paying the bills, didn't see the need and didn't care. Spreadsheets
and paper just worked. End of story.

I'm not trying to discourage you from entrepreneurship at all. However, not
all businesses work. You can attempt to compete on price, but that almost
never works. As others have said, your competition will smash you on price.
You can compete on features. But you have to ask yourself, why aren't
businesses using the competition now? If it turns out that it is because they
just don't want a technical solution, or because they don't believe they have
a problem, then you are in a position where you have to win on educating a
market, and that is a costly and formidable issue. Maybe instead you'd like to
try to pull customers away from existing solutions, not onboard customers who
aren't using a solution. Well, is the time and effort worth it to switch from
an existing solution to your solution for $10 in monthly savings? I doubt it.
Finally, remember that there are other costs to onboarding customers. If you
have to spend an hour on the phone with each customer each week for a $20
monthly fee, just remember how much you are really making.

Sorry, I realize that doesn't help you to solve your problem or find your
competitive advantage. Sometimes, there is no competitive advantage.

~~~
Someone1234
Amazing anecdote/post there.

To me, the biggest take-away is: confirm the market before you build. So
instead of just coming up with a legitimately good idea and then going to
work, set up the marketing material first to measure hits, or talk to people
in industry and see if they _would_ pay $x/month if such a thing existed.

This is even pre-minimum viable product level, this is putting feelers out to
see if the MVP is worthwhile.

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brudgers
When people are competing on price, the products are fungible...one scheduling
app is as good as another. When competing on price against pencil and paper
then you'll probably need to _pay_ your customers, since

    
    
       paper + pencil ≅ $0.00
    

There once was a Steve Martin bit about doing one show for 1000 people for
$1000 a ticket [or something like that] and then retiring. 20 restaurants at
$50 a month would get you to $1000. Supporting those 20 customers will almost
certainly be less effort than 50 customers @ $20/month.

That said, I suspect the reason scheduling wait staff is such a mess is that
wait staff are people and hence unpredictable, unreliable, opinionated and
moody. On top of that, the ideal scheduling solution from the scheduler's
point of view is almost certainly an automatic tool, but that requires all
those _people_ on the wait staff to enter accurate information...and the odds
of that happening in the average ten staff restaurant that's looking for a
solution is probably zero.

Finally, it is probably the case that scheduling by paper and pencil or excel
requires zero cash directly. The manager is on salary and does the scheduling
in slack times and Excel is already a sunk cost. Again, even a $10/month SAAS
is competing with zero.

Good luck.

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rahimnathwani
Someone with a very similar profile asked a very similar question 6 months
ago:
[https://news.ycombinator.com/item?id=9117728](https://news.ycombinator.com/item?id=9117728)

Maybe someone should start a business aimed at actors starting SaaS companies.

~~~
rahimnathwani
Actually, now that I read that original comment from 6 months ago, I believe
you may be the same person. Both posts use the word disinterest(ed) in a way
that used to be considered incorrect. Disinterested ~= unbiased. Uninterested
= 'not interested'.

------
jl2fa
I think that segment of really small restaurants of less than 10 employees
wouldn't be facing a problem of scheduling processes to such a degree that
they would be willing to pay. First, the lower number of employees reduce the
need for such an app, and second, smaller restaurants are less likely to pay
for services when they're operating on lower margins.

Best of luck though, and good luck with your aspirations to become an actor.
:)

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seekingcharlie
Disclaimer: I work at one of said scheduling startups.

I don't want you to think I'm deterring you purposefully, but one hint is that
scheduling alone is just not lucrative enough for your goals.

Talk to a few merchants & you will find that restaurants with < 10 employees
are going to fight tooth & nail for free features. They are operating on very
tight margins and they are not going to pay much for this, if anything at all.

On top of that, the types of businesses/restaurants that will pay $50-100 p/m
require a complicated set of features that would be too much for a one-person
lifestyle SaaS.

I'd suggest you look to models like Zenefits', who entirely make their revenue
from health insurance brokerage.

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notahacker
As you've pointed out yourself, it's a massively saturated market with new
startups seemingly launching every month, and yet most restaurants still
survive quite happily on Excel and paper, and are certainly not the easiest
businesses to sell to. I'm not sure that a 33% price cut is going to change
that. Getting those 500 customers isn't beyond the realms of possibility, but
it probably involves an awful lot of work relative to getting 500 customers to
spend $20 per month on something else.

I'd be tempted to double down on your old site, unless the reason for the
dropoff is that you've upset a very small vertical or been overtaken by vastly
superior competition.

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thenomad
One question: do you hear your non-tech colleagues (and in particular, your
boss) complaining about the scheduling process?

If so, you may be onto something. If not, step #1 before writing a line of
code is to sit your boss (if possible) down for lunch (you're buying) and get
him to tell you as much as possible about all the things in the business that
don't work. Either that list will include your scheduling issue - in which
case start work - or it may have other problems which could be a better target
for your SaaS work.

Just like in film and theater, doing thorough pre-production can really save
you a lot of cash, time, effort, and eventual flops, in post :)

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bbcbasic
What was the $1,300/mo SaaS. Maybe start that baby up again?

