

Ask HN: Surprised by your revenue? Easier than you thought? - route3

I'm slowly hacking away at a niche B2B SaaS product after work and on weekends.<p>I'm looking forward to the prospect of some extra monthly cash. I get a kick out of thinking, "At $30/mo, I only need 200 users to bring in a cool $6000 a month!" (gross, of course)<p>...but wait. Will I get even 200 subscribers? Maybe I'll struggle to reach 10. What if I'm underestimating my market here - what if I get 2,000?<p>I bounce ideas around in my head: "Of course I'll get 200 subscribers. 1.3 million people live in New Hampshire alone, and we're just one small state in the USA!" Even though my product is for a niche market, my local Yellow Pages confirms there are a dozen likely candidates for my application. I sometimes think I could secure 200 subscribers from just New York City alone, never mind the rest of the country, world.<p>I'm genuinely interested in the product I'm working on and the experience developing and marketing it is invaluable. I'm excited to see how my projections line up with actual revenue, good or bad.<p>What revenue goals did you have when launching and did you hit them? Were your pre-launch market analysis/projections correct or way off?<p>(Patrick, writing about BingoCardCreator on his blog, said that his initial goal was $200/mo. His very next sentence? "The business has been successful beyond my wildest expectations and has made it possible to quit my day job at the end of this month." Makes me smile every time I read it!)
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bigsassy
A little off topic, but you should know there's a better way than the Yellow
Pages to find customers. The ReferenceUSA database will give you all the
companies in a given area that fall under the entered NAICS code. Here's a
small sample of the information you'll get:

* Business Name

* Address

* Contact Information

* Number of Employees

* Number of PCs

* Location Sales Volume (in dollars)

* Credit Rating Score

* Names of Management and their Titles

* $ spent on accounting

* $ spent on contract labor

* $ spent on advertising

And this information is all free to you thanks to your local public library.
It's pretty awesome if you ask me. Here's how to get access to it:

1) Get the NAICS code for the industry you're selling to. This code is used by
the government to classify businesses. <http://www.census.gov/eos/www/naics/>

2) Go to your local library to access the ReferenceUSA online database. You
may even be able to do that through the library's website (I can through
mine).

3) Click on U.S. Businesses under Available Databases

4) Customer Search

5) Enter the NAICS code in one of the boxes at the bottom of Business Type ->
Keyword/SIC/NAICS.

~~~
famfam
I'd upvote you twice if I could for pointing out this amazing resource. I'm
amazed I never knew about it.

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mahmud
This morning I shopped our idea to 20 potential users. Cold-called them. They
have been extremely nice and supportive, but it's been 4-5 hours since I sent
them links and I am sitting on the edge of my chair staring at a blank tail -f
/var/log/access :-|

\-- Edit:

They have come! it's been 50 minutes since I wrote the above and already got
two beta users. My other startup went for 43 days before I got a 2nd client,
and the first was my former employer.

I had to warm them up with a phone call but so far 8 of them have followed the
links and 2 signed up. Twelve more to go.

This is my first B2C, I think it's gonna be a different experience.

~~~
pbhjpbhj
B2C = business-to-consumer.

Contrast to B2B (business-to-business). Slightly confusing as he mentions his
former employer as his first customer, I presume he means his boss in a
personal capacity.

~~~
ryanhuff
I read it different. Last start-up was b2b, and his former company was one of
this first clients. This time (b2c) much easier to attract interest. I bit its
an apples to oranges comparison though.

~~~
mahmud
You understood well.

------
prpon
Guy Kawasaki had an article where he mentions doing a bottom up approach to
financial projections. "How many biz dev meetings can I attend, how many
people can I reach out every single day and add in the conversion rates for
each one of them". It's probably better than saying my company will get 1% of
a 10 billion dollars market.

------
drewcrawford
I spent literally 35 minutes writing my first iPhone app and it's brought in
over $4k in sales over the last two years. That works out to ~7k/hour.

Alternatively, I've spent weeks or months on projects for zero revenue.

The moral of the story is: there is only weak correlation (at best) between
effort spent and revenue received. Entrepreneurs do not get paid by the hour.

~~~
qq66
What was that app?

------
callmeed
We had no goals–which is great because anything you get is gravy. Let me
explain: 6 years ago I built something for a friend. "Hey, this is great. You
should try and sell it," he said. "Meh, ok, whatever ... " I replied. Sent
some emails. Got some good response. Fast-forward and we've got thousands of
customers, 6 employees, and 7 figures in revenue.

Was the revenue easier than we thought? Well, yes ... because we never thought
anything. I know that doesn't really help, but what I'm getting at is maybe
it's a bad idea to waste energy "setting goals" to any degree beyond covering
costs or being ramen profitable.

Just focus on finding a need, saving/making people money, doing customer
development, and iterating/adapting. Most everything else is beyond your
control.

And don't forget, when you're setting goals, there are a lot of numbers less
than 1% (that came from an HN post/comment IIRC)

------
joeld42
People tend to overestimate short-term revenue, and underestimate long-term
revenue.

It will probably take you much longer than you think to get 200 users, but if
you stick with it and your idea is good, you'll end up with more than you ever
expected.

------
izak30
Do not be fooled by the field of dreams. It was a movie. You have to do much
more than build it before they come.

------
exline
It has taken longer to get to where I am that I thought. I have a number of
spreadsheets I've made of the time showing cash flow based on number of
customers. The growth has been much slower than I wanted. Part of that is the
software aspect is much easier to me than the marketing. I would say that
software is absolutely critical, but it is only the first 10% of the business.
The rest is sales/marketing etc. That is what is going to get you the 200
customers you want. Its not the software by itself.

Even for Patrick, he did't get there over night and he is very good at his
marketing. But the good news is that you can get there. I'd focus on the first
customer. Getting that first customer is one of the best feelings ever. And
the good news about SaaS, is that they stay with you. I still have my first
customer paying me every month.

My thoughts were similar to yours going into it. I only need 500 customers and
I'm set. I'm a long, long way off. The problem is not that there are not
enough customers, the issue is reaching them. I have a ton of competition in
my market, some good, some bad. I'm somewhere in the middle product wise and
somewhere near the bottom half marketing wise. At my current rate of customer
acquisition, it will still be a few years until I get there. But I keep
plugging away.

Good luck!

~~~
exline
Just found this link on HN:

<http://blog.chrometa.com/you-launched-your-app-now-what>

Related and a good read.

------
Asa-Nisse
Most everything I ever did has been totally random. Things that I thought was
safe bets went out the window. Stuff I did when hacking on beer and booze over
a weekend has netted me $100/yr.

Key is to not spend to much time thinking about it, just do it. The more you
play the higher your chances of winning are.

~~~
Asa-Nisse
Giggle @ self. $100k/yr :)

------
JangoSteve
I've built 2 B2b products now, and I can say that it depends entirely on what
_type_ of business is your target market. Case in point:

-RateMyStudentRental sells to colleges and universities. Schools are essentially large corporations, and the sales cycle is excruciatingly long (a year or more). To top it off, my absolute maximum market in the US is around 5500 possible clients if I garnered 100% of the market (probably actually less because some schools are commuter campuses which puts them outside my market). I've been doing it since 2007, and I'd tell you that you may get 3 customers in 3 years if you're incredibly lucky.

-LeadNuke on the other hand is a B2B product that can be useful to almost any type of company, startups to multi-national corporations, franchises, and freelancers. I haven't even really told anyone about it yet (except the occasional HN post), and it already has around 30 companies signed up and using it. In this case, I'd tell you, pshh that's easy.

My point: it depends. The only way to know is to try it. Any speculation
before trying it is just that.

------
cullenking
I was surprised to receive $5k in donations this year, while working towards
our premium featureset. It has created high hopes for some real recurring
revenue in the next 1-2 months when those premium features are released. But
yes, the donate button along with a simple paypal payment setup was very easy
and the amount of donors continues to surprise me.

Then again, if you count up the hours spent with no revenue, the $$$ per hour
is very small.

We were recently surprised to be approached randomly by a second company
(first company approached out of the blue as well) asking if we would license
our stuff. I guess this is a decent example of an unexpected revenue stream,
requiring a slight pivot in revenue model.

------
kadavy
Making revenue projections is useful when you have something concrete to work
with, but otherwise it gets in the way of actually making money.

The most important part is collecting your first few bucks. Something clicks
the first time you get someone to take out their wallet. Like Jason Fried has
been known to say "learning to make money is like learning to play the piano:
the more you practice, the better you get at it."

Your product needs to be less perfect than you think. The hard part is getting
your product under the noses of the right customers - and enough of them to
actually make your first sale. After that, you can learn through trial and
error - and start making reliable projections.

------
jon_dahl
If you've sold at full price to 5 customers at arms-length (people who aren't
positively predisposed to you already), then sure, I wouldn't be surprised if
you land 200 customers at $30/month. Dial up the marketing and repeat the
process as prospects come in.

But until then, you have no idea what is going to happen.

(Plagiarized from Steve Blank...)

------
visava
One of my friend created a Desktop software for small business.He was giving
free trial license and download for 30 days. Adwords gave him 50 daily
propsects.It took him 6 months to get his first customer and 2 years to reach
200 total sales. But in the process he learnt a lot about that specific
industry ,added lot of features to his product and also added an online
offering. Now he is selling 60 a month.

------
edw519
I continue to be amazed by 2 things:

1\. How difficult it is to get a raw prospect to understand how my offering
will benefit him.

2\. How easy it is to get his money once he does.

~~~
SoftwareMaven
I think that is the case for most good software. Many engineer-led companies
think the engineering is the hard part, so get totally surprised by #1, to the
point that their business fails.

Of course, there is a name for #1. It is a name mocked and derided by
engineers world-side: _Marketing_

Learn it, love it, earn from it.

~~~
waterside81
Spot on. Don't club me for saying this, but once I got my MBA, I was able to
see tech products from more than just a nerd's eye view (I did my undegrad in
CS)

~~~
dtegart
The same for me (Mechanical Engineering undergrad). I think part of the
problem stems from thinking that marketing == advertising. In fact if you are
going to create any part of a business plan, I think it should be your
marketing plan. It will force you to really think about your product, what
features will bring the most value to your customers, and how to reach those
customers.

------
kljensen
I love fantasizing about future revenues and FU money. But, I've worked like a
dog for every dime thus far.

Regarding revenue projections based on New Hampshire state population, see
<http://sivers.org/1pct>

------
csomar
This is not an easy issue and this is why advertising exist. (and companies
like Google with billions $$ of profit means that advertising is really a huge
issue).

Unless your product is making people money, you need a strong argument so that
people subscribe to your product. To show you the effect, offer two products:
One free and the other cost as little as $9. Post the product (can be any
crap) on a forum and watch the downloads/buy.

People are curious about products, but they are very unlikely to pay. They are
serious about money. BUT for a _good reason_, they'll pay. Find that good
reason, find the targeted audience, build the reason and they'll come and pay.

------
cme
Hey Paul,

I'm in NH too and run a very small niche app. I've got about 100 people using
mine after 3 months. this is with very little marketing.

I was surprised at how difficult it was to get people to understand the
benefits of my app, especially when it was for a very specific need. But once
people understand they are more then willing to give it a try.

We are currently working on version 2.0 based on customer feedback and hope to
finish/begin marketing the new version by the end of summer.

Let me know if you would ever want to meet up, its hard to find fellow web
entrepreneurs in NH!

------
tocomment
How will you reach these customers? Will they find you, or you find them?

------
switch
Why don't you focus on providing value before you start worrying about how
much money you'll make.

From your questions it seems you want someone to tell you it's going to be
easy - a piece of cake. It's not.

Why not flip the equation and focus on how you can add enough value to 100,000
people a month. That though you're charging them $30 a month they've
benefitting to the tune or $3,000 or even $30,000 a month. Plus do this
without focusing on your own need for a side stream of income.

------
freshfey
"Expect the worst, but hope for the best" is the advice I can give you.

I have the exact same thoughts as you and I truly believe that if you work as
hard as you work before product launch, you can make it. I'm not sure whether
this is true or not, but I see a lot of people getting excited during product
creation and launch and the whole energy and excitement kinda goes away with
time. You gotta endure on the slow days, too.

Although I hate to give pessimistic advice, check this link:
<http://goo.gl/MF7D> \- Rob Walling talks about that your focus shouldn't be
to get rich on your first product, but to learn as much as you can.

Good luck!

------
dmillar
The power of traction always amazes me. There is nothing like watching your
business gain a reputation and existence of its own outside of your idea of
what your business is. Once you start getting traction you will always be
surprised how easy it can be. But, getting to traction... that's the hard
part.

