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Ask HN: What are some things you should know before starting a SaaS?
49 points by nkkollaw 41 days ago | hide | past | web | 21 comments | favorite
I'm wondering if folks who have a SaaS can list a few things that they learned after running it for a while.

I'm trying to start one, and I realize that there are many things that I have to consider—like dealing with spammers, credit card fraud, common mistakes, etc.

I've read many, many articles, but I wonder if there are some important things that you only learn with experience that I should prepare for.

Most of the SaaS companies pretend that their website generates 99% of their revenue. Don't believe to them.

70% of the money will come from the enterprise/offline sales you do and the rest will come from your website.

Yes, I thought so as well.

For the kind of sites I'm making right now, I can ask ~1000 for a heavy use of the service I'm building.

That's like gaining 100 customers in a hour.

If you are not familiar with HN'er Patrick 'patio11' Mackenzie, I would recommend looking at what he has written and said regarding building and running SaaS businesses.


Good luck.

Oh, wow! That's a lot of stuff he wrote.

Thanks, I'll try to take a look.

There are lots of SaaS tips/advice in the StartUpsForTheRest of us podcasts.



This is particularly useful: http://www.startupsfortherestofus.com/greatest-hits/

Few things I learned running a bootstrapped SAAS:

- On-boarding and acquiring new clients is still a lot easier than sustaining/retaining them. A lot of us focus too much on marketing, getting new clients etc. but not on sustaining them. For some businesses, that works but for SAAS, customer retention is a big deal and really hard.

- Every month, a small percentage of Credit cards will fail to renew the client's subscription. Sometimes it is just the banks being stupid, sometimes the cards expired or reported stolen. You need to have a process to ensure clients are aware and fix this asap. Fancy word for this is "dunning"

- Unless you have a solid team with good funding, offering a free or freemium version will be difficult for you since you will get tons of tire kickers and time wasters. So you will be spending too much time talking to them when they are probably not going to be paying customers anyway. Hint: If after 2 discussions/emails/calls, someone still asking questions are most likely the ones who will never convert. Yes, there are a few who take time but in my experience of doing this for 3 years now, I almost know who will convert and who won't.

- Not all clients are same. You may have to be partial at times depending on the client. For example, some clients just want the whole world and don't get the idea of a SAAS. Learn to keep them in check while it is ok to pamper the good ones a bit more. Hint: Keep track of support emails/questions/tickets for each client. If you see too many unreasonable requests from a client, be polite but frank with them about what is possible vs not. Often times, clients mean well and just don't understand why a feature cannot be built just for them. It is your job to explain that to them.

- Reduce friction when it comes to on-boarding. A lot of clients leave because they find it difficult to get started. This is not the same as building an easy software. This is about ensuring that your clients learn how to use that software when early on. Documentation, FAQs, Guides whatever you call it. And no, don't listen to people who say that only badly designed software needs documentation. Everything needs documentation. Trust me.

- Backups. Remote backups. Not on the same server. Don't take this casually.

- Learn to Sell. Only way is to actually do it. Don't "outsource" your sales specially in the beginning. You being able to convince someone that your product is worth it is what matters.

- If you start growing and think you need to hire, be very careful. Hire really slow. Fire really fast. If you can, hire a freelancer/sub-contractor instead of full-time. Then go from there as needed.

- You will need to do some basic accounting yourself to understand your business numbers. Learn how to create a simple PnL statement. If you don't know, talk to a good CPA (or equivalent in your country).

- If you are making some money, don't forget to incorporate AND also hire a good CPA if you can afford. For small businesses or SAAS products, a good CPA can cost anywhere from $500-$2000 for the entire year (depending on what you ask them to do)

Finally, I will leave you with this. Running a SAAS is awesome once you get a hold of what matters and what doesn't. You will learn with experience and probably make a few mistakes. But don't give up and keep fighting. Nothing is better than seeing recurring payments hitting your bank every month and knowing that you are providing value to some people in the real world.

Thanks, this is exactly what I was looking for.

Great points.

thanks for this, it is helpful

Get a customer first. Then build it. Find someone to give you money to be a customer. That is the only way to qualify if you should even bother getting started.

this x 1000

I've run with many bad SaaS ideas, some good ones and one great one.

It takes great to get liftoff. The bad ideas aren't the hard ones. The hard ones are the good ideas .. Maybe people are paying. Maybe they even like it. Sadly good isn't good enough in SaaS. For a SaaS product to really win it needs real, measurable velocity.

If I could offer one big of insight I've managed to pick up - genuine traction in SaaS is hard won, but then it's really (really) obvious. If it's not slapping you in the face, then time to change tack. Maybe that's a tweak or it's a pivot, but keep trying till you have that clarity.

> genuine traction in SaaS is hard won, but then it's really (really) obvious

Can you give an example? :-)

I have a few! One mildly churlish one -- I was at a SaaS event way back and got asked how you know you have traction. My (rather uncharitable) answer was "you stop showing up at events like this".

Traction is really when the business starts driving you rather than vice-versa.

I suspect the reality is every SaaS startup out there will have a different metric or moment of realization. Could be a pulling in a big customer, or a piece of content marketing that really hits home. If I really had to hone in on just one, it's cash.

If you've got a business that's getting by -- If you're charging monthly, I'd ask how many customers you can get to commit to annual payments. If people are paying $100 month, I'd ask how you double it. If your sales cycle averages to a month, I'd wonder if it can be a week.

My dataset of successes is limited, but plenty of misses The meta-point is that it's really obvious when it hits. It's obvious when it misses.

The tough calls are when it's just creeping along. Doesn't mean it is a bad idea, just that you need to keep iterating -- your marketing, features, onboarding, whatever you can.

Good luck!

Thanks. This is helpful.

Try and sell it for a one time payment first and then try to sell it with a monthly payment. Might be the product is seen as a great one time purchase but bad as recurring.

Focus on sales. Did I say sales? Have you ever sold anything? Did you write your prospect list and started setting appointments?

Sales. If you are bad at those, anything else wont matter.

I can sell my services as a freelance developer very well, but I've never tried selling a product.

Selling a product is about the same. Dont second guess too much and get to it asap.

how do you transition from a one time purchase to a recurring one? I.e you say "200€/year", how do you change it to 30€/month during that year?

From my experience you'll spend 20% of your time building your SaaS and 80% of your time selling, marketing and supporting your SaaS.

The kicker is, how well you do on the 20% determines how hard your 80% will be.

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