For the past two years we’ve been hard at work building Outseta, an undertaking that was a direct response to our own experience launching and scaling a successful SaaS start-up.
As an early stage company, we found that a lot of stuff we had to build had nothing to do with our core product; authentication for existing users, lost password workflows, subscription management logic—that kind of thing. Then we did what everyone else in SaaS does—we evaluated, bought, integrated, and maintained a whole bunch of other SaaS products. A CRM. A billing system. Email marketing software and a help desk. Should we build our own subscription management logic again?
At the end of the day we decided to build Outseta because:
We saw an opportunity to help SaaS founders get products to market much faster.
The status quo was ridiculously inefficient—we saw an opportunity to give SaaS start-ups the tools they need to scale to about $5M in ARR for a fraction of the price.
If you’ve been following our progress something exciting happened since our last company update—we launched an entirely new SaaS product of our own. Here’s how we got that product to market about 50% faster while also gaining significant efficiencies that will help us scale well into the future.
Let’s get a few things out of the way first—yes, we launched this product partially to highlight how easy it is to launch a SaaS company with Outseta.
Second, while that was the case, this is a legitimate product that we only built because we realized a true need for it ourselves—this was not a creative exercise.
Finally, there are all kinds of “Launch your product today” or “Launch 10 products next week!” contests flying around the internet of varying pedigrees. The product that we launched is not a one page website, and it’s not a hack to validate your idea overnight. It’s a full-fledged, well designed, and fully functional SaaS application. You can call it a micro-SaaS project if you like or you can check it out for yourself by signing up for a trial at CompareRentalBookings.com.
The idea behind the product
My Co-founder Dimitris has built software products for the real estate rental market before, Co-founding Buildium in 2004. While he’s still actively involved in the company as a board member, more recently he’s been working on Outseta as well as an Airbnb rental business in his hometown of Athens, Greece.
Unsure of the nightly rate he should be charging for each of his rentals, Dimitris began using Airbnb’s own smart pricing tools. He found that the tool consistently told him to drop his prices down to his base price—the lowest nightly rate he’d allow his property to rent at. He had a hunch he was leaving money on the table.
Next, he tried a number of the other Airbnb pricing tools on the market. Again, he found his nightly rates were dropping prematurely. These tools were also expensive and they didn’t tell him anything about how often competitive properties were being booked and at what nightly rate. He wanted to know exactly how his property was performing against the properties he was most often competing with for bookings. He could get at this information but it was a manual process that he found himself performing over and over again—a perfect problem to solve with software.
That’s the problem we set out to solve with CompareRentalBookings.com—a tool for hands-on Airbnb hosts and management companies who, armed with the best data possible, can make better pricing decisions to maximize their Airbnb hosting earnings.
The very first version of the product pulled data from Airbnb’s API into a Google Sheet. Dimitris was finally able to see how much competitive properties were actually making, so he could benchmark his own performance and price his properties more appropriately.
Realizing that this data was proving valuable to him, he pulled together a prototype of what the product might look like in Moqups and shared it with Dave and I in late October.
“This is a product we could build pretty quickly, and it’s been really valuable to me,” Dimitris said. “What do you think?”
We were all a bit gun shy about taking time and energy away from our product backlog at Outseta, but we realized that by using Outseta we could dramatically cut down on the time required to deliver the product.
We looped in our design lead, James, and decided the product would consist of a SaaS application that allows hosts to choose the competitive properties that they want to track as well as email notifications highlighting new bookings. We decided hosts could track 5 comparison properties for each of their own for $5 per month—if hosts get even one additional reservation by using the tool, the product likely pays for itself 20 times over.
James delivered some final designs for the email and SaaS product using Invision. Here are the design files.
With the designs in hand, Dimitris and Dave began development in mid October. Dimitris had already requested access to Airbnb’s API, which we use to pull in the pricing and occupancy data the product relies on. In terms of technical architecture, the product is built using .NET and the base angular framework.
The product would likely have taken 3-4 weeks to build if we’d focused on it full-time—instead we built it over about 6 weeks in a very part-time capacity. Here’s how that time was split up.
1-2 days to setup the development environment
1 week to create the algorithm that downloads the data and creates summary data
1 week to build the APIs
2 weeks for front-end development
2 weeks to build the email notifications
Standing up the business and implementing Outseta
During product development, Dimitris and Dave were able to spend all of their time and energy on building “core” product functionality because they knew we’d be launching the product with Outseta.
As a relatively non-technical person, I was able to instrument much of the functionality they would have otherwise had to build. First, I bought the domain comparerentalbookings.com and created a Squarespace website using the “Bedford” theme. I paid $20 for the domain and the website is $18 per month.
Next, I decided that we’d offer a 14-day free trial prompting users for payment after the trial expires—I set this up as well a pricing plan to charge $5 per month per property tracked. I was able to do both of these tasks within Outseta, which can be connected to a payment gateway in seconds. If you have an existing Stripe account, here’s how to connect Stripe to Outseta (all you need is your “secret key.”)
Without using Outseta, we would have had to build the free trial logic manually. We probably would have billed manually for some time, as we would have had to write something automated to handle billing based on the number of properties tracked. This logic easily could have taken 3-4 weeks to complete and integrate with Stripe.
Next, we needed a way for people to sign-up and login to the product from our website. Using Outseta’s sign-up and login widgets, I was able to easily drop this code into our website pages.
Here’s documentation on how to integrate Outseta’s sign-up and login widgets with your website and product. I embedded the sign-up widget directly on our free trial page, which you can see here: https://www.comparerentalbookings.com/free-trial/. I used a pop-up for the login functionality so that users can come back to our website to login to their Compare Rental Bookings account.
Using these widgets also meant we didn’t need to build lost password workflows—realistically it could have easily taken a month to build the functionality that these widgets gave us out of the box.
We can also see who has registered for the product and who is logging into the product without needing to access our database or integrate with a CRM system. This is something we likely would have done further down the road if we weren’t using Outseta, but it’s a nice added benefit at this stage that makes it really easy to identify which accounts are engaged.
With the technical implementation of Outseta complete, I set out to prepare us to bring on and support new customers.
First, I set up our sales pipeline stages within Outseta CRM so we can track sales.
Next, I added Outseta live chat to our website. All I needed to do here was add a script to the <body/> tag of our website pages. I also set up our shared customer support inbox so users can submit support requests by emailing us at at support(at)comparerentalbookings.com.
I then used Outseta’s knowledge base to author some articles that I thought would be helpful to our early customers. We mapped the knowledge base to a custom subdomain that’s accessible here: http://support.comparerentalbookings.com/support/kb#/categories.
As a final step, I set up activity notifications so that Dave, Dimitris, and myself get email updates whenever an account is created or updated. Again, this callback functionality is free and available to us out of the box.
Just like that, we had a fully operational business ready to scale.
Using this process, we were able to launch CompareRentalBookings.com in about 6 weeks while working part-time. We have the tools in place that we can easily use to scale the business to thousands of users and millions in revenue. Perhaps most importantly, we have known, low overhead of $99/month and far fewer manual processes and disparate software tools.
How Outseta Helped Us Get Our Product To Market Faster
- We saved time by not needing to build free trial logic.
- We saved time by not needing to build sign-up (product registration) or login (product authentication) functionality.
- We saved time by not needing to build lost password workflows.
- We saved time by not needing to build infrastructure for activity notifications.
- We saved time by simply adding a script to our product that handles account upgrades, downgrades, cancellations, user management and permissions, and updates to billing information.
- We saved time by not needing to spend any time integrating software solutions—our CRM, help desk, marketing automation, and live chat tools work seamlessly together from the get-go.
Key Benefits Realized By Launching With Outseta
- We increased efficiency by not billing manually to start. We didn’t have to write an automated script to handle billing based on the number of properties tracked.
- We can now change pricing models and experiment with new pricing plans without any development help. We can change our pricing plans from within Outseta and our website and registration workflow will update to reflect the changes automatically.
- We can see who has registered for our product and who is logging in consistently (a useful barometer for user engagement) without accessing our database.
- Our technology stack is completely free and likely will be for several more months. Once we cross 250 contacts in our CRM, all of this functionality will cost us just $99 per month with no limits on users, contacts, emails, or conversations.
Have any questions about the process we used to launch CompareRentalBookings.com? Wondering if Outseta can help you get your SaaS product to market faster? We’d love to hear from you—just drop us a note as a comment below!
By Geoff Roberts 10 min read
Today marks the two year anniversary of when we published our launch announcement, telling the world of our plans to build Outseta. While we’ve consistently published monthly updates to keep our customers and audience abreast of our progress, the two year milestone is a good opportunity for us to share more broadly some of the decisions we’ve made and what we’ve accomplished. I hope this is a useful barometer of progress for other bootstrapped SaaS start-ups with equally ambitious projects.
Let’s get right into it starting with how much we’ve spent on the business.
We’ve written in the past about our decision to bootstrap the company and shared our operating agreement publicly so that customers and potential employees alike understand how we make financial decisions. Dimitris, Dave, and myself have yet to pay ourselves any salary and are instead trading our time for sweat equity in the business. We’ve tried hard to be extremely financially disciplined and fight the urge to invest in growth prematurely.
2017 2018 Total
To date we’ve spent $32,179.72 building Outseta - roughly $8,000 in 2017 and $24,000 in 2018. The majority of our expenses in 2017 were related to software and development infrastructure required to build the product. Food and dining represented our biggest line item for the year - we admittedly got a little carried away there so we pulled back heading into 2018. Remarkably, Dimitris is still invisible when he turns sideways.
In 2018 you’ll notice some line items grew significantly. The $11,123.75 we spent on consulting services was primarily design related expenses, as James Lavine began working with us. We knew we needed more design bandwidth than we could afford, so James has been working for a combination of salary and equity (more on this shortly).
Forte fees represent payment processing costs associated with one of the payment gateways we support, Forte Payment systems. We invested about $3,000 in marketing, the majority of which was related to paid customer acquisition experiments we ran with Linkedin, Twitter, and Google Ads. We also signed up to attend MicroConf for the first time - an expense incurred in 2018 even though the event is this upcoming March.
One of the reasons we’ve been able to keep our expenses so low is that Dave, Dimitris, and myself have not yet taken any salary. Any time and money we’ve invested in Outseta has been in exchange for equity in the business. When we added James to the team at the beginning of 2018, we asked him to help us out 20 hours per month. We’ve been paying him for 8 hours of his time each month and he’s been earning 12 hours worth of sweat equity in the business each month. Here’s how equity in Outseta shakes out today.
Dave and Dimitris spent some time setting up our development infrastructure at the end of 2016 and invested more time in the business throughout 2017 as they worked to deliver our minimum viable product. Our founding team worked an equivalent number of hours throughout 2018, but Dave and Dimitris also kicked in some cash to cover our operating expenses which explains the differences you see in the equity allocation between each of us.
Dave, Dimitris, and myself will begin paying ourselves a nominal salary in 2019 - more on that in our next company update.
On the product front, we’re all very excited about the progress that we’ve made. 2017 was spent entirely focused on delivering our MVP. We began marketing and selling our MVP on January 1, 2018 while continuing to build out the product’s core functionality.
Dimitris has focused primarily on back-end development while Dave does both back-end and front-end work. James’ design work dramatically leveled up the usability and polish of the user interface throughout 2018. So far, we’ve built functional product that includes…
Customer communication tools
Other “scaffolding” SaaS businesses need
Widgets to sign-up or login to a SaaS product
Lost password workflows
Lead capture forms
When we initially scoped Outseta, we envisioned SaaS metrics and reporting as a key part of the platform. While we still intend to build these features, we de-prioritized them as there were (and continue to be) a number of features more immediately relevant to our customers. We have the infrastructure and designs in place for reporting, but will be focusing primarily on additional improvements to the CRM moving into 2019.
Generally speaking the product’s core features are in place. We’ll now focus on taking each of them deeper by adding functionality to draw us closer to feature parity with the point solutions we compete against (as long as it’s specifically relevant to SaaS start-ups).
Marketing Strategy and Results
With the exception of about $2,000 spent testing paid online advertising, we’ve focused our marketing efforts over the last two years entirely on “free” channels. This has included:
Launching Outseta on Product Hunt and BetaList
Launching on Product Hunt and BetaList is worthwhile - these channels provided a one-time spike in website traffic and account sign-ups and are a great way to stir up some early users. The day we launched on Product Hunt we saw more website traffic than any other day in the last two years, and both the Product Hunt and BetaList launches resulted in 30+ account sign-ups each.
In addition to these launches the other major spikes in traffic were a result of another company’s blog post published on Hackernoon that did really well and linked to one of our own blog posts and one of the most successful articles that we published on our own blog, 4 SaaS Start-ups And Their Quest For Independent Growth.
Email prospecting was our second biggest undertaking from a marketing perspective. My approach to email prospecting is very time consuming, but it was effective in starting sales conversations.
Emails sent: 452
While email prospecting did start the majority of our sales conversations in 2018, in retrospect I wish I had spent less time here. While it’s a strategy that I think was appropriate given our stage - my goal was basically to stir up a small number of early accounts without spending any money - if I could do it again I’d focus more time in areas that would deliver longer term, sustainable gains. Like content marketing.
Content Marketing Results
Content marketing is where I’ve spent the vast majority of my time and energy over the last two years - I began these efforts a full year before we had any product to sell. Our strategy has been pretty simple - we publish a monthly company update (only if we genuinely have something worth our audience’s attention) as well as one other post per month on topics primarily related to growing SaaS start-ups.
We published a total of 27 posts in 2017 and 16 posts in 2018, including a few guest posts on blogs from companies like Kissmetrics, Crazy Egg, and Capterra. Here’s our content calendar with a history of all of the posts we’ve published or you can check most of them out on our blog. Most of the content we’ve published either highlights our own entrepreneurial journey or is heavily researched, long form content of 2,000-3,000 words. Our top performing posts to date are:
I chose to invest in content marketing for a few reasons.
We have some internal competency in writing. I was a writing major as an undergrad and see writing as one of my strengths.
We’re playing the long game - we set out to build Outseta with a genuine 10+ year mindset. We started to feel the impact of our content after about 18 months, which was OK because of this mindset.
I view content marketing as an investment in our brand.
I view content marketing as a long term investment in building sustainable, organic traffic.
So how has it worked out for us?
In short, I’m really pleased with what our content marketing has done for our brand. In a relatively small period of time, we’ve developed a small but highly engaged audience. I’ve gotten a lot of positive feedback on the articles we’ve published from people I admire and whose opinions I trust.
As we continue to grow tying our content marketing investments to revenue is most important, but as an early stage company I’ve bought into a metric called Unsolicited Response Rate (shout out to Jay Acunzo for popularizing this measure). This is simply a measure of how many people send me an unsolicited comment or note after each piece of content that I publish. We’re all busy, so if someone goes out of their way to send along a note that says, “hey this post is awesome and/or helped me,” that’s a pretty good indication that the content is resonating and providing value.
Coupled with our publishing cadence, I’m proud that we’ve earned a “these posts are worth reading” spot in many people’s inboxes. More importantly in terms of measuring ROI, almost every account sign-up in Q4 of 2018 was either a referral form an existing user or someone who specifically mentioned that they found us through one of the articles we’ve published.
While the positive feedback has been great, I definitely haven’t spent enough time investing in what I call “deliberate SEO.” I have spent very little time on deliberate link building outreach, further optimizing older posts for target keywords, or working on content projects that were designed primarily for their SEO benefit or potential. Earlier this year I asked SEO expert Neil Patel how much time I should be spending on link building and he suggested 5 hours per week - I definitely haven’t done that.
While I’ve promoted my posts fairly aggressively (without paid promotion), my hypothesis has essentially been, “Focus on creating awesome quality content and links and organic traffic will follow.” While that’s proven to be true and our organic traffic has grown, outseta.com is still a low traffic website - I know we can grow organic traffic much more quickly.
I think that we’re sitting on a golden opportunity in the sense that with a little more time spent in this area, it should be relatively easy for us to grow our site traffic substantially. As we look to grow more aggressively in 2019, this is an area that I need to spend more time on.
Without spending much time on SEO, our website traffic went from about 4,000 unique visitors in 2017 to over 10,000 unique visitors in 2018. More importantly, account sign-ups grew from 32 in 2017 to 279 in 2018.
Customers and Revenue
OK, OK, I know what you’re thinking. All of the above it great, but how is Outseta doing in terms of customers and revenue?
We’re not publicly sharing our customer count and revenue only because we haven’t really invested in growth yet. The majority of the companies that we’ve signed up so far have been opportunistic or inbound. Our numbers are still very modest, but we’re happy to share them with any prospect that asks.
Most importantly, we’re trying really hard to be patient and follow Mark Roberge’s framework:
Customer success. Then unit economics. Then growth.
Heading into 2019, the product and company is at a point where we’re now ready to invest more heavily in growth. We recently took on a project that’s essentially providing seed funding to support these upcoming investments - we’ll be detailing this decision in our next company update.
We’re also committed to sharing customer and revenue updates for the first time later this year in tandem with the launch of Outseta's reporting features. Stay tuned and you can hold us accountable to that!
We hope our reality is helpful
We wanted to share this information because topics likely equity allocation and expenses are so often secretive in the world of technology start-ups. Beyond that, our social media feeds are so often flooded with the outcomes and performance metrics of a small swath of successful, heavily venture backed companies founded by celebrity entrepreneurs.
While our metrics and expenses are in no way jaw dropping, we think from product to marketing we’re chipping away and making slow and steady progress in the right direction. If you’re a team of “normal” founders that’s bootstrapping a side project into a full-time one, we hope this post is both helpful and reflective of what reality often looks like. Any and all questions welcomed!
By Geoff Roberts 3 min read
The home stretch of 2018 is upon us and it’s been an exciting year at Outseta. We began charging users for the first time in January and the evolution of our product since that time has been remarkable to see. Here’s what we’ve been up to since our last company update.
New Feature! Live Chat
Live chat tools have been a big deal as of late - companies like Intercom and Drift, Hubspot and Zendesk - they’ve all gotten into the mix. While Outseta has long offered various customer communication tools - email marketing, a customer support ticketing system, and knowledge base functionality - this means of engaging with prospects and customers had been missing from our platform.
We’re psyched to announce that we now offer live chat to all Outseta customers - it can easily be installed on your website or within your product. A few specific advantages of our live chat offering…
Live chat tools have become very expensive almost overnight. With Outseta live chat, you can have as many users and conversations as you want for one set price. Your company will grow, but your bill won’t.
Because our live chat tool is built from the ground up as part of the same platform as Outseta CRM and our other customer communication tools, chat history is automatically recorded on CRM records. No integration necessary.
Live chat also represents an exciting milestone for us - it’s the last “core” piece of functionality that we plan to add to the Outseta platform. Going forward, you’ll see us taking each of our primary features deeper but we won’t be adding any new core features. We’ve got the functionality SaaS start-ups need to launch and scale covered.
You can read more about Outseta live chat here.
Update! Paid Advertising Experiment Results
Earlier this year we set off to run some experiments with paid customer acquisition channels. Our September company update detailed some initial results when we experimented with Linkedin advertising. Since that time, experimented with both Twitter advertising and Google Ads.
As you may recall, with all of our paid acquisition experiments we’ve needed to think outside the box a bit because our product competes against better funded competitors in extremely competitive categories. One audience we’ve decided to target is attendees of MicroConf, which is a conference specifically for self-funded software entrepreneurs.
Twitter offers marketers some pretty unique targeting abilities; in this case we chose to target ads to people who follow @MicroConf on Twitter. You can also target ads to people who use a specific hashtag (like #MicroConf for example). As such, we ran this ad to followers of @MicroConf.
The ad landed visitors on a landing page we designed specifically for this audience. Here are the results of that experiment.
Ad spend: $254.88
Clicks: 48 clicks
Account sign-ups: 2
Cost per account: $127.44
We also experimented with Google Ads (formerly called Google Adwords). This experiment was different because instead of targeting a specific audience based on demographic factors like we did with Linkedin or Twitter, this time we were targeting people who searched for specific search queries.
We conducted keyword research to identify search queries that were highly relevant to our product but had low search volume and low competition (to keep costs down). Here are the keywords we targeted and a few examples of what the ads looked like.
“Best platform for startup” and “Best free tools for startups”
“Subscriber management” and “Recurring credit card billing”
Here are the results of this experiment:
Ad Spend: $506
Account sign-ups: 27
Cost per account: $18.74
Having now experimented with Linkedin, Twitter, and Google ads we now have a decent baseline - at least some early understanding - of the opportunity each of these channels represents to our business. These initial results will at least be helpful in informing any future spending on paid digital advertising.
That’s all for this month. Thanks as always for following along.
-Geoff, Dave, Dimitris, & James
By Geoff Roberts 5 min read
With some vacation time now in our rearview we’re heading towards the home stretch of 2018, making it the perfect time to fill you in on what we’ve been up to at Outseta since our July company update. Here’s the latest and what’s to come.
We now support Stripe as a payment gateway
When we launched our subscription billing and management functionality, we initially partnered with Forte Payment Systems as our payment gateway. We did this because it allowed us to offer the best possible pricing to our customers, but Forte can only support processing payments in the United States and Canada.
We’ve received quite a bit of interest in Outseta from international customers and companies domestically that sell internationally. As a result, adding Stripe as a payment gateway very quickly became the most requested feature from our users.
We’re happy to say that we now offer Stripe as a payment gateway. While many early stage SaaS companies just think “I’ll use Stripe!” when considering their billing needs, they very quickly realize that they need to build quite a bit of other “scaffolding” around Stripe - subscription management functionality and logic to handle upgrades, downgrades, and cancellations being a few examples. We’ve built this functionality already so our customers don’t need to and we’re eating the $.30 per transaction fee that Stripe charges as well.
You can learn more about our subscription management and billing tools here.
API support for partial CRM record updates
When we rolled out the first version of our REST API, if you wanted to update one of your CRM records the API would resubmit all data on that record. This wasn’t ideal for companies using multi-step onboarding processes or forms, because if a user abandoned the form or onboarding sequence prior to completing it the data that they had entered would not be captured and they would essentially lose out on a (partial) lead. We’ve updated our API to now support partial updates to CRM records to better support these workflows.
Shout out to Callum at TapTapGo for this feedback!
Paid advertising experiments
Our go-to-market strategy to date has consisted primarily of launching on Product Hunt, email prospecting, and content marketing - essentially free tactics focused on building our our audience and stirring up some initial customers. As our product matured, we got to the point where we decided it was worth experimenting with some paid advertising moving into Q3.
The goal of these efforts is to test the waters and see where opportunities to acquire customers with paid advertising may lie, while being very judicious about limiting expenditures. Here’s what we’ve done so far.
Because our product competes in a number of hyper competitive categories, we need to stay away from keywords like CRM, subscription billing, and email marketing. While these keywords are accurate descriptors of what we offer, there’s simply too much competition on these keywords; we’re priced out.
As a result, we’re looking for creative ways to cost effectively tap into search intent from people who would likely be interested in our product. That means we’re primarily targeting keywords that have low search volume and low competition, but still represent highly relevant traffic. A few examples of keywords we’re bidding on…
MicroConf - MicroConf is a conference for self-funded software entrepreneurs; there couldn’t be a group of people that’s a better fit for Outseta. While this audience is not searching for software when they search for MicroConf, we’re using some interesting ad copy to lure them in to a landing page we built specifically to address this audience: https://www.outseta.com/microconf.
Indie.VC - Indie.VC is a venture capital firm that invests in companies that focus on selling their product at a profit from day one. Again, our approach at Outseta likely resonates with this audience and companies that are truly focused on profitability from an early stage are attracted to our pricing model.
Best platform for startups - A long-tail keyword that’s relevant and has low competition.
Because these keywords all have low search volume it’s going to take several months to get a good sense of how effective these campaigns will be; we don’t have any results worth sharing just yet. But we’re getting clicks, quite cost effectively.
Linkedin Direct Sponsored Content
A more aggressive experiment that we ran was throwing $500 at Linkedin advertising. We did this because we know founders of SaaS companies tend to be active on Linkedin and we can easily target the right buyer persona using targeting criteria like…
Industry: Computer Software
Title: CEO, Founder, Co-Founder
Company Size: 1-10
You get the idea. For the $500 budget, these ads generated:
3,018 impressions (the number of times the ad was shown)
80 clicks (landing visitors on our website - $6.25 per click)
3 Outseta accounts created ($166.66 per account)
Ultimately the success of these campaigns will be assessed by revenue created and there’s lots of room for landing page optimization - we sent people who clicked on the ads to our home page this time around. But this experiment gave us some useful benchmarks in terms of how our ads would be responded to, which messages resonated, and how cost effectively we can drive visitors to our website (and create account sign-ups) using Linkedin.
Sales Pitch, Take Two
You may remember from previous updates that we decided to put a page called "Sales Pitch" in the primary navigation on our website. We don't want to come off to prospects as "salesy," and instead want to readily surface any materials that will help them decide if Outseta is right for their business.
Our original sales pitch hit hard on the importance of start-ups saving time evaluating, integrating, and maintaining software tools. But we started hearing from our users that that was only part of the story; they were realizing other benefits as well. As a result, we updated our sales pitch page pretty dramatically to give a more complete picture of the benefits of working with Outseta. The retooled page better represents our pie-in-the-sky vision of the benefits all Outseta customers will realize.
You can check it out here: https://www.outseta.com/sales-pitch/.
We’re hard at work on what the next major feature that will be added to the Outseta platform - it’s one we’re particularly excited about, and the next time you hear from us it should be ready for action. At that stage we’ll transition from building new, primary pieces of functionality to going deeper on each of the core features of our product.
Thanks for following along!
-Dimitris, Dave, Geoff, & James
By Geoff Roberts 5 min read
It’s been a couple of months since our last Outseta Company update, so we figured we’d hit you with one before you’re all lounging by the lake/beach/pool for the 4th of July. Here’s what we’ve been up to since April.
New Navigation UI and Global Search
Since James Lavine joined our team, he’s been focusing on improvements to our user interface. These changes are perhaps most evident in our new navigation, where you’ll see CRM, Marketing, Support, and Billing tools running down the left hand side of the screen. We’ve also added search functionality at the top of the screen, so you can locate People, Accounts, or Deals that much more quickly.
We’ve rolled out a new onboarding process to make it easier for customers to get started off on the right foot. You can see the new onboarding workflow for yourself either by creating a free account and walking through the account setup steps (complete with jokes about canned meats), or by clicking through this InvisionApp prototype.
We also added a “Getting Started” checklist once you complete the initial account setup steps along with some calls-to-action to complete the most common onboarding actions.
Other Quick Hits
A few other noteworthy enhancements; you can now accept Amex payments, merge email lists, and look at drip email campaign performance statistics on both an aggregate and email-by- email basis.
We recently pow-wowed to set goals for Q3 and came away with two primary product priorities that we'll be working on this summer. The first is allowing Outseta customers to process payments through Stripe in addition to Forte Payment Systems, our existing payment gateway. We've had some inbound interest from international customers, and offering Stripe will help us better support them.
The second major product priority is adding live chat functionality, both for use on your website and inside your application. Live chat is commonly used in both the context of sales and support, and adding this feature will help bring us closer to feature parity with the more established players in this space who are increasingly being dragged upmarket. This is one example of additional value we are delivering to our users, without any increase in price; the goal here is make the decision to use Outseta a no-brainer for an early stage subscription business.
What we’ve done so far
After launching our MVP on January 1, we made a deliberate decision to think long term and fight the urge to start pursuing growth aggressively. It was more important for us to start working with a small number of customers to validate what we’ve already built and incorporate their feedback into the product. So far we’re happy to say that customer retention is at 100%, which was our primary goal as a company.
In addition to things like launching on Product Hunt and growing our organic website traffic via content marketing, the vast majority of effort towards landing those early customers has been focused on email prospecting. Some quick stats on this front.
Companies contacted: 329
Companies that engaged with us: 120 (36.5%)
Product demos: 24 (7.3%)
All of this outreach was 100% “cold,” sourcing leads from sites like AngelList, Product Hunt, Betalist, and GetProspect. You can read more about our approach to email prospecting here.
As we move into the second half of the year, we have a much more mature product and are going to look to test some paid acquisition channels - primarily via Facebook and Google Adwords.
Our prospecting efforts have given us a significant and highly targeted list that we can use in Facebook to build a look-a-like audience and expand our reach to new buyers of the same persona.
We’re going to focus our Adword experiments in two areas - one is targeting software buyers specifically at small, self-funded SaaS companies. The other will try to intercept search intent for relevant keywords that have a low search volume, but also low competition. We’ll provide an update of the success of these experiments later this year.
Other Company News
As you may recall from our operating agreement, we've made a deliberate decision to embrace remote work. We think it's a significant competitive advantage both in terms of recruiting and in terms of employee retention. So catch this...
On a normal day, I work in San Diego, CA. James works in Portland, ME. Dimitris and Dave work in Boston, MA. So if I hopped on my sleigh and rode to pick up James in Maine, then we roared down to Boston to pick up Dimitris and Dave, chipped the ice off our windshield and headed to San Diego for an afternoon surf we'd cover about 6,296 miles.
This summer we're stretching that net quite a bit. At various points this summer, Dave will be working from Oahu, Hawaii. Dimitris will be in Athens and Varkiza, Greece. Geoff will be in Sifnos, Greece before joining Dimitris in Varkiza. And James will be in Nairobi, Kenya.
So if Dave jetpacked from Hawaii to Greece to meet Dimitris and Geoff for our weekly team meeting, before shooting down to Nairobi to swoop up James, then we all continued on our way back to Hawaii for some R&R, we'd cover about...
We hope you don't do that - it's summer, it's hot, and we hope you enjoy your 4th of July wherever you are!
-Dimitris, Dave, Geoff, & James
By Geoff Roberts 3 min read
This is the first company update we’ve published in 2018, so let’s start with the big picture; we’ve delivered our minimum viable product, have started charging our users, and are continuing to develop the platform based on user feedback. Here’s a closer look at what’s new.
Our team is growing
We’re excited to announce that James Lavine has joined our team as a designer. James started working with us in January and is already responsible for the brand refresh that you see on our website and in our software. James is now earning sweat equity in Outseta commensurate with his contributions. We feel that with Dimitris and Dave on development, James on design, and myself focused on our go-to-market efforts we have the team we need to get Outseta to the next level. Welcome, James!
Redesigned knowledge base
One example of James’ work is our newly designed knowledge base. The new design features larger, easy to read text as well as an easy means of navigating between categories. The design is also particularly well optimized for mobile devices, making important product documentation available wherever you are.
New Feature! Sales pipeline management
We had initially scoped SaaS metrics and reporting functionality into our minimum viable product, but we decided to punt on this feature temporarily and instead build functionality to help SaaS start-ups manage their sales pipeline. We made this decision primarily because of our own need for sales pipeline management tools; we figured if we needed this functionality prior to reporting capabilities most other early stage SaaS start-ups would as well.
The drag-and-drop interface allows you to set up as many pipelines as you like, while easily adding columns to your pipelines that can be customized to mirror the stages of your customer acquisition process. As deals progress you can move cards through the various stages of your pipeline, making it easy to keep track of where each potential customer is in your customer acquisition funnel.
New Feature! Engagement index
Last but not least, we added a widget to our dashboard to help you measure your customers’ engagement with your software. If you are using Outseta’s subscription management widget for product registration and authentication, you can now easily see the aggregate and unique number of people who have logged into your software each day. By selecting the “Data View” you can see exactly who is signing into your product and when they logged in.
This has been really useful to us from a sales and customer support perspective, as it enables us to proactively reach out to users and offer help when we know they are actively engaged with our product.
At the end of Q1 our team got together in Boston to do a retrospective on Q1 and discuss our goals for Q2. Here's what we'll be focused on.
Improve the customer onboarding experience.
Implement a customer success program for early customers. This includes weekly meetings where we ask for product feedback, then help customers with their businesses however we can. We're looking for 100% customer retention.
Improve sales pipeline management tools; help sales reps spend their time in the right areas with better lead scoring, lead management, and engagement metrics.
Develop a Wordpress plugin to make it easier to capture website form data and send it to Outseta CRM and email lists. Our users often start by syncing newsletter sign-up, beta registration, or “request early access” forms with Outseta.
That's all for now.
-Dave, Dimitris, Geoff, & James
By Geoff Roberts 5 min read
An operating agreement is a key document used by LLC companies to govern internal operations. It basically lays out for the business owners how financial and functional decisions within the business will be made.
This past month Dave, Dimitris, and myself got together in Boston hash out the details of the operating agreement that we’ll use going forward. This post serves to break down the key decisions that we made in layman’s terms, so future employees understand how Outseta will operate moving forward. Our hope is that other start-ups can also benefit from seeing where we ended up, and maybe borrow some ideas as they consider their own operating agreement.
Here are the key details of Outseta’s operating agreement.
Who works at Outseta? How will decisions be made?
There are two different classifications for people working at Outseta - employees and members.
Anyone working at Outseta that is not a contractor is an employee. Well, duh.
All employees that have been with the company for more than 1 year will participate in our profit sharing program.
Members are employees who have an ownership stake in the company and are eligible to vote on the following decisions. A 66% majority is needed for an item voted on by members to be approved.
Dissolving or selling the company
Amending our operating agreement
Issuing more membership units (think of these like stock options)
Removing “managers” (more on this momentarily)
Every 4 years members will vote for “managers” who will serve a 4 year term.
Dave, Dimitris, and myself are Outseta’s existing managers.
All other management decisions (but not those listed above) related to the business will be made by the managers.
If there are 2 managers, decisions need to be unanimous to be approved. If there are 3 managers, there needs to be a majority vote for decisions to be approved.
Delivering financial rewards
When Outseta makes money, we think our employees should make money. Aside from salary there are two other ways to line your pockets when the business does well; profit sharing and membership units.
Profit sharing program
50% of the Outseta’s profits will be distributed to employees who have been with the company for more than 1 year.
The extent to which you participate in the profit sharing program will be based on how many years you’ve worked at Outseta. The longer you work at Outseta, the larger your portion of the profit pie.
Because Outseta is a LLC we offer “membership units” as opposed to traditional stock options or equity grants. This essentially represents an ownership stake in the business - if Outseta is sold, acquired, or in some other way liquidated all members working at Outseta will receive a payout based on the number of membership units that they hold (just as you would with traditional stock options). Initially membership units will be granted at the managers' discretion, but we’ll look to formalize a more scripted means of issuing units to ensure fairness going forward.
If a member leaves the company they do not retain any ownership or equity in the business. Instead, we offer a buy back program where Outseta will buy back membership units from departing members. Members who have left will receive a payout based on the number of membership units they held and how much the company is worth. The valuation of the company will be calculated as two times last year’s revenues. For example, if last year’s revenues were $5mm and a member had membership units that represented a 1% stake in the business, our buy back program would pay them ($10mm X 1%) = $100,000. We will periodically review this formula to make sure it’s fair. The buyback will happen over the course of a few years based on the financial reserves of the business.
In short, we think that the profit sharing program incentivizes all sorts of good behaviors amongst employees - it encourages commitment to the company and financial discipline, while also giving all employees who have been with Outseta for more than a year the opportunity to participate in the financial successes on the business. And if members do wish to leave Outseta to pursue other opportunities, it also allows them cash out their membership units at a fair rate.
Why do we exist? How do we behave?
It’s unusual to see information around durable items like company purpose and values in an operating agreement. We thought it would be useful to include this information in ours because we hope to leverage our operating agreement as an asset that can help prospective hires understand the opportunity at Outseta, how the business will be run, and how decisions will be made.
Why do we exist?
To help small companies simplify the technology choices they have to make to run their businesses
To create a profitable company we are proud of and is enjoyable to work for
How do we behave?
We look to invest in, develop, and fill open roles with employees/members first
We optimize for the best people possible by embracing remote versus co-located work
We value flexibility, but we honor our commitments to each other
We think long term over short term and care more about the journey than the destination
We embrace self management, encouraging autonomy and empowering our people to make decisions openly and transparently without managerial oversight
We earn influence by consistently demonstrating great work and decision making
What do you think? We’d love any and all feedback on the agreement we’ve come up with. You can also view the full version (the actual legal document) of the operating agreement here.
-Dave, Dimitris, and Geoff
By Geoff Roberts 7 min read
You may have noticed that while we’ve kept a steady drumbeat of SaaS related content flowing, it’s been four months since we published our last Outseta company update. Long story short, we’ve been head down working on some of the most challenging aspects of building our product. We didn’t have enough to say that we felt was worthy of your inbox, but we’re back - here’s what we’ve been working on…
For the very first time, our product is publicly available - you can create a free account on our website and check out the product for yourself. Yes, we have some apprehension about this but as Reid Hoffman, the Founder of Linkedin famously said, “If you’re not embarrassed by first version of your product, you’ve launched too late.” The onboarding experience is still pretty rough, but the product functionality is there.
Outseta & Techstars
We’re excited to announce that we’re the newest member of Techstars' Perks Program. Techstars is one of the biggest accelerator programs in the world, currently operating accelerators in over 17 cities worldwide. Techstars has accepted over 1000 companies into its programs to date, with those companies currently having a market cap of over $8.1B.
Any Techstars company can now find Outseta in Techstars Connect, a private resource which portfolio companies are given access to. We're offering a free year of Outseta to any Techstars company that signs up by the end of June 2018.
Subscription management widget
A huge part of our value prop hinges on reducing the amount of time SaaS start-ups spend managing the technology infrastructure that their businesses depend on. This is important because it gives start-ups more time to focus on building their product and business, while extending their runway.
With that in mind, we built a feature we’re calling our subscription management widget. While this may not sound sexy at first blush, we believe this will come to be a real differentiating feature for Outseta because it’s not functionality we’ve seen built in competitive products.
So what is it?
This is useful because if a SaaS business has a subscription model that Outseta supports, companies can simply “drop-in” this functionality in minutes without needing to build this “scaffolding” logic that all SaaS companies need, yet is logic that doesn’t differentiate them in any way. This work represents busy work, not get-your-product-to-market work.
An additional advantage worth mentioning is that because this information syncs with Outseta’s CRM records, we can easily add a simple engagement index based on login activity to each person or account record in Outseta. This is a simple but effective proxy/indicator for product usage and engagement which we’ll make available to our customers in a subsequent release.
There are other services that will handle authentication for you (Auth0, Okta), and there are services that handle subscription management. However, we came up empty when searching for a service that offers a drop-in solution to automatically give your website this functionality in a matter of minutes.
We’re building our billing system
In order for us to charge our own customers - but more importantly, to enable our customers to charge their customers - we’ve been hard at work building our subscription billing system. We’ve made a couple of important decisions here:
We’ve partnered with Forte payment systems to process credit card and ACH payments. We have a pre-existing relationship with Forte, as they are also the payment processing partner of Buildium. Working with Forte allows us to offer the lowest possible payment processing fees (cheaper than Stripe!). The application process Forte offers our customers is also very straightforward, and will allow our customers to go live with their payment processing system in as little as a day or two. Here’s what the application looks like.
At some point in the future, we will also offer our customers the ability to process payments via Stripe. We’ll be offering this option primarily to support international customers.
Our billing system will be complete and we expect to start charging our own customers beginning January 1, 2018.
We changed our pricing model
The last company update that we published was focused 100% on the process we used to develop our initial pricing strategy. While we put a lot of thought into our initial pricing, as we thought further about our pricing model over the summer we came to the conclusion that we didn’t quite get things right the first time around.
Initially we proposed a blended pricing model, with our pricing tied to both number of contacts (as most e-mail marketing tools are) and number of users (as is the norm for most CRM and help desk tools). We liked the idea of tying our pricing to the number of users of our software because it seemed fair - as a start-up grew and needed to give more people access to our software, what they would pay us would scale in conjunction with their own company’s growth.
We did voice a mild concern with this - we know that we’re going to be selling into a target market (start-ups) where the majority of our customers will fail and in turn, churn. As a result, we need to plan for this churn and figure out how to make our product as “sticky” as possible so that we do retain our successful customers and extend their lifetime value to our business as much as possible.
By charging on a per user basis, we would be actively discouraging companies from getting as many of their employees as possible into our software. The more people who are accessing and using our software, the “stickier” the product ultimately becomes. Said another way, getting as many users as possible into our software benefits us more at this stage than monetizing each and every user.
We think our initial pricing was too focused on capturing revenue as our customers grew or from larger customers, when in reality for the first couple of years we’re primarily going to be successful working with companies with only a handful of employees.
As a result, we’ve made the following updates to our pricing.
We’re still offering a free plan, but it’s limited to your first 250 contacts. This is not a time bound trial, and it’s not a limited feature set offering. You can access and use all aspects of the product for as long as you like, but once you’re really ready to go and need to service 250+ contacts you’ll need to pay.
Once you move to a paid plan, you’ll pay us $99 per month or $999 annually. This hugely simplifies our pricing and makes it so start-ups will know exactly what their bill will be. No surprises at all, and we think $99/month is a fantastic deal for your CRM, email marketing, customer service, billing, and reporting software.
We’re offering all customers unlimited users, unlimited contacts, and unlimited emails. This is hugely disruptive as we think about winning business away from other companies in existing categories like email marketing, CRM, and help desk software where pricing is typically tied to number of users or contacts.
We think this pricing is aggressive and will allow us to compete and win deals. We are more interested in growing our user base than maximizing revenue potential. Shout out to Randy Parker, Founder of Constant Contact and Brevi, for sending us a note sharing this concern and giving us a gentle nudge in this direction. We appreciate ya.
By Geoff Roberts 2 min read
We’ve talked quite a bit on this blog about our desire to build a self managed organization. Self management depends heavily on transparency - everyone in the organization is enabled to make decisions, including spending company money, because everyone is operating with all of the information available. With that in mind we thought it would be both fun and appropriate to take a closer look at our expenses now that we’re six months into building Outseta. This exercise was a valuable checkpoint for our existing team, and let’s face it - we’d like to work with some of the people reading this post in the future - so we figured we’d start giving you access to all of the information available now.
The graph and breakdown of our spending shown above is from Mint.com. We’ve spent $4,702.85 to date. That includes $1,541.18 on “Food and Dining” - this is mostly Dave & Dimitris getting lunch together when they work from Dave’s house. The $178.88 spent on “Entertainment” was primarily a round of golf that the three of us played together when I was in Boston last.
Where this is most interesting (and hopefully valuable) to other SaaS start-ups is looking at what we’ve spent in the broad category of “Business Services.” It’s interesting to look at both the timing of these expenses, and the breakdown. Some highlights are below - they are listed in the order in which we first incurred an expense with each vendor.
My initial reaction to this table? It’s fairly remarkable how little overhead is needed to start a SaaS company. It’s worth noting that we’ve chosen to bootstrap the company, and have made a pretty concerted effort to keep expenses low to date. For example, we are all using computers we had purchased on our own and we are not yet paying ourselves at this stage (we are working for sweat equity).
Oh, and Dave and Dimitris really like Pure Cold Press in Brookline - they’ve eaten lunch there more than anywhere else (6 times!). They even brought me once the last time I was in Boston - good place.
We’ll circle back at the end of the year and publish a similar update focused on our total expenses in our first year of building Outseta.
By Geoff Roberts 9 min read
This month’s company update is focused entirely on pricing. Our goal is to share the process we used to come up with our pricing, to publicly share Outseta’s pricing for the first time, and to share our thinking and values around how we’d like to price our product well into the future.
Let’s start with our process.
When thinking about pricing, there are three useful barometers that we considered:
Pricing based on persona
Pricing based on the market or competitor pricing
Pricing based on value delivered to the customer
Let’s tackle each of these one at a time.
Pricing based on persona
Considering our pricing based on the persona of our potential buyer was relatively easy - we are going to be selling to early stage, SaaS start-ups. We want our pricing to be accessible to bootstrapped companies (like ourselves). The companies we’ll be selling to may even be pre-revenue, so we know that they are going to be highly price sensitive.
On top of that, there are a slew of point solutions out there already targeting this buyer persona and it’s the norm for these products to be free or very inexpensive. Hubspot CRM, for example, is free. Mailchimp’s email marketing software is also free for up to 2,000 subscribers, with a cap on the number of emails that can be sent. You get the idea. This led us to...
Decision #1 - We wanted the eliminate the barrier to entry and allow companies to start using our product for free.
We think this is important in allowing us to effectively compete against the other point solutions in the market. Perhaps more importantly, we know that we’ll be competing against more established and better funded competitors - as a result, we’re designing our go-to-market strategy to keep customer acquisition costs as low as possible from the get-go. Rather than relying on a time-constrained free trial model with an inside sales team following up on those leads, we’re going to focus on building a product qualified leads (PQL) model where users can access the software for free and essentially qualify themselves based on their engagement level with our product.
Pricing based on the market or competitor pricing
Pricing Outseta against the market or our competitors was a bit trickier, as we had to look at the overall cost of a handful of point solutions against the cost of our platform. There were countless permutations, but here’s a pretty representative view.
*This table does not include subscription billing pricing
Let’s start by acknowledging the above table is imperfect - these companies all price their products based on different value metrics and have different thresholds for users, contacts, customers, etc. Beyond that we’re not talking about complete parity of features or functionality.
All we’re trying to do here is illustrate that there are countless different permutations, options, and prices… and I think the table speaks for itself in showing that it’s very easy for a start-up to lose sight of what they’re actually paying at any given point in time for the combination of point solutions they select. Which led to...
Decision #2 - We wanted our pricing to represent a great value against even the least expensive combination of these point solutions. This is important because we won’t offer true feature parity; just the basic, core functionality that a start-up actually needs (we don’t and will never support emoticons, sorry). And we wanted our pricing to be easy to understand so you’re never surprised when you look at your bill.
Pricing based on value delivered to the customer
More than anything, we wanted our pricing to be based on value delivered to the customer. We think this is simply good business and if our customers are truly getting significant value out of our product they will have no problem paying us for it. The difficulty here was deciding on how we can measure value delivered to the customer - what was our value metric going to be? With such a broad range of functionality within our product it could be anything from number of users, contacts, customers, revenue, support tickets answered, or emails sent.
We initially came to the conclusion that users was the value metric that made the most sense. As a start-up begins to grow, they inevitably need to give more salespeople access to their CRM, more customer service people access to their support ticketing system. What our customers pay us should scale up in parallel with the growth of their business, and users felt like a more real-world indication of growth than simply growing the number of “contacts” in your database.
That said, we are a new email marketing provider and need to be cognizant of building a strong “sender reputation.” Basically what this means is we need to safeguard ourselves from bringing on companies that will try to use our platform to send email broadcasts to large lists of people who did not give them permission to email them. When this happens the emails inevitably have high bounce and complaint rates, which in turn hurts our sender reputation and lowers the deliverability rates of our email marketing tools. This risk led us to...
Decision #3 - Our value metric is going to be a blended model of both users and contacts, because both the number of users and the number of contacts should naturally grow as a start-up gains traction, begins to hire more people, and begins to market to more folks. Our plan is to give our users more than enough contacts for the stage that they are at, but to provide some sort of cap in the vein of building a strong sender reputation and ensuring our email marketing tools aren’t abused.
Outseta’s Pricing - Where did we end up?
Reviewing the above decisions, we know that we wanted to…
Offer a free plan so there’s no barrier to entry to get started with Outseta.
Offer a fantastic value, even in comparison to the least expensive combination of point solutions. And have an easy to understand pricing structure so you always know what you’re being charged.
Use a blended model of users and contacts as our value metric to effectively mirror the traction and growth of a start-up.
Without further adieu, here’s a link to our first pricing page.
Let’s unpack this a little bit - everybody who wants to use Outseta will start on our “Founder’s Plan” which is free forever for 1 user and up to 500 contacts. This is not a time constrained free trial, or a limited functionality offering - you’ll get access to all of our features until you outgrow this plan. As a small, bootstrapped start-up ourselves we’ve been working on Outseta for six months now and would still be on this plan - we wouldn’t have paid a penny, and we think that makes sense given our stage.
Eventually as we start bringing on more salespeople, more support users, whatever it may be we’ll need to scale up. Or maybe we’ll simply have grown our database beyond the 500 contact limit. Whatever the trigger is, the price is the same - you’ll pay $30/mo (billed annually) for an additional user which includes 2,000 additional contacts. Free to start, easy to understand, and it scales with growth.
Now, let’s look at how our pricing scales as a start-up grows versus that least expensive combination of point solutions (Hubspot CRM, Groove, MailChimp, Profitwell).
Total Price Per Month - Outseta vs. Point Solutions
We think any way you cut it, Outseta is a great deal.
What we think we got right and what we’re not sure about
Any time you release a new product into the market for the first time you’re taking an educated guess at best in terms of how the market will respond to your pricing. Despite the fact that we’ve given this a lot of thought (enough to devote a 2000+ word blog article to it), that is absolutely true in our case as well. There are three things that we feel really good about that we haven’t discussed yet.
We’re giving a 25% discount for selecting an annual versus monthly plan. While the dollar amounts here are small, that’s a significant discount. We’re selling to start-ups, which we know is a population that will naturally have a high churn rate. As such, we want to incentivize people to make that larger commitment to our platform which will help us raise our average customer lifetime value (ACLTV).
Despite the fact that we already win on price for the price sensitive customer, we think our customers will realize enormous value from gaining a single, “360 degree” view of their customers. They’ll be able to better understand their customers and their business, which is imperative to an early stage start-up.
Our customers will also realize significant savings in terms of time spent evaluating, integrating, and maintaining a handful of point solutions. Over time the cost of these activities becomes, very, very real in terms of employee time. Your VP of Engineering has better things to do.
All of that said, we do have a mild worry which was rightfully raised by Patrick Campbell of Price Intelligently in his article Stop Per User SaaS Pricing You’re Killing Growth. In short the point that Patrick makes is if your pricing is tied to the number of users, then companies will try to limit the number of users to limit their costs. If you think about it, you should want everybody possible to be using your software because that increases the stickiness of your product and makes the customer less likely to churn. We absolutely buy that and it’s something we’ll monitor closely going forward, but our thinking is that with our blended model companies that are growing will either need to genuinely add more users or increase their number of contacts.
All things considered, we’d betcha we didn’t get our pricing perfectly “right” this first time around. Almost nobody does. FrontApp published an article we found useful on derisking your pricing strategy that gives an interesting perspective on the path they took to optimize their pricing. It’s worth the read and started an internal discussion amongst our team around the commitments we’d like to make to our customers when it come to pricing.
We know that we don’t want to be the company that nickle and dimes you, raising prices every time a new feature is delivered. We also don’t want to be the bait and switch company, whose prices start out low and then increase almost every year in an effort to keep up with investor’s revenue expectations. But we do want to reserve the right to experiment with our pricing consistently; it’s too important not to. Our thinking is simply that as we run future pricing experiments, we’ll do so only for new customers and will honor the pricing that our customers originally signed up for. Across the board pricing changes will be very few and far between.
So now to put the ball in your court… what do you think? If you are someone who has purchased the point solutions we’ve reference in this article or just someone who has thought quite a bit about pricing SaaS products, we’d love to get your take. Please share you thoughts with us via a comment below.