Someone asked a good question on Reddit that I’ve been thinking a lot about lately.
The OP has a product that launched a month ago. They’re getting 150 visitors a day, around a third of which are creating a free account. Of those free accounts, around 1% end up making a purchase. The title of the question indicates SaaS, so I assume this is a monthly subscription situation.
First of all, these are pretty decent funnel numbers. If those averages hold out, then that’s a new paid account every two days. Call it 15 paid accounts per month. That’s 180 accounts over the course of the year. The subscription price isn’t given, but at $100/mo that’s over $100,000 of revenue in the first 12 months, and over $300,000 in the first 24.
Assuming 80% or better gross profits, those are pretty respectable targets for solo/small SaaS product in the first two years.
That’s still going to be some real work to sustain that kind of growth for a solo engineer-entrepreneur. Sustaining 150 new visitors per day over two years is over 100,000 unique visitors. What’s the market like for this particular product? How many people will have to be reached to sustain that rate? Where’s the tension here between defensible differentiation, general appeal, and competition within the product’s category?
So there are some big questions here, but there’s enough forward momentum to get some real work done.
First, I would recommend reading Competing Against Luck once or twice. This is one of the most helpful frameworks I’ve been introduced to when it comes to understanding and categorizing the motivations that drive purchasing decisions. Watching some presentations on the topic can give a good feel for how this construct is applied in an interview format.
Conduct interviews. Get in touch with the people who decided to pay. Take them to lunch, or visit their place of work, or get on a phone call, or just exchange a few emails. Whatever you can get.
Ask questions. Ask how they found you. Ask what motivated them to start their search in the first place. Ask them what they were doing before they decided to make a change. Ask them what other alternatives they considered and evaluated. Ask them the biggest unknowns or uncertainties or questions they had to get past when considering your product. Ask what would have happened had they not decided to choose your product and stayed with their previous status quo. Ask them what the most pleasant surprise has been; and the most unpleasant. Ask them what else they wish the product could do.
Ask as many questions as you can, listen carefully, and take good notes. Collect ten of these interviews. Then twenty. Then start looking for some patterns in the answers.
You probably already know something about the pain your product is solving, and the opportunities and capabilities it creates. Maybe those were based around solving a problem that you previously had. But hearing it, repeatedly, from other people, in their words, will give you some new insights about why other people are choosing your products. And over time, your customer base grows, and the market evolves, so this kind of learning should be a continuous habit.
Look at your site with a critical eye. Your home page copy. Every step along the conversion and onboarding experience. Think about the people who are most successful with your product. Does your site’s messaging and experience speak to their pain? Does it speak authoritatively to the value your product has created? Can you tell specific stories about the specific ways your product has been used by specific people?
Consider discounting a last resort on a long series of steps. I used to reach for discounting a lot in the early days. Now it rarely comes up. Price negotiation is certainly common enough, and an integral part of the process. But it’s the total value and the promises being made on the other side of that price which matter way more. We use discounting as an occasional minor nudge in the process, when needed, or a consideration for expansion within the context of a strong relationship.
Adding features should similarly be approached with a bit of skepticism. Use those as a starting point for interviews to learn more about your customers’ pains and goals. Don’t ship features, solve problems. Protect your time and momentum for this, it’s good to ship with some consistency. Try to continually align and realign with what you learn about the promises that your customers come to expect from your product.
Often it makes sense to create a free account that can be used without payment. Figure out features that can create habits in customers’ usage. Read Atomic Habits for some more thoughts on how to approach habit formation. More habitual usage creates more opportunities to communicate with your prospects and make a case for upgrading. Or think of other ways to monetize your free accounts with some amount of virality – customer usage of the free product can drive exposure to other potential customers.
One thing I wouldn’t worry too much about is interviewing those accounts who choose not to convert to paid. You may get some ideas from them, but I think you’re just as likely to get those same ideas from the folks who did decide to pay, when asking them about how to make the product more valuable. Trying to ask how those freemium customers could have been convinced to pay is just going to get muddled in all the reasons they probably wouldn’t have anyways. Have those conversations from time to time as a sanity check, but don’t mine them too aggressively.
All in all, I would say congrats, good luck, and keep grinding! There are a lot of great resources out there to help a company stay small while growing. Don’t be afraid to aggressively outsource to quality paid products as a way of reinvesting in growth. And set aside a few grand for a business attorney and CPA some time to get a corporate entity online and bookkeeping, taxes, and payroll on autopilot.