Ask HN: Just want to make $1,000/mo from my SaaS, competing on price?
8 comments
When people are competing on price, the products are fungible...one scheduling app is as good as another. When competing on price against pencil and paper then you'll probably need to pay your customers, since
That said, I suspect the reason scheduling wait staff is such a mess is that wait staff are people and hence unpredictable, unreliable, opinionated and moody. On top of that, the ideal scheduling solution from the scheduler's point of view is almost certainly an automatic tool, but that requires all those people on the wait staff to enter accurate information...and the odds of that happening in the average ten staff restaurant that's looking for a solution is probably zero.
Finally, it is probably the case that scheduling by paper and pencil or excel requires zero cash directly. The manager is on salary and does the scheduling in slack times and Excel is already a sunk cost. Again, even a $10/month SAAS is competing with zero.
Good luck.
paper + pencil ≅ $0.00
That said, I suspect the reason scheduling wait staff is such a mess is that wait staff are people and hence unpredictable, unreliable, opinionated and moody. On top of that, the ideal scheduling solution from the scheduler's point of view is almost certainly an automatic tool, but that requires all those people on the wait staff to enter accurate information...and the odds of that happening in the average ten staff restaurant that's looking for a solution is probably zero.
Finally, it is probably the case that scheduling by paper and pencil or excel requires zero cash directly. The manager is on salary and does the scheduling in slack times and Excel is already a sunk cost. Again, even a $10/month SAAS is competing with zero.
Good luck.
Someone with a very similar profile asked a very similar question 6 months ago: https://news.ycombinator.com/item?id=9117728
Maybe someone should start a business aimed at actors starting SaaS companies.
Maybe someone should start a business aimed at actors starting SaaS companies.
Actually, now that I read that original comment from 6 months ago, I believe you may be the same person. Both posts use the word disinterest(ed) in a way that used to be considered incorrect. Disinterested ~= unbiased. Uninterested = 'not interested'.
Disclaimer: I work at one of said scheduling startups.
I don't want you to think I'm deterring you purposefully, but one hint is that scheduling alone is just not lucrative enough for your goals.
Talk to a few merchants & you will find that restaurants with < 10 employees are going to fight tooth & nail for free features. They are operating on very tight margins and they are not going to pay much for this, if anything at all.
On top of that, the types of businesses/restaurants that will pay $50-100 p/m require a complicated set of features that would be too much for a one-person lifestyle SaaS.
I'd suggest you look to models like Zenefits', who entirely make their revenue from health insurance brokerage.
I don't want you to think I'm deterring you purposefully, but one hint is that scheduling alone is just not lucrative enough for your goals.
Talk to a few merchants & you will find that restaurants with < 10 employees are going to fight tooth & nail for free features. They are operating on very tight margins and they are not going to pay much for this, if anything at all.
On top of that, the types of businesses/restaurants that will pay $50-100 p/m require a complicated set of features that would be too much for a one-person lifestyle SaaS.
I'd suggest you look to models like Zenefits', who entirely make their revenue from health insurance brokerage.
What was the $1,300/mo SaaS. Maybe start that baby up again?
the scheduling process is terrible -- excel sheets, manual paper schedules, etc
Excel and paper might be terrible to you, but you're a tech minded entreprenuer so what it feels like to you is essentially irrelevant. The person who needs to think Excel and paper are terrible is your customer. The two important things are: Do Excel and paper have a fundamental disadvantage compared to a SaaS solution that people would be willing to pay for, and would people be willing to pay $<price> in order to get that advantage? It's definitely possible that the answer to those questions is a resounding 'YES!' to you, but you need to ask people who would pay for your product those questions rather than believing you already know the answer. Research your market.
As for competing on price, I wouldn't. You competitors will just discount their products if you take any significant market share. They've picked a price they believe people will pay, really there's (probably) nothing stopping them charging $1/month.
(Note: My startup competed with Excel. What we built was definitely better than Excel for the problem we were tackling. But ultimately most of our potential customers thought the pain was quite trivial (despite losing $thousands on projects due to it) so no one bought in. Excel was good enough and effectively free because everyone already has it. $20/month is a heck of a lot more than $0/month.)
Excel and paper might be terrible to you, but you're a tech minded entreprenuer so what it feels like to you is essentially irrelevant. The person who needs to think Excel and paper are terrible is your customer. The two important things are: Do Excel and paper have a fundamental disadvantage compared to a SaaS solution that people would be willing to pay for, and would people be willing to pay $<price> in order to get that advantage? It's definitely possible that the answer to those questions is a resounding 'YES!' to you, but you need to ask people who would pay for your product those questions rather than believing you already know the answer. Research your market.
As for competing on price, I wouldn't. You competitors will just discount their products if you take any significant market share. They've picked a price they believe people will pay, really there's (probably) nothing stopping them charging $1/month.
(Note: My startup competed with Excel. What we built was definitely better than Excel for the problem we were tackling. But ultimately most of our potential customers thought the pain was quite trivial (despite losing $thousands on projects due to it) so no one bought in. Excel was good enough and effectively free because everyone already has it. $20/month is a heck of a lot more than $0/month.)
I certainly cannot compete on features, and saying that I'll compete on "design"/"ease-of-use" is trivial; it's the execution that's hard. I could target only restaurants, and customize my entire software for it to serve it better, but there are already solutions out there doing it to appeal more to the restaurateurs.
In other words, I don't know what my competitive advantage will be should I decide to enter this market, yet I know this market pretty well based on my first-hand experiences.
In other words, I don't know what my competitive advantage will be should I decide to enter this market, yet I know this market pretty well based on my first-hand experiences.
First, a quick anecdotal story. Recently, an entrepreneur came to me and said he had a solution for a particular market he had worked in for years, inventory management software. His daughter had recently started a small business and was using spreadsheets and paper to keep track of inventory. He started looking around and many other small businesses were doing the same. There were solutions that were out there, everything from spreadsheet templates, to iPhone apps, to access databases that could help these small business owners but they didn't use them. It was obvious that these solutions weren't easy to use, weren't what the small business owners wanted, and weren't working. So he built an amazing, simple, attractive solution using his decades of industry experience. I am not sarcastic when I say his solution was, honestly, pretty nice, and better than the rest of the market.
He came to me because it wasn't selling. In fact, he decided after some time to put it on a freemium model. Even the basic, absolutely free edition had almost no users. Why? Was it not working as intended? Did he have bugs? Was it slow?
Well, no. It was a great piece of software. The market didn't want it though. It turns out that spreadsheets and paper work well for small businesses looking to track a certain amount of inventory. If they get big enough to need more than they want something more than this guy was offering. There was literally no market for the software he built. He had no competitive advantage because the market didn't see a need for a solution. Some lower level employees of small businesses might have wanted his software, but the owners, the people paying the bills, didn't see the need and didn't care. Spreadsheets and paper just worked. End of story.
I'm not trying to discourage you from entrepreneurship at all. However, not all businesses work. You can attempt to compete on price, but that almost never works. As others have said, your competition will smash you on price. You can compete on features. But you have to ask yourself, why aren't businesses using the competition now? If it turns out that it is because they just don't want a technical solution, or because they don't believe they have a problem, then you are in a position where you have to win on educating a market, and that is a costly and formidable issue. Maybe instead you'd like to try to pull customers away from existing solutions, not onboard customers who aren't using a solution. Well, is the time and effort worth it to switch from an existing solution to your solution for $10 in monthly savings? I doubt it. Finally, remember that there are other costs to onboarding customers. If you have to spend an hour on the phone with each customer each week for a $20 monthly fee, just remember how much you are really making.
Sorry, I realize that doesn't help you to solve your problem or find your competitive advantage. Sometimes, there is no competitive advantage.
He came to me because it wasn't selling. In fact, he decided after some time to put it on a freemium model. Even the basic, absolutely free edition had almost no users. Why? Was it not working as intended? Did he have bugs? Was it slow?
Well, no. It was a great piece of software. The market didn't want it though. It turns out that spreadsheets and paper work well for small businesses looking to track a certain amount of inventory. If they get big enough to need more than they want something more than this guy was offering. There was literally no market for the software he built. He had no competitive advantage because the market didn't see a need for a solution. Some lower level employees of small businesses might have wanted his software, but the owners, the people paying the bills, didn't see the need and didn't care. Spreadsheets and paper just worked. End of story.
I'm not trying to discourage you from entrepreneurship at all. However, not all businesses work. You can attempt to compete on price, but that almost never works. As others have said, your competition will smash you on price. You can compete on features. But you have to ask yourself, why aren't businesses using the competition now? If it turns out that it is because they just don't want a technical solution, or because they don't believe they have a problem, then you are in a position where you have to win on educating a market, and that is a costly and formidable issue. Maybe instead you'd like to try to pull customers away from existing solutions, not onboard customers who aren't using a solution. Well, is the time and effort worth it to switch from an existing solution to your solution for $10 in monthly savings? I doubt it. Finally, remember that there are other costs to onboarding customers. If you have to spend an hour on the phone with each customer each week for a $20 monthly fee, just remember how much you are really making.
Sorry, I realize that doesn't help you to solve your problem or find your competitive advantage. Sometimes, there is no competitive advantage.
Amazing anecdote/post there.
To me, the biggest take-away is: confirm the market before you build. So instead of just coming up with a legitimately good idea and then going to work, set up the marketing material first to measure hits, or talk to people in industry and see if they would pay $x/month if such a thing existed.
This is even pre-minimum viable product level, this is putting feelers out to see if the MVP is worthwhile.
To me, the biggest take-away is: confirm the market before you build. So instead of just coming up with a legitimately good idea and then going to work, set up the marketing material first to measure hits, or talk to people in industry and see if they would pay $x/month if such a thing existed.
This is even pre-minimum viable product level, this is putting feelers out to see if the MVP is worthwhile.
I think that segment of really small restaurants of less than 10 employees wouldn't be facing a problem of scheduling processes to such a degree that they would be willing to pay. First, the lower number of employees reduce the need for such an app, and second, smaller restaurants are less likely to pay for services when they're operating on lower margins.
Best of luck though, and good luck with your aspirations to become an actor. :)
Best of luck though, and good luck with your aspirations to become an actor. :)
One question: do you hear your non-tech colleagues (and in particular, your boss) complaining about the scheduling process?
If so, you may be onto something. If not, step #1 before writing a line of code is to sit your boss (if possible) down for lunch (you're buying) and get him to tell you as much as possible about all the things in the business that don't work. Either that list will include your scheduling issue - in which case start work - or it may have other problems which could be a better target for your SaaS work.
Just like in film and theater, doing thorough pre-production can really save you a lot of cash, time, effort, and eventual flops, in post :)
If so, you may be onto something. If not, step #1 before writing a line of code is to sit your boss (if possible) down for lunch (you're buying) and get him to tell you as much as possible about all the things in the business that don't work. Either that list will include your scheduling issue - in which case start work - or it may have other problems which could be a better target for your SaaS work.
Just like in film and theater, doing thorough pre-production can really save you a lot of cash, time, effort, and eventual flops, in post :)
As you've pointed out yourself, it's a massively saturated market with new startups seemingly launching every month, and yet most restaurants still survive quite happily on Excel and paper, and are certainly not the easiest businesses to sell to.
I'm not sure that a 33% price cut is going to change that.
Getting those 500 customers isn't beyond the realms of possibility, but it probably involves an awful lot of work relative to getting 500 customers to spend $20 per month on something else.
I'd be tempted to double down on your old site, unless the reason for the dropoff is that you've upset a very small vertical or been overtaken by vastly superior competition.
I'd be tempted to double down on your old site, unless the reason for the dropoff is that you've upset a very small vertical or been overtaken by vastly superior competition.
The market seems pretty saturated/crowded with little to no differentiation. In fact, it seems almost as if they're just competing on who has more features. As a solo founder who's just building a lifestyle startup, I don't want to go down the features route.
I plan to differentiate based mainly on ease of use (intuitive design, less irrelevant features that just simply don't apply to smaller restaurants) and price. Competitors now average $30/mo. I'd undercut them and take $20/mo for a simpler, no-bells-and-whistles solution.
There has to be an underserved market segment of really small restaurants (<10 employees) that would use my site instead, I believe. Or is this wishful thinking?
PS I once started an SaaS site that made about $1,300/mo at its peak, way less now though due to my disinterest (I took a year-long road trip, did loads of random stuff, had a YouTube career, wrote a book, etc. etc.).