It was an interesting evening spent with services founders discussing about transitioning from services to SaaS at GVFL Limited. Here are some notes on what we discussed:
๐ ๐๐๐จ๐ฎ๐ญ ๐๐จ๐ข๐ง๐ ๐๐จ๐ญ๐ก ๐จ๐ ๐ญ๐ก๐๐ฆ ๐ญ๐จ๐ ๐๐ญ๐ก๐๐ซ
In my limited experience, doing both services business and a SaaS business together is extremely difficult. Both of them require more than your full time attention and come with very nuanced problems to be solved. Some founders are able to do it. Most companies that do this achieve a really large scale in one of those two and then start the second one. I wouldn't recommend.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ซ๐ซ๐ข๐ฏ๐ข๐ง๐ ๐๐ญ ๐ฉ๐ซ๐ข๐๐ข๐ง๐
As a service business, pricing is simpler. It is cost + margin. In SaaS however, it is difficult to arrive at a cost based pricing. Most folks recommend value based pricing but in early stages, it is unclear - the amount of value your SaaS will build for your customers. I'd recommend competitor benchmarking and then speaking to a lot of customers while running experiments. Pricing, much like user research, is an on-going exercise. It is never complete. Hubspot is $2B in ARR - changes pricing every 6 months.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ฎ๐ข๐ฅ๐๐ข๐ง๐ ๐ญ๐ซ๐ฎ๐ฌ๐ญ
I wrote a post about building trust as a SaaS company a while back. Here's the link --> https://lnkd.in/dTVuX_9F
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ก๐๐ง๐ง๐๐ฅ๐ฌ ๐ญ๐ก๐๐ญ ๐ฐ๐จ๐ซ๐ค
At Clientjoy (Acquired by Synup), we tried over 10 GTM experiments. 3 of them worked. The one that worked best was building resources that answered our prospect's most difficult questions (not ebooks, not blogs - but spreadsheets or cheat-sheets). We got about 17K subscribers for these resources. 5K of them became our customers over next 18 months.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ข๐ง๐๐ข๐ง๐ ๐๐จ๐ฆ๐๐จ๐ซ๐ญ ๐ฐ๐ข๐ญ๐ก ๐ฌ๐ฆ๐๐ฅ๐ฅ ๐ญ๐ข๐๐ค๐๐ญ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ
As a services company, we are comfortable with monthly ticket sizes of $4K to $15K. SaaS most likely is 500 times less than that. Building comfort with small ticket recurring payments takes some adjustment. Having customers who you've never spoken to also takes some adjustment.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ก๐๐ง๐ ๐ข๐ง๐ ๐ฆ๐ข๐ง๐๐ฌ๐๐ญ ๐จ๐ ๐ญ๐ก๐ ๐ญ๐๐๐ฆ
Services business has Clients and these Clients have requirements. SaaS companies have customer cohorts and these cohorts have problems. The mindset required to deal with clients vs customer cohorts is very different. Building that thought process within yourself and the team becomes important. The team will have to go from understanding requirements and giving quotes to listening to problems and identifying insights.
There were a couple more things discussed as well. Do join in the next time if you are around. Thank you Jatin and eChai Ventures for having me in this conversation.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐จ๐ข๐ง๐ ๐๐จ๐ญ๐ก ๐จ๐ ๐ญ๐ก๐๐ฆ ๐ญ๐จ๐ ๐๐ญ๐ก๐๐ซ
In my limited experience, doing both services business and a SaaS business together is extremely difficult. Both of them require more than your full time attention and come with very nuanced problems to be solved. Some founders are able to do it. Most companies that do this achieve a really large scale in one of those two and then start the second one. I wouldn't recommend.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ซ๐ซ๐ข๐ฏ๐ข๐ง๐ ๐๐ญ ๐ฉ๐ซ๐ข๐๐ข๐ง๐
As a service business, pricing is simpler. It is cost + margin. In SaaS however, it is difficult to arrive at a cost based pricing. Most folks recommend value based pricing but in early stages, it is unclear - the amount of value your SaaS will build for your customers. I'd recommend competitor benchmarking and then speaking to a lot of customers while running experiments. Pricing, much like user research, is an on-going exercise. It is never complete. Hubspot is $2B in ARR - changes pricing every 6 months.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ฎ๐ข๐ฅ๐๐ข๐ง๐ ๐ญ๐ซ๐ฎ๐ฌ๐ญ
I wrote a post about building trust as a SaaS company a while back. Here's the link --> https://lnkd.in/dTVuX_9F
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ก๐๐ง๐ง๐๐ฅ๐ฌ ๐ญ๐ก๐๐ญ ๐ฐ๐จ๐ซ๐ค
At Clientjoy (Acquired by Synup), we tried over 10 GTM experiments. 3 of them worked. The one that worked best was building resources that answered our prospect's most difficult questions (not ebooks, not blogs - but spreadsheets or cheat-sheets). We got about 17K subscribers for these resources. 5K of them became our customers over next 18 months.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ข๐ง๐๐ข๐ง๐ ๐๐จ๐ฆ๐๐จ๐ซ๐ญ ๐ฐ๐ข๐ญ๐ก ๐ฌ๐ฆ๐๐ฅ๐ฅ ๐ญ๐ข๐๐ค๐๐ญ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ
As a services company, we are comfortable with monthly ticket sizes of $4K to $15K. SaaS most likely is 500 times less than that. Building comfort with small ticket recurring payments takes some adjustment. Having customers who you've never spoken to also takes some adjustment.
๐ ๐๐๐จ๐ฎ๐ญ ๐๐ก๐๐ง๐ ๐ข๐ง๐ ๐ฆ๐ข๐ง๐๐ฌ๐๐ญ ๐จ๐ ๐ญ๐ก๐ ๐ญ๐๐๐ฆ
Services business has Clients and these Clients have requirements. SaaS companies have customer cohorts and these cohorts have problems. The mindset required to deal with clients vs customer cohorts is very different. Building that thought process within yourself and the team becomes important. The team will have to go from understanding requirements and giving quotes to listening to problems and identifying insights.
There were a couple more things discussed as well. Do join in the next time if you are around. Thank you Jatin and eChai Ventures for having me in this conversation.
The eChai Effect - In Their Words
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Growth and Tech, Sheth Info
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yash shah
Chairman, ES Group of Companies
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