Category: Products

  • Pricing a SaaS app is hard

    Pricing a SaaS app is hard

    Pricing a SaaS app is hard. Really hard. My flagship product Teascript launched with a subscription-based pricing model in 2007. This was primarily due to a limitation in the payment system I was integrating with. I did a bit of “market research” before settling on $19 per year for unlimited use of the app. (And by “market research” I mean that I Googled some keywords related to my app to find competitors and learn what they were charging.)

    This pricing stuck for several years but I eventually realized the amount of value I was providing through the app did not match the price tag. As I continued building new features, the value was increasing and I needed to change my pricing accordingly. I also decided to move from an annual charge to a monthly charge, mostly because I wanted a shorter feedback loop to measure churn.

    I switched all subscriptions to $5 per month and also put a cap on app usage (which in hindsight, I should have been doing from the start but that’s a topic for another post). Surprisingly, this actually increased my sales even though the effective annual rate had more than tripled to $60. Why was this?

    I was scratching my head initially until I realized many of my users were signing up for one or two months and then canceling their subscriptions. So I had actually increased churn by moving from an annual to a monthly charge. But that told me something about how my customers were using the app. Teascript helps homeschoolers and private schools build high school transcripts for their students. This is something that’s typically only done once in a student’s lifetime. Therefore, even in a family with 3 or 4 kids, a parent is only going to be using the app for a few months at a time per student, then they won’t have any further need for it.

    This leads me to believe that moving to a fixed pricing model may be the right approach. Recently, I’ve been experimenting with various metrics to try to measure how much money I make off a typical subscriber. If most of my customers only remain subscribed for 3 or 4 months, that’s $15 to $20 of revenue. If I had instead been charging a fixed price of $39 (a price point comparable to most offline high school transcript kits) then I would have nearly doubled my revenue.

    I still haven’t found a reliable way to determine the lifetime value of a customer, though. I’ve been experimenting with various Stripe metrics providers but haven’t found anything that calculates metrics based on the past 7 years of payment data I have in Stripe (everything I’ve found only calculates metrics going forward). When I do figure this out, I’ll be sharing the results here. Stay tuned.

    In conclusion, did I mention pricing is hard? There are so many different ways to price an app. It’s hard to know ahead of time what will work for any given app. This is where A/B testing and customer feedback can be helpful. Even with that additional information, though, I feel like it’s something that could take a lifetime to master. I’m well on my way, but I still have a lot to learn.

    Have you run into challenges pricing a SaaS app? Share your story in the comments.

  • 2015 goals (part 2)

    I met with Susan Hand last week to convert my incredibly long list of goals for 2015 into an actionable plan. By the end of the hour, I had a spreadsheet categorizing my goals into 3 main areas:

    • Consulting (currently my core business)
    • Programs/Products (things that will replace my consulting income eventually)
    • Personal (basically everything else)

    Susan also had me rank each goal according to whether it would generate revenue immediately or later, and whether it was mandatory to get done this year or merely optional. It was a good exercise since it forced me to think deeply about each goal and consider what would need to be done to declare the goal “complete.”

    We also did some preliminary scheduling of goals for each quarter of the year. It’s a great start to assembling a comprehensive business plan for the year. Susan helped me transition from my “brain dump” into something organized, prioritized, and understandable.

    The next steps I’ll need to take to continue developing this plan are:

    1. Using the worksheet we started, spend some more time documenting my “ultimate” 2015 goals and activities for my core business, programs, and personal growth.
    2. Start a 12 month calendar and start blocking out holidays, vacation, travel plans and events. These are the days that I already know I’m not going to be working.
    3. Once I’ve completed the 12 month calendar it’s time to start laying in my quarterly, monthly and weekly plans. I’ll start with what goes in each quarter and then break it down by month. If I’m not sure what month I’m going to do something, I’ll leave it in the quarter list until the quarter gets closer and move it down to the month at that point.

    I want to thank Susan for sharing her time with me. If you’re looking to develop a similar business plan for 2015, get in touch with her. I’ll be posting periodic updates as I continue building out my own plan and executing on it. In fact, I may dedicate a entire post to executing on goals in a few weeks. It’s something I struggle with. I’m sure I’m not alone in this, but in my experience it’s much easier to come up with goals than it is to actually bear down and start doing the work necessary to achieve them. Procrastination springs eternal.

  • 2015 goals (part 1)

    I established some general goals for 2015 in my 2014 annual review, however I’ve since become convicted about being more specific about these goals and describing them in a bit more detail. Fortunately, my friend Susan Hand is a project manager and has graciously offered to donate some of her time this week to assist me in refining and organizing my goals.

    Here’s my not-so-short list of things I want to accomplish this year. These aren’t in any particular order and they aren’t categorized very well. Realistically, many of these probably can’t be accomplished in 2015 (if at all). I’m only one person and don’t have infinite time and resources (though I wish I did). But the first step to accomplishing something is establishing it as a goal. So here we go:

    • Establish realistic quarterly goals for the year
    • Maintain my existing monthly revenue from consulting
    • Finish building my 7 Days to Kick Sugar email course
    • Finish building my How to Build a Transcript email course
    • Hire a contract writer to improve copy for Teascript, my SaaS app
    • Hire a contract writer to create a companion eBook for Teascript
    • Aquire and execute a marketing plan for Teascript
    • Double monthly revenue from Teascript by the end of the year
    • Put Teascript on “autopilot” by automating or outsourcing time consuming tasks
    • Move my blogs from AppFog to Linode
    • Write a new post on my personal blog each week
    • Write a new post on my distance education blog each week
    • Put up Facebook/Google+ pages for my company, Adeptware
    • Put up Facebook/Google+ pages for my consulting services
    • Assist with organizing a local tech conference
    • Present at the Triangle Ruby meetup
    • Present at the Agile RTP meetup
    • Attend Triangle Startup Weekend
    • Build a web site “health check” SaaS app
    • Build a SaaS app to establish, track, and achieve life goals
    • Write an eBook about how to manage variable income as a freelancer
    • Write an eBook about nutrition for developers (or more generally, freelancers)
    • Revise and re-release the Career 2.0 eBook with Jared Richardson
    • Exercise consistently 3 times per week
    • Select and hire a good financial advisor
    • Rollover my old 401(k) to an IRA
    • Pay off my home mortgage
    • Learn more about real estate investing
    • Start attending a real estate investing meetup
    • Find a real estate investor who can be a mentor
    • Aquire a piece of investment real estate
    • Learn more about investing in privately held businesses
    • Invest in a local privately held business
    • Continue on the Specific Carbohydrate Diet

    Yes, it’s a lot. I’m sure Susan will help me whittle this list down to something more manageable. It should be interesting comparing this list with whatever comes out of my meeting with her. Check back next week for those results.

    Have you established any goals for 2015 yet? Is your list as crazy as mine? Post a comment and let me know what you’re planning.

  • Introducing my latest Rails app: Fuelinator

    Gas CanI started building Fuelinator at the last West End Ruby meetup. The motivation behind the project was the lack of a decent system for tracking my business mileage. Existing apps like Fuelly and My Mile Marker make it unnecessarily difficult to enter mileage, and the statistics they produce just aren’t that useful to me.

    My initial goal with Fuelinator is to make mileage entry dead simple and to provide some compelling new features… for example, alerts via email or SMS when my vehicle’s mileage changes suddenly. This helps me track down maintenance problems early and gives me valuable information about what does and doesn’t improve my gas mileage. For example, I changed my air filter and inflated my tires last week. If my mileage changes drastically this week, I want to know. Now, Fuelinator will tell me.

    The ultimate goal is for Fuelinator to save its users gobs of money on their gas bills. I haven’t made Fuelinator public yet, but if you’d like to participate in the beta program make sure you sign up. It’s going to be a fun ride!

  • Setting speed dial numbers on a Sprint RAZR V3m

    I’ve been generally displeased with my Motorola RAZR. Sprint gave it to me over a year ago and aside from terribly poor battery life, it has one of the worst user interfaces I’ve ever seen on a phone. Despite that, it’s very compact and since my Sprint plan doesn’t expire until October of this year I’ve stuck with it.

    Something I couldn’t figure out was how to set the speed dial numbers. Turns out that there isn’t a way to do this through the main “Contacts” list (seems like that would be the best place for it). After Google failed to turn up anything, I began randomly clicking through my settings menu in frustration, attempting to locate the speed dial settings. I finally found them. Finally.

    Go to the main settings pane, then select the “Contacts” button (orange book with a phone icon on the front). There will be an entry on this menu titled “Speed Dial #s” which will let you configure everything you need. Why this wasn’t included on the main contact list I’ll never know, but there you have it.

  • Slides from my RailsConf talk

    For those who may have missed my talk at RailsConf, you can download the slides to get a better idea of what the talk was all about.

    I had a blast, by the way! The audience seemed to enjoy it, and I was pleasantly surprised at the number of questions people had about Teascript and the process of building it. About a dozen people came up to me afterwards saying that they had an idea they were mulling over, and my talk had inspired them to get started on it.

    I’ll probably be writing a couple of follow up articles that go into more detail on how homesteading worked for me. I didn’t have enough time to cover everything I wanted to at the presentation due to the enthusiastic response from the audience. To those who attended, thanks for being there and making the talk a success!

  • Teascript goes live

    TeascriptI’m proud to announce that Teascript went live early last week. It’s been a long several months since originally conceiving the idea, building the app, beta testing, and deploying but now it’s finally ready for prime time.

    Teascript is a Rails application that makes it easy to design and build professional high school transcripts. It’s mainly targeted towards home school parents and students, however, I’ve received interest from several public and private schools who are looking for a transcript generation package they can install locally so the potential for this product seems huge.

    For those interested in how Teascript was deployed, the application runs on Apache 2.2 with mod_proxy_balancer and a cluster of Mongrels. I’m using a VPS provided by Slicehost. This setup has been rock solid so far.

    My talk at RailsConf this year will focus on the development of Teascript: how the target niche was chosen, how the application was marketed, and so on. My goal is to demonstrate how the principles outlined in 37 Signals’ book Getting Real and the homesteading concepts put forth by Nathaniel Talbott at last year’s RailsConf were combined to produce a web product that is self-maintaining, sustainable, and capable of generating passive income.

    So please, check out Teascript and let me know what you think.

  • Teascript opens for beta testing next week

    Teascript is my latest Rails application. It’s scheduled to go live in mid-September. You can read more about it in the original announcement that I posted a few weeks ago.

    Beta testing for Teascript begins next week. I’m looking for a dozen or so people to help sanity check the application before I unleash it on the public. (I already have 8 signed up.) As a beta tester, you would receive full access to the product starting early next week.

    While I’m not requiring anyone who volunteers as a tester to send me feedback, it’s much appreciated! Interested? Shoot me an e-mail at matthew AT teascript DOT com and I’ll add you to the list.

  • Introducing Teascript

    Teascript is a Rails-based web application I’ve been working on for about a month. It’s targeted towards home school parents and students who need to design a high school transcript with minimum fuss.

    Traditionally, this process has been quite involved. My own parents and I designed my transcript using an Excel spreadsheet. It was painstakingly slow! Many home school books have transcript templates in them, but again, the process of photocopying and filling them out is time consuming.

    It is because of this that I decided to create Teascript. The application is still under development, but I have put up a teaser page highlighting some of its features. The page also allows you to sign-up to receive notification when Teascript goes live sometime later this year.