2 months into SaaS, easy to sell LTD, hard to get recurring revenue - AMA
Hey all, I'm Damon. On 12/22/2020, I launched my 5th bootstrapped project testimonial.to -- a tool to collect video testimonials.
I mimicked other indie hacker's marketing strategy, and also offered a lifetime deal for my Product Hunt launch. People loved it. The LTD helped generate $5,124 revenue in the first 10 days after the launch.
But ... I canceled it on the 1st day of 2021. Revenue dropped drastically!
Why canceled LTD?
- It's not sustaining. Video hosting and streaming cost will add up. 😭
- The more people know about LTD, the fewer people will consider subscribing. Bad business model! 🚨
- Need recurring revenue as I expect it to replace my day job. 💪
Now one and a half months later into the real SaaS, I got 29 subscription users. MRR sits around $500. It's 10X harder than selling LTD. I know $500 is not that much. But it's a long-term game. I just need a little bit more patience and consistency.
If you are interested in knowing more about my indie journey, feel free to ask me anything 🤗
Hello @damonchen,
well done on your launch and product hunt, have seen your product around. 👏
With LTDs you should introduce limits. Calculate the costs and until when it is still feasible. But I guess that is what you have already learned. :)
The plan with LTDs is, that you get them easy, and then you try to upgrade them, so they can gain more from your product and you can convert them to recurring (higher) revenue. Perhaps a plan between Free and Premium, e.g. just one space, etc. based on the traffic costs what would make sense.
FYI by making $500/month after just one and a half month, you are already doing great!
By the way, on your pricing page, you have the Premium plan with a label "Recommend", I think it should be "Recommended", "Customers recommend", "Testimonial recommends", or even better would be "Most popular". I would still have there one more plan, either replacing Free or adding one lower plan or one between enterprise and premium and make that one "Most popular".
You are right! I didn't do too much study on setting up a proper LTD, and I didn't even set any limit. So for now, it is extremely difficult for me to convert LTD adopters to my recurring customers. But those are just a handful of people, I am ok with that, and I feel glad I canceled the LTD early.
Also, thank you so much Marek for the tips regarding the pricing plan 🙏 I am actually thinking to add another plan with a higher usage tier, so that it can make the existing "Recommended" one more outstanding.
You are welcome Damon, look at the usage of your current customers now, it is great you can already check how they are using it, and use it for your new limits. You can also remove the current Premium plan, change the limits (keep it for existing ones) but it is then harder to maintain. E.g. if your current customers are using just one space and no more, make it just one space and in the next tier make it three. Needless to say, I am not within your context, so take this with a grain of salt. :)
If you will have any update and would like some feedback, feel free to reach out.
You are doing well! 👌
Yep, analyzing existing customer's usage really helps structure the best plan. You made another really good point! Connected you on Twitter as well 😉
Very observant on LTD and similar lessons we've learned for our SaaS product. LTD are amazing for quick revenue, but they never seem to work on financially in the long term.
That said, by first offering a LTD you were able to validate the market - if there was no market it wouldn't matter if a LTD or not - and you got first users to improve your product so it is ready for subscriptions, which I find demand a more refined product and level of service.
If you're at $500 MRR, that is awesome and I would argue much better than the $5K. Assume an LTV of 18 month, that is $9K. And if you want to go into fuzzy VC valuation math, subscription services have a 10x-20x value vs a 3x - 5x for one time products - so if a way you have already created $90K in value (VC fun math).
Point being - you have a much more solid (or real as you said) business with MRR, even if it is more work.
You made a good point Geoffrey! That's the beauty of LTD. It really helped me quickly validate the market. And also, some early adopters raised a lot of awesome feedback as well as a ton of bug reports. Because of that, I can make the product even more attractive and robust, and leverage the new features to get more customers.
I think you're making a wise move.
LTDs never made sense to me. Yes, it's possible to make some short-term cash (uh big surprise, it's easy to sell things that are massively discounted!) but in exchange you get:
Aim for slow, steady MRR growth and you will learn so much more and build stronger foundations.
Yes Jon! I care ☝️ the most! After I canceled the LTD, I still got people asking for the deal, and they weren't interested in the subscription at all if they can get the deal. I think the longer LTD is live, the bigger the harm would be to my brand.
Awesome concept. I have someone who would buy immediately if you had prompts/questions on screen so that people know what to say.
Thank you! Users have the full ability to give customized instructions whiling creating their own Testimonial's landing page.
Here is a real sample
I’m just loving it! Your doing an amazing job.... 👍
Thank you 🙏
You mentioned that this was your " 5th bootstrapped project". Do you mind sharing your ideation and validation process for potential buisness ideas?
I tweeted a thread about this whole journey:
IndieLog is my 1st project. It's an indiehackers-like community, but instead of writing text posts, we do updates in videos. I added lots of cool features, like video recording/uploading/hosting/streaming, sending video as a reply, etc. The community is 100% free as I don't want to charge my community members.
But I always have this idea that maybe I can take one or two cool features and make them into a standalone project. So I picked the video recording component.
Tbh, I reused lots of existing code from IndieLog. That helped me make the MVP in 4 days.
Instead of spending time on validating "ideas", I chose to ship things fast and let the market test them out. If they buy, then it's kinda validated.
Hi! Is your website built with webflow? 🤔 The design reminds me one template on their marketplace
I used the Cruip.com template for the home page, and the rest is all customized.
I saw your pricing and was wondering how you could sustain a LTD user with more than a 100 reviews.
You will be charged hefty for streaming these reviews on a high traffic website.
You should limit the monthly views on a LTD.
You are so right Mido! Glad I canceled the LTD early, so in the future I think I can bring the average cost down 😉
Nice job Damon!
It seems the reason LTD does't work in your specific case is because video products have quite a high cost (data transfer, storage, etc).
But with simpler Saas style products where the hosting and management costs are peanuts, then why wouldn't a LTD work? Most support costs tend to be upfront during onboarding; and if you have good help guides, etc then ongoing support drops to nothing.
Do others think that with the right 'simple' Saas product that LTD can be a good ongoing model?
The long-term game for SaaS is definitely to grow recurring revenue. LTD can be used in the early-stage to validate the idea and generate some early cash. If there is always the LTD option, nobody will even consider subscribing to your service.
Definitely a different game @damonchen - do you have any immediate action to boost your recurrent revenue source?
I would try to get some big volume customers like agencies, DTC merchants. This will help boost the revenue a lot.
Hey Damon, thanks for sharing your experiences. Can you provide some more Information about the "lifetime deal" you noticed?
What are your strategy now to increase your MMR step by step?
Sounds like a solid plan.
What did you mean with #buildinpublic.
(I'm new to IH, and don't know what all those special insider wording means)
Oh, it's just a hashtag people on Twitter like to tag while they are building their products in public.
https://twitter.com/search?q=%23buildinpublic&src=typeahead_click
Great product and I love the design. How many users do you have?
600+
What an amazing landing page! What technologies did u use?
ReactJs + TailwindCSS
There are so many people asking me for a LTD for Lastform that I had to write a dedicated paragraph on "Why we don't offer LTD".
On the front page.
LOL 🤣
I'm curious, what happened when you cancelled those LTD's?
The purpose of offering LTD is just to quickly test the market, and get some early cash. I think my goal has been achieved. But LTD is never my long-term plan.
After I canceled it, no more revenue for the next 3 weeks. One of my friends told me I need to update the landing page copy because the old one was still LTD-focused, not really driving people towards the subscription path. He helped me rewrite the whole landing page👇
After making this change, subscription starts to occur.
When I read this I thought you cancelled the service to existing customers who bought a lifetime plan, but are you saying you just stopped taking new LTD plans but kept supporting the existing ones?
Of course the latter ;)