Waging war on LTDs (Lifetime Deals)
LTDs (like those offered on AppSumo or FB Groups) will hurt your business if/when you want to sell.
At xo.capital, we've evaluated hundreds of awesome micro-SaaS companies that have a high TTM (Trailing Twelve Month) revenue but low MRR/ARR.
The culprit? LTDs
As an acquirer, LTDs are a liability.
LTDs are helpful; they are a quick way to generate some cash and validate PMF. However, don't expect that revenue to increase the value of your business when you go to sell. TBH, we've actually lowered the value of certain businesses because LTDs eat up customer support time, new owners don't ever get paid again, and the feedback can sometimes be counterproductive.
Anyways, sorry for the little rant, but we think there is a better way... simple discounted monthly subscriptions.
Subscribe to www.saasdeals.io and get a simple code you can use at checkout. First deal goes out on National Productivity Day lol (June 20th, 2023)
PS -- if you're interested in sharing your company and a special code, send us a note at [email protected].
Finally someone speaks what I think about LTDs. Also LTD customers are way different than Recurring ones.
agreed, 100%
I don't think you could count LTD as a way to validate your PMF, unless your ICP are "people who buy only if it is a LTD" in that case that is the way to successfully validate your market.
It's just a gut feeling but I think people that buy LTD does it for the deal and not for the service.
If you need to sell LTD maybe your product are not good enough for the customer to jump across ships. In that case I would lower the monthly price and offer a free data migration to make transition smoth as possible.
Don't get me wrong, it's indeed a good way to generate a quick burst of clash flow. But it will bite you in customer support in the future.
LOL haha... fair point on your first paragraph.
i wouldn't go far as to say that LTDs means your product isn't good enough. it just provides a really quick distribution channel, which is great; however, our claim is that the compromises you have to make with a LTD can hurt during an acquisition process
Everyone knows LTD is a short-term thing/ It is a tactical thing to buy time for development & growth. Deciding when to stop LTD really depends on product growth, definitely weigh in on the LTD cost mentioned in the post.
i agree. we've seen some interesting things happen in the microsaas acqusition space with the boom of acquire.com... especially now with ai (btw -- columns looks sweet. goodluck on your PH launch, ill check it out on the 6th)
i agree that its a short-term thing. we've seen people pump on software... run it thru LTD for 4-6 months, generate 50k in revenue (non-recurring) and then put it on acquire for 2-4x TTM.
this is the sort of example where the intention isn't to buy time for dev or growth... at least it doesnt seem like thats the intention .
Thanks for supporting Columns' launch!
Yes, I think it's difficult to decide the balance point, it's a call for the founder, wise or not, :)
as someone who featured 1000+ revenue from Appsumo deals, I don't understand why this fight against lifetime deals but only love for freemium.
and yes, LTDs are a great way to validate your product as it gives you one of the most important elements of growth, PAYING users.
the bootstrapped way looks awesome, daniel! haha i admit the tagline is a bit dramatized :)
What's an LTD?
ill clarify. thanks!
Lifetime Deal. like App Sumo stuff
If someone still wants to run or check lifetime deal, make sure to check https://lifetimo.com , the largest curator of tools with lifetime deals since 2017.
While there is definitely some valid concerns raised about the long-term effects of LTDs on a business, there are also benefits that should not be overlooked.
Firstly, lifetime deals can be a great way to attract new customers and quickly generate revenue. By offering a one-time payment for access to your product or service, you can entice customers who may not have been willing to commit to a monthly subscription. This can help increase your user base and provide valuable feedback on your product.
Secondly, lifetime deals can create brand loyalty among customers. It can help differentiate your company from competitors. If done right, these deals can create buzz around your product and set you apart in a crowded market. This can help attract attention from potential investors or acquirers down the line.
Having said that, these deals must be done only for a limited number of users and for a very limited period. As it can't be sustainable for long, the founder must keep bringing MRR in their mind.
In conclusion, while there may be some drawbacks to offering lifetime deals for SaaS companies, it’s important to weigh the pros and cons carefully before making a decision. Ultimately, what works best for one company may not work for another, so it’s important to consider all options and do what is best for your business.
all fair points and i also do not disagree that LTDs are great for generating revenue.
the brand loyalty claim though is a bit tricky because we've seen LTDs often do not reflect the actual ICP. similarly, the userbase might be impressive to an acquirer however the recurring revenue that would not be passed on to the new acquirer is where we've seen a lot of conversation during the acquisition process.
thanks for sharing.