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Comment by jondubois | Hacker News Reader

I was really surprised at how expensive a lot of B2B software tools were considering how easy they were to build. Then I remembered that a lot of these companies have to feed hundreds of idle investors, board members, advertisers, landlords, property managers, etc...

Anyway, so I got together with a co-founder (a big open source contributor like me) and we built a cheap realtime pub/sub (push notification) service: https://baasil.io/#!/plans

We are like a tenth of the price of some of our competitors but our profit margins are still ridiculously large. I guess it's because we don't have to give our profits to hundreds of idle investors and board members. We just have to feed a couple of hard-working engineers (myself included).

I look forwards to this new age of frugality and restraint with open arms.

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More accurately, you don't have to pay a bunch of sales people. Sales is the dominant expense of SaaS companies (many SaaS companies in fact have more salespeople than engineers, especially when you consider that most "support" people are in fact sales).

Baasil looks interest. I've also never heard of it, but I have heard of your competitors—thanks to the marketing/sales which their higher fees pay for.

If you're actually planning to grow a business, you need to cover acquisition costs in your pricing. For many businesses, CAC is by far the biggest expense.

Yes, true. I do think that generic B2B software services like this should be treated more like commodities. Maybe this will happen as more competitors spawn up.

In my view, paying to advertise such a service is equivalent to a farmer paying to advertise his wheat.

In practice, that's basically what AWS is. They offer things at prices much lower than other B2B software, but don't have the niceties and sales efforts around each individual line item.

A farmer may not have to advertise his wheat to consumers, but he still needs the stores to know about him if he's going to sell anything. I'm not a farmer, but I would imagine this would mean advertising or doing direct sales with stores. Also there is such a thing as commodity advertising. :)

Nobody really wants their product to be a commodity though, as that means low margins. Fortunately, software products tend to be complex enough that even if there are generic product categories (e.g. "email service provider"), there are still ways to stand out. Even the "pub/sub service" market has quite some variety.

Er just as a point I would say that most often support people, especially in b2b companies, are not sales. In fact there is often an intentional, clear distinction. I've worked support at several companies now and while I've definitely been a resource for sales I was never actually sales driven in any fashion.

Enterprise companies don't want to buy software. They want to buy a solution to a problem that they have. In addition to software, they need someone to call upon whenever there are any issues. They also need support in terms of integrating software into their existing stack without red flagging compliance, finance and other departments who have a say in the technology stack. Price is a non-issue for enterprise companies - what they want is a reliable business partner.

I would say that most small B2B software companies aren't giving profits to investors, they're giving revenue to operations overhead to support staff that aren't strictly needed, but are nice to have (sales, marketing, HR, larger than necessary dev teams, etc.). Any company focusing on solving a single problem while growing slowly is generally a lifestyle company rather than a true startup in the HN sense, and can be as efficient and profitable as yours.

Just be careful you're not ignoring the expensive parts of B2B businesses: sales/marketing/service, customer specific setup/integration/features.

There's a reason why other companies charge a lot and have "fat" orgs.

Also, "leaving money on the table" does no one good. Let businesses with budget pay you money. If anything, the money lets you improve the product for your customers - everyone wins.

I'm confused by your statement. Investors and board members aren't generally paid? These other things like landlords and property managers are a function of size admittedly. Advertising should not be a net loss as well...

Is there something wrong with my browser? Because looking at the website it is designed for the visually impaired. The font must be something like 72point.

What is a pub/sub service and why would I want one? Would it help with distributed teams? Sincere question (but you shouldn't ignore all sales and marketing!).

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