Hacker News Reader

Comment by fiatjaf | Hacker News Reader

The most basic question: if people can host themselves, why do they pay for your service?

I get that for large companies it is perhaps better to just pay for the software as a service than to have an internal team dedicated to run it, but for small and super-small companies it is perhaps better to host it -- while accepting some (little) maintenance work and some risk of crashes for the low price.

So, if I'm building some software that will be used mostly by small teams, how can I make it open-source and still make money by offering it as-a-service?

View on HN

There's a lot of things, but at the end of the day its marketing, and ensuring you challenge your customers to think about what really matters:

1. You, as a developer, care about open source and want to fund it.

2. You, as a business, don't want to run more infrastructure.

3. You, as a business, care about expenses (and SaaS is cheaper).

4. You, as a developer or business, want the latest and greatest version all the time, and on-premise is not tailored to that.

(there are certainly more, but this is just some quick ones that come to mind)

For us a lot of these things come more easily as Sentry requires Serious Infrastructure(tm) unless you're a tiny little side project. If you are a tiny little side project, you can just use our SaaS for free.

Now on the counter side, the biggest reason you host it internally is compliance. Thats not usually legal compliance these days, but its more about controlling liability, or because you (usually incorrectly) think you are better at securing systems than other people. This has been shifting for a while with the rapid rise of AWS, and the time is absolutely right to focus on SaaS.

If SaaS is cheaper, then that's the only argument we need. But it isn't clear that SaaS is cheaper.

I run a small SaaS thing for which I charge $19/mo from a dozen clients. Each one of these clients could run it for $7 on Heroku. Someone could easily write a "Deploy to Heroku" button in no time.

I also thought about the free plan Sentry.io offers. That, as you said, eliminates all the small projects need to host themselves, but (I'm guessing) it isn't something that all companies can afford: offering so generous free plans.

I want to open-source it, but I'm afraid I'll lose all my income.

You're either ignoring the cost of engineering time, or you're underestimating the engineering time your clients might spend running their own instance.

With the numbers you give, running your service themselves would save them $150/yr. That's 2-3 engineer hours per year to keep it running, keep it updated, keep it secure, and troubleshoot if things go wrong. If they spend more than 2-3 hours per year, they spent more on the engineering time than they would have paying you. This is even ignoring questions like "can that $7 heroku box handle the same load as your $19 plan?" or "do your clients even know how to set up/manage Heroku?"

Of course, people underestimate this effort/its potential complications, and overestimate their own abilities, so they often think this is a worthwhile tradeoff, but in reality it's usually not.

We started to pay for Sentry a few years back since it was both cheaper and easier than hosting it ourselves.

Might be cheaper for a lone hacker to self host on a VM running multiple applications. But if you are to host Sentry on a separate VM the cost quickly exceeds the SaaS service.

The reasons for self hosting are probably more related to compliance, security and direct database access than cost.

Just curious, what was the biggest cost, storage, CPU, RAM, bandwidth or matinence? Any kinda breakdown you could give?

Just trying to figure out what made SaaS a good value vs hosting on site, were you able to get rid of a server & the associated power & maintenance costs?

I'll echo what @robinwassen said. It's almost always going to be engineering time. We are going to have lower hardware costs at scale, but we are also going to charge a premium there (to operate our business, of course). It just ends up being more and more engineering hours the more you utilize things like Sentry, which often correlates to how successful your business is.

Scrappy lean startup who has no resources and no traffic? Great you can bring up our docker container. Growing company? VC backed startup? Large corp? We offload all of your cares for a trivial cost, which is especially important since we're monitoring a core chunk of the 'health' of your business.

I estimate engineering to cost $50/h. So each hour engineering spend on self hosting is almost 2 months at the SaaS.

On top of that an isolated dedicated VM and database probably cost about $20-30 per month.

To be honest I have not done any in detail breakdown, the main factor was that we did not want to spend engineering resources when we didn't need to.

Makes sense, its easy to end up with a mythical man month type situation.

Reply on news.ycombinator.com