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Comment by 02thoeva | Hacker News Reader

So we launched https://emailoctopus.com around 3 years ago, it was pitched as 10x cheaper than Mailchimp and that's remained our core proposition.

That said, it's very difficult to grow a bootstrapped business when you're not charging much. At the lower end of the market you usually have less committed customers and depending on the SaaS, you may attract less favourable customers. As such we're slowly moving away from pricing being our only unique selling point and beginning to look at differentiating features.

Copying features at a lower price is a fine way to start out as a one-man band and gives you sufficient focus to get it out ther door, however, to grow the business I think you'll need to look bigger.

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I thought a lot about entering this space as a low-cost alternative to the unnecessarily expensive choices out there. So if you want some unsolicited advice, here goes.

In my opinion, one of your biggest problem in acquiring customers is that the gatekeepers out there, the big name bloggers, have a vested interest in continuing to send their readers to Aweber, ConvertKit, MailChimp, etc. The kickbacks they get are huge.

As a specific example, go to smartpassiveincome.com and look at his monthly income numbers, and how much he is getting from ConvertKit (a few years ago it was Aweber). Those affiliate commissions alone are a solid six figure income.

The end result is that he has no incentive to push a basic mailing list management solution that satisfies 99% of his readers' needs. Instead he has a great incentive to push the narrative that his readers need this overkill solution for when they launch their million-dollar course in 3 months. (I actually like Pat, or at least his internet personality, so no offense to him, this is just how human nature works)

Not to mention the strong pull on the customers' parts to feel like pros by using software the pros use, even though they don't need any of the features or support they are paying for.

I never came up with a satisfying solution around this. The best idea I had was to cultivate a brand as a rebel in the space, pushing back against this "evil conspiracy" by passing the cost savings directly to you.

P.S., you guys really need double opt-in. I believe it is legally required in many places.

Just checked out the Smart Passive Income post. It's amazing that almost 10% of ConvertKit's revenue has come from this guy. Thanks so much for sharing.

Think this also shows how important your product pricing is, particularly if growing by these traditional methods. The affiliate model of giving away a 30-40% recurring cut (as Aweber and CK do) is unsustainable unless your prices factor this in and affiliates will also only work with you if your prices are high enough in the first place to make it worthwhile.

If I remember correctly he is also on their board, so there's a chance he has an equity stake as well.

You're right about pricing. It's not a $30 / month product where they share the revenue, it's a $20 / month product where the extra $10 was directly added for affiliates. If someone happens to signup directly it's just a bonus.

They have managed to grow not just being one of the most expensive options, but also without any trial period. (They just added one, I think). This is substantially thanks to it being pushed by Pat at SPI.

Off-topic, but this touches on how I feel about all those "passive income" / "niche site" / FBA big shots. When you look at their income, almost all of it is for meta stuff (hosting referrals, tool referrals, book sales) and not for the stuff they -claim- to live off (the FBA, the niche stuff, ...).

Kind of how most people who got rich off the gold rush are those who were selling shovels.

It also pains me to have to sift through all the meta noise. But some examples do stand out. patio11 is one.

I recently found about Tyler Tringas, who has open revenue numbers, is profitable, and specifically focused on making the business as automated as possible to have time. He was going to write and sell a "metabook", but decided against it precisely for reasons of credibility. He's publishing it for free at https://tylertringas.com/micro-saas-ebook/.

Another one is Jason Kester, who wrote about how he did it for free on one simple blog post here: http://www.expatsoftware.com/Articles/guy-on-the-beach-with-...

It's good to see there are some actual cases, and it sounds at least more doable than the crazy startup lottery that is, ironically, more socially acceptable. (Passive stuff is for lazy people.)

Interesting links, thanks. I would like to point out though that since it asks for (though doesn't demand) email addresses to keep up with the book's progress, Tringas's book is not entirely without a profit for him. (Based on the assumption that a mailing list is highly valuable for these kinds of entrepreneurs.)

Except selling shovels in a gold rush is a legitimate business that provides value.

A more accurate analogy for 99% of the online passive income people would be that they got rich selling maps for where gold is, except the maps are a complete fabrication.

This is really interesting.

But it also means if you (GP) don't mind stepping on a few toes, you can turn this in your favor.

Start attracting attention by writing articles about

"What the big brand bloggers don't tell you about email marketing" and start showing some numbers on how much traffic a blog needs before the ConvertKits and the MailChimps start making economic sense.

"How to make $X by selling affiliate products" - with a link to each of these bloggers public income figures. And then you add a little message at the bottom that says "But for the beginner, my service is so much better because..."

If you think that the big name bloggers are genuinely the gatekeepers, you can actually use this to your advantage in your marketing.

Although having said that, you are probably not going to be attracting the best type of customers for a business. The more a customer pays, the more invested they become in their own success and indirectly into the success of whomever they do business with. That just seems to be how human nature works.

Yeah, this is what I was thinking with the "rebel" approach.

A problem is that every budding internet entrepreneur thinks they are going to have a list of 10,000 in 6 months and be selling a $10,000 course to hundreds of people in a year. (That Ramit Sethi makes so much money off his $10k course is testament to this)

Most of them will never get to 1,000, and in the meantime, they're paying Aweber $20 / month.

So it requires getting them to accept more reality than they may be comfortable with to use a cheaper service for now and then switch to a high-cost one with fancy drip campaign features later when they need it.

I think it is far easier to sell big dreams for $20 / month than reality for $5 / month.

I wish I knew about EmailOctpopus before I built an in-house solution at work to save $3k per month. Maybe you just need an explainer animation to market your service?

Here I made one for you using my startup: http://www.superanimo.com/animos/cartoon/148

But seriously I think starting out simple is the way to go anyway. I can't get anyone to make animations on my site and the site has an 80% bounce rate. I'm starting to think I started with a product that's too complex. Now I'm turning it into an app and trying to simplify it.

ahahah man this is the funniest thing i've seen today!

>> At the lower end of the market[...] you may attract less favourable customers

This is worth emphasizing. When you offer your service at rock bottom prices compared to your competition, you will wind up with all of the "bad" customers who will expect to be treated as if they're paying for premium level support. They want the same level of service they would get with your expensive competition, but without paying for it.

Regardless of your price points, you must handle support emails, phone calls, social media accounts, etc. - all of which take significant resources. If you neglect supporting these customers by saying "sorry, we cannot offer extensive support for the amount you are paying", some of your customers will drag your brand name through the mud and you may wind up with a negative reputation.

One the reasons I know about and use mandrill is that my framework's documentation had 3-5 quick install options and I really picked mandrill at random. This is a bit also like how stripe operates. It's free or dirt cheap to prototype indefinitely. Making sure popular frameworks have first class support (or at least obvious, easy to use installation instructions, and or great API with great documentation) could be a lot of benefit. The UI's inside those applications allow my support and non-dev technician staff to review data, refund payments, resend emails etc. without me having to build them an interface to use.

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