We spent $980k on a failed SaaS project | Hacker News Reader

We spent $980k on a failed SaaS project

niteo.co

75 pointszupo17 comments

> All of this resulted in revenue being slow. Really slow. It took us 16 months after launch to get to $5k MRR. In our succesful project, we started with $5k MRR.

I think that early traction is the key indicator of potential future success. Unless you're working in an industry where early traction is literally impossible to attain (pharmaceuticals, medical, VR hardware, R&D, etc.), the market tends to be pretty responsive.

If you're working on a piece of software, make a "free tier" open source version, give it out for free, get as many people to try it out as you can. If people aren't even remotely excited, pivot: it's not a good idea.

It's like fishing: if you're getting no nibbles, change the bait.

The trick is in knowing where to draw the line. We definitely felt we had "some" tracking. We had hundreds of people sign up to our newsletter. We had a couple of users that absolutely raved about the product (or as it turned out later, not about the product specifically, but the support we were providing).

We asked ourselves many times: is this "too slow" or are we just being impatient?

Additionally, there is a huge difference in getting free users and getting paid users.

We tried with a very low-price plan and got a lot of interest & signups. The moment we raised the prices a bit to cover hosting costs, the interest went away.

What was the price difference between the low price and increase?

Did you consider trying a debt/capital backed growth strategy? Where you take on funding and use it to subsidize introductory pricing to gain market share ahead of raising prices? cf. Spotify's free 3 month trial, AWS free tier, food delivery app shenanigans.

I feel like this strategy is often just delaying and magnifying a failure, but if you really believe your product is better than similarly priced products, and the hurdle was getting customers to switch, then providing aggressive price incentives for switching, then ratcheting prices to parity would probably work pretty well.

We never wanted to go the funding route so this was never considered. While it might have worked, it would prolong the whole thing and make it much, much more stressful.

> We tried with a very low-price plan and got a lot of interest & signups. The moment we raised the prices a bit to cover hosting costs, the interest went away.

I have to correct my partner here as his memory is a bit fuzzy. :) We tried a low tier price ($15/m vs regular $49/m) but it did not make any significant difference in signups.

We targeted the high-end of the WordPress market where we competed against Kinsta, WP Engine, Flywheel etc. And the problem there was they were "good enough" (and in some ways muhc better) as I mention in the blog post.

At the same time, the lowend SiteGround had prices below $5/m so we couldn't compete against them in that segment as we were paying more than that to Google Cloud.

> We asked ourselves many times: is this "too slow" or are we just being impatient?

Yeah, this is extremely tricky to gauge (and I'm no expert), but when it "clicks" it's hard to miss.

Yep, completely agree. We had a project before when it "clicked" and we could tell.

Oh wow, what a roller coaster ride! Thanks for sharing, this is just so much more informative than the usual "look how successful I am" posts!

And good luck with your future projects, Pareto Security sure looks interesting!

How is Pareto Security different from endpoint security solutions like CrowdStrike (which our team uses for all the Macs we distribute)

It's "zero trust". I.e. no-one from Pareto Security, nor anyone from your company can access or track any of your Macs.

The only thing that the local agent running on a Mac does, is sending a list of failing checks every now and then. It does not allow any centralized pushing of configuration, no tracking, no remote access, nada.

You mentioned that you had a decent amount of low-price plan signups - how much did you increase the prices that scared away your customers? Curious if you tried lowering prices again/used other discount pricing strategies.

Sorry, forgot to reply here. See the answer a few comments above: https://news.ycombinator.com/item?id=31490449

Love honest assessments of self like these. Super helpful. Thanks Zupo!

What were the product pricing tiers?

It started at $49/m and we were clearly targeting the upper end of the market. It went up to a few hundred dollars and we had a user or two on those plans as well.

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