How we got to $1,000 in recurring revenue
blog.idonethis.com
blog.idonethis.com
I'm not asking for more features, because I like the fact it does one thing and does it well. I reckon it's probably a fair price around $1-$2 per user per month. I can't help but think you'd get more revenue overall with a lower price-tag.
1) something useful they need 2) cost is low enough that they don't need to get approval
I am not underestimating the work/effort that goes into creating it, I am very aware of the effort required. My primary motivation for using it in the first place was because I was too busy to write something like this myself, and for that the price is fair - my time is worth more right now.
But I don't think a system which sends out email reminders and logs daily text updates is $600 per year software, sorry.
The author is clearly perfectly entitled to keep the price at whatever level he likes, and I wish him all the luck in his endeavour.
Keep in mind your dealing with programmers on Hacker News, but most non-programmers don't think anything is necessarily simple or easy to recreate.
Great job, and good luck on future sales.
As a fellow subscription revenue biz, we've found that lower priced plans invite customers whose support requirements are much greater. And you won't make it up in volume.
Real businesses that value their time will spent $50/month for a service that saves them time without thinking twice. Your early traction proves this out.
The graphic you had in your post about developer thinking makes me think you guys already know this, but I see the lower price advice a lot on HN, and almost always, I think it is the wrong advice.
[1] - This is obviously 100% opinion, and you know your business 1000x better than I do. BTW, our product's subscription price point is significantly higher $12k per annum at the low end, and we just moved this up from $7500 earlier this year. BEST DECISION WE EVER MADE.
As with many subscription products, I feel that iDoneThis will become the product that business owners get used to paying each month.
None of this is a dig at the grandparent comment. Just a general tendency. Produce something of value, and people will pay and be glad to do it. The whiners will go elsewhere and you'll be better for it. (again, NOT a dig at the grandparent. There's an actual class of whiny users that vanishes when your don't pander to them)
Some price point is too high, but you won't now what it is until you've found it via testing.
With all due respect to louthy, making a decision to lower your prices based on the notion that a customer finds it to be a good use of their time to save $600 / year to build a copy of your service indicates that the amount of time it takes him to build it is worth less than $600.
That might not be a great target market.
For a good engineer, 600 dollars gets you something between 10 and 20 hours of work. To produce a polished project, start to finish, that's not going to happen.
I think it's hard to group all "subscription services" into the same bucket. Selling proprietary data in the financial services market (like CB Insights) is very different from selling a simple tool (like iDoneThis).
Also, it should be noted that price is just one component of a pricing model. If you don't look at how you charge, and only consider how much you charge, chances are you're not going to maximize revenue.
$5/user/month looks good on paper, but I wouldn't necessarily assume that the perceived value scales with a flat-fee-per-user (no tiers) model. Example:
1. If my company has 10 people, sending iDoneThis $50 each month probably isn't a big deal.
2. If my company has 10 teams of 10 people, iDoneThis is now a $500/month expense. That's $6,000/year. I might not dispute that there's value to the service, but my perception and consideration of its value is likely to change as the total cost increases.
I do agree that for larger company/enterprise type deals, the current iDoneThis pricing may not work and IMO, that's a large opportunity.
The challenge for iDoneThis is not to make it cheaper per user, it's to re-invest the highish costs in order to beat the competitor who is charging 50c per user. Make iDoneThis better at managing the ever-growing complexities of syncing information when you have 100/1000/10k staff members and you have no damned idea what they're doing.
Especially because quite a few hackers are thinking "you know, I could make that app and sell it for a few bucks less." Don't race them to the bottom, because Twitter is at the bottom at $0p/m.
This type of thinking is prevalent on HN, but it's not always realistic. Most companies of a certain size have financial controls, and even if $500/month is not a lot of money in a relative sense, the number of $500/month line items for nice-to-have, this-helps-a-little products and services is reasonably limited.
Getting a budget for something that isn't in a "checklist cost" category can be a real headache, every vendor relationship has overhead, and instituting a new SaaS for 100 people (and getting them to actually use it) may have its own costs (staff time, etc.).
> Make iDoneThis better at managing the ever-growing complexities of syncing information when you have 100/1000/10k staff members and you have no damned idea what they're doing.
That's a fundamentally different product than what iDoneThis has today. To support development of that product, it will need substantially more than $1,000/month in recurring revenue, or it will need additional funding.
> Especially because quite a few hackers are thinking "you know, I could make that app and sell it for a few bucks less." Don't race them to the bottom, because Twitter is at the bottom at $0p/m.
If you build a business around a simple concept that requires limited functionality, you can refuse to engage in a race to the bottom, but it doesn't change the fact that you will almost certainly be undercut if others see a worthwhile opportunity.
In other words, iDoneThis can keep its $5/user/month price point, but if this is an appealing enough concept, it will have competition, and cheaper competition, before it ever obtains enough revenue to "re-invest the highish costs" as you have suggested.
This has been my experience, too. The customers who consume the most support resources are almost always on the lowest cost plan.
explanation of software:
http://tech.pro/blog/1490/how-it-works-google-s-snippets
some former google engineer rolled out an open source version of the software that with some factoring, nightly cron jobs instead of weekly and potentially a cleaner user interface for the web app could prolly fit your needs
I've since developed my own daily forward-looking/backward-looking format, essentially a simple text-based mashup of David Seah's inspiring productivity forms:
It's open source as well (in Python for App Engine): https://github.com/tedpower/snptz
Looking at the code, I noticed it actually supports teams, a feature I've never used but that looks quite functional.
As a point of comparison, I pay $600/yr (same amount @louthy pays for idonethis) for Xero which is my accounting system. It does reconciliation for multiple banks accounts, statements and invoicing with templates, handles payroll for up to 20 staff at that account level, enables remote and auditable participation from my bookkeeper and accountant, has extensive reporting, etc. I could not build even a simple replacement for all that functionality for less than a few years worth of $600/yr in time.
Just do 3 tiers for like 1-5, 5-20, > 20 users on the order of $19, $29, $49 or something.
If you have 20 employees, many, many, MANY things with less certain value than this software cost you more than $100. Many of them are just costs of doing business which you ignore because $100 is chicken feed and moves no needle at the business.
It seems like you're arguing that if you have 20 employees, you're probably wasting more than $100/month on other products and services, so spending another $100/month on iDoneThis isn't a big deal.
You might be right in certain cases. Some companies have tighter financial controls and are more thoughtful about managing expenses than others. But as valuable as it might be, iDoneThis is very limited in scope and, perhaps more importantly, is not a "checklist cost" that companies (justified or not) expect to have each month. As such, I think it's very precarious for iDoneThis to depend on the old "companies waste more money on other stuff" non-value proposition.
As I noted in another comment, I think it would be wise for iDoneThis to reconsider its pricing model as $5/user/month seems very likely to create agita as the number of users scales. As an example, consider that a Silver Github plan costs $50/month, and can easily support many companies with a 20 person development team.
It took me about a week, so that's fair, but that's to rebuild not just the core functionality, but also the multi-tenant SaaS part.
I have a 50 person team. So, I would've paid $250/mo, or $3k/year. So, I really invested $2k to develop my own version, which also has the potential to make money if people prefer paying $15 for a team of unlimited users.
So, no, I didn't find that a waste of time. Plus, I learned some new things along the way, and can fine tune the app as I see fit.
This is the risk of building a business around simple, contained functionality. They're easy to clone, and you better get the execution and pricing right, and figure out how to expand on the concept, or you'll be commoditized quickly.
I agree that you should not take into account the fact that most people say taht software is too expensive, but I think that you should also take onto account when people would prefer to "roll their own" than pay for your services as it also demonstrates that you dont have a "lock in" effect and so cant charge a lot more than what the product is worth to a customer.
At $50/month, it would take you a year to recover the cost of building it yourself on your company's dime. A time cost you should be spending on something to increase your company's revenue, instead of trying to save them $600 a year.
"I wouldn't pay 2 Starbuck's coffees per month, but I'd pay the price of a cheap cup at the gas station"
C'mon, man - everything on the internet isn't free.
best of luck, I feel that "We made $1,000 in recurring revenue" is so much more constructive than 'Show HN'.
That said, Show HNs are one of the most exciting parts of why HN rocks, even if they don't yet make money.
"As Paul Buchheit, creator of Gmail and partner at Y Combinator, says, the correct order of operations is to “sell before you build.” When you launch, you want a whole list of people that you can tell to buy it. But more than that, you want to ensure that you’re investing all that time building something that people want to buy."
As far as I can tell, they built a product for 40,000 people over a certain period of time without generating a cent in profit or knowing in advance that any of those people would ever consider paying from the product. While some users did claim they wanted a team version they would pay for, this was only after the base product was built without knowing people would pay for it.
This bugs me a bit because I'm working on a project where I'd love to be able to sell before I build, as it's obviously a very sound principle, but in practice I just can't see how to go about it and I was hoping to learn something new from this post.
There are a few options for seeing if people will buy before you build. The often quoted one here (and it's also used in the Lean Startup as an example) is have a sales site, have a 'buy now button', but go through to a 'we're currently in beta, email me when it's ready'.
Then buy google ads or whatever your sales pipeline is and see if people click 'buy now'. If no-one does, you've got a problem.
If you've got a big ticket item, you can do something similar but be upfront that it's not built. Talk to clients, see if they want what you're thinking of making and suggest a price to see if they say yes. Again, if you can't find anyone to say yes, you've got a problem.
And for some projects, Kickstarter is another obvious method.
From there, we cold called / emailed like maniacs - 'here is what we are working on, here is the problem it will solve, here is why you need it, can we have 20-minutes of time to walk you through this?' We leveraged every possible network connection that we had.
When we got people on the phone, we actually showed them mocks of what their site would look like with our platform (lots of Photoshop). Explained that about how we wanted to get them in a beta program, and how much would they pay?
It was a ton of hustle, but we had 10-customers when we launched that were generating a little bit of revenue and willing to give us quotes in the press or get on stage at events.
It is more of a larger, enterprise sale, so it won't work for all companies, but we were essentially selling something that we were building in parallel and wouldn't accept free for an answer.
That first $1/$1,000/$1,000,000 is the hardest. Good luck.
I signed up on my iPad, and forgot about this, assuming an email would remind me. If I hadn't checked hacker news again I would have forgotten about your service entirely.
You can use this email to orient new users too.
Edit: might have been a bug due to a clumsy signup I had on my iPad. Couldnt input well on the keyboard. Just changed my password and instantly got an orientation email.
Our solution was to email daily commit logs at 12AM to the team. The logs are parsed and beautified so they're easier to read, like a report. This only works for the programmers, your solution makes more sense for other departments.
Basically I suggest other startups to consider the price a part of the marketing mix. It's never a standalone thing. You might discount on price to decrease your marketing costs, or vice versa.
The higher you go with the price: $3, $5, $10 per user - the harder it becomes to understand how much is it the price and how much the product that's holding back paying users.
Another option is to have different prices for different team sizes depending on your sweet spot. Eg Atlassian JIRA starts at $10/10 users, then goes up to $2-3, then down again. Asana is free for 30 users, then goes up, then down again. Weekdone now is also $1.5 at lower level, then growing to $2-3, the lower again.
Weekdone has some similarities to iDonethis by the way, although we work with the weekly, not daily paradigm. We actually have many users who use both, or switch between the two.
As a personal tool, iDoneThis is neat but it competes with a ton of other tools in a very crowded market. I had already lost interest and stopped using it when they launched the team version and pricing.
...but when I heard about what they were doing with teams it was immediately obvious that this would be great for us. Everyone seemed to like it and get it right away.
Thumbs up to iDoneThis for recognizing their potential as a team product.
I tried idonethis, but found the interface confusing and the pricing prohibitive.
It wouldn't hurt to add a signup button at the top of the page either.
First - not a particularly important detail - but please do your site a favor and get rid of the very tacky rocket ship clip art. I don't know why every SaaS MVP decides to abuse that image.
Second, this: "Status reports suck. We make them suck less."
That's not a professional sales pitch. Unless you're trying to sell to college teenagers (who wouldn't buy the product to begin with), it comes across as almost a parody or joke.
Also, saying you make the focus and point of your product suck less, is an extraordinarily bad way to try to sell a customer. It's a sales pitch from a negative. Never do it.
I disagree on the tagline, though. I'm not saying that our product sucks less. I'm saying that it makes doing status reports suck less. You may prove me wrong in the long run, and I'd be happy to be wrong on this, but my initial instinct is to keep it the same.
Thanks though! And sorry to the idonethis team. I don't want to hijack your thread.
Thanks again ;)
Second: you say that: "Your privacy and security is our top priority. We take all reasonable precautions to keep your data safe and secure."
Does that mean that you support s/mime and gpg for the emails you send and receive?
I mean, they're targeting developers and teams with a useful service, but also a service so simple that most developers could create a minimal clone that performs their core feature in a few hours.
Either their product needs to have really neat integration into other tools (like time tracking, project planning, etc) or they need to have some magic tricks that I don't see. Anyone care to enlighten me?
Hence, I just created a mashup of Google Calendar + Docs and Gmail to create a solution does the same thing as iDoneThis for zero dollars.