Ask HN: My SaaS is stuck at $10K MRR, now what? | Hacker News Reader

Ask HN: My SaaS is stuck at $10K MRR, now what?

21 pointsflashproblem17 comments

We got a little bootstrapped project, got to 10K MRR (took us a couple of years, more than 1000 paying users). We had nice growth until break even (we are very frugal and have other sources of living income, such as day jobs for the devs / past exits of the founder so burn rate is just about $10K), but now it's kind of plateauing. And we don't know why.

10K MRR is not enough to allow hiring more developers, but it's also not negligible.

The biggest issue is that we don't want to raise money, (and not sure with these stats we'll get any good deal out of any investor).

An even bigger issue is that we can't afford help, even a support person will move us back to losses.

The CEO is the angel funder, and we are trying to take it to the next level. Any suggestions? when do you turn your back to a nice lifestyle SaaS that makes more than $10K MRR?

How do we take it to the next level?

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The simplest explanation for the plateau in a SaaS business is that you're likely at the point where churn eats growth, which you can quickly verify by looking at the math. (e.g. If you have 5% monthly churn, which you'd be doing well to have at your price point, then you need to find 50 new accounts every month. If it's card-up-front then that's 100 trials. If you convert 2% of visitors that's 5,000 visits. Just to tread water.)

Your solutions include less churn and more growth. Both of these are deep topics.

That said, given that you have an average account value of around $10 per month, I'd be looking for some way to move upmarket. It's just brutally difficult to build a business at $10 a month unless you have massive Dropboxian scale on the back of a very viral product.

Some ideas below in no particular order. Pick the lowest hanging fruit.

- upsell to your customers. Looks like on the average each customer pays $10 per month. Is there anything you can do to give more value to the customers and charge more. (depends completely on your business and customer profile)

- look at new customer acquisition channels - adwords, facebook, retargetting, forums sales threads, affiliates etc

- increase spending on current customer acquisition channels. If you have a good idea on your customer LTV, you can figure out how much you can afford to spend to get a single customer.

- decrease churn - if your churn rate is high, you could analyze why it is so and focus on reducing it. Apart from increasing MRR, reducing churn automatically increase customer LTV and thereby justifies higher market spend.

- increase number of plans - if you have three plans, add a fourth plan priced at 2X-5X relative to the third plan (offering something of value to customers who can afford to pay more - e.g. phone support).

- increase pricing across the board - there is no way to know whether you are undercharging without actually increasing the pricing and seeing no change in customer acquisition numbers. The largest plan in my SaaS business has gone from X to 2X over the last 6 months (in three price increments), with no customers complaining of the price being too high. I plan to keep doing this until a decent number of customers tell me that the price is indeed too high. (do remember to grandfather in existing customers)

Funny, just listened to a podcast where they talk about a lot saas's hitting a plateau at around 10k a month.

May be worth a listen:

http://www.startupsfortherestofus.com/episodes/episode-231-b...

Why do you need to hire more developers? It sounds like you need more customer acquisition. You found 1000 people who were willing to pay so you should know something about your target customers. Finding the next 1000 should be a lot easier.

1000 paying customers is $10k MRR? Have you considered raising your prices?

Also, read everything patio11 has written at http://www.kalzumeus.com/blog/

There was an interesting take on TechCrunch this morning on the same topic. I think it applies well to this situation, even though the numbers are different. What is your target market? SMB, consumer, enterprise? I'm guessing SMB or consumer based on average deal size.

http://techcrunch.com/2015/04/26/back-to-the-future-in-enter...

If your average deal size is $10.00 per month. Any way to increase the average deal size? 1000 customers is great. Can you get $20.00 per month out of them upselling or crosselling? More?

If it's an SMB product. I would say you need to hire in the right spots. You mentioned not wanting to raise money but also are looking to take it to the next level. You don't need to raise much, but $500k - $1m at good terms would be enough runway to hire 2-3 sales and 1 support person. From there, you can make the sales commission structure friendly so when they make money, you make money.

If it's consumer, I'm not an expert here. I would focus on marketing vs sales people.

You need to Systemise your Sales process.

Businesses that get stuck at $10K MRR have generally built a good enough product and network to bust through the $6,500 MRR black hole that kills a lot of companies, but don't yet have scalable systems for Sales (current priority) or channels (which you'll need to get past $20K MRR).

Where can you gain efficiencies in your Sales process? Is it lead generation, engagement, conversion, or retention?

Why is there a problem at $6,500 MRR for a lot of companies?

As a general rule, no scalable solutions. It's essentially a 1-person-company at that level and the owners never take the necessary risks (investing in recruitment, technology, marketing, etc) to grow beyond 1-2 people in a garage.

Approximately $80,000 per annum is enough for 1 person to 'comfortably' live on, and if they're doing all the delivery themselves it also probably fills their time; so while there's pressure on them to get to that level, there's usually less urgency to move beyond it. Hence, stuck.

I'd think it depends on a lot of factors e.g. how easy it is to copy the idea, is the start-up just selling their time, the nature of the customers, the motivations of the founder etc.

However sounds like a good rule of thumb, and a good question to ask. "Is this the kind of business model that would get stuck at a salary level income".

I had this PG advice tagged:

"When growth plateaus you pretty much have to start from scratch. You have to treat your situation as if you needed to come with a new startup idea. You can't just somehow revitalize things."

https://www.youtube.com/watch?v=nrWavoJsEks#t=9m45s

What you can do depends on what you've got. If the service is consumer facing then growing to 10k paying customers is practical (iff the product is actually viable) and largely a matter of marketing.

On the other hand, if the service is business (e.g. developer) facing, then growing users is a tougher path to growing revenues and the main route is going to be via higher prices (iff the product is actually viable).

If the burn rate is $10k and the income is $10k then it's not really a lifestyle business unless that lifestyle is poverty. Reducing expenses could turn it into a modest source of income, but probably not enough to pay a full time developer in a place like the US.

Good luck.

This article might help: https://unicornfree.com/2013/help-my-saas-isnt-growing (and the follow-up https://unicornfree.com/2013/how-i-increased-conversion-2-4x... )

In short, here priorities are: - Raise prices

- Convert more trials to paid

- Retain more already-paying customers (already mentioned)

- Convert more visitors to trials (already mentioned)

- Get more visitors

consider a personal assistant for 10-12/hr off craigslist, a college kid

you can also probably find an intern or two for free - but you cant really work them you have to teach em

but it can be a godsend for support and marketing

i do a bit of consulting, with only a few days of consulting: i can help... and i can give you a half off rate... i know the startup gamut a-z and am a developer (for 15yrs) as well.. if you want to chat drop me an email at jg [underscore] work [at] kify [dot] com

What did you do to get those first 1,000 customers? What are you actively doing now to try to get the next thousand?

What's your site? You can send me a link to it (email in profile)

Same here, please. I'd appreciate any advice to improve my customer base.

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