[57] Is $99 The New $19 in SaaS?
This is Bootstrap Web episode 57. This is the podcast for you if you're the founder who learns by doing as you bootstrap your business online. Today, we're gonna talk about some listener questions and comments. Things like, is $99 the new $19? I think it is.
Jordan Gal:I sure hope it is. So we'll get into that, and we'll talk about a few other comments, questions. We love these episodes. We love talking about real things that you guys are dealing with. So if you want to hear your issue and question, just let us know.
Jordan Gal:As always, I'm Jordan.
Brian Casel:And I'm Brian. Yeah. I'm looking forward to this one. And we've got a couple of really good questions to answer here. And as always, you know, you can always reach out to us on Twitter at Jordan Gal or at Castjam and send us your questions.
Brian Casel:Or you could always, you know, submit them on the form on the website as well, bootstrappedweb.com/ask. And, you know, just tell us what you're working on. What are you up to right now? And if you want some feedback, if you want us to kinda talk talk a little little bit about it on the air, you can let us take a look. So today, let's let's get right into some updates.
Brian Casel:Jordan, what are you up to right now?
Jordan Gal:So for the most part, no. Not much has changed over the past week except for my focus. And, really just been thinking about math a lot. So as exciting as that sounds, what it really means is just looking at a spreadsheet of projections and trying to figure out what needs to happen over the next few months and over the next year to make this thing work for me. So how much do I need to spend?
Jordan Gal:How much needs to come back in order for that to to work? And, you know, as you're staring at a spreadsheet, you know, a a lot, you start to learn about the the key metrics and the drivers, the the things that make the biggest difference. You know, like, I change average revenue per user, that makes a huge difference. For me right now at this stage, I really look at how many customers can I acquire per month? That's that's really the big the big driver at at this stage.
Brian Casel:You know, I I've actually found the same exact thing, and we'll definitely talk about this more when we get to that question on the $99 or $19. I was, you know, playing around with with the similar spreadsheet for my business a couple of weeks ago. And, yeah, that that average revenue per user is makes such an impact on the bottom line, like, across the board. And I I have in the past, I've always been kind of focused on the the the number of users number as, like, the key metric, like how many new people new customers we're adding every month. And then I kinda shifted to total monthly revenue for the month, and now I'm kinda focused on that average revenue per user.
Brian Casel:So
Jordan Gal:Which makes sense. Right. Given given the stage that you're at. You know, if you have a lot of users, then increasing the amount that each pays by 10% is a big deal. But if you're right.
Jordan Gal:I'm in acquisition mode. I just want new customers because the the fixed expenses in the business, the the salary, the hosting, the all these things that are fixed, they need to be overcome by revenue, and that's just just adding more people won't really increase those expenses. And so just the more people that come in the door, the closer I get to profitability because that starts to cover these fixed expenses, and and beyond. And, you know, the other piece of of this whole thing is when when you look at a spreadsheet like this, it makes you, it
Brian Casel:makes
Jordan Gal:you act more and think more like a business owner instead of an operator. And so looking at month to month, looking at right. Let's let's say, for example, your business spends 20 excuse me. Yes. Your business spends $20,000 a month, and you're currently bringing in 5,000 a month.
Jordan Gal:Okay. So losing $15,000 a month, that looks like a disaster if you look at it at for month one and month two. But if you grow at the right rate over the next twelve months, you might lose 15 k this month and then 12 k next and then eight after that. And then at some point, it tips over. And so that that view of things looking at a twelve month picture instead of a one or two month picture, it changes your thinking.
Jordan Gal:It changes the it changes the question from are you making money right now to would you pay this much money over the next twelve months in order to have an asset that makes this amount per month. Right? If if someone said, do you wanna take over this business that loses $15 a month? That sounds terrible. But if someone says, Jordan, would you pay a $100,000 right now for a business that one year from today will make $25,000 a month?
Jordan Gal:And I think most people would say yes to that question and no to the first question. So yeah. So it just helps change your thinking, into something more strategic. Right? And then I can dive back into the day to day work, but at least I have this this perspective by by looking at the math.
Brian Casel:You're cutting out a little bit. But, you know, I yeah. I mean, I I always kinda, like, look at those numbers in, like, the same way. And, you know, for me, at least currently, I'm I'm in this mode of, you know, spending a bunch of money on on different channels to kinda get some data and see what's working. And then I can, you know, have a a better picture of of what these projections are gonna be.
Brian Casel:Like, last month, I was making all these big projections for the year of 2015, and now I'm starting to, you know, throw a bunch of these new strategies at the wall to see what's working. And I'm actually in this mode now where I I was making some assumptions that I can, you know, easily get this many clicks and this many leads and opt ins and and certain things are, are turning out to be a little bit more difficult than than than they are, you know, like certain, given assumptions. So it, you know, it it makes it makes it difficult as you look at these, like, hypothetical projections and looking ahead. But but at the same time, you know, I I I what I'm what I'm kind of learning and I've been learning for a while is that you have to, you know, put in a couple of weeks of just trying a bunch of stuff to get you're you're basically paying for data, to get get a more accurate view on that spreadsheet. And then that makes things easier just like what we've been talking about in the last two episodes.
Brian Casel:Like, right now, I'm I just hired a a new customer support person, and next up, I'll be hiring that that developer. So trying to get people in the door so that work can get done so that I can focus more on this this marketing stuff. So, yeah. I think we're in the same boat there.
Jordan Gal:Yep. You gotta do it. What what else do you have, you have going on?
Brian Casel:Yeah. Is is that the conference coming up, what, next week? Yeah. So big snow tiny conf. Let's see.
Brian Casel:When this airs, I'll be I'll be on the road the following week. You know, we're going January 26. And, man, I'm so excited for this. This is gonna be awesome. We've got 12 people signed up.
Brian Casel:We're renting a house at Sugarbush, Vermont, just a a mile or two from the slope and, been organizing this is the second year in a row organizing it with, with Brad Tunar. Of course, this year is is sold out. Every every bed in the house is taken now. But, if you are interested in in getting in, we will almost certainly do this again next year, this time next year. So you can go to bigsnowtinyconf.com and get on the mailing list, and you'll hear about it, you know, about a half a year from now when we start organizing the next one.
Brian Casel:So, yeah, I'm just really excited about this. It's gonna be like, you know, half half day snowboarding, half day hanging out and talking business, of like a mastermind group and meeting some new faces and and whatnot. So should be a lot of fun. What else? So I've been reading Nathan Barry's recent post about about how he handles his email autoresponder or how he recently changed it.
Brian Casel:And I've heard this concept in from different people in in different ways before, and I never really I never really wanted to implement it for myself, but now I am thinking about doing it. And, basically, the idea is setting up an autoresponder that goes out to all new subscribers who just joined your list and have it, like, cycle through a whole bunch of your previous articles from your archives. And that way, you know, your older articles that may have come out like a year ago or even like two years ago, which were which might have resonated big time at at the time, you know, they're not getting buried in the archives and never to be seen again. All of those new subscribers who may have just found you today, they can still get them. So so I guess the idea is and I've just been trying to wrap my head around how how this would work because I wanna make sure that when I do come out with new articles, which I try to do every every two weeks or so, I wanna make sure that my list is going to get it.
Brian Casel:I want I want everybody on my list to find out about my my stuff. But I I also need to embrace the fact that, like, not everyone needs to get my latest article at the very same time. And so I guess the whole idea here is, you know, new subscribers, they'd be on a on a sequence of it might even be, like, three three to four months of weekly articles being sent to them. And these are articles and newsletters that that I've written before. They're getting those over a sequence of, like, three to four months.
Brian Casel:And then at the end of that, now they're just dumped into, like, the general newsletter list. And and that's who would get, like, the the broadcast emails of, you know, if if I'm gonna publish a new article tomorrow, I'm gonna send a broadcast email just to the people who've been on the list for a while, but the new people are still getting the older articles. Does that make sense?
Jordan Gal:Yeah. That makes sense. The the concept of the newsletter happening in real time is just this embedded relic from, you know, from when email marketing started ten years ago. But the the the truth is the the ideal is the the never ending autoresponder. Right?
Jordan Gal:Someone joins your list and then you choose to give them the absolute your best stuff in a particular sequence and not only does that theoretically maximize your impact on them and have the benefit of potentially maximizing your revenue from stuff that you're selling, it also gives them your best stuff instead of them missing out on that just because it happened six months ago, they actually get the biggest impact. So, yeah, we know several people that do this. Yeah. The the way I've seen it before from someone like Andre Chaperone, the the autoresponder guy. It's it's a never ending autoresponder, but then people can raise their hand at any time if they are interested in something that you're offering in real time and then get on to that sequence, but everyone else isn't disturbed.
Jordan Gal:Everyone else just keeps getting good value. So, yeah, I think this is one of those benefits of writing great content over a long period of time. These things are assets, and you can use them instead of just saying, okay. Everyone who joins today only gets the good stuff from today going forward. It doesn't doesn't make as much sense.
Brian Casel:Yeah. Exactly. I mean, I think there are there are a couple other benefits there. I mean, you can when a new subscriber finds you and subscribes to your email list, that's that's like their warmest period. They're so they're they're not gonna be more excited about your stuff than, like, those first two to three weeks that they just joined your stuff because they just found you.
Brian Casel:They've been reading, you know, maybe going through the the the past couple of weeks of your articles. So, so they're really excited about the about the stuff. So that's when you wanna kinda send them your very best stuff and keep that going, you know, as as much as you can and and really solidify them as like a loyal, a loyal subscriber. And then the other piece of this is it adds a little bit of freedom to to you as the blogger, because, you know, it it keeps that treadmill turning, and you can go through a period or two and and not be able to, you know, put out a new article. But rest assured that those new subscribers are still getting still getting the, you know, some some really quality content.
Jordan Gal:Yeah. And and Yeah. Nathan's post on it is interesting in that. Right? This is this is sort of the logic behind Drip.
Jordan Gal:Right? So when when I jumped on to Drip as a customer, you you have to wrap your mind around a different it's like a different theory. Like, there's a difference between Mailchimp and sending out emails in real time to a large group of people and this this other concept of campaigns that happen based on when the person entered that campaign. And that could be an opt in, that could be becoming a customer, starting a free trial, and and then just having the the broadcasts that go out all at once to everyone as as part of it, but not the main component to your email marketing.
Brian Casel:Yeah. I mean, I I use drip, I mean, quite a bit now, and I I still use it in somewhat of, the old school way. Like, I I love using Drip for all the automated courses, and we and we've got some, like, marketing emails that go out on Restaurant Engine and and all that sequence kind of stuff set up. But we still both on Restaurant Engine and on my personal newsletter, I still do the weekly or weekly ish broadcast newsletter. You know, all at the same thing goes out to the whole list.
Brian Casel:And, I mean, like, maybe it is time to get away from that. But, you know, there there is one downside to this whole approach of putting everyone on this really long autoresponder. And I guess that's sometimes you do wanna have, like, a real time announcement, like, tucked in along with your newsletter. Right? And I I've done that quite a bit, you know, like, around the time I was launching Productize last year.
Brian Casel:I would just send a newsletter with, like, my latest article. And and by the way, you know, just a reminder, this thing is launching next month or something like that. Or or, you know, what I did last year was I like, I'm headed to I'm headed to to MicroConf next month. Are any of you on my list gonna be there? You know, maybe we can meet up.
Brian Casel:That those kind of little notes and PS statements probably can't get out to those new subscribers who are currently going through the automated sequence. But
Jordan Gal:Unless you inject something in real time along along with it. Right? They're not necessarily mutually exclusive. Would have
Brian Casel:to be a separate Right.
Jordan Gal:You could But
Brian Casel:that would have to, I mean, that would have to be a separate broadcast, like
Jordan Gal:Yeah. Okay. So, you know, every few weeks, they someone gets two emails a week instead of instead
Dan Norris:of one.
Jordan Gal:Yeah. Cool. Very
Brian Casel:Yeah. That that's true. So I mean and then, like, the other quick thing here that I've just been thinking about, like, speaking of writing and and and sending to the newsletter and blogging, like, I've been writing I've been working on this new article for the last, like, two two weeks now, and I've been trying to get it out and published before I go away to to to Vermont. And it's just one of those things where I I'm writing and writing. It's up to, like, 3,000 words now, and I'm just like, know what?
Brian Casel:This is not there. I'm just gonna trash the whole thing. And this happens from time to time. I've done it a number of times, but now it's like, I'm just really I I I feel like my writing has come a long way, but at the same time, I I just I'm, like, self critical in that it's I'm I'm too long winded in these posts. You know, 3,000 words.
Brian Casel:I I wanna get it down to, like, a thousand or less. I I prefer the the more focused, you know, tighter point being made, and and I wanna try to get get to that. And I know that what it takes is is more practice writing them on a more frequent basis, which I just don't have the time for right now. So but, you know, I I I had this 3,000 word post that I've been working on, and I knew what what I wanted to say, but then I just kept writing. I kept, like, I had this topic, and I'm like, oh, but I I've gotta tell them about this.
Brian Casel:I gotta teach them about that. I gotta I gotta make sure that I mentioned this. And then I flesh out this whole thing, and it's like, this is like nobody wants to read this this long. You know?
Jordan Gal:That's tough to describe to scrap it at at at that point. But if that's that's the gut feeling, then that's what you're doing?
Brian Casel:Yeah. I mean, it it it's tough, but then it's like, I I felt such a relief afterward. You know? Because now I I I'm gonna go back and rewrite it from scratch, and I know exactly what I'm gonna focus on and a whole bunch of stuff that I'm just not even gonna touch. And and that'll make it a a tighter post, I hope.
Brian Casel:So we'll we'll see about that. But, anyway, that's the update. Let's let's head right into the the questions for today. What do you think?
Jordan Gal:Yeah. What's what's first? We got something from Craig Hewitt on Twitter. Right? And he says let's take a look.
Jordan Gal:You talked last episode about finding those first customers. How about strategies for doing that in service businesses? I'm assuming, right, as opposed to software product businesses, getting those first customers with a service business. I don't know if they're
Brian Casel:Yeah.
Jordan Gal:That different from one another. It was a bit different of approach, but you you have any thoughts on it, Brian, in general? I know you've you've done the the service, the agency, the product type service thing in the past. What's what what's your take?
Brian Casel:Yeah. I think I think today, I were starting to offer services and I mean, I do offer services in in different ways, like, through Restaurant Engine and and and even, like, when I do some, like, coaching stuff through product ties. But I I would probably do it differently today than I did, you know, a couple of years ago or, you know, when I was doing freelance web design consulting work. I mean, the the the common way to do it, the way that most freelancers do it is they go out to, like, job boards and they respond to a bunch of leads or or they rip you know, re rely on referral leads and whatnot. The way that I would do it today is I I would I would go ahead and build, a productized service or come up with some kind of productized offer, you know, a set price, set scope, and just really focus on coming up with a clear problem and solution, a value proposition.
Brian Casel:And, of course, there are different ways that you can do that, and you can go back to a previous episode where we talked all about that. But then I would figure out who my ideal client is, and I would make a list of about 50 of them. You know, maybe go through my LinkedIn contacts or just people that I know or people that I that I I've seen in in the around the industry that I'm trying to target. Then I would if I'm like brand new at this and this is a totally new offer, what I would do is I would try to do it for free. Offer it to do it for free for one or maybe two people.
Brian Casel:These might be people that I know personally, or I would actually go to that list and and maybe cold email 10 of them and try to get one or two to agree to me performing this service for them. And the goal there is, of course, to get feedback and to adjust the service and make sure that it's it's working. And, I mean, because there are always gonna be unforeseen, you know, kinks and hiccups or, you know, different pieces of value that you that you thought was valuable, but really the client cares about this and not that. So you're gonna learn about all that stuff. And then, of course, at the end of the day, you're you're looking to get a a really valuable case study from these clients.
Brian Casel:And then you can use that to sell paying clients on the service. And then from there, I would go ahead and cold email 50 of those handpicked prospects, you know, personalized emails one by one, and just send them your your pitch, your idea, connect with something that they've been working on. And then you might even go a step further and actually create, like, a personalized video, you know, talking to them or maybe, like, doing, a website teardown. It depends what the service is. You know, saying, like, hey.
Brian Casel:You know, I I I've been really like what you're doing, but I I created this this personalized email for you here. A couple of tips that I think could really help you, and, you know, I would love to talk to you and and schedule a time where we can talk about this further and and and see about working together.
Jordan Gal:Yeah. I I think that's that's a smart approach. Right? I think the the key in this question is the first customers. So we're not talking about a service business that, is stable and now wants more customers.
Jordan Gal:That's a different thing. If we're talking about getting the first few customers for a service business, then I think the most important thing is to make sure that what you want to offer, people actually want. So the difficult thing in that is that you need to find out who would need it most. Right? If you want alright.
Jordan Gal:I came I came across a good, product I service, recently from, a buddy here in Portland, Josh, that offers to set up your analytics. Right? So that's definitely valuable. But who do you want to offer that to at first? Not everyone.
Jordan Gal:You wanna figure out who's gonna find that the most valuable. So if maybe if it's new sites that are just coming online for new companies and they're saying to themselves, need to get everything set up in analytics. It's something important, then, right, he should be going after those people to figure out, is this a viable business? And if so, who's gonna get the most value out of it? So if you're if you're in that stage, I think that's what you wanna do.
Jordan Gal:The first goal is just figuring out, is this viable and who makes it viable? Who finds it the most valuable? From there, I I thought you had a a lot of good ideas. I I think working with people in your network, either for free or for a reduced rate, just gives you so much feedback and so much confidence in figuring out where the value is, how to talk about it, how to describe it. And then the really important part to come out of that with is to be able to talk about what you've done for someone else.
Jordan Gal:So if you work with with a buddy or a friend of a friend or someone you've kinda know one way or another and you can just say, you know what? I'll set up your analytics and I'll do x, y, and z for you. And if you're happy about it, then, you know, can I use you as a reference? So if you wanna do this for people for, I don't know, a thousand bucks, then you can find someone in your network and say, are you wanna pay a $100 for this just to see if there's value there? Do it for them.
Jordan Gal:Do it really well. And then you can walk away from that saying, hey. I just set up CardHooks Analytics, and this is the result of that over the past month. This is what they're learning from it. Is this something that sounds to you?
Jordan Gal:You're in a similar situation, then Yep. You have, you know, where you're like parlaying one thing into the next into the next into the next.
Brian Casel:Yeah. Totally. Okay. So let's move on to the next one. This one comes from Patricia Carvalho.
Brian Casel:I hope I'm pronouncing her name right. She says, I was wondering if you're if you'd consider talking about business journaling as or what did she say? Talking about business journaling on one of your future episodes. I really liked the one that you talked about goals and how you measure them. I was really curious to know more about business journaling.
Brian Casel:So I actually replied to Patricia's email a couple weeks ago, but I'll I'll talk more about it here. Again, you know, I use an app called Day One. It's, you know, really easy to use on iOS, iPad, computer, syncs across all of them. It has, a little, lock, like, passcodes that, like, only you can get into it every time you open it. Yeah.
Brian Casel:So it's, like, super private if if you really care about that kind of thing. So I don't, like, use the journal or write in the journal on a regular basis, like, every Friday or every night or every morning. I know a lot of people do that. I I don't get into that kind of routine with it. I just kind of write into write in it when I feel that I need to to get some things out of my head and written and and think through something.
Brian Casel:So that happens when I have a lot of things on my mind, and I need to sort through different plans and different options. Everything that I write in there is very, very list based. I'm a I'm a big bullet list person as I know a lot of people are. So, I also mentioned, I think, in the previous episode about how what I write in there usually doesn't make a lot of sense to anyone else but me. And sometimes even to myself, when I read back a couple months later, it's like, what what does that even mean?
Brian Casel:I don't I don't know what that even says. Is that a word? You know? And, like, you know, because it's I know that I'm the only person who's ever gonna gonna read it, so I never hit the backspace. I never delete.
Brian Casel:I never edit. I just write, and I don't care if things are misspelled or doesn't make sense. Maybe I should care more about that. Examples of things that I would write in there. Sometimes I like, I was actually writing it last night at one in the morning when I should be sleeping so I can wake up early, but, I just had a lot a ton on my mind thinking about these plans of of the sales funnel and and the things that I need to change, you know, going into the next couple of weeks.
Brian Casel:And so I I needed to play out different scenarios. Like, if scenario a, what does that entail? And then how does that gonna play out in in in the next, you know, six to twelve months? And scenario b, what what does that look like? Like, who are the people that will need to come in for that?
Brian Casel:You know, just kinda going through that stuff. And or sometimes I'm, like, really wrestling with a with a super hard decision. You know? Should I should I do a or should I do b? And what are the pros and cons of that?
Brian Casel:So I'll make two lists for that. And and, I mean, lastly, the the thing that I found it it to be really helpful is when just something's not right and I had a really bad couple of months, you know, or just really struggling with something. I'll write about that, and and I'm gonna write about, I'll try to, like, diagnose it. I'll I'll kinda troubleshoot it in in a way. And, you know, write it down, like, what what's really getting getting me down personally or what's not working in the business right now and and figure out what are the factors that that have caused this.
Brian Casel:And just writing it down is not gonna solve those problems. Right? You know, you're gonna have to get out of that hole somehow and and that, you know, that eventually will happen. But what this does really help with is that a cup is that it kinda prevents this thing from happening a second time or happening again. Because having written it down and having this whole documented of of what happened just really helps.
Brian Casel:So I can look back on it, you know, six months, twelve months down the road and and and be like, wow. I've really come a long way since since that low point. And I don't even have to reread it. It's just like there's just the act of writing it and getting it out of my head kind of, like, solidifies it as, like, okay. I'm acknowledging this happened.
Brian Casel:This went wrong. This is why. Alright. We're moving on. Yeah.
Brian Casel:That's why see that's how it helps.
Jordan Gal:That's what I see the real benefit being. It's it's not that you'd go back and read it. It's that writing it forces you to think about it and work through it to find the words to put to it. Yeah. That's what I I would see as the benefit.
Jordan Gal:I I don't do any of this. I just instead think about, you know, business all day, every day, and while I sleep, which I don't think is, the the healthiest, approach to it. So I I can see the value in in this, and I assume by journaling, she she this is what she's talking about. A regular written contribution, looking back, learning, putting it into words. I think it's a good idea.
Jordan Gal:I personally just find it very unlikely that I will I will do this personally. I just don't have the discipline for it or, you know, I can make the excuse too easily that I don't have the time for it. Yeah. So I I think I do it in my own way, but I I don't do something like this. It would be interesting to try.
Jordan Gal:I have a hard time wrapping my mind around how or where, when I would actually get it done. Yeah. Yeah. Yeah. I that's one of the pitfalls of, you know,
Brian Casel:working I can relate to that.
Jordan Gal:Know, other businesses, work with other people. You know, every Friday Yeah.
Brian Casel:I mean, I
Jordan Gal:I can
Brian Casel:totally relate to that. Like, I I can't really
Jordan Gal:my own form of looking back and I have. Like, I don't What's going on?
Brian Casel:We're cutting out again.
Jordan Gal:No. Go for it.
Brian Casel:Hey, Jordan? Hey. Okay. So you can hear me?
Jordan Gal:Yeah. So we took we took a little break there. I guess we'll we'll we'll cut that out later. It's a good two minutes of just Yeah. Of silence, but I think we're Yeah.
Jordan Gal:I think we're good.
Brian Casel:Okay. So so, yeah, I I think that I think that covers that question. Right?
Jordan Gal:Yeah. Yeah. I I see how we can help. I don't do it. I'm happy to try to be persuaded by it.
Jordan Gal:I think it's it's it's healthy, but I guess everyone does it in in their own way. Yep. How about how about the next question from Dennis? This is a reader from from your newsletter.
Brian Casel:Yeah. So, Dennis replied a couple this was maybe a week or two ago, and he said, you because one of the questions I asked there is, you know, what's your biggest challenge and that you see over the next twelve months? And he says, you know, I spent the last ten years working at different startups, and I never really had the experience to try building something of my own and charging for charging for it. However, I would also put as a huge challenge is my fear of putting my work out there. I admit that I get constant nagging feelings of, oh, that idea will never work or how will you ever expect people to pay for that.
Brian Casel:So it's a struggle to get those in check sometimes. And, you know, I I could really relate to this. I know that a lot of people out there can for sure. I I always come back to this idea. I I heard someone say it recently.
Brian Casel:I forgot where where I heard it, but just this idea of practice in public. Right? Like, you've gotta put stuff out there and understand that everything that you do is a practice for your next attempt. You know, I still feel that way today with with Restaurant Engine. I really I I very much look at Restaurant Engine like a like a huge learning experiment that I'm gonna take all these lessons from and apply to whatever next business I come up with.
Brian Casel:You know? And that's how I felt about the businesses that I did before this. When I was selling WordPress themes or when I was doing freelance web design work, you know, everything is, you know like, nobody ever gets it right on their first try, and you're gonna get a ton of things wrong on your fifth try too. You know? So you you've gotta just keep on learning.
Brian Casel:You've gotta embrace that, and that should make you like, understanding that fact that you have to make mistakes in order to learn, that should make you eager to to jump in and do that thing and get it out there.
Jordan Gal:Right. It's not gonna get any better. Like, when when if you're more well known, that's even more pressure to perform, and it's even scarier to to do things in public and look bad or, you know, be afraid of what what you put out there. The the truth is when when you're anonymous, you know, then that's that's actually the time to just go for it. The what what do have no one's watching anyway.
Jordan Gal:Nobody cares about what for you're for a long time. So That's that's exactly right. That's the time. Just go for it. What what's Yeah.
Jordan Gal:What's the worst that happens? You go back and delete some blog posts or, you know, this this happens all the time, man. I I was just, talking over email to to Joanna Wiebe. You know, copy hackers, these guys are well known. These guys are really good at what they do.
Jordan Gal:And they launched a software product, and they just shut it down. You know, it's just and that's in public with a big audience, with a big reader base. And then you have to say, you know what? This isn't working and we're gonna shut down the business and that's that's a failure and I'm just gonna keep moving forward. That that's a lot more stressful than when you're anonymous.
Jordan Gal:It's it's much easier before people know you to just I mean, the the truth is all these feelings are totally understandable, and we all deal with them.
Brian Casel:But the
Jordan Gal:the bottom line is that the market does not give a shit about your feelings, and there's no pity out there. And it's not me trying to be harsh. It's just the reality. Nobody cares. And so the way I look at it is if your desire to succeed is strong enough, then you will that will overwhelm your fears and your issues and your struggles.
Jordan Gal:Like, right now, not a goddamn thing in the world is gonna stop me from succeeding. And people looking bad or laughing or whatever, like, that is nothing compared to succeeding for my wife and my daughters. Like, that that that's the way I look at it.
Brian Casel:Yeah. Yeah. Exactly. I mean, that's that's our job. That's what we that's what we're here to do is is to go out and and do things and and put things out there.
Brian Casel:And, you know, I I've always come back to this idea of I'm, like, deathly afraid of regret. I I can't stand it when I when I think back on something and I regret something. And it happens all the time, by the way. I mean, I could just I could look at, like, yesterday and think of, like, three things like, gosh, shouldn't have said that stupid ass thing. You know?
Brian Casel:Or That's a good news. Could, know, or I could look at, like, last year or the year before. I mean, all you need to do is look into the archives of my blog, and there are plenty of huge announcements that I thought were gonna be the next big thing that turned out to be, you know, major missteps on my part. I didn't delete those posts. They're there.
Brian Casel:But, you know, you can but yeah. I I'm always so afraid of regret, and I and I know how much it kinda burns to think, like, oh, that was a stupid thing. I shouldn't have done that. But the worst kind of regret I think is to look back a year or look back ten years ago and think, oh, man. If I only if if I had only had the guts to launch that thing, I wonder what it could have been like.
Brian Casel:You know, that's I'd never wanna get to that point. So I just wanna throw out a bunch of things and and hopefully something will will come together that I that that that I won't regret. The other piece of this that I, you know, you mentioned in this question here, I spent the first ten years working at different startups. And this tells me that, you know, maybe you're working alongside a few folks who are pretty accomplished and and achieving a lot of big things like your your coworkers and and and and, you know, the, you know, the people that you're working with there. Again, I don't know if this is like a personal thing on my part, but, like, I would try to remove what you're doing away from from from them and just remove the thing that you're gonna launch.
Brian Casel:Like, launch it in public, but don't necessarily launch it to your circle of people that you see every day. Does that make sense? Like, you you should definitely try to extract any kind of, like, help and guidance and experience that you that you gain from working at those startups, which I think is awesome. But I tend to try to launch stuff in public, but kind of, like, launch it to strangers. I think that's great advice.
Brian Casel:That's how I that's how I push myself to do it. And same goes for me. The same goes for, like, family and friends. Like, so many of my family and friends really have no idea what I do for a living. I never publish any of my stuff on Facebook.
Brian Casel:I mean, I'm not totally secret about it. When people ask me about it, I'll I'll talk about what I do. But I really don't like talking about what I do to to people who aren't like us. You know? Like, I only like talking to to people, like, listening to this podcast and going to MicroConf and
Jordan Gal:Right. In our in our world. I I think it's great advice because the the feelings of, oh, it won't work or how can I expect people to pay for it? I might be wrong on this, but but a lot of those feelings come out of a place of of worrying about what our peers think of us. Right?
Jordan Gal:Other people like us, the truth is you should be much more worried about the people who might pay you. Like, if if I you know, if you release an app, you should not care at all about what your competitors think or what your friends or other people in the industry think about how ugly the design is and how it's how it's not a smart idea or if you're thinking small because you're, you know, you're building software for contractors and that's boring and it's not consumer, like, doesn't matter. The people who might pay for it are really where you should be focused. And as long as they like it, I don't know. This it's like you focusing on the wrong thing.
Jordan Gal:So I I think that's great advice to kinda look at it as it's separate. You don't have to be super public, especially if it's like small that something you're launching. No one's even gonna know about it at first. So you don't have to go Yep. You don't have to go talk about it and worry about what people will think for for a lot longer than than you think.
Brian Casel:Yep. Yeah.
Jordan Gal:I think it's a it's a good question. It's relevant, but, you know, no no no easy answer there.
Brian Casel:Yep. Alright. Should we get on to this final question here? And this is one that I I actually grabbed from the the forum over at discuss.bootstrapped.fm. That's a great forum.
Brian Casel:A lot of good discussions happening there. I I try to hop in there from time to time. So this one kinda popped out at me today, and we'll include the link to that forum thread. It it's a public forum. Anyone can join it.
Brian Casel:So we'll include that link in the show notes, but it's very simple question. It says, is $99 the new $19? And he was, asking about SaaS pricing models. And, you know, because I I think and it's true to if we just look at all these new SaaS products that are being, you know, launched and and put out there. I think yeah.
Brian Casel:Like, a couple of years ago, two, three years ago, everything was in, like, the 19, the $29 range or even, like, $9 range, you know. The assumption Just crazy low.
Jordan Gal:And and thousands thousands of users, you know, and Yeah.
Brian Casel:You look at like a Dropbox. You know, you look at like Dropbox or you look at, you know, any of these
Jordan Gal:Evernote. Right. Thing things that are things that are widespread. I mean, Skype, you know, Skype Skype's $3 a month for, like, a to
Brian Casel:be able
Jordan Gal:to call from Skype. That's because they're going after 50,000,000 customers, not what what we're dealing with.
Brian Casel:Yeah. Sometimes I wish Skype would would just charge me more money so that they can give me better service, but that's another story.
Jordan Gal:Yeah. That's another story. But I I love this. Is 99 the new '19? I think it's very relevant.
Jordan Gal:I know when I struggled through how to price CardHook, I just I tried to be as humble as possible, not in the pricing, but in the potential to acquire customers. And and and that's it. And this is the advice I give to people who who ask about this. It's to to get a 100 customers is not easy. And so if you're going to do the work to to get a 100 customers in the door, it's probably not that different if they're if you can ask them to pay $40 a month or a $100 a month.
Jordan Gal:So I I always looked at it that way. It's it's if you price it for cheap, it's it's just really hard to make the math work of acquiring customers. Yeah. And it's something that Jason Cohen talked about in that talk that I brought up last week, and I I see you're you know, you you wanna bring it up in here. You watched it last night, so it's fresh.
Jordan Gal:I wanna I wanna hear your
Brian Casel:take on I I did watch it last night. And, I mean, I've been reading his blog for years, so it was a great kind of, like, recap of a lot of different ideas that he's been writing in in his, in in in the Smart Bear blog in that talk from 2013 at MicroConf. Mean, yeah, it's just so awesome the way that he put it, you know, just running the math, like, getting to 10,000, you know, monthly recurring revenue. It's so much easier when you're in that 99 to $2.50 a month range. And this gets back to our discussion earlier, you know, talking about that average revenue per customer.
Brian Casel:Again, it is another big point that Jason brings up in that talk. It really makes such an impact, and you could literally see it when you run the numbers in in a spreadsheet. Just increasing that average monthly revenue from, like, you know, by, like, 10 or $20 makes a huge difference. But, of course, if you make the jump from, like, $19 up to $99, that's a major shift. A few things that I think you need to get your head around, and I I've I've had to go through this process myself.
Brian Casel:Like, when I first launched Restaurant Engine and Hotel Propeller, I looked at $49 a month for the for the main service. Like, man, who is gonna pay this? That's that's pretty high because when I look at, like, other web hosting providers, they're charging, like, $6 a month. And if I look at how you can go about getting a a WordPress theme installed and set up, I mean, that's practically free. It's like, who's gonna pay for this?
Brian Casel:And then and then sure enough, you know, customers find value in it. And and now that I'm learning the impact of average revenue per customer, I've I've just recently added a new tier on restaurant engine, which brings it up to 99 a month. So now there's a 49 and a 99 a month. And and that helps. We have a couple of new customers on on this on this higher plan.
Brian Casel:Nice. And and yeah. And and I've done the same thing on Hotel Propeller, again, to to raise that monthly cost. I mean, that that monthly revenue. You know, I I you do have to look at it like you have to add something of value and to make sure that the value is there.
Brian Casel:But the the realization that I had to come to and it and this is very difficult or was for me was that, like, I I need to get out of this mindset of, like, would I pay for that? Like, am I this type of customer? And at the end of the day, I'm I'm not the customer. I'm just running this business. I'm not the target customer for it.
Brian Casel:You know, for me, like, restaurant owners find a ton of value in having all this stuff just done for them so that they don't have to pay for it. And they're willing to pay a $100 or or more per month to just have it handled. Whereas, I I'd be happy to just have my assistant do it or or I do it myself for the same type of service.
Jordan Gal:Right. The, yeah, the pricing conversation and the pricing level yeah. Looking at it from from your own point of view, definitely not not ideal. Right? What's always price based on value and all that, but it's it's tricky because you have to look at the competitive landscape if if it's that type of industry.
Jordan Gal:It's not it's not an easy question to to answer, but I don't think I would enter a business that that you had to charge very little money for. $19 a month, something in that range. If if you think about you wanna get to something substantial, $50,000 a month, You know, at at $99 a month each, it's 500 customers. Like, that that's a lot, but that's doable. You can you can do that.
Jordan Gal:If you take that and multiply it many times over, $20 a month for for 50,000, that's 2,500 customers. That is just a very different thing. You can't spend money on acquisition. You have to depend on different types of traffic. It just sounds a lot riskier to me.
Jordan Gal:So if I were going into a business and I didn't see how it justified, I didn't see how it provided enough value to charge at least a $100 a month, then I don't I don't I don't think I would do it.
Brian Casel:Yeah. It that that's right. It comes back to that question of, like, alright. There are plenty of business models out there. You look at Dropbox.
Brian Casel:They're you know, they make plenty of money, but that that's a different business model. And for for us who are, you know, bootstrapping something from the ground up, self funding it with our own savings or with a credit card or or something, you know, you've gotta look at what's most viable for your current situation. And when you start running the that math, finding fewer customers paying more per customer just makes sense. Of course, you know, that the extreme of that would just be consulting. Right?
Brian Casel:Like, know, doing a project for several thousand dollars. But, you know, there are middle grounds there. You can look at, like, a product high service, you know, a a a retainer type of service, which can be very valuable. Maybe just find five or 10 clients who can pay you, you know, a thousand bucks or so every month. That's that's great little business right there.
Brian Casel:Or, you know, go go down a couple 100 a month and and offer some kind of service and find 50 to a 100 customers, you know, and kind of claw your way up that way. And and it's a much more viable path forward.
Jordan Gal:Yeah. And and I think you see examples of it in the bootstrap world, and and you find yourself envious of the of people who are are in that situation. I remember a few years ago when I did the the foundation course. Right? I wanted to just kinda up my game on the software marketing and all that.
Jordan Gal:I remember looking at Dane's business, and he was doing somewhere in the range of $40,000 a month at that point. And his average revenue per user was close to $200. And I said, okay. That's interesting. $200 a month for software.
Jordan Gal:He's adding a lot of value, and he only needs about 200 customers. I can do 200 customers by brute force, knocking on doors and just hustling. So I I kinda took that as a mental note. And then I saw his most successful student, Sam Ovens, with Snap Inspect, and I saw the same thing. I said, Snap Inspect, their average revenue per user, I think he got it to, like, $10,000 a month in revenue in, like, six months
Brian Casel:Mhmm.
Jordan Gal:Which is awesome. And then I looked at the average revenue per user that he was talking about, and it was somewhere in the $150 range. I said, so that, you know, that seems to be a lot easier to make work. If you find a good problem to address and you're providing value, then you can charge more for it. And charging more for it, it makes the path of profitability and success just a lot easier.
Jordan Gal:You just need you know, you need a 100 200 clients, you have you have a real business going as opposed to, you know, much higher numbers, at the lower price point.
Brian Casel:Yep. Absolutely.
Jordan Gal:That's that's how I look at it. Alright. Cool, Brian. So I think these were some really interesting questions. Right?
Jordan Gal:The the pricing issue, how to get your first customers in a service business, journaling and looking back on what you're what you're learning, all these internal emotions that we deal with and and doubt, all these things that swirl around our head that prevent us from doing what we're capable of doing. Yeah. This is, right, what people in our situation deal with, and, you know, I'm just appreciative that people are open enough to to share it. You're definitely not alone in all these crazy struggles. Everyone deals with it to you know, in their in their own flavorful way.
Brian Casel:That's for sure. So so, yeah, this was a good one. We'll wrap it up here, and we'll we'll be back next week with another Bootstrapped Web. As always, you can dig into the backlog of episodes over at bootstrappedweb.com. And if you wanna get your question answered or just hear our feedback on what you're working on, bootstrappedweb.com/ask.
Brian Casel:And you can be one of the smartest people on the Internet and head over to iTunes and leave us a five star review. And tell us what you think of the show. We appreciate it.
Jordan Gal:Alright. Thanks, guys. Brian, have a great weekend.
Brian Casel:You too, sir.
Jordan Gal:Alright. Cheers.
![[57] Is $99 The New $19 in SaaS?](https://img.transistorcdn.com/LDB_Cv9bHAA2vtoSPkZCpkdHPF6fAqfl7PL-PG7_c-M/rs:fill:0:0:1/w:800/h:800/q:60/mb:500000/aHR0cHM6Ly9pbWct/dXBsb2FkLXByb2R1/Y3Rpb24udHJhbnNp/c3Rvci5mbS9jMjkw/MDYxZDQ0MWIxYTUw/NTMzMGI2NTExZWMx/MWQ1Yi5qcGc.webp)