RS032: 7 Times when SaaS is Totally Wrong For Your Business

SaaS and recurring revenue are all the rage.  But after a trip to MicroConf Europe Craig came back with a totally different view of what the potential for one time downloadable software can offer.  And it spurred on a really interesting train of thought around when SaaS is wrong of your business, how you can move into SaaS from a one-time transaction.

Dave and Craig covered 7 times when SaaS may not be the the best business model for you to choose.  This is based largely on our experience and exposure we’ve had to colleagues that have operated in these spaces.  The circumstances where SaaS may not be best for you include:

• Any type of plugin – WordPress plugins and themes.  This is due largely to how customers have been conditioned to expect to transact.  The vast majority of WP Plugins are one-time transactions, with some few exceptions moving onto the SaaS model now.  
  • Support can be different- such as with EDD
  • Some things DO work, like VaultPress (ongoing value)
• B2C, or consumer-oriented tools
  • Consumer software, like AirParrot for the Mac, TextExpander, Evernote
  • Counterexample:  Dropbox
• When you’re looking for quick growth.  The beauty of this in an early-stage startup is that it transfers all of your customer value to beginning of customer lifetime
  • An example of this could be the Genesis framework
• Anytime a small price point comes into play.  You simply just can’t bootstrap a sub-$10/mo SaaS
  • Buffer is a good example of a SaaS that pulled this off, but they are venture funded.
• Non-technical crowd – even though SaaS has grown with technical crowds, some users are still resistant
  • Example – printer and scanner driver software
• One final deliverable – consulting engagements
  • Good examples here would be consulting, one-time website design, or anything where customer derives most of the value up front
• Potential for customers to derive more value up front than over a lifetime (solves a one-time problem)
  • MastermindJam

We’d love to hear your thoughts about how you’ve priced your apps, and whether you’ve gone towards or away from monthly recurring billing.  How is it working out for you?  Drop us a line at [email protected] or leave a comment below.  We look forward to hearing from you.

Announcement

Big announcement for anyone looking to join up with like-minded entrepreneurs for a long weekend, and enjoy some epic skiing or snow boarding.  Dave is coordinating Big Snow Tiny Conf West.  This is a 3 day combination of epic business discussions in a long term mastermind style format, and some awesome time on the slopes.  Beaver Creek, CO will be the location and it will be from Feb 8-11.  Head over toBigSnowTinyConfWest.com to learn more.

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