Amy has lots of good points, but I'm of the opinion that her "$30x500" premise for building a SaaS ISV is backwards. You're often better off targeting "$500x30" instead.
* Most every place that publishes stats has shown that the higher-tier plans account for the lion's share of revenue.
* A good programmer values out at $20,000/mo or above. It is not hard to create $500/mo in value (~ half-time minimum wage!) on an ongoing basis. All you have to do is step away from the computer and start talking to real people who fit your target personna.
* With the reversed formula, you can get your first few customers by cold-calling and face-to-face sales if you have to. Ramen profitable is in the neighborhood of five customers, instead of over eighty.
* You can always backfill to a smaller plan if necessary. Even targeting $100/mo makes it far easier to get initial traction.
Don't make your main target the price-conscious end of the market!
The businesses you want to do business with (e.g. not lemonade stands) aren't even capable of differentiating price points $500 and under. Like, almost literally, you can give a number in that range and they'll just hear "pocket lint."
I posted this primarily as I didn't even know this podcast existed and this new episode was released recently and wasn't posted to HN (according to HN's dupe detection and my recollection of recent stories).
Of course, this is selfish as well -- the more exposure and fanfare it gets the more likely it is that there will be more episodes ;)
If you like this, I'd also highly suggest TechZing with Justin Vincent & Jason Roberts at techzinglive.com. TechZing has had patio11 and Amy Hoy on in [1], patio11 in [2] and Amy Hoy in [3]
It was posted to HN a while ago (I think patrick did), but it didn't stay up for long.
Thanks for posting it though -- I think it was much more informative than our first podcast, as we're slowing getting the hang of them. Amy Hoy was a great guest, and we were really glad to have her on the show.
Lots of great points, and I love the fact that there is a full transcript. Personally, reading the transcript, noting the important parts, then listening for other contextual cues in which the point was made adds another dimension to these podcasts.
Just as an example from this podcast, the points about Recurring Payment pricing strategies were extremely helpful. It immediately struck with me because:
(a) Recurring Payments are awesome! (profit wise)
(b) They are Hell to setup for anyone outside the US
US companies have awesome companies like Stripe, Braintree, etc... as a Singapore Pte Ltd, the only 2 choices were Paypal or WorldPay. We chose the latter, and while their Customer Service was good, the technical details absolutely sucked.
Anyway, the point is that Patrick being in Japan and facing the same issues (he uses Recurly + Paypal), was a good personal reminder for the issues facing a small startup.
Maybe a profit opportunity? Well, at least it would make a good blog post.
My company is based in the UK, and FastSpring has so far been working very well for our recurring billing.
I think you're only very limited if you're selling subscription products with such low margins that paying 6% or so to a reseller is a significant problem. A good reseller like FastSpring makes recurring billing much easier by handling tax, invoices, cancelled cards, PCI compliance, and by simplifying your accounting as you only have one customer (them).
* Most every place that publishes stats has shown that the higher-tier plans account for the lion's share of revenue.
* A good programmer values out at $20,000/mo or above. It is not hard to create $500/mo in value (~ half-time minimum wage!) on an ongoing basis. All you have to do is step away from the computer and start talking to real people who fit your target personna.
* With the reversed formula, you can get your first few customers by cold-calling and face-to-face sales if you have to. Ramen profitable is in the neighborhood of five customers, instead of over eighty.
* You can always backfill to a smaller plan if necessary. Even targeting $100/mo makes it far easier to get initial traction.
Don't make your main target the price-conscious end of the market!