Building a Profitable SaaS
One of the first things we tell people wanting to build a SaaS is that you’re not building software, you’re building a business. Some of the first questions you have to ask yourself are:
- Can you make any money on this thing? How much?
- Will anyone buy my great new idea?
- How much is this thing going to cost me to build? Is it even possible?
- How do I get the word out about my fancy new product?
- What about all those pesky business questions like:
- How many people do we need to make a purchase in order to be cash flow positive?
- Who is going to answer the phone?
- Do we need insurance? If so, how much will it cost?
- What is our monthly operating cost?
- How do we grow the system?
- What happens when something goes wrong? How much will that cost?
- How do we get the word out about this system to the right people?
- How do we manage new versions?
- How do we know what our customers are asking for?
And of course, the biggest questions of them all:
Are people going to pay for your SaaS, and if so, how much?
These questions all seem like simple, straight-forward questions that anyone should ask before starting any business. But so often people jump into building software systems without clearly thinking through all of this.
So, let’s take a look through some of these questions and the lessons to be learned from them, starting with the big ones first.