I’m staring at Mixpanel’s homepage. It’s beautiful. I flick across to KISSmetrics. They’ve changed their homepage, again, and it looks amazing. I look through another 5 or 6 websites, and the heavy stone in my gut grows a little bit bigger.
I distinctly remember vomiting at one point that day.
I’m looking through every possible “customer analytics” tool because it’s 2013 and we’re just about to hit “Publish” on the landing page for our new SaaS product, “Trak.io Customer Analytics”.
Specifically, we’re launching a landing page that asks people to pre-order a software product that isn’t even built yet, has no Silicon Valley VC backing, and is in a seemingly crowded space.
Will people understand that we aren’t trying to compete with these established tools? Will people realise there’s a gap in their analytics setup? Will people put in their credit card and pay for our solution?
As it turned out, the whole pre-order process was a success. While it didn’t raise much money relative to our costs, it did provide an awesome engaged audience of 105 customers to develop our early product.
So we’re doing it again, for our new SaaS product, Metrix, launching in October. Here’s why.
1. A Group Of Evangelists
People who are willing to spend money to back a product before it launches are the absolute top 1% of engaged users. They could have the most severe pain, or just really love your brand.
Kickstarter has understandably produced a lot of case studies of home-run successes with pre-orders. However, these are (usually) physical consumer products.
But in the case of Ghost, the premium blogging platform to compete with WordPress, John O’Nolan managed to raise £196,362 (~$306,413) for his unfinished SaaS product. These backers provided John with an amazing group of 6,000 passionate evangelists… and bloggers are known for being able to make quite a bit of noise!
2. Early Pricing & Revenue Validation
From our first pre-order campaign, we know not to expect a huge amount of gross revenue. However, just as Nathan Barry experienced with his SaaS pre-orders, the product validation and pricing validation are extremely valuable alone.
Here’s our problem. We intend to price Metrix ONLY on how many employees in your organisation are using the product. And only charge $10 /user /month. This is because we want to solve the pain of collaborating on customer data and being fully data-driven as an organisation.
Most analytics or customer data warehousing platforms charge based on number of customers, or number of events, or unique visitors (?!). But we’re making the customer data warehousing component Free (for all but the biggest companies), as our Hub product. This has the problem of being a little confusing, and also, seeming ‘too good to be true’.
- Will customers understand that Metrix is actually Hub (Free) + Metrix ($10 /user /mo)?
- Will customers trust that we can afford to deliver the product for only $10 /user, when similar products or alternative solutions have entry price tags of $150 /mo?
- Will they pay for 3 months in advance? Will they pay for 1 year in advance?
Ginza Metrics wrote a great post on SaaS pricing in 2012. Specifically, the dangers of charging too little and blindly copying your peers/competitors pricing models. I think I’ve read, re-read and taken inspiration from that post 10+ times over the last few years. I regular refer fellow SaaS founders to it.
Choosing a pricing model, and a price, is scary stuff. And despite what anyone says, comes down 50%-75% to the CEO (the other 50%-25% is related to the alignment of stars and a strong Jupiter rising I believe).
3. Investor Validation
I love bootstrapping. I admire my friends such as Dan Norris (WP Curve) and Justin McGill (LeadFuze) who have built successful recurring revenue companies without any outside investors. However, we made the decision 2.5 years ago that we would be a funded company, and took investment from tech investors
Building SaaS products is hard. Building data/analytics products is expensive. And (unless you’re IBM or Oracle) companies today expect to pay about the salary cost of an intern for their total SaaS budgets.
In order to make MEtrix as awesome as we’d like, we are in the process of talking to more investors for Trakio. One of the most exciting topics in the past was traction on pre-orders for our product. Smart investors know that every 1 pre-order represents another 10 sales if the product was released.
So if we can include a slide in our presentations explaining that we made 100 pre-orders for Metrix, they feel confident that with their cash, we could make another 1,000 sales.
Follow Our Journey!
I used to blog very openly about our growth journey. But when things got really, really tough last year, we stopped. That’s a future post…
But we realised we’re way more awesome (and interesting!) when we’re sharing our journey with the SaaS community.
We’ll be blogging up all of our journey through the launch of Metrix. Be sure to subscribe to updates, or of course, pre-order Metrix here!