Loading...
Answers
MenuSaaS platform with 10k niche users and a large company wants to buy a custom version. How do you model a cost structure beyond hourly?
Answers
Great question, I've dealt with this exact same issue. I've found the best way to look at this problem is by analyzing the problem you are solving for this "lighthouse." Is this something they would build anyway? If so, how much would it cost? Anything less than that is probably a win for them. Is this a nice to have, or a need to have for them? Are they price sensitive? How do they usually pay for this type of product/service?
If you are able to answer these questions it should help you figure out the best pricing model (up front cost + hosting, monthly service, per user/group etc..). It sounds like you have something pretty valuable that they want. I think pricing it based on "modification" is selling yourself short. If you solve a big business pain for them, they should be willing to pay you something non-trivial. My hunch modification pricing would be trivial for you.
Sounds like a great opportunity for you and your company, don't sell yourself short. You'll never get a price that you don't ask for.
You are the best judge of the cost and time estimate to do this. But as long as it does not take away a lot of time and attention from running your core business and growing it do it.
They way I would price it:
1. Hourly fees upfront or to be paid with milestones.(so that you are not worrying about cash flow problems or diverting cash to this while you could be using it for growing your core business)
+
2. Charge per user on top of the customization. Discount it but charge something. Figure out if they are charging for it from whoever is going to be using it, if yes establish a revenue share, very simply if they are doing all the work to sell and market it and you are doing all the work to build and maintain it then you should get at least 30% of the per user fee they are charging on top of the modification hours. You can also forego your upfront modification for getting 90% of the per user fees, if you truly believe they will do a good job spreading it around in the marketplace (get a commitment from them in writing of x number of users per months on a 12-24 month contract that they need to pay for)
2. If they are not charging their users, and giving it for free, figure out what value does it and to their core business. If it does add value to their core business then they should be willing to pay a price for it in addition to the modification charges.
Major impact of branching the platform - You will have to bug fix, support and make sure it's up. It can become a animal of it's own so this whole thing has to be profitable enough for you to support the dedicated resources you'll need. support it constantly and make you money in the process.
Also, look at co branding options, if possible. Don;t white label it if you can avoid it. It becomes a lot more interesting then.
Determine how much the custom modification is going to cost you in time and cost. Is this a fast track project? so something you have already considered doing but has less of a priority on your current roadmap.
If this is something that is on your roadmap you may what to not charge as much for the fast track. Of course you need to determine this.
If one "lighthouse" company wants your system with some mods then why wouldn't "lighthouse2"? Expanding your market is a good thing.
At the same time how much is this project/mod going to affect your focus on your system and roadmap? Can you afford to delay your roadmap?
As for branching, you need to figure out a way to add this Mod as a module allowing you to easily integrate. You should be building your system in a modular manner anyways. Turn off/off features easily based on customer wants/needs.
Figure out a way to do the mod for the light house customer. :)
Related Questions
-
What is the average pre-money valuation of a enterprise/SaaS stat-up that is pre-revenue?
There is no valuation until you sell something. An idea or a company is only worth what its sales are. Once you have your initials sales, sales strategy and forecasting length (ie 9 months from first customer lead to close) then you have a formula for valuation. Valuation for start-ups is generally 3.5 x last years sales model should be the growth factor. When you are looking for investors, you will want to have atleast 9-18 months of SALES, not just pipeline and they will be looking at 5x revenue for a 3-5 year payback.TP
-
What companies have successfully implemented both B2B and B2C products or services? Which should I start with for the non-profit sector?
I would suggest the first question to ask is "what problem do I solve?" And of those people I solve problems for "who do I create the most value for?" In the non-profit world you need to add "How does my business help the non-profit run better and/or help the group the non-profit focuses on?" For example, if you've created a platform that drives donations, your company "has created a platform that helps you reach fundraising goals faster." What you don't want to do is market and sell to B2B and B2C audiences simultaneously. They have different ways of buying - a B2B audience needs to have their benefits quantified (using your thing makes me x amount more) - and it's extremely hard for a startup to be able to do both well. Better to start with one, execute really well and move into the other. Feel free to give me a call and we can dig into who your most valuable audience is.AV
-
I have an idea for a start up, but I don't know how to code, whats the next step?
Hello, If you have time, I suggest that you learn coding yourself. That saves you money but takes a great amount of time to do. And if your interested, I'm a coder myself. You can give me a call and we'll discuss the details of your idea.GS
-
How can I become an idea person, as a professional title?
One word: Royalties This means you generate the idea and develop it enough to look interesting to a larger company who would be willing to pay you a royalty for your idea. This happens all the time. Rock stars, authors and scientists routinely license their creative ideas to other companies who pay them a royalty. Anyone can do it. Your business, therefore, would be a think tank. You (and your team, if you have one) would consider the world's problems, see what kinds of companies are trying to solve those problems, and then develop compelling solutions that they can license from you. You have to be able to sell your idea and develop a nice presentation, a little market research and an understanding of basic trademark and patent law. The nice thing about doing this is that if you develop enough cool ideas you will have royalties coming in from a lot of different sources, this creates a stable, passive revenue stream that requires little or no work to maintain. Start in your spare time and plan on the process taking 3-5 years. Set a goal to have a few products in the market that provide enough revenue (royalties) to cover your basic living expenses. Then you can quit your day job and dedicate more time and increase the momentum. A good idea business should have dozens, if not hundreds of license contracts generating royalties. It's possible to pull this off. And it is a fun job (I'm speaking from experience).MM
-
What are the SaaS B2B expectations when paying annually - annual paid annually or annual paid monthly? Is a discount necessary (i.e. 20%)?
Most Software as a service vendors generally don't book annual deals except in highly specialized cases. Most customers prefer to be able to cancel/change anytime they choose. Also, deals done "offline" end up actually often being more trouble than they are worth to administrate especially for a $2988 ticket. Generally, companies don't view prepaying for SaaS products a year in advance as a "convenience" (to them) so if the debate is internal (not customer driven), I'd set this debate aside until it's requested by the customer. Most customers will request a discount to pre-pay annual service. Happy to talk this through with you in a call, to work through the specifics of your situation in more detail.TW
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.