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Best advice I'd give someone just starting out - pick a product where you can charge enough to build the type of business you want. ARPU influences a lot. In B2B, a seemingly small difference of $25/m vs. $50/m can produce a radically different business, especially as you grow.
Queue the obvious: Lower ARPU means you need more customers to hit desired revenue targets. It's not exponentially harder to find someone to pay $50/m than $25/m, but exponentially harder to acquire double the number of paying customers.
An example - a $1 million SAAS product.
$25/m - ~3,300 paying customers
$50/m - ~1,670 paying customers
$25/m - ~3,300 paying customers
$50/m - ~1,670 paying customers
$25 vs $50 can be the difference in the number of employees you need to hire.
More customers = larger support team
More leads = larger marketing team
More customers = larger support team
More leads = larger marketing team
$25 vs $50 can mean a difference in where you spend your energy.
Focusing on marketing and growth instead of focusing on building a better product.
This is painfully true when you have a small, bootstrapped team. I see it all the time.
Focusing on marketing and growth instead of focusing on building a better product.
This is painfully true when you have a small, bootstrapped team. I see it all the time.
The math seems obvious. We didn't think about scaling or growth in this way. We thought about building amazing products for developers. But we also wanted to maintain control over our growth. Doing the math ahead of time would have come in handy. 🙄
If you see your favorite startup building big sales teams, and going really up-market, it's because the core product can't charge more. It doesn't provide more value and therefore becomes infinitely harder to scale.
