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Bootstrappers Diary – Pricing

THE BOOTSTRAPPED PRODUCT

Welcome to part 4 of my bootstrapper’s diary,

In part 1 I outlined what the aims and plans for this series were, I plan to create a series of different bootstrapped products.

In part 2 I explained my product and announced the name Kanban cash flow. I also launched my landing page.

In part 3 I explained the decisions about building the MVP for Kanban cash flow.

In this post, I am going to dive into pricing my product Kanban cash flow, and you find out how it impacts my MVP…

Pricing, pricing, pricing

As Kanban cash flow is going to be a Micro saas, I decided to look at how other Micro saas’s price themselves. What I found was that the pricing seemed to range from $5 to $20 a month or a flat yearly fee of around $99. With this research and my gut instinct for pricing Kanban cash flow, I decided that $5 a month or $50 a year (making it hopefully a no-brainer to just pay for 12 months upfront).

Now with this pricing, I can work out how many customers that I need to make a decent income from it. My example target income will be $5000 a month.

Based on the $5 a month income I would need 1000 customers and that seems like an awful lot but not impossible if marketed correctly. However, that’s not the complete story because I would have outgoings that need to be met. These would include, support, development, hosting and marketing fees. I am going to guess that these could be in the region of $1000 per month at the scale of over a 1000 customers. Now to make my $5000 a month I need $6000 a month and that would need 1440 customers. Of course, this doesn’t take into account those customers who have pay annually, and if all of the customers decided to do that, then I would need 120 new customers a month or 1440 customers a year. The annual income at 1440 customers would be $72,000

These numbers I think are doable but I think my first target would not be $5000 a month it would be $500.

Is there another way?

Now after looking at the above method for pricing Kanban cash flow, I started to look at what it might look like if it was not a Micro saas and instead was a desktop app.

I think that as desktop software it could be priced at $20 to $30 per download, but if you were selling it via the app stores, you would have to account for the cut that the app store would take so $20 would become $14.

To compare pricing models I took the number of target customers I needed to meet my monthly target which was 1440 customers and used that as the number of downloads I would get. 1440 sales at $14 equal $20,160 per year a lot less than the $60,000 (this is the figure without the extra amount for outgoings). To reach that $60,000 figure via desktop downloads it would need 4286 sales per year. However, it’s not all bad news because I think there are some upsides to being a desktop that might suit me and this product.

Why change from Micro saas to a desktop app.

The reasons I am going to switch to a desktop app are:

The product itself works well as a desktop app and might have more appeal at a lower cost to budget conscious freelancers who are tired of paying for online services.

Simple accounting, My current accountants and their software does not support e-commerce and using app store payments works within this system.

A ready-made audience, A lot of my target audience use app stores, and while I know discovery is not great on app stores, it is still possible and an added benefit.

Marketing, As I am a Mac person the app will be made for the Mac first and that opens up Mac blogs as well as freelancing blogs as a marketing channel.

Support costs will be a lot less, and security of customers data online won’t be an issue.

So there you have it, looking at pricing as made me realise for a first-time product I am better off building a desktop app.

Next week, I will give you a review on how I am progressing with the desktop app.

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