This will tell you how much you will make from your customers (their lifetime value) which will tell you your expected revenue. Understanding all of these costs will help you determine your fixed costs. Since few businesses are profitable on day one, knowing how long you can last until you reach profitability is a key fact.
Cost includes not just servers and software, but your time, insurance, taxes, etc. This is the all important final question, because it tells you how much you can invest before the business needs to be profitable.
This is especially true if your Saa S product represents something that is integral to their businesses.
After all, they are usually becoming “members” of your secret society.
It often takes a good amount of coding knowledge, combined with a good amount of user interface design skills, to really make a Saa S product worthwhile.
Saa S businesses in general are probably the most complex business models in our explainer series.
One of the phases that is often not talked about, though it is one of the major stress periods for a Saa S business when they either make it or break it, is known as Hypergrowth.
Let’s dive into the three phases: Many Saa S products are actually quite good, but the inability to manage hypergrowth is something that many businesses suffer from, which can cause many to fail as well.
For example, Zendesk offers software that helps businesses create an effective customer service solution.
There might be a new ticketing software that comes out that blows Zendesk out of the water, but because Zendesk is so vital to a business’s success and so integral to that business’s process, the business is unlikely to change everything for the new and improved solution.