The One About SaaS Companies
TL;DR
This past July I wrote to you about how not be the crusty person who screeches on social media when a bookkeeping app raises their prices by $5 each year.
But this week, something happened that was a bit of a different flavor. A popular payments app announced that it was going from free to, well, not free. People were shocked and angry. They use this app to serve clients to make a living. And they would automatically take a “pay cut” because of this price increase.
So I thought it might be time to explain a little bit about how this app development stuff works. I remember feeling the punch when apps have raised their prices. But as I’ve learned how SaaS (Software as a Service) companies operate, I’ve tried to train myself to internally respond with a “well, duh” when they raise prices.
It is very expensive to develop a software. Picture it, y’all. They’ve got enormous upfront costs before they start making any money at all. And those costs are more or less the same whether they get 1 customer or 10,000 customers or 100,000 customers. And they have no clue how many customers they will be able to get.
They either bootstrap (if they are young & don’t have a family so they can work around the clock or if they are independently wealthy and willing to gamble their own wealth on their idea) or they seek outside investors. But either way, all of these stakeholders are only giving time and money to the new application because they hope it will return them money. Lots more money.
Many founders have to seek outside investors to float the company for years before they turn a profit. But their pitch decks all mention some magic number of users at which point they predict they will start to turn a profit and are able to return value to their founders and shareholders.
They all have to eventually charge and all will always raise their prices. Free is just a fairy tale. Charging a fee was always a part of their plan. What investor would give them money if it was not? What founder would grind all day and night if it was not?
I’m not trying to besmirch any app. The point I’m trying to make is that we’ve got to remember your basic economic principles.
This is capitalism. It is competitive. Even if you and I are not really very competitive and want to be all “Kumbaya” with our cute bookkeeping businesses, every single tool we use to run our businesses does not think of their business that way. Those companies are serious companies with big financial goals. Nothing cute about them. They may be run by great people. They may not turn the screws to suck as much cash as possible from their customers. But they also aren’t playing small ball here. And isn’t in my best interest when my most valuable apps to make enough money so I can smoothly run my own company?
It is HARD to act like a real business owner. To find serious clients. To raise your prices every year. But it is also hard to feel poorer and poorer because you let app price increases eat away at your margin. Assume it will happen and plan accordingly.
Don’t get mad. Get aware.
Now, the best of apps will invest a lot into helping their users become better business owners. The more successful their users are, the larger piece of pie there is to share between the app and the bookkeeping companies.
Our sponsor this week invests heavily in teaching folks just like you and me how to run successful firms. From the partner reps, to the annual co-marketing funds they give firms, to the in-person gatherings that happen all over the country all the time, Xero is an app that wants to build their application so that their accountant users succeed.
Xero is inviting every one of you to check out their platform at their Intro to Xero events. The next one is October 30. Bang that graphic to sign up.
Deals Deals Deals
💰 If you missed your chance to join Justine Lackey's Bookkeepers Business Incubator program (enrollment closed on Wednesday), she's offering my subscribers a last minute chance to join the program but you have to act by midnight Sunday September 28th at 12AM EST.
Use code BSH100 for $100 off the monthly fee of $297 (6 month payment plan) OR BSH500 for $500 off the full fee of $1,497. Learn more about the program and signup HERE*.
💰 2024 Xero Road Shows: Y’all, the 2024 Xero Roadshows only cost $50 with their Early Bird pricing! Happening all over the US in November. I promise you that you will receive more than $50 worth of food and swag. That is like making money. And these events aren’t only about the Xero software. You’ll learn something even if you haven’t started serving clients on Xero yet. If you are scared to go stag, just find a friend in the facebook group. Good things happen when you put yourself in real-life rooms and shake hands. It is what serious business owners do.
Be There or Be Square
Items with a “+” are hosted by me. All these events can be viewed and registered for in the DESCRIPTIONS of each event on the Bookkeeping Side Hustle Calendar.
📅 +September 30 & October 7: BSH Co-working Hour. Join me on Monday mornings for co-working hour. Start your week with some accountability - tell the group what you are going to do in the hour and then get it done! RSVP in the FB group to grab the link.
📅 +October 3: Making AP Profitable. MakersHub* will be giving a demo of their app in second part of a 2-part series. Ted McRae will show how AP Services can be a profitable service line if you use the right technology. RSVP HERE and catch the replay of part 1 HERE.
📅 October 16-19: I’ll be in Florida attending the Reframe Conference put on by Hector Garcia. Hector says there are 8 tickets left.
📅 +October 23: How To Hire A Bookkeeper Who Knows What They Are Doing. Giles Pearson from Accountest will join be live to explain ways to make sure you hire a bookkeeper with the technical skills to help your biz succeed. RSVP HERE.
📅 October 30: Intro to Xero. Hop on this webinar to learn about Xero and how to get started. Register for HERE.
Featured Posts
🌶️ Drea J. asked why a client would ask for a bookkeeping report in a spreadsheet vs a PDF. Some accounting pros like us even prefer the excel versions. Good to understand the use cases for both and when one is better than the other.
🌶️ Crystal A. started a conversation about being a sole proprietor or hiring folks to help. This is a good conversation, and sometimes it just depends on your goals. And if you are thinking of hiring someone to do client work, be sure to join us on October 23 to learn how to verify that you are hiring someone who KNOWS what they are doing.
Help You Hustle
💪 Learning how to price your services is probably one of the hardest and most uncomfortable thing you do as an entrepreneur. Not sure that anyone ever reaches complete confidence in how they charge. But I think our recent stream about the Value of Value-based Pricing with Ted McRae can help. Be sure to grab the full slides which contain his links to all the scripts he mentions in the description of the video.
Here is some of what I took away:
Maybe Fixed-Fee vs Value-Based isn’t as different as the smarty-pants people want me to think.
I should never, ever make less money because I’ve gotten better at my craft. Value-based pricing helps solve that conundrum.
The parody video about what would happen if restaurants charged like old-school accounting firms charge keeps running on replay in my head. Maybe simply sharing that video with clients would be a great way to explain to existing clients why you are changing your pricing model.
Kate’s brain wanderings…,”I think my clients would benefit from implementing value-based pricing in their own businesses. What if I sent them that parody video and told them to think about how THEY should switch from hourly to value-based pricing???”
💪 Alert for QuickBooks ProAdvisors: Intuit is making major changes to the ProAdvisor testing and training. You have to finish any in-progress certifications by the 2nd week of October! If you are in the middle of studying or training, Do Not Delay! If you need to move a little faster or have questions about the changes being made to the ProAdvisor certification program, you can always get support from the free Fast & Easy QBO community*.
And if you realize you need to pay for the courses to help you get more practice and be more focused in your studies for the exams, you can use our community discount code “Hustle” for their study materials*.
My Family Circus
🎪 In Praise Of Carpools:
I am obsessed with carpools. I think carpools are one of the single most valuable things in my entire life.
Sure, the monetary value of a carpool can be calculated. You are saving on gas. You might include your effective hour pay rate in your calculation. It is better for the environment. Yada Yada.
But, y'all, the benefits of spending less time in the car are so much more than that.
Here is a list of just the top things that come to mind.
I can cook more and healthier home cooked dinners. And notably, I can cook before my husband gets home, which is a real critical component right now as he has the most stressful position he has ever had in the Navy and I want to honor that as best as I can (and be grateful that I know it won’t be this way forever). I find that a calm, home cooked meal is a balm to the whole family.
I am more available to be aware of my children’s homework and catch some gaps before they get behind.
I can hear conversations from other children in my car.
My children have to learn to live life with and act politely with other families, even ones they might not choose to otherwise hang around with. Assuming no safety issues, I don’t really ask their opinion about whether they like their carpool or not. They don’t get a vote.
I can build some strong relationships with other school families.
Considerate carpool families can bail each other out of hard days, like illnesses or family emergencies. It is assumed that we will just both help each other and not abuse it.
I believe in carpools so much that I will do whatever it takes to find them. Most carpools arise somewhat organically. And that is my preferred method. But this school year was the second time I’ve had to take an extreme measure.
I stood on the sidewalk at the school parking holding up a poster board that said “Do you want to carpool to XX neighborhood”. Yes, I really did this.
See, I was not having success finding a carpool home from flag football practice for my 7th grader. I knew that I had all the other flag football teams AND all the girls’ volleyball teams with similar schedules, but I didn’t have a way to contact all those parents.
So y’all, I scribbled some big letters on a sign and stood on the corner of the sidewalk at pickup and advertised my desire for a carpool. And I got one! It was a 9th grade volleyball girl’s family. Turns out I know this family. The mom works at the school.
Now I don’t have to drive back to school at 5:20 every single day any more.
And there was much rejoicing!
I’m probably going to have to resort to the poster board method for the city choir my daughter joined. The slight embarrassment will pale in comparison to the long term benefit.
Kate Builds In Public
🎢 This week I sent an email to my firm email list asking for a favor. I asked them for some leads about trying to get on small business podcasts for their industry. Here is a Google Doc of the text of the email I sent to my list, and the text I sent to the podcast hosts that were recommended. Do you want to know the results of the campaign, you need to comment below on Substack and I’ll answer. But feel free to take my words and make them better (please make them your own).
🎢 So, I’ve been sharing the progress of hiring my first real employee. Nothing major to report yet, BUT, I did write up my script for the interviews. I figure I need to be systematic about this. I hope none of these questions will get me sued! I haven’t interviewed anyone yet. I’ve told everyone who applied (2 whole people!) that I’m collecting applications and will be interviewing in October.
🎢 I finally completed my own Beneficial Ownership Information (BOI) report. Almost all of you reading this and all of your clients are going to have to file this report if the business is located in America. After I finished my own, I emailed my firm email list about it, and included the links to the resources I used to learn how to do it myself. You can use these instructions and also consider sharing information like this as a way to build good will with your clients and prospects.
🎢 I attended the DFW Bookkeepers Club monthly lunch this week. It was great. If you live within 50 miles, you should try to make a few a year! Plan it in conjunction with another errand you need to run. There is a meeting in Allen and a meeting in Arlington. Write back if you want the details!
From The Vault
Lots of Xero talk this weekend. Still on the fence if it is the right platform for you? In addition to doing Intro to Xero and/or attending the Xero Roadshow you can watch this video, Why You Should Niche in Xero.
Letters To The Editor
✉️ Shanita J wrote me a full-on love letter and identified her top 8 favorite things about this newsletter. I was floored. Thank you for this feedback and to the many who chimed in that you agreed with her. For anyone who agrees with her, the best thing you can do to show your appreciation is to investigate the advertisers who run ads in this publication by clicking on their graphics.
✉️ I try to be as open and honest as possible in my newsletters:
These newsletters feel like you and I are enjoying a cup of tea together at a local cafe or on the balcony. (Amazing that you can have a coffee chat with thousands of people at once.) Nancy M.
Classifieds (Clickable)
Keep hustling!
Kate
-Chief Hustler-
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