I’ve been doing a lot of testing lately with some new software that we’ve been working on. It’s something that’s been over 12 months in the making from my initial concept and we’re still adding new features and improvements on a daily basis.

It’s the kind of software that everyone who wants to generate more sales from their website needs but I know there’s one thing about it that some people won’t like…

It will be a software that will be made available as a service. We call these kind of apps – SaaS Products (or Software as a Service) The reason being that customers will pay an ongoing fee, either Monthly or Yearly, to use it and they can cancel their account at anytime (but they will no longer have access to the service that the software provides)

You see a lot of people have been pre-conditioned into thinking that everything should be available for a One-Time Fee. So you pay once for something and get to use it forever.

But what people don’t understand is when they invest in a One-Time Fee for Lifetime Access Product they are guaranteeing themselves a lot of disappointment and frustration down the line.

 

Let me give you this example to illustrate this….

You see a new launch, say for an awesome piece of software that does XYZ. It’s only $17 and you jump on the deal during the launch and grab yourself a bargain.

Out of that $17 that you paid for that software the product creator probably earns ZERO. This is because for a $17 product they more than likely would be offering 100% Affiliate Commissions.

So the person who referred the sale would be getting paid an Affiliate Commission of about $15 after PayPal Fee’s etc.

Now this isn’t a major problem during a launch because the product creator is hoping to earn enough money from the rest of the sales funnel to cover their costs….for the time being.

But the problem usually arises a few months after the launch when bug fixes are needed to keep the software functioning.

 

I can tell you first hand that there are a lot of Updates and Bug Fixes happening in my business and we do these in the background or when a customer sends in a Support Ticket. We’re happy to keep our software updated and I have a full-time member of staff who does this for me.

But not every product creator is like this.

What you find with some is that after the excitement of a Product Launch dies down they move onto the next big project. And they kind of have to because they didn’t really make a lot of cash from the previous launch (remember they gave away 100% Commissions to Affiliates)

And that’s where the problems really begin.

That $17 software that was such a great deal during launch week stops working and when you get in touch with their Support Desk you find they are not as accommodating and helpful as they should be.

They’re too busy working on their next big project to worry about some little app they released 6 months ago.

So you are left disappointed by their lack of customer support and unfortunately the Lifetime Access Software that you bought really only had a Lifetime of about 6 months before it became obsolete.

 

Before we go any further – Hands Up if this has every happened to you?

Yes, well you’re not alone – it’s happened to me both as a Customer and as an Affiliate who promoted some software that stopped working and was abandoned a few months after it “launched”.

 

I once promoted a software that I had tested out. It was so awesome and I could see myself using it in my own business and so I was happy to recommend it to my subscribers.

Then a few months after the launch I heard from a friend of mine that there was a lot of problems with the software and that the post-launch Customer Support was awful.

So I did some digging and when I navigated to the software Members Area guess what I saw? Nothing, it was completely gone.

And not only that but a paid FB Mastermind Group that cost $37 to enter had also been deleted.

Apparently the product creator just couldn’t be bothered keeping the software updated after the launch and simply shut everything down and ignored Customer Support Emails.

Even though it was a huge launch that grossed multiple 6 Figures in 7 Days there mustn’t have been enough money left over to pay the Domain Renewal Fee and the Website Hosting costs.

Of course I’m just joking….but at the time I was p*ssed off, especially since I knew customers I had referred to that software had been so badly treated.

 

I changed my approach to my Affiliate Promotions after that experience and the first question I ask people now when they ask me to promote their product is “will the product be supported for the long-term after launch”

If I don’t like the response I get I politely decline and make a mental note to avoid doing business with that person going forward.

But nowadays I don’t do a lot of promotions and when I do they are primarily for good friends of mine who I know and trust will really take care of any customer I send their way.

And that brings me back to the initial point of this post.

 

Why the Growth of SaaS is Good News for Everyone

You see there are many, many benefits of investing in Subsription Based or SaaS Products over those that appear to be a “One Time Deal for Lifetime Access”

1 – Usually Costs Less

SaaS type products usually cost a lot less than the One Time Fee alternatives. It’s like Netflix or Spotify where you pay a small fee on a regular basis to have access to the service and you can cancel it at anytime.

Imagine how much it would cost to purchase all the Songs on Spotify or Movies on Netflix – it would be astronomical but by operating on a subscription basis and dealing in high customer volume they are able to offer the same service to everyone at a very small ongoing price.

The same concept is often adopted by SaaS Software Companies. You may $20/mo for something that may cost $5k if you tried to buy a Lifetime Account (that many won’t offer to you anyway because they like the cashflow that comes from the small regular subscriptions)

 

2 – Customers Get Results Faster

Because SaaS Products are already set up and configured on the service providers system there is nothing to configure or set-up for the new customer. They simply log-in and start using the software right away.

No longer do you have to download a huge file to your computer and spend hours running the install procedure, simply access your account at anytime and from anywhere to use the service.

 

3 – Improved Customer Support

Because the service provider is selling access to the software in subscription form they now have a regular cashflow that they can depend on and can use this to invest in better Customer Support. This could be as simple as hiring an extra support agent or developer to help customers with any questions they have about using the software.

Again you don’t always get this with One-Time Fee type products because that business model doesn’t bring in regular cashflow each month so the product creators cannot afford to hire and pay Support Staff to look after their new customers.

 

4 – New Features and Updates

Another huge benefit is that because of the regular cashflow that the small subscriptions bring in the product creator can afford to continually invest in improving the software and adding extra features.

You don’t need to worry about the latest WordPress Update breaking the software because they will be able to afford to hire the best developers to keep the software in great working order and make sure they are always trying to make it better and improve upon it.

 

For me, as a person who has lots of little subscriptions I find Numbers 3 & 4 above as the main benefits of using SaaS products.

So I guess my whole point behind this post is that the term “One-Time Fee for Lifetime Access” is not always true…..it is for some businesses who stand by their products for the long-term but unfortunately not everyone operates with the same set of morals.

 

I know myself when we bring our new software online it will only be available for an ongoing fee. Not a high fee but a subscription nonetheless.

And by doing this we will be able to continually re-invest back into the software to make it better and in turn help our customers get better results from using it.

I know that this will turn some people off from buying into the software and I’m totally fine with that. Because if they can’t understand all extra benefits that they will get as part of their membership then the software is probably not for them.

Plus the fact that they will be paying a small ongoing fee to use the software will actually force them to take action and not just let it gather dust on their hardrive.

And the beauty of this is that if they are forced to take action and use the software then they are going to see results from using the software! And getting our customers positive results, far greater than the investment they make it our software, is a Big Goal that we have in our business.

Because the more successful our customers are, the more they will help spread the word about us and in turn the more we will grow.

 

Now as I begin to wrap up this ultra-long post I hope you’ve gotten some value from it.

Remember not to fear investing in a SaaS product if you think it can help you move forward because you’re more than likely going to get far better results with it than a small little app that you buy for a tiny One-Time Fee.

I know if I invest $20/mo in something and it helps bring in an Extra $200/mo I know I will never cancel that subscription.

It’s all about weighing up the results you get from the services and software you use in your business – and not always about price.

 

So keep that in mind the next time you considering to invest in a new app for business and really ask yourself “how will this add value to my bottom line”

Hopefully I’ve given you some food for thought and you got some value from this rather long post/rant 🙂

 

If you have any questions, comments or thoughts about this post feel free to leave them below and I’ll respond to them all personally.

Thanks for reading!

Noel.

 

P.S. Please click a little monster below and share you reaction with others…

 

    4 replies to "Why the Growth of SaaS is Good News for Everyone"

    • Rino

      Hi Noel,
      Thanks for sharing this valuable info – I quite agree with all you are saying, with all the pros… except maybe for the monthly fee given as approximate value – $20/mo is really small amount for an ongoing business, however for start-ups when everything ads up (domain, hosting, AR, site back-up & restore, other various membership sites, online courses, Solo Ad purchases …) and the business is not earning anything yet – this small recurring amount might also become an issue.

      I am not saying that in such case (and btw I am in this case at this moment 🙂 ) I would choose one-time-payment-option vs SaaS – what would be crucial for me to decide is the problem / issue the sofwtare solves … if it releases me from additional “one-time-money & time investments” I would surely go for SaaS.

      Never-the-less, I am waiting to see your new product. 🙂
      BR, Rino
      Rino recently posted…Quick Start Challenge – Is It Really Over?My Profile

      • Noel

        Hi Rino,

        The main question I ask myself when investing in a SaaS product (and I have loads of them) is “will it add immediate value to my business”

        If the answer is Yes then I’ll get it because I know the money it will bring in will be greater than the cost of the service. If it pays for itself and then can return a measurable profit to you then that’s a sign of a good SaaS product.

        Just be careful with the “Lifetime Access” Products for a small one-time price because although you may have access to them, it doesn’t mean they will always work or be kept updated 😉

        Thanks for stopping by,

        Noel.

    • Paul D. Chilvers-Grierson

      Great post Noel, very insightful and lays out the issues and the advantages very clearly and understandably.

      I also like your comment in your reply to Rino regarding your criteria for deciding whether or not to invest in a SaaS product.

      It’s interesting to note that some people who put out a lot of SaaS products have a fixed price during the initial launch but then switch to monthly very quickly, so they get an initial burst of cash flow and also awareness of the product in the market as well as a reasonably sized user base moving forward to provide feedback and improve the product.

      Then they might occasionally do brief specials further down the line where they open it up for a couple of days to remind the market that they are there and encourage more signups by new people made aware of the merits who may have missed the offer but now know they want it!

      And to get another injection of cash of course, which as you say will contribute to maintaining and improving the software.

      On the matter of being more likely to use something you are paying for regularly, I must say from experience that that is not necessarily always the case.

      I have had subscriptions e.g. that I have taken up because I knew (or thought) I would need it later but also knew the price would be much higher later, and then when I wasn’t using it (yet) been reluctant to cancel because I knew I would have to pay a much higher price to get back in.

      In that situation, eventually you have to make the tough decision to cut your losses and look at it that if and when the time comes you will be in a position to cover the additional cost from higher income, i.e. it all comes down to ROI.

      Which is where your reply to Rino comes in…

      Paul
      (“Kiwi” in South West Scotland)
      Paul D. Chilvers-Grierson recently posted…Mindmaps For Marketers Using Free Mindmapping ToolsMy Profile

      • Noel

        Yep, great points Paul.

        I only know of a few people who are doing SaaS successfully, especially on the front end. Aaron from Spin ReWriter comes to mind and so does Dan Anton from Backlinks Indexer.

        But they are few and far between.

        Cheers,

        Noel.

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