[HN Gopher] Ask HN: SaaS operators, what is the cost:earnings ra...
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       Ask HN: SaaS operators, what is the cost:earnings ratio of your
       SaaS?
        
       I'm interested in knowing what type of service you operate, how
       much it costs you each month, and how much it brings in.
        
       Author : lagniappe
       Score  : 40 points
       Date   : 2023-08-19 13:41 UTC (9 hours ago)
        
       | danjc wrote:
       | I'm surprised there are no comments here, I think this is a very
       | interesting question.
       | 
       | We are b2b and need to have high isolation between customers
       | which means dedicated resources. Because of this, it's likely out
       | our margins are lower than many other SaaS categories.
       | 
       | We target 80-90% margin on most of our subscription plans.
        
         | karim79 wrote:
         | > We are b2b and need to have high isolation between customers
         | which means dedicated resources.
         | 
         | I'm curious - is that to avoid "noisy-neighbour" and provide
         | performance guarantees through dedicated hardware, is it for
         | security/privacy/etc or is it a combination of factors?
        
       | encoderer wrote:
       | 70% gross margins is acceptable, 80% gross margins are normal,
       | 90% are exceptional. Remember, in most cases you are losing 4% to
       | payment processing right off the top.
        
         | aidanlister wrote:
         | We call it the 3, 7, and 10 rule.
         | 
         | 3% on payment processing, subscription management and
         | collection.
         | 
         | 7% on AWS.
         | 
         | 10% on product support, account management and retention.
         | 
         | If you're fast growing this is about right. If you're starting
         | to slow down then you can afford to spend more time optimising
         | these, eg 2, 4 and 9, giving you a GM of 85% which is elite for
         | a B2B SaaS.
        
       | huydotnet wrote:
       | Mine is $60 that bring in +-$600/mo
        
       | xmonkee wrote:
       | Onboarding and risk management tools for financial firms. Monthly
       | spend is about $1500, which is about 10% of revenue. I can
       | probably spend some time and bring that spend down to $1000 with
       | some work (but currently time is better spent getting revenue up)
       | 
       | Edit: I would like to add that with a combination of fly.io and
       | digital ocean the actual server costs are way under $100. Most of
       | the costs are paying for other Saas needed for the product
       | (document analysis, emails etc) and tools (github, copilot,
       | sentry, etc)
        
       | jokethrowaway wrote:
       | 50$ on Digital Ocean and it brings in 2-3k$ per month. I'm
       | selling API access to data (the servers process plenty of
       | requests, I need to scale them up every once and then).
       | 
       | I've read about someone on linkedin with a 7$ VPS making 500k per
       | year (half of that is selling data, the other half is talking to
       | people via mail) but barely using the server, it's just to keep
       | up a fancy dashboard.
        
       | jwr wrote:
       | B2B SaaS here, if you are asking about the gross margin (revenue
       | minus cost of goods sold), I've always kept it above 90%. I'm
       | careful not to use expensive hosting (like AWS) and I keep a
       | close eye on COGS at all times.
        
         | [deleted]
        
         | master_crab wrote:
         | COGS is key (and difficult). If you have an app that just
         | serves up APIs, great. Just cost per request served.
         | 
         | When you start dealing with blended and combined costs (like
         | large data warehouses) things can get hairy. But always aim for
         | some estimate of COGS.
        
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       (page generated 2023-08-19 23:02 UTC)