Growth October 18, 2020

3 ways to generate $10k/month, what would you prefer?

Minh-Phuc Tran @phuctm97

Hey guys, while I'm figuring out how to make $10k/month, I see there're basically 3 paths. What would you prefer, and why? (Feel free to suggest other paths)

3 ways to generate $10k/month, what would you prefer?
  1. 1,000 users, $10/month each
  2. 50 businesses, $200/month each
  3. 2 products, 500 users/product, $10/month each
Vote
  1. 16

    Can I offer a 4th?

    200 businesses at $50...

    $50 seems to be a bit of a magic number for us in B2B...

    1. 1

      Agree with this. It's better to have a price of around $50 even it's a B2B. At least the starting one.

    2. 1

      Definitely, that's actually quite interesting! It'd be super helpful if you can share further why you think $50 is your magic number (in comparison to $200 or more). I anticipate your target customers are 1-3 people businesses. Personally, I feel biz at that size is still very unwilling to pay, they want to minimize their cost as much as possible, while 8-15 people biz has more financial, and getting $200 out 8-15 people is very reasonable.

      1. 3

        A lot of times in a larger business, you can purchase software for your department without approval from your bosses. That number is usually somewhere under $100/mon. Once you exceed that number in that business, the sales cycle is a lot harder.

  2. 6

    1 business at $10k / month

    1. 1

      Haha, that's the question lol

      1. 1

        I think they mean B2B 1 client at $10k/month

  3. 5

    There are many of these situations where one can only say "it depends", but in this case I will be direct 😄 — all other things equal (market size, margin), and unless you have some very specific reason not to, ALWAYS go for 50 businesses:

    • The support you can provide to 50 users is in another league with respect to 1000
    • More support = less churn + better feedback loop = better iteration on the product
    • B2B churn is one order of magnitude lower than B2C
    1. 11

      Just to be devil's advocate:

      You say

      • The support you can provide to 50 users is in another league with respect to 1000
      • More support = less churn + better feedback loop = better iteration on the product
      • B2B churn is one order of magnitude lower than B2C

      I say

      • The level of support a business paying $200 a month will expect is in another league compared to a user paying $10 a month
      • When a business churns it will hurt you a LOT more than if an individual churns
      • B2C acquisition is one order of magnitude higher than B2B
      1. 3

        Exactly as @Primer said... at 200/mo lots of young hackers think they can ship code and sleep softly at night. I have been burned acouple times when i sign up to a service and pay a similar amount and get lousy/slow support. I end my sub the next month and find an alternative. At 200/mo you expect almost dedicated support... its pretty much a managed service. At 200/mo there is always another competitor willing to outprice you and its a race to the bottom if you get a price war. At 10/mo... its a lot harder for a competitor to start a price war (unless its Amazon).

      2. 1

        It's interesting to see this discussion. Both reasonings make a lot of sense. It seems like:

        • B2C is more for indie hackers, especially when we want to keep it $10k/month and stay independent.
        • B2B is more for startups, when we want to minimize churn, have better & faster iteration on the product and scale further. You'll probably need a team to ensure the best experience for your customers.
        1. 1

          Great point of view, thanks!

  4. 3

    Now that I think about this. $10 per month deal sounds very time consuming to serve customers, but maybe it won't be at all. When I think about services I subscribe to in $7-10 range, I don't email them at all. These are services like Canva, Netflix, Spotify, Typingclub. If something is in this price range, it must be bug-free and straightforward.

    However, as soon as services start to charge $30+, I email them a lot. But mainly because it's difficult to find or understand something, doesn't work something or need to customise something. These services are Convertkit, Typeform, Squarespace. Ideally, this service is also easy to use, etc. but it's never the case.

    At 200 dollars more likely, you will need to work a lot with my team or me.

    I think I would still try to find a way to work with people/business that I could charge 200+ dollars. If you charge already such amount of money, you can easily now and then upsell something cool for 500+ dollars. But if you have a service and you charge 10 dollars, there is no way people will pay you 100+ dollars for something extra. So, the only way to make more money is to bake more burger buns and sale more burgers.

    1. 1

      The reflection to yourself is actually interesting! I feel the same, I never feel like I will reach out to a $7-10 service to ask them fix a bug and add a new feature.

  5. 3

    Something tells me those who want 1k customers have some wishful thinking. 1) It's effing hard to get 1,000 people to sign up (as an indiehacker) let alone, buy.

    and 2) at $10/month you'll never get enough revenue. You need to charge more. @yongfook has great posts about this. He mentions charging $9/m here: https://www.indiehackers.com/post/5-ways-im-slowing-down-my-growth-on-purpose-d8ba488585

    I've said this multiple times before but I think the tendency for engineers to charge "$9 a month" kills indie businesses before they even get started. I think one of the reasons we shy away from charging more is because we are uncomfortable with confronting the reality that our product may not be delivering enough value. I say address this issue head on and price at a level where you must demonstrate value. It's a form of forced evolution.

    1. 1

      I think that it has less to do with the dollar amount charged vs the value perceived. I feel that engineers miss this key component of consumer psychology, a purchase has nothing to do with price and is all about how the purchaser will feel after having made said purchase. I also think that there is a strong aspect of product market fit that needs to be looked at, not just price point, but that is a much deeper conversation :)

      I look forward to your reply!

    2. 0

      Hmm, I kinda both agree and disagree. Setting low pricing because of not understanding the value is bad. But when I chose $10, I think it's a sweet spot of B2C value offering, especially for indie hackers. Charging more is definitely possible by adding more features and creating more value, but the more features a product has, the fewer users it can fit neatly into their existing workflow, and it's hard to charge an individual $20 if they don't need all the features.

  6. 3

    Other - 500 users at $20 a month or 350 users at $30 a month

    1. 1

      Yeah, the 2 products way, it's relatively similar, my suggestion is more for reference purposes. It's interesting to see not a lot of people actually prefer this way.

  7. 2

    I voted the 3rd with 2 products. Though the 1st one is a close 2nd choice for me. The reason I voted the 3rd is that the business there selling 2 products has some revenue diversity vs the first one option.

    The first business with a 1,000 users might sell for around $380,000 or so if that 10k is average net profit, but the 2nd business with some revenue diversity is more likely to sell closer to $400,000 just on the nature of having multiple things producing revenue so not reliant on one source.

    Option 1 and 3 are the most valuable options purely from viewing the business as an asset. Option 2 seems like it be wicked hard to manage but I know people who've gone that route, much more difficult to sell that asset though - it's either 50 transactions or it's a bundle deal and bundle deals can be really tough to sell

  8. 2

    I will say $200 per month of it is a service which involves humans. Else $50 is good price.

  9. 2

    2 products are a good idea in terms of diversifying risk

  10. 2

    Economies of scale. If you have a product/service/platform...I would milk it for 1k subs as opposed to building up the capital twice. Although, if you have a recipe for that...

    <Caveat> I am laughably far away from an expert and my opinion means little ;)

    1. 1

      Yeah, that's what I think. When you finish the first product and start feeling max out by 500 users (you may not that interested in sales), technically, it's easier to start another product because you have a recipe. But it's interesting to see not a lot of people actually prefer this way.

  11. 2

    As a solo founder, handing support for 50 businesses is way easier than 1000 users.

    I’d prefer to stay lean in terms of team size, so that is more attractive to me.

    But I’m also more interested in general in B2B products. I think finding a problem you care deeply about is more important.

    1. 3

      Amen. Getting customers is harder than you think. Even at $10/mo.

  12. 1

    I like the 200 customers at $50/month, generally speaking.

    That said, pricing can be complex and should be based on your actual costs.

    If you're charging $10/month, your cost (fully-loaded cost) to deliver that service, including your time, needs to be $1-$2. Otherwise it wouldn't be worth it.

    Much better to focus on a service where you charge more and also get high(er) margins, after considering all the costs.

    I have a small side-hustle (a WooCommerce plugin with a yearly license) that did $1,068 last month and $459 this month so far. Net profit is 85%+, and I haven't needed to spend any time/resources on it in September/October.

    While it's a small amount of money, it's a good model because the cost-structure works well.

    If I can scale it a bit, it could be a neat little low maintenance revenue stream.

  13. 1

    Don't forget option 4:

    100k users, $0.1/month each, monetized by ads.

    1. 1

      Do you know a site that does this? If so, I'd love to see it to learn their secret.

      I know this space pretty well because I have two sites that monetize based on ad impressions (premium network ads).

      Indirect advertising such as this pays on a CPM/RPM (per thousand pageviews) basis. CPM/RPM varies greatly between sites & demo that visits it.

      In your model, those 100k users would need to view 3-10 pages each, each month to have a chance to earn $10k from premium network ads.

      I don't know of any sites with 100k pageviews/month that can earn $10k -- unless of course the site is highly relevant and has direct paying advertisers.

      1. 1

        I never said anything about static pages.

        My first flash game did over a $10 CPM. Some mobile games do even better than that now. If you really just want static pages on a site, you won't hit that level, but you can still do okay if you pick the right niche like financial services or high ticket items, etc.

        At the high end, sites like FB earn about $1/user MRR. Unless you have something incredibly engaging (like a game), you won't hit that level but $0.1/month is doable with the right app.

        1. 2

          Gotcha, thanks for clarifying! Really appreciate it :)

  14. 1

    2 Products is just extra work

    €200/month means your business is high touch.

    I'd say something like €50/month is ideal, but an even better idea is to bill yearly.

    https://medium.com/everhour/growing-our-saas-company-to-1m-arr-7-people-3-years-no-vc-money-key-lessons-learned-2d53766507d2

  15. 0

    "1,000 users, $10/month each".

    1. It indicates you have at least some share of the the market. Gaining new customers will be easier from here than other options (the law of compound interest). And it's more likely to get acquired by a bigger company.
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