23
43 Comments

How much money do you need to become a full-time indie hacker?

  1. 7

    Whenever you're ramen profitable

    Depending on your living circumstances, I think it starts at around $3k/mo revenue for a frugal single solo founder with no kids/dependents living in the US.

    At least that's the point at which I went all-in on Zlappo.

    Anything before is foolhardy and an unnecessary risk IMO.

    You almost never need to leave your day job prematurely in pursuit of an idea or even a revenue-generating project whose revenue hasn't eclipsed your day job salary yet.

    This revenue number goes up if:

    • You have a wife/girlfriend. Even if they have a job.
    • You have kids, parents, and/or siblings to care for.
    • You have one or more co-founders.
    • You have high monthly expenses, e.g. car note, student debt, credit card balances, exorbitant rent, recurring medical needs, etc.
    1. 6

      $3k/mo revenue for a frugal single solo founder with no kids/dependents living in the US.

      That's exactly it for me.

    2. 3

      Also depending on where you live in the US, I guess. Also, important to not that it should be net profits, not revenue.

    3. 1

      How does $3k per month revenue translate to money in your pocket after

      • business running costs
      • business taxes
      • personal taxes

      ?

      1. 1

        It doesn't.

        But most pre-seed SaaSes tend to run lean with high gross margins.

        You either make up the shortfall through savings or just be extra-frugal.

        Also, if you sell annual plans and lifetime deals, sometimes your monthly revenue can be double your MRR, you can definitely use that revenue to fund growth and your living expenses.

        What really matters at the end of the day is the number hitting your bank account at the end of every month.

        Also $3k/mo is the point at which you should make the jump.

        If your business is growing, plus now it has your full-time attention, it's unlikely to stay at that revenue for very long.

        1. 1

          Sorry it wasn't a trick question. I really just wanted to know what 3k translates to after taxes etc. As in, the number.

          1. 1

            Oh. Easy.

            15% costs (i.e. $450/mo for $3k MRR, including Stripe fees, SaaS subscriptions, affiliate commissions, server fees, etc.).

            You're left net with ~$2.5k MRR, which should still be a livable wage for a short period of time.

            But like I said, if you sold a lot of annual/lifetime plans, your cash flow will very likely exceed that.

            Taxes aren't due until the next tax season (April 15th), so we don't have to worry about that (yet) in terms of our cash flow calculations.

            1. 1

              Ah thats cool. That's where I was confused. I always put tax money away from the income directly. I've played the game of "We'll worry about tax when we need to pay it" before and it ended badly.

  2. 6

    For me to be able to be a nomad, it would be a minimum of $1800 monthly.

    Mind you, this is what I was living off while hopping around Asia, and bits of Eastern Europe on a budget. Might not be ideal, but completely doable on that amount, but at the end of the day, everyone’s situations are different.

    Some may have families, others may be paying off debts, and others might prefer to enjoy the finer things in life.

    1. 1

      I'd bump it up to $3k/mo, then you can be a nomad in more places.

      Instead of just artificially limiting yourself to only SE Asian/Eastern European countries, you can also live in more of Asia (e.g. Taiwan, China, Japan, Korea) and Western Europe.

      I'm planning to be a digital nomad in Spain once this Covid thing is over.

  3. 5

    I recently made a blog post that got some positive reviews and thought I'd share it here too.

    Here's a TLDR;

    We can surmise that to leave your job for full-time indie hacking you need to consider the following;

    Accept that it's a risk
    Social media tends to focus on success stories. Keep in mind that for every person who escaped the shackles of gainful employment, there are 10 who have not. A lot of unseen souls have crashed and burned, lost their life-savings, and had to go back to work.

    Know this and prepare for the worst. Try to arrange your finances in such a way that minimises the downside as much as possible. Give yourself enough time to fall, get up again and pivot. A whole lot of times, just in case.

    Also, know what you'll be doing if things don't work out. Plan it out. Consider at which point in your reserve burn you'll need to start looking for a full-time role again. Do not go on this journey without a graceful backup plan.

    Have a large runway
    Your training wheels need a Boeing sized-runway. You will likely have many false starts and sharp turns to navigate.

    Remember, the idea is to worry as little as possible about money for as long as possible. You want to focus all your mental effort on increasing that MRR.

    You need to generate fuck-you money(or fuck-you frugality), but for flipping off stress. That means scratching together lots of liquid cash. Or hacking your lifestyle in such a way that reduces your expenses as much as possible.

    Having a partner with a well-paying and steady job(and patience) will help. A tolerable alternative would be to get an easy, part-time job to help reduce the drain on your reserves if need be. But that would, of course, be at the expense of spending time on your business again.

    From the above examples, my suggestion would be to aim for, at the very least, 6 months worth of fixed costs saved up. And then only quit if your business is growing at mad multiples and covers your expenses outright.

    A more reasonable amount would be enough reserves for a year. The best case would be for more than that.

    Your idea needs to be validated
    That means it should not be pre-revenue, untested or what "you think the market needs". It should be out there already earning decent bucks and be growing at a respectable rate before you can even consider leaving your job.

    Depending on where you live, this might mean making at least $1000 per month and be growing at a steady 20-30% a month.

    If you do not have a year's worth of reserves, consider only taking the leap when your net business income has properly exceeded your current salary for more than 3-6 months.

    1. 2

      "Accept that it's a risk."

      So true.

      The best founders I've worked with are those who quit without a surefire plan for the next six months. The pressure forced them to find creative energies they didn't know they had.

  4. 4

    2-3k stable income would be enough

    1. 2

      What would stable mean in your case?

      1. 3

        For example, if I have a SaaS which brings me 3k profit for X months, (maybe 2-3 months), then there is not a big probability that it'll be zero in a instant moment.

        So I suppose that I'll still get 3k, maybe less but the decrease won't be more than 50% in a week for example, or in a month.

        So stable = more about confidence that what I have now, I'll have in NEAR future

  5. 3

    I used to work for an airline and corporate bank as a communications manager. I saved $60,000 NZD ($40,000 USD) to give me a financial cushion so I can work as an independent content creator.

    I'm still in my second year of experience and thanks to the national lockdown I saved my travel and entertaining expense which on one hand force me to focus on my business, on the other hand, save more money than before.

    I totally agree with the answer that it depends on a personal level how much money do you need. I think stress and anxiety from lack of money could kill your creativity and make you spend more energy to think about plan B or quit; on the other hand, too much money won't motivate you to work hard or meet the deadline. Take my case as an example, the first year was totally wasted because I was travelling around and eating out every day... I wasn't working as hard as I planned to be and didn't take my business as seriously as I should have done.

    Anyway, I just joined Indie hacker and would love to learn more from everyone here! All the best hackers!

    1. 1

      Good luck, Camellia. Sure you'll do well!

  6. 3

    Important to note that the sum itself includes the earnings of the partner in life if you have one. Also I believe in equality when taking risks if both sides have careers.

    1. 1

      Could you explain your equality point? Equality in risk? So both sides taking some risk?

      1. 2

        Hi, as I see it, living with a partner means supporting their dreams. Exciting as it is, a saas business may have the same weight with your partner as painting. So if my wife wants to follow her dreams I will support her. I had some failed attempts a few years ago and we were dependent of her earnings. 2 years ago she wanted to take a phd and so i lowered the scope of risk i am taking to 3/5 of my potential earnings. When she finishes her degree and jump start her business i may increase the risk factor. There are more considerations like the age of the kids and reputation drift when i am out of touch of my industry. But roughly these are my calculations.

        1. 2

          Thanks for explaining. I 100% agree. Partners support each other, no matter what it is. They help each other realize their dreams and become better people than could’ve been possible alone.

          And yes it’s always wise to not go overboard with the amount of risk taking in the family. Take calculated risk, not unneeded ones.

  7. 2

    I think this depends on the person; it depends on what they want out of their business, where they live, how they live and what their goals are.

    Personally, I care more about the experience in getting from starting my own business than to continue to work a job just for the purpose of saving a bunch of money. I’m 26 with no kids, so I’m optimizing to learn while I’m young. You can always make more money (and very easily if you’re smart) so I cut my expenses down below 2k a month and I’m ready to give it my all for at least a year.

    The experience and life skills I’ve built doing this full time is far more important to me than any amount of money.

    1. 1

      Yes, perfect time to do this. Good luck!

  8. 2

    In my experience it really depends on many factors; lifestyle, responsibilities, liabilities and so forth. I have done well and also crashed and burned horribly. I am now rebuilding my war chest again to $200K before I jump again whilst I'm developing and testing two concepts. Traction is everything so to jump in without a plan and no traction is foolish I have personally found. That being said, if something is growing fast, in terms of cash I would go full time as soon as it hits $10K MRR OR is exploding in terms of users /growth.

  9. 2

    For me it's been "getting laid off and collecting EI / using savings" for the next year to make something happen. If it doesn't pan out, I'll try to find some part time work and keep trying different approaches and products. I think the true answer is, do you really want it? Is it going to be a part of your lifestyle and how can you make it happen?

  10. 2

    I will go with 3k monthly.

    1. 1

      Would your decision only come down to monthly earnings? Do you have some funds saved up?

      1. 1

        Is the money I need to survive including house, food, car expenses of three ( not a big deal this ones ).

        My side projects, are generating some income and the expenses are only the domains.

        If it scales a lot, It won't be more than 100$

        No funds needed.

        1. 2

          Wicked Funds? New Project? 😁

          1. 1

            Hey, I bought WickedPatterns.com though 😅

            Wicked Funds..... I can see some angel investors with that name.

            1. 2

              Build that wicked prefix domain monopoly 🤙

                1. 2

                  Remember me when you're a billionaire 🎉

                  1. 1

                    I doubt I will be billionate, definitely not on my plans.😀

                    1. 2

                      Do you even hustle bro? lel

  11. 1

    Thanks for sharing the article as well as the nicely done case studies. This should give aspiring indie hackers who are considering quitting their jobs.

    1. 1

      Thanks for reading!

  12. 1

    I think there is a huge amount of success bias when looking at people who are able to go full time on their IH adventure. A lot of these people are in very well paying jobs and are able to put away a lot of surplus cash to prepare. It can be great motivation, but we need to remember not to get hung up on not being able to match them in terms of life flexibility if we find we’re wondering how tf they’re doing it.

    1. 1

      I agree, the amounts some people can save up especially is mindboggling to me.

  13. 1

    $5k month: not enough.
    $15k/mo : definitely enough.

    Fuzzy in between those two. My W-2 job is pretty chill, so really it's just a matter of what I'd rather be doing with my time.

    1. 1

      That's a good situation too, having a chill day job. I wish I had that 😅
      I barely have time to work on my own stuff.

Trending on Indie Hackers
Somebody stole our work, then the indie community came to the rescue 43 comments I'm building a decentralized city for independent online creators—AMA! 13 comments Don't just build in public, be strategic 11 comments The Journey Starts 4 comments Follow each other on twitter 3 comments How do you quickly grow an online audience? 2 comments