Most SaaS subscriptions aren’t worth it
My energy bills are several times as expensive this winter as they were last year. Food costs way more too. I like being warm and I definitely like eating so like many others, I’m making cuts elsewhere.
So my eyes turn to my variety bucket of SaaS subscriptions. It’s painful to see how much comes out of my accounts each month for subscriptions I barely use. I want to support Indie-owned businesses but it should be because their product gives me value, not as a charity donation.
I imagine many of you feel the same way. But if you build your own SaaS products then there are two questions:
What SaaS subscriptions do you cut for the health of your business?
How do you stop your subscription from being the one other people cut?
Here’s what you should be considering:
Stagger it
When you start building a new project, it’s easy to get all the tools you think you’ll need all at once. As the project progresses though, you realize your initial assumptions were wrong and you need another subscription instead. Of course, you forget to cancel the original subscriptions. By the end, you’ve paid out way more than you needed to but keep subscriptions just in case.
The smarter thing to do is only buy the subscriptions absolutely necessary at each stage. Try to get as far as you can on the lean stack and make a wish list of other tools you want. Then limit yourself to a certain number of new tools per week. By forcing yourself to prioritize you might realize the tools further down your list aren’t important at all.
As a builder, you need to be honest with yourself. Is your product core to people’s work or is it a nice-to-have? You know which type will be a harder sell in times of drought.
Go monthly
I paid $360 for an annual subscription to TillyPay. A month later my bank released a similar feature and I stopped using it.
I paid $392 for an annual subscription to Later. A month later I deprioritized my cross-platform social strategy and I can’t remember the last time I logged in.
I could go on but you get the point.
Never buy an annual subscription straight away. Yes in the long run you save money but only if you continue to use the product. I ended up paying 10x the amount I would have paid if I bought a monthly subscription and canceled it when I stopped using it.
The rush of adrenaline at the start of a project can cause you to do stupid things. Follow my rule of only upgrading to annual after using the product for at least 3 months.
Now as a builder, you obviously want people to buy annual subscriptions because it frontloads your revenue and gives you money to invest in improving the product. Deep inside yourself though, you don’t want customers buying an annual subscription they don’t use and feeling bitter about it.
Rather than focusing on how to convert people to annual subscriptions, put all your energy into how to reduce subscription churn.
The simple trick is to offer people one more month at a discounted rate to continue.
The smarter trick is to create a process where you reach out to anyone who is on this rate to get their feedback and make them feel like they are being listened to.
Group them
I love a good micro-SaaS story from an indie hacker point of view but as a consumer, I hate paying so many subscriptions. Switching between all my different accounts becomes a hassle and I end up not using some out of sheer laziness.
It makes sense to buy micro-SaaS products if you only need a few. Yet if you’re paying for a few dozen then you could be better off buying one more complete product instead. I have Kajabi for my website, podcast, products, email marketing and several other services I need.
I used to have individual products which were better at their core focus but when it came down to it, the extra features didn’t impact my bottom line enough to make them worth it. Don’t underestimate the power of simplicity.
Now if your product is a tiny micro-SaaS tool, it doesn’t mean you should just shut up shop. You can be creative and work with other Indie Hackers to create bundles where customers get a discount. It might cost you a bit of money on each transaction but you could gain far more volume by pairing with complementary products to make up for it.
VA it
When you love tech, you can try to find a digital solution for everything even when it might not be what’s best for your bank account.
There are tons of virtual assistants available online who are great at what they do and are good value too. When trained correctly, they can have the nuance a SaaS tool might lack. For large one-off tasks, I prefer to use a VA than buy a tool I know I’m rarely going to use again in the future. I have to fight my techy urge to automate it because in the past it’s taken me longer to investigate the right tool than to just pay someone to do it for me.
From my consulting days, we used to tell clients how much money they’d save by using our solution compared to paying their staff to do the same thing. E.g. This feature costs you $2000 but in time saved from staff, you’ll free up $10,000 worth of people's time.
You should do this analysis whenever you buy a SaaS subscription. If you want your own product to have longevity then you should make sure you can make this cold hard business case for your product too. If it’s cheaper for your customers to hire a VA to do what your tool does then you’re relying on them not realizing this which isn’t a good place to be!
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What systems do you use to make sure you aren’t paying for subscriptions you don’t need?
How are you protecting your product from being the one cut when money gets right?
In my experience, lifetime deals on AppSumo tend to be disappointing. The tools are often sub-par and the credit systems they use to tally spenditure end up being insufficient to get the work you need done without upgrading the limit which defeats the purpose of buying a lifetime deal.
Upvoted, I feel this is good for other Indie Hackers to know!
I'm building a subscriptions tracker for this exact reaason. You can try it here: https://subly.app
Also, as some people already mentioned, I recently discovered Appsumo (launched Subly there to get real user feedback), and you can find some great alternatives to popular services there, I've actually purchased two licenses for apps that I need for Subly. So far so good.
that looks great mate!
If only there was a way to switch between Netflix/HBO/Apple TV/Disney + ;)
Just signed up! I look forward to testing it out :)
Great article Amardeep - both in terms of content and just well-written. I agree, as developers and business owners we need to cut costs wherever we can. I watched a YouTube video yesterday on the history of Suzuki. At one point the founder ordered all lights to be turned off and he saved $40,000 per month in electricity costs. That may be a bit much but the things you've outlined in your article make a lot of sense. Thank you.
SaaS subscription hell is such a thing
I know :'(
It's an interesting point of view. I feel that's why the B2B market is a much safe choice than B2C because B2B companies don't care that much about wasted money, especially medium & larger firms so it's easier to secure annual payments and probably don't get big churn.
Agreed. I have multiple customers paying me monthly that only use my service bi-monthly. The wasted cost doesn't seem to annoy them - at least not enough to downgrade to my forever free plan.
Absolutely! I feel like many Indie Hackers often target smaller businesses and customers which can leave them vulnerable. Maybe it's an imposter syndrome thing where even though they have great products, they find it harder to approach larger businesses and be taken seriously.
Yeah. I had a similar approach this year.
I launched a tiny SaaS in the B2C market because I was afraid of delivering solutions for B2B with a higher cost because it means bigger risk & responsibility to customers.
Totally understandable!
It's funny, I never really thought about using VAs because I always think of a tech solution. Sometimes I spend forever trying to find the right tool when you're right, it's probably quicker and cheaper for me to just hire someone to do the work manually.
Also, don't be afraid to self-host. I think every single indie hacker should have a server running they can throw apps up on and run themselves. You can buy a server really cheap from https://www.hetzner.com/ and run a TON of stuff on a box.
One of my favorites is https://n8n.io/, a powerful alternative to Zapier.
As a founder, there are so many impulse subscription buys that get you over a hump but later realized you're no longer using them. Sometimes a year later!
And don't even get me started on AWS services. It's too easy to build something to test an idea that you forget about and it's hiding in your overall billing expenses. In my last startup, we shaved off 2k a month in unnecessary AWS expenses at one point when we finally had time to go over the billing, line item by line item.
Completely agree! I think every founder should review their expenses (including their subscriptions) monthly to check what kind of expenses actually deliver value and which ones should be cut off. Expenses can quickly get out of control without anyone noticing if nobody is keeping an eye on it.
Spot on! Controlling subscription expenses is crucial, especially with rising costs. I focus on lean usage—only opting for essentials at each project stage. Curious, what tactics do you use to avoid unnecessary subscriptions?
Seconded on choosing monthly subscriptions early. I have made the mistake of picking up yearly subscriptions in the past, only to find out that the product is not delivering what I want / my project does not need the product anymore.
Only get the yearly subscription once your project is fully validated.
I completely agree!
Currently, my company pays for several hefty SAAS subscriptions. I'm not complaining, but I do know there is another way.
A few years ago I was at a startup. We were lean and scrappy and frugal. The founder basically refused to buy anything that could be replaced with a freemium or something he built himself.
I developed a technique I called "frankenfunnels" that took the platforms we knew, looked at which features were free or very cheap, and stitched together CRM, marketing automation, email marketing, landing pages and WHATEVER else we needed for as little money down as possible.
There was a hidden cost : the time it took to find and integrate these various systems.
But honestly, if we had paid for a zapier subscription, we could have used that tech stack to scale to $100k MRR (we reached $20k MRR right before the pandemic hit, which was a huge blow, as we worked directly with restaurants.)
good one
"You should do this analysis whenever you buy a SaaS subscription. If you want your own product to have longevity then you should make sure you can make this cold hard business case for your product too. If it’s cheaper for your customers to hire a VA to do what your tool does then you’re relying on them not realizing this which isn’t a good place to be!"
How do you measure the return on investment for each SaaS subscription to determine its worth?
Hey, I echo your emotions. I've myself been someone who prefers taking monthly subscriptions. Even while selling envsecrets.com I honestly tell customers that they should preferably take a monthly subscription so that they can evaluate it after some usage. Even though an annual subscription is more valuable for me.
That being said, as a fellow Indie hacker, I've love for you to try out envsecrets.com. Take it for a spin and let me know how you feel about it ❤️
I always book monthly first. After a month, I evaluate if I needed the tool and if it I had ROI from using the tool (ROI does not have to be monetary, it can also be time saving).
A strategy is to immediately cancel. If you do that, you will never forget a subscription.
Also if you cancel, and within some weeks you did not access the tool, then you don't truly need it (or you don't need it at all time.)
Some providers I use are very used to their customers just booking for a month and canceling again, because you don't need their tools 24/7.
I'm amazed at how far we've gone in terms of subscribing to more and more SaaS. It's like we've been or are being brainwashed.
I still remember when, only a few years ago, WhatsApp decided to charge a $1 annual fee. At least in Spain, people went crazy. "Let's all go to LINE!", "I use Telegram!", etc. In fact, they dropped the annual fee soon thereafter. At that point in (very recent) history, ordinary people didn't want to spend not even a small fraction of the money ordinary people spend.
In my opinion, converting an idea into a SaaS is the most lucrative option and, by far, the most frequent business model too. However, as a user, I'm more than tired of having to subscribe to yet another service every time I find something I like. Many times, I'd simply love to have the chance to pay only once (as long as the product isn't overpriced).
One last thing, there's a third option that comes second in popularity: free software. An app or service can be free for many reasons but one of them, maybe the most common, is... Well, you know what they say: "If you don't pay for the product, you are the product."
Even for AI-related writing content thing, promptsense[dot]co is also a great choice to go with.
ConveyThis.com is honestly a SaaS that's really worth-it. Much cheaper rates than Weglot and Polylang if you ask me.
Hi Amardeep,
Thanks for your insightful post. I agree with many of the points you've raised, particularly the need to stagger subscriptions and truly scrutinize the utility of each service before committing financially.
In my experience, I've also found it very beneficial to periodically review all of my subscriptions. This ensures I'm actively using and deriving value from them. I would like to know, do you have any specific strategies or tools to track and review the subscriptions periodically?
Regarding your point about switching to a monthly subscription to avoid unused annual ones, I totally resonate with that. However, don't you think that in some cases, the cost-saving benefit of the annual subscriptions might outweigh the risk of not using the service after a certain period?
I also really like your idea about creating bundles with other Indie Hackers. This sounds like a great way to provide more value to the customers and potentially expand your user base. How do you think would be the best way to approach this?
Looking forward to hearing more about your thoughts on this topic!
Best Regards,
Sebastian
I always try to stay on free versions of any product for as long as humanly possible. I listen to ads on Spotify, I watch YT videos with ads, I borrow friends' Netflix etc. Unless I'm not being productive, I do not upgrade to paid plans. And in most cases the upsell triggers are just some slightly inconvenient things, rather than making it impossible to work.
It's interesting to see how many people can relate to the pain of paying for SaaS subscriptions that aren't worth the cost. As a SaaS product owner, it's important to consider how to make your product valuable enough to keep customers coming back and avoid being cut. The author provides some helpful tips, such as staggering subscriptions and offering monthly rather than annual subscriptions to reduce churn. It's also important to listen to customer feedback and make improvements based on their needs to ensure they feel heard and valued. What other strategies have you found effective in keeping customers subscribed to your SaaS product?
Also, you can look for LTD deals on Appsumo.
I mean, the topic and content are so contrasting 😂
I’m always hesitant to do an annual subscription because there’s a good chance I’d no longer need the product in a year
I usually look for monthly even if it’s higher because in the long run I’ll pay less
Yeah so much money down the drain for me on annual subscriptions but I always used to do it with such good intentions.
great article
Thank you!
I like the approach of trying new subscriptions liberally and then periodically doing a review to see if it's useful and unsubscribe if unnecessary.
The challenge is remembering to cancel but as long as you do that then it works :)
really ....
Use AppSumo for lifetime plans.
There are always great alternatives to your favorite monthly-charging SaaS apps there.
Great tip, thanks for sharing!
I prefer to buy a good product with lifetime deals. I hate ongoing subscriptions and tried to avoid them as much as possible. I only buy them when I feel using them will help me 2X my revenue/productivity.
Yes as a consumer I totally agree but for builders that recurring revenue really helps. Different hats and different preferences.
Do some simple financial modeling before you start also helps. I wrote a free one here: https://increnovation.azurewebsites.net/fermi/highlevel
Thanks!
This touches on a broader point. With the coming global recession, will consumers and businesses continue to spend on niche indie products? How much success in the past 24 months was driven by low interest rates and essentially free money? I hope that this isn't a period that will see large corporations take customers away from indie makers as this just accelerates transfer of wealth to the wealthiest.
Absolutely when times get tough, it's can we still support indie makers but also can indie makers build a product which people still want/need when money isn't easy.
I'm guilty of buying a bunch of saas tools I don't actually use then hating myself when I see my monthly outgoings. :|
I'm torn I want to help fellow Indie Hackers but sometimes buying products from bigger companies that do everything I need works out way cheaper. Food for thought for me.
Indies usually price way too lower, i would be surprised to see them charging more than big companies at the start.
Depending on the product, pricing too high may also drive first customers away at first.