A product owner I worked with at a large software company once told me that the secret to a good product is reducing a feature from it. Less is more. He essentially meant that having five features that work great is better than ten that don’t work half as well. I apply the same logic everywhere, especially when working with SaaS tools. Following the Less is more approach helps me immensely whether I’m evaluating a solution for use in my office or working on micro-SaaS development.
What is micro-SaaS?
First things first. What is SaaS? SaaS, or Software as a Service, is a hosted software solution provided to the end-user through a web browser or a dedicated client. In most cases, all the user needs is to open a web browser on any device and start using the SaaS tool, reducing their dependency on powerful hardware. SaaS software dominates the software world today by providing cloud-hosted products and solutions for nearly every need. This includes products we use every day, such as the Google Suite, Slack, Salesforce, Microsoft Office 365, the Adobe Suite, HRIS software, SAP solutions, and more.
Micro-SaaS is a small, cloud-based niche product that provides solutions for a particular problem. In the words of Tyler Tringas—the founder of StoreMapper, the world’s first micro-SaaS platform:
“A SaaS business targeting a niche market, run by one person or a very small team, with small costs, a narrow focus, a small but dedicated user base, and no outside funding. Hence, micro-SaaS.”
Why is micro-SaaS better than SaaS?
When SaaS platforms got popular, they quickly scaled and added features to do a lot. This meant that most platforms you’d see in the market had a host of tools and services that you didn’t need, or they just did not work too well. Additionally, as the feature set grew, it created clutter (and in some cases, downright chaos) in the user interface, making it difficult for the end-user to effectively use the product without frustrations.
Micro-SaaS products address the problem of complexity using the Less is more approach. They offer a niche set of features that perform a particular task—somewhat like custom software, just produced en masse. This also gives them some distinct advantages over their older SaaS cousins, which include:
- Low operating cost per user
- Small team size
- Low cost per license (or subscription) for the end-user
- Small user base
- Faster time-to-market
- Quicker resolution of issues
- Faster innovation cycles
- Quick decision making
- A niche product that does not require cross-domain expertise
- Better support
Is micro-SaaS popular?
Enterprises use over 150+ SaaS applications every day. From these, many micro-SaaS products solve niche problems.
Here are a few examples:
- Bookmark sharing
We have a large marketing team that constantly browses the web for examples, inspiration and good reads. After using Slack, Sheets and Keep, we finally found Curabase, and this micro-SaaS product allowed us to share and organize bookmarks between our team.
- Retrospective meeting management
Retro aims to reduce the frustration in retrospective meetings—something that all developers dread. We’ve only been using this for a week, but it is fun, and the interface is amazing!
- Off-page SEO
Linkody helps us organize link building campaigns, get essential metrics (DA, PA, TF, CF), and generate PDF reports for our management. Over time, we’ve come to love this tool more than other, more powerful alternatives.
- Grammar checking
Grammarly is used dozens of times a day by our team. This tool reduces our editorial workload and helps us maintain our brand writing style without breaking the bank!
We are currently evaluating this tool that can create cool yet functional dashboards for our marketing campaigns.
These are just 5 examples of the dozens of tools that we use every day. Your organization might be using micro-SaaS tools without even knowing it! Micro-SaaS tools are exceedingly popular and are beginning to gain traction with organizations large and small.
You can also check out our blog on SaaS Examples.
Steps to building a Micro SaaS Product
So now that you’re all set to take the micro-SaaS market by storm, it is time to discuss step 1:
Step 1 – Finding micro-SaaS idea
An innovative idea is essential for any micro-SaaS product or any product. Finding the right idea at the right time is the only way to set the stage for success. Here’s what you can do for inspiration if you’re a budding entrepreneur who is on the lookout to create a new SaaS business from scratch:
- Analyze the market you wish to be in
It is always helpful to find the market you want to compete in before creating a product. Micro-SaaS products are niche and solve a particular need. Understand your market well before you begin.
- Address small business problems in that market
Small businesses have very specific problems that conventional solutions cannot effectively solve. Understand these problems well before you begin.
- Analyze existing solutions so you can create niche versions of them
Check the competition before you begin. There are chances that there’s an existing, established player already offering these services. Analyze their solution and see how you can create a niche.
- Pick a growing market
Choosing a stagnant market is not good for any product. A growing market will have a larger appetite for risk-taking and experimentation, which is where you must be as an entrepreneur.
- Talk to people in the micro-SaaS industry
Look for forums, podcasts and shoutouts from the micro-SaaS industry to know more about them and join discussion forums to discuss your idea.
Step 2 – Validating your micro-SaaS idea
You must validate every idea to understand if it can transform into a successful product. Here are some ways to validate your product idea to determine potential success.
- Find a problem
Most entrepreneurs find a problem without research or sometimes think that a glitch they face is a real-world problem. More than one person should face the problem that you’re trying to solve. The best way to look for problems is in industry or product forums. If you find many people complaining about a particular issue, you’ve got your problem right there. You must spend most of your effort here.
- Determine the need for your solution
Your users might have a real problem, but the solution needs to address the problem in the right way for it to be accepted. Find your USP at the outset. Some examples of USPs can be:
- Better UX
- Offers key features missing in the competition
- Find users who need your idea
Finding users who need your solution is essential. You can try experimenting by creating a one-page landing and using SEO to drive traffic to that page. Contact the visitors using a form, and you have a user base already!
- Join user groups
User groups on Reddit, Facebook, Twitter, LinkedIn and other product or market-specific discussion forums are great for idea validation. Places where your target group hangs out is best for validating your idea.
Step 3 – Building an MVP for your micro-SaaS idea
Building an MVP is essential to test the waters and know if your product will make sense in the real world. An MVP or a minimum viable product is a simple, early-adopter version of your product that can help potential customers understand the value your product brings. Here’s what you must do before you build your MVP:
- Find the most important underserved need of your audience
Know what ticks your customers off and fix that problem. Once you identify this pain point, you already have a solution ready. If bad UX puts your customers off in the existing product, make the UX better. Change the pricing if they do not like it. If they think an essential feature is missing, add that.
- Your MVP must be simple and solve the underserved need
Do not go for a load of features. An MVP is often just one feature that your customers need. Remember Groupon?
- Get to the market faster than the competition
Understand that there are thousands of people who have the same idea as you. Find the problem, get to the market quickly using your MVP and make it better iteratively.
Understand if you’re not out there with a solution customers need, you’re out of the race. So get cracking!
How much does it cost to build a micro-SaaS product?
The cost to build a micro-SaaS or a SaaS MVP is very similar to regular SaaS products as the basic costs of development remain the same. Here’s what impacts your development cost and an approximate number of hours needed to create a simple, micro-SaaS MVP:
- Hiring a team
If you wish to hire your own team, be ready to onboard developers, testers, support personnel, project managers, and designers. All these members are essential to ensure the success of your MVP. Finding a reliable development partner such as Volumetree is your best option as they have the workforce your product needs to succeed.
- Requirement analysis
Although you can gather a lot of requirements during the planning phase, the requirements phase helps you to dish down a list of developer-friendly requirements and choose a tech stack so you can build a working micro-SaaS MVP. Usually, this phase takes about 100 hours to complete.
- Designing a compelling UI and UX
UI and UX can take a lot of time to finalize and get it right. Understand that as your micro-SaaS MVP is a niche product, customers will interact with it closely. Getting the design and the flow right can take up to 150 hours.
- Developing, testing and deploying your product
Developing the product takes approximately 150 hours. This includes fixing bugs and getting the product ready to deploy. Testing this product is continuous and will take an additional 150 hours to complete. Deploying the product and ensuring that all the subsystems are in ship shape can take up to 50 hours.
- Marketing your product
Marketing is an essential aspect of creating any micro-SaaS MVP. Effective marketing will ensure that you get the traction you need, and you may even find your first 10 (or 100) paying customers before your product ships!
Finding the right pricing model for your micro-SaaS product
Now that you have figured out how to build your product right, it is equally essential to price it right so that your customers use it. A product that suits all your needs but is terribly out of budget for most customers will find few takers.
Getting your pricing right is as essential as getting your product right. Here are a few pricing strategies that you can think of:
This is the most common pricing strategy for SaaS companies. In this model, you choose a subscription price per user billed on a monthly or annual basis. Early adopters easily understand this pricing, and you can add tiers later as you add features to your product.
If you offer your product with a fixed set of features or a set number of licenses, you can create tiered price points. For example, if your basic plan is for small companies with less than five users, you can create tiers for 5, 15, 50 and 100 users (or as per need).
- Pay as you go
Usage driven pricing is good for companies offering value that increases with usage. For example, if you offer a micro-SaaS product for live chat, each user session or user will add value. Storage solutions also offer a pay-as-you-go approach.
Flat pricing is simple and offers one cost to access all paid features. You can easily see this in products such as Grammarly.
How to find the correct pricing tier for your product
The pricing strategy for your product will be as unique as your product. However, it is essential to have a tested, industry-standard pricing strategy that works for most people. Here’s what we think is good for a micro-SaaS pricing strategy
- Free tier
A free tier is essential so that customers get to know your product without committing to pay. They can then drive others to your platform, leading to more paying customers. With Grammarly, we started with a free plan and then migrated to a business plan with six users when we found that the value was immense.
On the contrary, keeping a paid-only plan helps to keep out customers with no intent to upgrade, and you have more serious customers who will pay upfront for your solution, which lowers your business’s running cost.
- Free trial
A free trial of all paid features is a good way for a customer to evaluate your micro-SaaS offering. A 7-day free trial is good for most products, but you may want to evaluate longer or shorter durations.
This is a great option for paid-only micro-SaaS products. Give a free trial and ask customers to pay after the trial ends.
- Limited tiers
Do not have too many pricing tiers. Your micro-SaaS product is a niche product and may have small businesses as customers that might get overwhelmed with too many pricing options. Keep it simple. Remember the Less is more principle.
- Low cost
Keep the cost of your solution as low as possible without hurting future growth plans. If your micro-SaaS product is expensive, it keeps smaller players away, resulting in business loss. However, keeping your pricing too low will attract non-serious customers that might not stick around for long. Keep your sweet spot at 30% of the industry average.
See also – Business Model of SaaS Products
Marketing your micro-SaaS product and getting the first 10 (or 1000) users
Now that you’ve built the product that your customers will (potentially) love, it is time to start marketing it for visibility and finding your first customers. SaaS marketing can help you get those customers in to set the wheels of industry turning!
I marketed my first product while backpacking through Europe! All I did was to wear a t-shirt and a cap with a question—and a potential answer (from me). People approached me in trains, subways, restaurants, museums, and beaches! It worked well for me as I got my first ever customers for that startup. It was just a gimmick, but it worked!
Here’s what you can do to market your product well:
- Remember those social networks?
Facebook, Twitter, Slack, Reddit, LinkedIn, Instagram, YouTube, Google Search, Shopify forums, Salesforce forums and more are all places where everyone—and your customers hang out. Get your first posts out, start interacting with people with clearly crafted posts/messages, and you are sure to attract attention. This simple method requires no special skills and can get you some initial traction—and even some customers!
- Landing pages and SEO
SEO is relevant, and so are landing pages. You can use social media marketing channels to drive traffic to your landing page. Ask visitors to fill a form and you have a list of potential customers. Reach out to them individually and start working towards your first set of customers!
- Creating communities
Creating discussion forums, communities and pages for like-minded people is a great way to interact and even get people to sign up! Understand that these people already know what you’re building, so they might want to give it a try!
- Start a podcast (or a video or Clubhouse event)
Podcasts are popular amongst busy CEOs and founders as they can listen to them passively. You can start by interviewing some micro-SaaS founders to build audience traction, and going from there.
- Do not overshoot your marketing budget
Spending less than you earn works well for every business. Understand that spending 10k marketing your product and making 3k is not a win-win situation. Carefully evaluate the following:
- LTV or lifetime value
In SaaS, what matters is the value you get per customer over a year or five years. Immediate gains do not matter, and the customer lifetime value does.
- CAC or customer acquisition cost
If you sell a product that costs $100 a month, it is OK to spend $500 to acquire another customer. Assuming that your average customer stays with you for a year, you will end up profiting from the additional customer base than think of what you spent to acquire them.
Overall, a healthy LTV:CAC ratio will not breach the 3:1 barrier, which is what your micro-SaaS should yearn for.
How can Volumetree help with your micro-SaaS idea?
We were once a 3-person startup. From there, we’ve grown into an established name in the on-demand and SaaS product development industry. For years, our product experts have helped customers build cutting-edge, world-class products that millions of people use every day. We’ve built world-class large SaaS solutions and niche, domain-specific products for governments and small one-person startups without breaking the bank. A presence across three continents and access to a vast talent pool gives us an edge that few can match.
We believe in nurturing our clients from the ground up to continue to grow with us, and this has resulted in our 95% client retention rate that we are exceedingly proud of. If you believe that you have a great micro-SaaS idea in mind, set up a free 15-minute consultation with one of our product experts here. Let’s build your success story together!