Planning to do Lifetime deal for your SaaS, read this first.
Planning to offer a one-time fee (lifetime) deal of your SaaS? Read this first. The pros & cons of doing Lifetime deals and how to avoid them.
There are hundreds of products being launched on all the marketplace websites every month and we’re running more and more posts on how much they made after running the deal. I did the same a year ago when I completed my campaign with AppSumo — one of the major marketplaces for selling Digital Products. Well, now it’s been almost a year and it is important for me to address how things went after doing a “successful” campaign on AppSumo and what I should have done correctly.
This is for anyone who is building SaaS or any digital product that you want to make big one day. If you’re selling a course or an ebook, you can skip this article and come back later when you’re doing SaaS or a product.
In this article, I’m going to talk about the pros, cons, and how to avoid the issues you may face down the line. I will keep this article short and to the point, I will be happy if even one person on the internet finds this piece useful before planning to launch their SaaS.
Well, let’s talk about the Pros and Cons first and then we will see how to make your launch the right way in any marketplace.
Scenario: You’re selling a product at $79 for one plan and the maximum one can purchase is up to $499 for more features and benefits. In the most ideal case, you’ll probably sell more around 1000-3000 depending on how better you market or how much you actually want to make.
So, $200 (Average Sell) X 1500 Customers = $300,000.
Considering you weren’t able to negotiate much on the % revenue and the marketplace took 70% from this directly from you. So the end you were left with $90,000, which is still not bad. It should be enough on hiring 1-2 devs or 1 good developer and one marketer for one year and build the product further from there.
FYI, TexAu generated over $400K+ revenue after all negotiations and this is what we received from the campaign at the end. We were able to make a good successful launch but also did many mistakes. Around $150K was ideally enough for us but we sold more.
Ok, so now let’s look at the Pros and Cons.
You will have instant $$$ to reinvest in your product.
You will get lots of feedback on your product which may or may not be related to your future roadmap.
You can get lots of reviews on multiple review sites very quickly.
You can grow your followers, create a community and add lots of members very quickly.
You get many new backlinks from different lifetime deal sites and affiliates.
Your website traffic will surge during your campaign.
You will make new friends from the community who will reach out to you during your campaign.
If you have a blog, you will get new subscribers.
If you launch on Producthunt during this time, you may get more upvotes.
You may not be able to validate your idea if you built your product and launched it. People will buy your product in FOMO and you will spend a lot of time explaining to them what your product does.
You will have users to take care of for the rest of your life.
Your product valuation may decrease by 20-30% as you have hundreds or thousands of non-paying customers using your product.
If you didn't plan well on how much you want to charge for different plans, you will be at a loss and your server cost will be HUGE.
You may face difficulties in raising money in the future and investors may offer you less money if you have more Lifetime customers than monthly paying.
You will need more people in the CS team to handle Lifetime users’ queries if they are using your product heavily.
If you roll out any new product or a new feature, you will have to deal with queries from Lifetime about access and days will be spent deciding if you want to give them access or not.
You will burn money if you are not able to get monthly revenues and in the end, after a year or 2, shut down the company.
You will be spending more on tools and services from day 1 as you have lots of customers.
So, we looked at the pros and cons. Don’t worry, there is still a very good way to do the deal correctly. You first have to decide what your goal is, making more revenue (wrong goal 🚩 🚩) or making more people aware of your product and get onboard some people who are genuinely interested in trying your product and give feedback at every step.
How to avoid this problem and do the lifetime deal the right way
Do a very small lifetime deal only to get 500 customers who will help you in building the product and you will also have some money to invest.
Provide a clear copy of who your ideal customer is so that you don't get random customers.
Set a very detailed plan and feature access and make sure to mention what they will get and what they won't. Make sure to write if future updates and features are included or not.
Make a close community with these 500 members and talk to them, prepare your roadmap and build your product with their help.
Don't launch your Lifetime deal on any big marketplace or deal sites with 100s of thousands of users. Even if you do, that's fine but keep the codes or the total number of users, very limited, 500-800 is a good number.
Don't fall into the trap of numbers like $400K or $500K, you won't realize how quickly this money will go away and you will be left with nothing. FOCUS ON MONTHLY CUSTOMERS and HOW YOU WILL SUSTAIN YOUR BUSINESS NOT ON LIFETIME DEAL MONEY.
That’s all you need to know.
I was thinking of writing more on each point but wanted to keep it short. Just grasp this and make a better decision when you’re doing a Lifetime deal.
I hope this helps.
For Marketplace, I recommend Pitchground and AppSumo (no particular order or preference).
Want to discuss this? Ping me on Twitter.
I consider that as one of my mistakes but it also helped us in many ways. I still love all our customers and our early adopters. Our customers are not like normal users, we were able to involve them in all parts of the business and get feedback. I’m so grateful and thankful to all our amazing LTD members. I love y’all.
If I’m asked, I will do this again for any other future SaaS, probably not. This is not just good for the business (money). I will open a beta program for 100 users and give them the product for free at the end.