Micro-Startup Guide: Build a Profitable Micro-SaaS Product in 2024

My personal photo.
Ilya Novohatskyi
December 11, 2023

I’m a software engineer, and I’ve built several SaaS products for my clients. With my experience building several startups for myself and clients and facilitating the sale of dozens more, it’s safe to say I know a thing or two about building software businesses. So I’m going to show you how to build a profitable micro-SaaS.

Let’s jump in.

What is a micro-startup?

A micro-startup (or micro-SaaS, as it’s fondly called) is a small startup run by a team of one to five members. It’s built with minimal resources, and in most cases, solves a specific problem for a niche market.

The major differences between a micro-SaaS startup and a traditional SaaS business are that traditional SaaS businesses require a huge amount of capital/budget and larger teams, and they build products with loads of features. A micro-startup isn’t any of that. Its focus is on solving a precise niggling problem for a subset of a market.

Tyler Tringas, who coined the term micro-SaaS, defines it as: A small SaaS company (with pretty much the same business model as a traditional SaaS company) but built by a solopreneur or a small team. It’s typically bootstrapped and goes after a niche market. It’s also prioritizing profitability and business sustainability as opposed to growth.

Let’s make it clearer.

What are the benefits of building a micro-SaaS?

Here’s what I’ve found makes building micro-SaaS so appealing to founders;

  • Profitability: They generate recurring revenue from the get-go. Unlike traditional SaaS startups that take a while to turn in a profit, micro-SaaS startups are built to generate profit from inception.
  • Bootstrapped: They’re built using a lean approach and minimal resources.  This makes it easy to be bootstrapped by a solo founder.
  • Easy to build: You don’t need to be tech-savvy to build a micro-startup. Many indie hackers with zero coding skills build profitable startups using no-code or low-code tools. Founders with non-technical skills can easily acquire one for a small amount on Microns.
  • Minimal financial investment: You’ll rarely need a massive capital injection.
  • Minimal time commitment: Many founders build their micro-startups while working a 9-5 or building other side projects.
  • Low risk: They carry low financial risks and don’t require you to quit your job. Even if it fails, you’ll learn valuable skills like marketing, sales, customer service, product design, etc., that will benefit future endeavors.
  • Freedom: You can manage the business part-time and from anywhere without pressure from investors.
  • Easy exit: You can quickly sell your startup at a good price (up to $300,000) on Microns anytime.

Here’s a story of a developer who built a micro-SaaS in 6 days that drove $70k in sales. Now you know the reasons why most founders build micro-startups, let’s get into the meat: how to build a profitable micro-SaaS.

How to build a profitable micro-SaaS startup

As with building a traditional SaaS startup, not all micro-startup ideas become profitable. One of the most important determinants of your micro-SaaS’s profitability lies in the idea.

Generating software ideas for micro-SaaS

There’s no formula for generating profitable software ideas for your micro-SaaS. However, success leaves footprints. There are some indicators that your idea has got potential for success.

Emerging markets

Unless you’re bucking the trend in a saturated market, you want to target growing markets.

It’s 2023, and with ChatGPT going viral, AI has become all the rage, and there’s no sign of slowing down. Paul Graham, co-founder of Y Combinator, describes AI as seeming to “be the missing piece of the puzzle.”

Source: Twitter/X

To further show how lucrative the AI market is, Garry Tan, Y Combinator’s CEO, admits “AI has a big presence in the S23 class,” with the incubator registering 160 AI startups out of the 218 companies on its S23 batch.

Virtually every new startup uses AI to solve problems – that were thought unsolvable – in different industries. This shows that you may be striking gold by jumping on the AI trend. Some other growing/emerging markets are in the development of no-code and content-creation tools.

Product development

Micro-startups are simplistic by design since they’re built using minimal resources. So if your software idea seems feature-heavy, requires more expertise than your technical knowledge, or demands too much capital, you may be defeating micro-startups' purpose.

For example, rather than building a startup like WordPress, you may be more successful in building a minimalist landing page builder like Carrd.

Also, development time is another factor in product complexity. Many indie hackers develop their MVPs over a weekend. Typically, you should aim to develop your MVP between a week and a month. If not, consider minimizing features to only develop what’s important. Your MVP should only solve one problem and do so efficiently.

A defined audience

Micro-SaaS caters to the needs of a subset of a niche. But just how precise can your idea be?

A defined audience describes your target market in depth. For example, you stand a better chance at success building a tool for commercial real estate agents to manage social media leads than building one for all real estate agents: the latter is more competitive.

Another good example is how ConvertKit (for creators) and Klaviyo (for e-commerce businesses) defined their audiences.

Where to find profitable micro-SaaS ideas

Typically, you want to find problems in places with a wide market potential. So where are the best places to look?

Solve your problems and your clients’

I had clients who had difficulty buying startups – either they found lots of spammy listings on marketplaces, or the startups on sale were above their budgets. These problems birthed Microns.

So before you begin snooping around the internet for the next big idea, think of what you and your clients struggle with.

Here are some micro-SaaS software ideas;

  • A tool to automate some boring, repetitive, or time-consuming tasks;
  • An easier and cost-effective tool for a problem;
  • A tool with a feature lacking in a piece of software you use regularly;
  • A database of niche items, making it easy for people to find what they want;
  • A blog/content business that distills your experience better than most blogs/newsletters do.

You want to create a product that solves a problem you’re constantly frustrated with. And most importantly, since your goal is profitability, the problem should be one many others struggle with.

Your audience

Who would make a better target market than your existing, engaged audience? This group follows you, is inspired by your journey, and has similar interests. Plus, they may also consist of a large chunk of your existing clients. If you talk about cold outreach, SEO, or software development, you can build a product along those lines.

Niche versions of traditional SaaS startups

When finding ideas for your micro-SaaS product, one of the best places to look is larger SaaS companies. Sometimes, their products have so many features that they become unusable and too expensive for small businesses.

Rather than build a full-sized competitor, a cheaper product that improves on a feature or has a better UX could do the trick. Or you can target a defined group with specific needs, as with the commercial real estate agents mentioned earlier.

There's an opportunity for everyone.

App marketplaces

After looking around your immediate environment, app marketplaces like the Shopify App Store, Slack App Store, and WordPress App Store are a goldmine of opportunities.

Marketplaces are great as they’ve got all the customers you need. Secondly, there are lots of problems waiting for you to solve.

Mat De Sousa is an example of a great guy making a good living building apps on the Shopify App Store. He recently announced growing his earnings to $53,000 MRR from his Wide Bundle apps. Although you may not make as much as he does, it shows the massive potential these platforms hold.

Source: Twitter/X

Use search

Google is your friend. While that statement may be trite, it’s true. You can find out about people’s interests through keyword research on Google Trends and Ahrefs.

Online platforms

Think Reddit, Twitter, Facebook, or Stripe: these large platforms hold millions of users. They’re just like marketplaces, except that you need to invest in creating content and probably run ads.

Also, these platforms have forums/groups where you can learn about people’s pain points and make targeted solutions. So they’re definitely some of the top places to find micro-startup ideas.

Productized services

This may not fit the mold of micro-SaaS software due to its service delivery mode, but it’s a great channel to try. You can productize your service such that clients can easily order from you. Plus, its subscription-based pricing model means you get a predictable source of income.

A good example is Brad from Designfly.io, who’s built a decent productized service designing landing pages and social media posts.

How to validate your software idea through market research

Now you’ve got your idea. Brilliant! Before jumping into building your MVP, you need to determine if there’s a market for it. But how?

Consider the severity of the problem.

Your idea may be brilliant but may not be solving a real problem. So the first step in validating your idea is considering the impact it’ll make in the lives of your target customers and if they’ll be willing to pay for it.

Does your idea have a value proposition to be uniquely positioned in the market?

For example, before Airbnb, there were hotels and the like. But people couldn’t have that comfort of a home-away-from-home experience. Airbnb made it possible for groups of friends to live together in a house and connect with the locals.

Your idea doesn’t have to solve a big problem like Airbnb. But does it do any of the following?

  • Create or improve on a competitor’s key feature
  • Have a better UI/UX 
  • Cheaper alternative

If your product has any or more of these, you can develop its unique value proposition (UVP) and speak with potential users to gauge their interest.

Should you find interested people, the next thing you want to consider is the size of your target market. Typically, you’ll want to build an idea with thousands of potential users.

Gauge market interest by understanding your audience’s pain points and needs.

Strategies for finding your first 100 users

Some of the methods outlined above for finding your startup idea also double as ways to get your first set of customers. 

Here are a couple more free ways to find users for micro-SaaS business.

Leverage your network

This could be your clients, social media following, and/or email list.

No doubt, social is turning out to become one of the most important marketing channels. Many creators and indie hackers have used it to build their online reputation, email list, and businesses.

If you have quite a following on social media and an email list, you can create a landing page and a series of posts encouraging your followers to sign up for your new product (even without building the MVP). If you get a sizeable number of signups, you may just have a winner.

Should you have a small audience, you can encourage your online peers to promote your idea to their audience.

Join online forums

Earlier, we mentioned joining Reddit, Discord, Slack, Twitter, FB, etc. These platforms are a treasure trove to validate your idea. There are groups for virtually every topic and niche. You can find groups for sales professionals, designers, marketers, weight loss, Notion, e-commerce, Shopify, Klaviyo, etc. Consider finding groups with lots of members.

You can then post about your idea, engage/chat with people who engage with your post, and encourage them to sign up on your landing page.

Building a minimum viable product (MVP)

Eric Ries, in his book, The Lean Startup, describes an MVP as “The version of a new product that allows a team to collect the maximum amount of validated learning about customers with the least effort.

That definition means your product could have a few features or just one: this isn’t a full-sized product. What makes a good MVP?

  • A problem-solver with desirable core functions: it should solve your customers’ pain points with its core feature(s) and a compelling UI/UX. You don’t need a bloated app. If your ideal customer’s challenge is a lacking feature, convoluted features, poor UX, or expensive products, your product should solve just that.
  • Short timeline development: it should be ready to enter the market within a few weeks. Your goal is to gauge user interest and get feedback, not spend months or years building what you’re not sure anyone desires. Also, quick development can help you determine if your core product can get referrals.
  • Revenue generation: Unlike large SaaS companies that rely on funding till profitability, generating instant profit is the primary aim of micro-SaaS startups. You can get a few customers willing to pay for your product.
  • Customer retention: You want to keep your churn rate at the minimum because acquiring new customers is more expensive than retaining existing ones. Also, customer retention indicates customer satisfaction, and these satisfied customers can become your brand evangelist.

What are the best pricing strategies for my micro-SaaS startup?

The pricing strategies for most micro-SaaS startups aren’t so much different from those of traditional SaaS companies. So we’ll explore some of these pricing strategies.

Freemium

While creating only paid plans for your startup attracts only serious buyers, offering a free plan has advantages, especially if you’re in a competitive niche. More users (including those using competitor products) will show interest in your product and likely upgrade to the paid version.

When offering users a free trial, you want to apply any of these strategies;

  • Gating some of your features
  • Setting the trial period to not more than 30 days
  • Telling users to upgrade upon reaching a usage threshold

Flat pricing

For many micro-startups, this is the best way to go, as it’s easy to implement if you don’t have many features to create tiered pricing. All the users, regardless of their usage and company sizes, pay the same price.

Tiered pricing

Tiered pricing is one of the most common pricing strategies. This deprives users of a certain level of access to certain features. This model is good as it appeals to a wide range of customers, both small and big prospects. The key is to have as few prices as possible to not overwhelm your customers.

Source: Hubspot

Regardless of the pricing model you’re adopting, your product shouldn’t be priced too low or too high.

Should you build a micro-SaaS startup?

Building a micro-startup can be rewarding. You get to earn recurring income, spend more time with those you love, possibly replace your 9-5, and live wherever you like. However, building a profitable one isn’t easy.

That’s why I started Microns to help aspiring entrepreneurs, developers, and people from diverse backgrounds buy micro-SaaS products. You can check our marketplace and find a range of listings ranging from micro-SaaS AI startups to extensions, mobile apps, newsletters, and e-commerce businesses.

FAQ

Are micro-SaaS startups profitable?

Micro-SaaS startups are profitable as they earn recurring revenue from inception. These small businesses are easy to build since they require minimal resources and zero overhead; which means you keep all the profit. Also, they’re low risk and you can exit the business anytime by selling it on a micro-SaaS marketplace like Microns.

Is building a micro-SaaS startup easy?

Micro-SaaS startups are easy to build because they require minimal resources such as the founder’s bootstrapped capital, shorter development time, and/or the use of no- or low-code tools. Typically, your micro-SaaS product will solve just one problem; meaning it has fewer features than a traditional SaaS product.

Can one person build a micro-SaaS?

Yes, many (if not most) micro-SaaS startups are built by one person (an indiehacker) because they're smaller and carry fewer features than full-sized micro-SaaS products. Today, there are many micro-SaaS founders with non-technical skills who have built micro-SaaS products with no-code tools. Microns has also built a marketplace for both technical and non-technical founders to easily buy profitable micro-startups within 30 days.

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