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.
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.
Here’s what I’ve found makes building micro-SaaS so appealing to founders;
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.
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.
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.
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.”
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.
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.
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.
Typically, you want to find problems in places with a wide market potential. So where are the best places to look?
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;
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.
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.
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.
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.
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.
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.
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?
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.
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.
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.
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.
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?
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.
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;
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 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.
Regardless of the pricing model you’re adopting, your product shouldn’t be priced too low or too high.
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.
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.
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.
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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