In this guide, you will learn the golden rule for finding profitable SaaS ideas that people will actually pay for. Here is an in-depth explanation of the golden rule to help you to identify the products you can build.
Let’s dive in.
#1. Listen to Client Feedback
Here is an example from my personal experience to illustrate this golden rule.
I recently partnered with the founder of Feedbucket to scale the app. The founder has a background in freelancing and web development. He spent a lot of time working with client feedback in his career. His experience influenced him to create a product that makes it easy for web developers to receive client feedback.
In the beginning, we were not too sure about our ideal target market. We initially thought freelance web developers, web agencies, and companies would be our customers. However, after making 20 sales, we realized the web agencies converted the easiest.
This was because they understood the value of our product. Most web agencies need project management even though they do not have project managers. Therefore, taking into account the investment of time and money made every week to receive feedback versus purchasing a product that could save them six hours a week and obtain client feedback at a cheaper cost, our product was a great deal.
Now, How Does it Save Time and Money?
Let's say when a web agency needed feedback from a client, they would hold a meeting with the client and have about 4 people sitting in the meeting. These 4 people would cost approximately $100 an hour each. That's $400 per hour, and for 6 hours a week, that’s $2,400. The web agency would spend $96,000 on client meetings to receive monthly feedback on projects.
We sold these agencies a product that delivered the same results while only requiring half an hour of time investment in a week and cost way less. Our product not only saved them when it came to obtaining client feedback, but it also made our customers' workflow more efficient. This is how we got our first customers. Freelance web developers did not have a lot of projects thus did not feel the constraint on time while big companies had all the resources they needed to obtain client feedback.
#2. Use your Experience
An additional golden rule to identifying profitable SaaS ideas is that; a SaaS idea should be built on the founder’s own experience.
Let's say I am a YouTube content creator, and I want to launch a SaaS product to help gardeners in growing tomatoes. Have I ever grown tomatoes before? No. Do I understand the field of gardening? Also no. So what does this mean for my product? It means that I would need to have an extra 20 to 25 meetings with tomato gardeners first to understand if there are challenges in growing tomatoes and then figure out what solution as a SaaS product to create.
Since I know nothing about growing tomatoes, should I decide to create a SaaS product without getting information from tomato gardeners, it’s highly likely it will be a useless product for them. And my start-up will have a very low chance of succeeding.
However, if I were to create a SaaS product that helps influencers starting on YouTube monetize their audiences in different ways, I would have a higher chance of succeeding. This is because this is an idea born to solve a problem I am already experiencing.
Why Paying Attention to Problems is Essential
I know nothing about growing tomatoes. With the SaaS idea for growing tomatoes, I do not even know if there is a problem in need of a solution, and secondly, I would need to rely on other people’s feedback to develop my startup. Of course, you should rely on your customers’ feedback to scale your startup. However, it's another thing when you use your ideas to create a product to help them, yet you have no clue the problem or solution yourself. Furthermore, it would require always to go back to your customers to understand what's happening in the market.
This scenario reminds me of my recent partnership with a guy who had a background in full-stack engineering. He came from his job at Google and wanted me to partner with him to grow his SaaS product. He presented two ideas: the first idea was a product that provides Twitter analytics for better marketing and the second idea was a product to help full-stack engineers with the front end.
The first idea would have us working on a Twitter analytics product, yet neither of the two of us had ever worked on Twitter analytics, nor had this founder ever done marketing on Twitter.
I decided that it would be best to work on the second idea for two reasons. The first reason was the founder had expressed that as a full-stack engineer, he had struggled with building a sexy user interface and he spent countless hours finding the correct procedure. This meant for us that there was a problem that our product would be solving. Furthermore, if this founder had struggled with this challenge for this long, there was a high probability that other full-stack engineers were struggling with the same.
The second reason for deciding to work on the idea of a product to help full-stack engineers with the front end was that we wouldn’t have to rely on other people’s research to build the app. This would have been the case with Twitter analytics for marketing products. And this is a huge factor to bridge the gap between you now and you as the founder of a successful SaaS product. Thanks to the founder’s background in full-stack engineering, it would be easy for us to know what features to put together to build a successful product.
Look at the case of the founder of IKEA. He founded his company because he couldn’t find the kind of kitchen furniture he liked. Therefore, he created his own and then sold it to other people. I am sure that the IKEA idea would not have gone as far if he had no need for the kitchen furniture but created it for someone else first.
So when you are choosing a SaaS idea, remember that ideas that solve your problems have a higher success rate. It will only be a matter of time until you find other people in need of the same solution. Secondly, ensure that your SaaS idea saves time and money. The easier it is to demonstrate how much customers will be saving by purchasing your product, the easier it will be to sell and scale your startup.
I run a Founder Transformation Program where I help founders turn their SaaS ideas into money-making products. If you would like my help, please apply on my website. If you found this article valuable, look out for more content that I will be publishing regularly.