As I mentioned in my earlier blog on who I met at Xerocon there is a well established community of wonderful Add-On products to Xero out there already, begging the question of Xero becoming more of a platform for business moving forward. While there I also had an opportunity to discuss building a software-as-a-service product with developers, business owners and advisers alike. This blog is a collection of notes from the nuggets of advice they gave me.
Advice on preparation for investors:
- Investors are apparently interested in your development team, one developer is considered risky, two better and three+ better still from the perspective of assuring investors you have depth and maturity.
- Investors need to be spoon fed so prepare detail, be prepared to answer loads of questions and spell the detail out.
- Not all investors are created equally – you need to do due diligence on them as much as they do on you
Advice on SAAS pricing:
- Test your per user price and test it again – if it’s too low people might dismiss your product as cheap and not even look at it, an example given to me was a price of $15 / month for a single user didn’t sell yet $24 / month did.
- Test price bundles too, there can be a different buyer psychology with bundles too much per user or too many users bundled for a minimum purchase can also have impact your ability to sell, don’t make it too much – not too many minimum users and not too much for the minimum bundle, in this instance keep the per user price cheaper.
- Make it easy to understand, easy to sign up and easy to renew – the easier the stickier.
Advice on different geographical markets:
- It seems like common-sense but all markets are different with different cultures, language and interpretations so every time you launch into a new market get (and listen to) local advice for that market and produce localised content. I have been told before we need to kick the kiwi out of us before launching into the US and know from experience Australian market nuances differ greatly from our own.
- Don’t underestimate how hard it is to break into a new market, it take commitment, fortitude and time on the ground. A few people told me it took longer to get the contacts they were looking to make and they ended up spending more time in the US or Asia than they had ever considered would be needed.
Surprising observations I made after talking to these wonderful people:
- Most of the people I met were bootstrapping their product
- Many had built a version of their Add-On for their own use before taking it to market in some form
- The Xero market place is a great way to market and get access to customers but all have a direct channel as well and many plug into other accounting packages (which I guess is logical)
Surprising observations on the Xero customer base at XeroCon:
- Most were oblivious to / didn’t really understand what cloud computing is but do understand the positive benefit of accessing Xero anywhere anytime (I would guess only know about “the cloud” because Xero talks about it all the time)
- Coupled with being oblivious to cloud computing most had no idea where these apps and therefore their data are hosted, I asked all of the Add-On companies this question and they all said I was the only one to ask (and unless I met the owner or developer most of the people on the stand had no idea either)
- Accountants have a strong hold on their customers, couldn’t quite work out why but most Xero customers are Xero customers by virtue of their Accountants and are usually locked into their Xero license via their Accountants as well
Loads of interesting observations as an IT person at what was essentially an Accounting conference it was a real eye-opener. Vic.