Is it hard to build, market and maintain a web app that makes at least $1,000 a month?
For a single, skilled web developer.
37 Answers
No, this isn't hard. All you need is 50 people paying $20 per month.
The key is choosing a niche that you understand very well, and fixing a problem that you have yourself.
Don't write a recurring billing engine, just use http://recurly.com or http://chargify.com
Don't offer a free plan.
Charge from day one.
If you sign up just one new member a day, after churn, you should be at $1,000 monthly rev in two months.
Go for it!
The key is choosing a niche that you understand very well, and fixing a problem that you have yourself.
Don't write a recurring billing engine, just use http://recurly.com or http://chargify.com
Don't offer a free plan.
Charge from day one.
If you sign up just one new member a day, after churn, you should be at $1,000 monthly rev in two months.
Go for it!
It's not hard to reach $1,000/mo, but when you're there, there's no reason not to go further. If you only want $1,000/mo, it'll be less work (initial and ongoing) to create a steady stream of infoproduct sales (ebooks, screencasts, templates, white papers). They don't have to "run" and are pretty evergreen, no compatibility or feature issues, etc., etc.
Our first SaaS Freckle started earning $1,500 from the first billing cycle, thanks to our pre-launch efforts (and now it's earning almost $20,000, less than 2.5 yrs later). I now teach people how to create their first successful, paid products that'll earn money from the get-go, while developing our second SaaS and I've guided several people to the kind of income levels you're talking about.
Now, it can be hard to reach $1,000/mo if you:
In other words, if you build the sort of thing everybody tries to build when they think "I'm going to build a startup." The typical startup media is not useful when it comes to acquiring customers as opposed to "user acquisition."
Marketing is not hard if you do the proper groundwork (above) first. Don't bother spending money on advertising (esp not banners), since the returns are teeny tiny unless you're an expert at dealing with keyword targeting. The trick is to know who you're marketing to and what they're interested in, then create content that's related to your product to draw them in. It just takes effort over time.
Do yourself a favor and study business and pricing.
As for the maintenance time and costs required, you can minimize that by choosing a low-maintenance, cheap-to-run type of product.
Our first SaaS Freckle started earning $1,500 from the first billing cycle, thanks to our pre-launch efforts (and now it's earning almost $20,000, less than 2.5 yrs later). I now teach people how to create their first successful, paid products that'll earn money from the get-go, while developing our second SaaS and I've guided several people to the kind of income levels you're talking about.
Now, it can be hard to reach $1,000/mo if you:
- do not do adequate market research
- do not choose an audience who pays for things
- do not create a product that generates value from the get-go
- do not differentiate or take a unique view to serve a slice of the existing market
- do not market, or market haphazardly, or have an unclear message
- do not price high enough
In other words, if you build the sort of thing everybody tries to build when they think "I'm going to build a startup." The typical startup media is not useful when it comes to acquiring customers as opposed to "user acquisition."
Marketing is not hard if you do the proper groundwork (above) first. Don't bother spending money on advertising (esp not banners), since the returns are teeny tiny unless you're an expert at dealing with keyword targeting. The trick is to know who you're marketing to and what they're interested in, then create content that's related to your product to draw them in. It just takes effort over time.
Do yourself a favor and study business and pricing.
As for the maintenance time and costs required, you can minimize that by choosing a low-maintenance, cheap-to-run type of product.
Planning Pod - http://www.planningpod.co
With that said, here are 5 key questions you should ask yourself before spending the hundreds or thousands of hours building out your great idea:
1. Will the product itself or your marketing give you a competitive advantage that will take another competitor more than 2 years to replicate?
This is critical because if your app is fairly simple and straightforward or does not employ some type of technology or process that you can protect via patent, trademark or copyright (note ... not many Web apps are patentable), then you may soon find many copycats. However, if you have a high search engine ranking or gain favor with industry influencers and publications, these are much harder things for competitors to duplicate.
2. Can the product be sold mainly through marketing or does it require a larger sales and education effort?
As a solopreneur or small shop, you won't have the resources (time, staff, etc.) to sell a product that requires lots of product education or that has a longer sales cycle. So you need to keep in mind in during your product development how much education is required to sell through the product without lot of sales calls, emails, etc. Complicated products are harder to replicate, but they also have a longer sales cycle and
3. What is the churn like in your industry?
Several previous posts have talked about churn, and it will be your #1 enemy in sustaining growth. However, some industries have a much higher churn rate than others. I would advise doing some research first and finding out as much as you can about the brand loyalty among your prospective target audience and then finding customer needs that aren't one-and-done. For example, an app that lets people streamline their processes or organize their data is much more likely to see month-over-month use than an app that lets people take care of a discrete task for which they won't need the app again for a long period.
4. Are you willing to forgo more revenue early on to gain market momentum?
This directly relates to your initial pricing. You shouldn't worry too much about setting the perfect price out of the gate, because most likely you will need to change it. But what you should attend to is making sure you get enough customers into the product so that you see some momentum in your industry and you start to get some good word-of-mouth traffic. So early on it's not a bad idea to underprice your product and try to make up for it in quantity. The other benefit of an initial lower price point is that people are less likely to cancel a product that is relatively cheap (under $20). Once you have a larger customer base with more stable monthly revenues, you can then consider raising your pricing.
5. Are you willing to support your product?
Customer support is a huge deciding factor for many people choosing an online app, especially for less tech-savvy customers. For even simple products, customer support is often one of the biggest investments in time and resources you will make in your product (with product development and marketing the other two big investments). The smart move here is to build lots of self-help into the product in the form of intuitive tools/processes, detailed instructions, how-to videos, support centers, etc. This will dramatically reduce the amount of time you spend emailing and talking with customers about their questions and issues.
Best of luck, and feel free to drop me a note if you have additional questions.
With that said, here are 5 key questions you should ask yourself before spending the hundreds or thousands of hours building out your great idea:
1. Will the product itself or your marketing give you a competitive advantage that will take another competitor more than 2 years to replicate?
This is critical because if your app is fairly simple and straightforward or does not employ some type of technology or process that you can protect via patent, trademark or copyright (note ... not many Web apps are patentable), then you may soon find many copycats. However, if you have a high search engine ranking or gain favor with industry influencers and publications, these are much harder things for competitors to duplicate.
2. Can the product be sold mainly through marketing or does it require a larger sales and education effort?
As a solopreneur or small shop, you won't have the resources (time, staff, etc.) to sell a product that requires lots of product education or that has a longer sales cycle. So you need to keep in mind in during your product development how much education is required to sell through the product without lot of sales calls, emails, etc. Complicated products are harder to replicate, but they also have a longer sales cycle and
3. What is the churn like in your industry?
Several previous posts have talked about churn, and it will be your #1 enemy in sustaining growth. However, some industries have a much higher churn rate than others. I would advise doing some research first and finding out as much as you can about the brand loyalty among your prospective target audience and then finding customer needs that aren't one-and-done. For example, an app that lets people streamline their processes or organize their data is much more likely to see month-over-month use than an app that lets people take care of a discrete task for which they won't need the app again for a long period.
4. Are you willing to forgo more revenue early on to gain market momentum?
This directly relates to your initial pricing. You shouldn't worry too much about setting the perfect price out of the gate, because most likely you will need to change it. But what you should attend to is making sure you get enough customers into the product so that you see some momentum in your industry and you start to get some good word-of-mouth traffic. So early on it's not a bad idea to underprice your product and try to make up for it in quantity. The other benefit of an initial lower price point is that people are less likely to cancel a product that is relatively cheap (under $20). Once you have a larger customer base with more stable monthly revenues, you can then consider raising your pricing.
5. Are you willing to support your product?
Customer support is a huge deciding factor for many people choosing an online app, especially for less tech-savvy customers. For even simple products, customer support is often one of the biggest investments in time and resources you will make in your product (with product development and marketing the other two big investments). The smart move here is to build lots of self-help into the product in the form of intuitive tools/processes, detailed instructions, how-to videos, support centers, etc. This will dramatically reduce the amount of time you spend emailing and talking with customers about their questions and issues.
Best of luck, and feel free to drop me a note if you have additional questions.
Venkatesh Rao
Updated 281w ago · Upvoted by Shane Luke, Start-up CEO, fmr. CPO at Recon (acq. by Intel), fmr. Dir. Product, Nike+ and Harjeet Taggar, Founder, Auctomatic
This is a very interesting question, and the responses are very revealing. It is instantly clear who knows what they are talking about.
My litmus test for sorting out those who have actually tried to make money online and know what they are talking about is mention of the word "churn." The hard part is not getting to $1000 a month. It is staying there. Actually "staying there" is much harder than either "going beyond" or "falling back to $0" because Web/digital products (unlike say a baker's shop) are fundamentally not stable cash flow generators. They are unstable in either good or bad ways. The only thing worse than having a $1000/mo idea fall back to earth by itself is to watch someone else with more drive taking a clone to $10,000/mo and killing you in the process, because YOU didn't have the drive to run with it. This is a fundamental weakness of lifestyle business ideas. Good ideas have a tendency to quickly break the 4-hour-work-week effort ceiling. Bad ideas fall back to earth.
I've "gotten there" with 2 different products in the last two months. The reason I am not shouting this from the rooftops and trying to sell my "formula" to others is that I haven't yet solved the problem of how to stay there with either product with sufficiently low costs on my side.
Calibrating Expectations
From the question it sounds like the intent is to have a passive stream of income (a common lifestyle business goal). So to qualify as "sufficiently low costs" the ongoing effort should be less than the hours spent at a regular day job to generate $1000/mo. Assuming an $80k entry level s/w developer job for 2000 hours a year (fifty 40 hour weeks), the number to beat is about $40/hour. That's about 25 hours. If you are spending more than 25 hours a month supporting this app, you're losing. Sure you could consider intangibles like building up a market that trusts you for future apps, a brand, having independence from pointy-haired bosses etc., but those come later. The baseline must be beating the lifestyle you could support in immediate cash flow terms, compared to a regular job. Gravy comes later.
$1000 per month in a 100x$10 or 50x$20 configuration sounds simple. It is not. Development work for an average app, given the idea, is not particularly hard engineering, so if all you needed were the engineering chops for it, you should see one out of two engineers quitting their day jobs to do this. Why don't we see that?
It's because the hard part is not the engineering.
How Hard is the Marketing?
Do the math. Whatever your main acquisition channel, after back-calculating "new user impressions" from current subscription rate, you'll likely be left with something like needing a blog or e-newsletter that hits 100 new people a month in order for you to acquire one new user (example: if referrals via your e-newsletter are your main mechanism, and 1 in 10 users forwards your newsletter to someone new, and 1 out of THAT 10 is likely to sign up... you're at a 1% conversion rate. This is VERY optimistic. Search marketing or blog marketing have similar profiles).
If your app hemorrhages existing users at the rate of 20%, you'll need 2000 new users exposed to your pitch in order to replace the users you are losing.
That is a VERY tall order. Since most marketing channels are designed to simultaneously serve acquisition and retention needs, it is easy to let the numbers fool us. We report acquired numbers (subscribers). What's more, the acquisition/retention tradeoff is very hard to manage on a single channel. The more you try to make your marketing appeal to new audiences, the less it will serve retention needs, and cause hemorrhaging.
Maintenance
What about maintenance? Well, even for a non-tech product that relies on 3rd party tech, like my wordpress blog, simply keeping the software and plugins up to date and compliant with the latest releases of related software... that can take a couple of hours a month. What do you think it is going to take to support software YOU wrote? What about random spikes, like an API you rely on being completely rewritten, requiring you to rebuild the whole app? What if a competitor app pops up that does better, forcing you to re-engineer and fight back? Trust me, if there's a market, there will be competition. Even if your app discovers the market, merely the fact of you making a steady $1000 a month will attract hungrier people, willing to do better for less money to take away your market.
There's a lot hiding under "maintenance."
Between managing churn via continuous marketing, and doing frequent updates and maintenance to keep up with technology and the competition, you're easily talking something that takes more than 25 hours a month. More like 40. Or a 25% time commitment. Which brings your hourly rate earnings to $25. And don't think moving to Bali will make that $25 stretch further. Your marketing will grow harder in proportion to your distance from the American market you are serving.
And Oh Yeah, It's Boring
Did I mention that sustained marketing and maintenance are among the most boring types of work, especially for someone who gets kicks from building new stuff?
So since the effort investment is roughly:
marketing >> maintenance >> original engineering
you are talking a very boring 25% job that pays less than a day job for the same skills. (assume each >> to be a a 10x increase.)
In other words, the initial developer's work is the trivial part of it. Marketing and maintenance are the really tough parts.
This explains the most common failure mode: having a good initial product and a great launch month, followed by a flame-out.
So Should You Do It?
After that very cynical analysis, it may surprise you to hear my recommendation. You should STILL do it.
Here's why: something like this is a GAMBLE.
A regular job has a higher guaranteed upside that hits its ceiling very quickly. Even if you beat this scenario 3-4x and are in a job that pays $120-$160/hour, you'll never get off the treadmill, because the treadmill is designed to never let you off. It is Hotel California. If you are making $300k, chances are you are a mission-critical linchpin, and The Man will figure out a pattern of incentives to keep you where you are.
Your app... 90% chances are it will perform as I outlined, even if you do everything right to the best of your abilities. In other words, 90% of the time, you will do (say) 80% as well compared to a regular job with the same effort. So the contribution to a normalized expected value computation would be: 0.9*0.8=0.72.
But there's a 10% chance that you'll hit upon an idea that just hits some market nerve and takes off on a wild trajectory of success, requiring no marketing and escalating inbound demand, and growing so fast that the competition cannot catch up (if you are willing to get off your lazy behind and tighten your grip on the tiger's tail that is; otherwise someone will very kindly take your market away from you).
There is almost NOTHING you can do to make this happen, other than to place as many bets as you can, as frequently as you can, without shortchanging any of the ideas on the effort side.
But if one of the ideas takes off, you're done. Screw the rest of the portfolio. Sell or abandon them. Double down HARD on the one that's taking off. Ride it all the way out of the crappy financial prisons that counts as "life" for most of us.
So it REALLY only comes down to a SINGLE question.
Do you feel lucky, punk?
My litmus test for sorting out those who have actually tried to make money online and know what they are talking about is mention of the word "churn." The hard part is not getting to $1000 a month. It is staying there. Actually "staying there" is much harder than either "going beyond" or "falling back to $0" because Web/digital products (unlike say a baker's shop) are fundamentally not stable cash flow generators. They are unstable in either good or bad ways. The only thing worse than having a $1000/mo idea fall back to earth by itself is to watch someone else with more drive taking a clone to $10,000/mo and killing you in the process, because YOU didn't have the drive to run with it. This is a fundamental weakness of lifestyle business ideas. Good ideas have a tendency to quickly break the 4-hour-work-week effort ceiling. Bad ideas fall back to earth.
I've "gotten there" with 2 different products in the last two months. The reason I am not shouting this from the rooftops and trying to sell my "formula" to others is that I haven't yet solved the problem of how to stay there with either product with sufficiently low costs on my side.
Calibrating Expectations
From the question it sounds like the intent is to have a passive stream of income (a common lifestyle business goal). So to qualify as "sufficiently low costs" the ongoing effort should be less than the hours spent at a regular day job to generate $1000/mo. Assuming an $80k entry level s/w developer job for 2000 hours a year (fifty 40 hour weeks), the number to beat is about $40/hour. That's about 25 hours. If you are spending more than 25 hours a month supporting this app, you're losing. Sure you could consider intangibles like building up a market that trusts you for future apps, a brand, having independence from pointy-haired bosses etc., but those come later. The baseline must be beating the lifestyle you could support in immediate cash flow terms, compared to a regular job. Gravy comes later.
$1000 per month in a 100x$10 or 50x$20 configuration sounds simple. It is not. Development work for an average app, given the idea, is not particularly hard engineering, so if all you needed were the engineering chops for it, you should see one out of two engineers quitting their day jobs to do this. Why don't we see that?
It's because the hard part is not the engineering.
How Hard is the Marketing?
Do the math. Whatever your main acquisition channel, after back-calculating "new user impressions" from current subscription rate, you'll likely be left with something like needing a blog or e-newsletter that hits 100 new people a month in order for you to acquire one new user (example: if referrals via your e-newsletter are your main mechanism, and 1 in 10 users forwards your newsletter to someone new, and 1 out of THAT 10 is likely to sign up... you're at a 1% conversion rate. This is VERY optimistic. Search marketing or blog marketing have similar profiles).
If your app hemorrhages existing users at the rate of 20%, you'll need 2000 new users exposed to your pitch in order to replace the users you are losing.
That is a VERY tall order. Since most marketing channels are designed to simultaneously serve acquisition and retention needs, it is easy to let the numbers fool us. We report acquired numbers (subscribers). What's more, the acquisition/retention tradeoff is very hard to manage on a single channel. The more you try to make your marketing appeal to new audiences, the less it will serve retention needs, and cause hemorrhaging.
Maintenance
What about maintenance? Well, even for a non-tech product that relies on 3rd party tech, like my wordpress blog, simply keeping the software and plugins up to date and compliant with the latest releases of related software... that can take a couple of hours a month. What do you think it is going to take to support software YOU wrote? What about random spikes, like an API you rely on being completely rewritten, requiring you to rebuild the whole app? What if a competitor app pops up that does better, forcing you to re-engineer and fight back? Trust me, if there's a market, there will be competition. Even if your app discovers the market, merely the fact of you making a steady $1000 a month will attract hungrier people, willing to do better for less money to take away your market.
There's a lot hiding under "maintenance."
Between managing churn via continuous marketing, and doing frequent updates and maintenance to keep up with technology and the competition, you're easily talking something that takes more than 25 hours a month. More like 40. Or a 25% time commitment. Which brings your hourly rate earnings to $25. And don't think moving to Bali will make that $25 stretch further. Your marketing will grow harder in proportion to your distance from the American market you are serving.
And Oh Yeah, It's Boring
Did I mention that sustained marketing and maintenance are among the most boring types of work, especially for someone who gets kicks from building new stuff?
So since the effort investment is roughly:
marketing >> maintenance >> original engineering
you are talking a very boring 25% job that pays less than a day job for the same skills. (assume each >> to be a a 10x increase.)
In other words, the initial developer's work is the trivial part of it. Marketing and maintenance are the really tough parts.
This explains the most common failure mode: having a good initial product and a great launch month, followed by a flame-out.
So Should You Do It?
After that very cynical analysis, it may surprise you to hear my recommendation. You should STILL do it.
Here's why: something like this is a GAMBLE.
A regular job has a higher guaranteed upside that hits its ceiling very quickly. Even if you beat this scenario 3-4x and are in a job that pays $120-$160/hour, you'll never get off the treadmill, because the treadmill is designed to never let you off. It is Hotel California. If you are making $300k, chances are you are a mission-critical linchpin, and The Man will figure out a pattern of incentives to keep you where you are.
Your app... 90% chances are it will perform as I outlined, even if you do everything right to the best of your abilities. In other words, 90% of the time, you will do (say) 80% as well compared to a regular job with the same effort. So the contribution to a normalized expected value computation would be: 0.9*0.8=0.72.
But there's a 10% chance that you'll hit upon an idea that just hits some market nerve and takes off on a wild trajectory of success, requiring no marketing and escalating inbound demand, and growing so fast that the competition cannot catch up (if you are willing to get off your lazy behind and tighten your grip on the tiger's tail that is; otherwise someone will very kindly take your market away from you).
There is almost NOTHING you can do to make this happen, other than to place as many bets as you can, as frequently as you can, without shortchanging any of the ideas on the effort side.
But if one of the ideas takes off, you're done. Screw the rest of the portfolio. Sell or abandon them. Double down HARD on the one that's taking off. Ride it all the way out of the crappy financial prisons that counts as "life" for most of us.
So it REALLY only comes down to a SINGLE question.
Do you feel lucky, punk?
Everybody will be different, but I can say from my experience that it wasn't difficult to get to $1,000. I effectively launched http://SifterApp.com by myself with a very small investment from my co-founder, but I did all of the design and development work. During the process, I blogged a fair amount about what I was doing and built up a modest following. (~1,000 subscribers for our launch announcement.)
Once we launched, we were making $1,000 by the end of the first month. So, it's definitely not unthinkable. That said, launching is the easy part. Supporting and maintaining it 24x7 after that is where it actually becomes challenging. Until your application can support you full-time, you have to balance a regular job or paying work with the time that a 24x7 web app needs, and things never go wrong at a convenient time.
Then, even once it does support you full-time, you're still the only individual responsible for the application if anything goes wrong. That puts a whole new twist on trying to go on vacation. If you don't have an internet connection, and the app goes down, or there's a major bug, you're going to be in a tough position.
Honestly, at $1,000/mo, I would argue that running a web app by yourself simply isn't worth the stress and inconvenience. After expenses, you're probably looking at about $750/mo in profit, and there are much easier and more sustainable ways to grow your income without the challenges of a business that's supposed to be open 24x7. I have no idea what your long term plans would be, but if it's only ever going to be a side project, I would think it's not the best option. However, if you truly want to build and grow it, then it's a lot easier than most people think.
Just remember, building and launching is the easy part. It doesn't become challenging until it's live and you're supporting paying customers. Then, $1,000/mo isn't enough to justify it.
Once we launched, we were making $1,000 by the end of the first month. So, it's definitely not unthinkable. That said, launching is the easy part. Supporting and maintaining it 24x7 after that is where it actually becomes challenging. Until your application can support you full-time, you have to balance a regular job or paying work with the time that a 24x7 web app needs, and things never go wrong at a convenient time.
Then, even once it does support you full-time, you're still the only individual responsible for the application if anything goes wrong. That puts a whole new twist on trying to go on vacation. If you don't have an internet connection, and the app goes down, or there's a major bug, you're going to be in a tough position.
Honestly, at $1,000/mo, I would argue that running a web app by yourself simply isn't worth the stress and inconvenience. After expenses, you're probably looking at about $750/mo in profit, and there are much easier and more sustainable ways to grow your income without the challenges of a business that's supposed to be open 24x7. I have no idea what your long term plans would be, but if it's only ever going to be a side project, I would think it's not the best option. However, if you truly want to build and grow it, then it's a lot easier than most people think.
Just remember, building and launching is the easy part. It doesn't become challenging until it's live and you're supporting paying customers. Then, $1,000/mo isn't enough to justify it.
