A Smart Bear: Startups and Marketing for Geeks

article thumbnail

Kung Fu

A Smart Bear: Startups and Marketing for Geeks

Instead, watch payback period for acquisition efficiency, watch retention for product/market fit, watch expansion revenue for long-term growth, and watch gross margin for long-term profitability. You’re not allocating enough costs to gross margin or the cost to acquire a customer. Priority depends on your goals (e.g.

Restful 202
article thumbnail

If you build it, they won't come, unless.

A Smart Bear: Startups and Marketing for Geeks

Yeah yeah, nowadays marketing is about "relationships" and "authority" and other things which cost time but not money. It sounds simple: The average cost of acquiring a customer is $C (advertising, sales, support, doing demos) and the lifetime revenue you get from that customer is $R, so if C < R you have a business.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

The unprofitable SaaS business model trap

A Smart Bear: Startups and Marketing for Geeks

I know the argument: The pay-back period on sales, marketing, and up-start costs is long, but there’s a profitable result at the end of the tunnel. The mindset works like this: It costs a lot of money to land an enterprise customer. So these costs are amortized over the customers you do land. for every $1.00 Just wait!

article thumbnail

Bending over: How to sell to large companies

A Smart Bear: Startups and Marketing for Geeks

Your EULA will be examined with the same fervor as a billion dollar acquisition. You set up the escrow agent and bear all costs." If someone sues us over your product, you have to pay our legal costs." A good software license agreement that you can re-use in a variety of situations can cost anywhere from $1000 to $5000.

article thumbnail

The right way to position against competition

A Smart Bear: Startups and Marketing for Geeks

However, whereas Microsoft can't afford to build this from scratch, if we show good growth and profits it would be an obvious acquisition target for them. A simple product with few features, low-cost, pain-point obvious, not tackling complex problems, focussed on making life easier rather than on saving money.)

article thumbnail

Which is better: Many customers at low price-point or few at high price?

A Smart Bear: Startups and Marketing for Geeks

For example, the average cost of customer acquisition diminishes. Suppose you discover that it costs $60 to acquire a new $10/mo customer which is too much to be sustainable — perhaps, but that cost diminishes over time, so it’s not a long-term problem. You spend less on marketing/advertising/acquisition.

Customer 320
article thumbnail

Bootstrapped CPC rule of thumb: MRR/25

A Smart Bear: Startups and Marketing for Geeks

Even after the first hundred customers, half of those were serendipitous one-offs, not representative of repeatable, controllable customer acquisition, and the scale of the data isn’t statistically significant. So to compute CAC, take your total costs to acquire new customers and divide by the number of customers you acquired.