Growth

How to reach your first $10k in monthly revenue with a SaaS

Your first $10k of monthly recurring revenue (MRR) is arithmetic before it is strategy: price multiplied by number of customers. MRR is the revenue that repeats every month, so $10k of MRR is $120k a year. The useful question is not "how do I get there" but "which combination of price and customers can one person actually sell?" All amounts below are in dollars, as in the sources; use the equivalent in your currency.

What does $10k a month look like in customers?

It is about 102 customers paying $99 a month, 34 paying $299 or 11 paying $990. That is plain division, and it shows the trade-off: a low price needs many customers, a high price needs few but more convincing conversations.

Which version can you sell on your own?

Y Combinator partner Kevin Hale links price to how you can sell. In Startup Pricing 101 he says a self-serve product at $2,000 a year or less cannot afford a sales team, so marketing has to be inbound and sales self-serve; between $2,000 and $10,000 a year you still cannot hire a dedicated salesperson, though you can have an inside sales rep. At $99 a month ($1,188 a year) you are in the first band; at $299 a month ($3,588 a year) you are in the second. For a founder selling alone, that is a reason to look closely at the higher prices before assuming that more customers is the only route. A copilot that suggests the next question during the call helps you hold the longer conversations those prices require.

Are you charging enough?

Probably not, according to YC. Hale says undercharging is "the number one piece of advice" the program gives most startups about pricing, and his rule of thumb is to price so the value is 10 times the price, then raise prices by 5% at a time until you lose about 20% of deals. Tom Blomfield, another YC partner, suggests pricing at roughly a third of the value you deliver, and says that if every deal closes straight away you are almost certainly underpricing, while losing more than 25% of deals on price alone means you are probably in the right ballpark (How To Price For B2B). To put the customer's own numbers behind your price, use the B2B ROI calculator.

Which number do you track every week?

Your growth rate. Paul Graham writes in Startup = Growth that if there is one number every founder should always know, it is the growth rate. He says a good rate during YC is 5 to 7% a week, and 10% a week is exceptional. As an illustration of the arithmetic: from $1,000 of MRR, 10% growth means adding about $100 of new MRR next week. After each call, a post-call report and a 0 to 10 score on the same rubric show which conversations actually move that number. If revenue stalls after the first yes, read the million-dollar leak in your follow-up and the five numbers to watch before your first salesperson.

Sources: Kevin Hale, Startup Pricing 101 (Y Combinator, video); Tom Blomfield, How To Price For B2B (video); Paul Graham, Startup = Growth.

Is the goal $10k of MRR or $10k of total revenue?

For a SaaS, MRR is the useful number because it repeats every month. Total revenue can include one-off payments that do not come back.

Should I raise my price before looking for more customers?

YC's pricing talks recommend testing it: Hale suggests raising prices in steps of 5% until you lose around 20% of deals, and Blomfield says that if every deal closes immediately you are probably underpricing.

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