When we launched Userships on ProductHunt, we were pleasantly surprised - our solution had quickly hit Product of the day. 🎉
As with most startups, we had our doubts - taking on some of the world’s leading SaaS solution providers in an existing space was a daunting (and scary) task.
All those doubts went away pretty quickly once we saw the support we received from the community. This was a clear indicator that we were indeed on the right path, solving a real pain point.
So, it wasn’t long until AppSumo reached out to us. AppSumo is the world largest LTD sites. For those who aren’t aware, LTD is Lifetime Deal where users can purchase a software at a very low cost an AppSumo currently dominates this area.
Anyways, back to their email. Here is the first line from it:
“Been hearing killer things about Userships, so I had to reach out! :)”
As a founder, it felt great to read this email. Apart from the ‘killer’ quote, they wanted to put Userships in their User Experience segment and offer an LTD to their 850,000 user base.
This got us thinking – what are the pro’s and con’s of running an LTD? Should we really do it?
We did a lot of digging, spoke to some of the industry experts and got their views on this. Here is a quick insight from what we heard.
The Pro’s 👍
1) You get a ton of visibility (read: signups)
Websites like AppSumo have a large user following and being able to reach out to all of them in a span of 2 weeks is invaluable, especially for a startup.
There are SaaS startups that have listed on AppSumo and have seen signups go as high as 10K in the 2 weeks time period. (Run a simple Google search, and you will see companies write in-depth articles about it.)
2) The LTD platforms run the marketing campaigns for you
This means, their team gets all the creatives done, they run the ads, they build the visibility to your site. Leaving you to focus on the one thing you do best – giving your users the best experience of your product
3) SEO boost
That’s right. When you get listed on some of the larger LTD sites, it helps with getting quality backlinks and bumps you up on Google Search – helping you boost your SEO rank.
The Con’s 👎
1) You don’t truly make the money
This is a very important factor to consider, especially if you are bootstrapped and looking to make money off the deal. Some of the LTD platforms have huge commission structures. Appsumo for instance, takes a whopping 70% of the deal value as their commission (we heard it could sometimes be 75%).
Let’s do the math here:
Taking the example of a company having received 10K signups for their $39 LTD, this converts to a total of $390,000 total sale value (yaay!).
Hold the enthusiasm. 🤚
The LTD platform takes 70%, which means they get a cool $273,000
You as the SaaS company gets $117,000
To some, at first, this still sounds great! Think about it - a startup that is bootstrapped seen a sudden inflow of $117,000!! That’s pretty good, right?
Yes and no. Remember, this is a one-time payout. This means, you get this amount just once. What happens after the month is done?
That’s right, nothing. You don’t get paid anything from these users for the foreseeable future.
So, if you are looking to increase revenues for your SaaS, you would be better off putting that time and effort into other activities.
2) Risk being seen as a ‘low-cost’ solution
This is a downside of an LTD strategy – you may be seen as a ‘low cost’ solution and in turn, users will wait around for another deal instead of paying the full market price.
Not to mention, your existing full price customers will feel they are overpaying for a solution they could have gotten for $39.
3) Lifetime no revenue customers
This probably doesn’t need to be pointed out again, but LTD is Lifetime Deal. This means, you will carry the LTD customers for as long as you exist (not just for a stipulated time-frame). This essentially translates to no future payments from these users.
However, there are a few SaaS companies that have tackled this issue well by providing add-on’s (or stacks) to an existing deal. It works like up-selling a product to your existing users. This helps you get some bits of revenue from these users (but yes, never the base).
4) No control on how many users
Most LTD’s are kept Open for a particular time-frame. This means, you have no control on how many users sign up. Tell this to your tech team and watch them squirm. The difference between 2K and 10K users is still 5x
That is a huge margin to work with. Not knowing what to be prepared for, could end up going in the wrong direction very soon.
Stop and ask 🛑
Before you jump into offering an LTD, ask yourself this:
- What is your LTD objective?
Are you looking to get paying customers?
Are you looking to show numbers on your books?
Are looking for beta customers only?
Do you want to see serious usage (aka get people to pay and try your solution)
- Are you ok with a set of users never paying you?
- Having potential users wait for your solution to go on a ‘deal’ and not sign up?
After speaking to a few experts, the advice was clear – have a clear LTD strategy before jumping into the deal world. The last thing you want to do as a startup is maintain these users at a cost, unless it fits into your overall strategy.
So, where did that leave us? What did we decide?
We are constantly approached by LTD platforms asking us to partner, but until we have a clear LTD strategy, we will stick to offering premier solutions at an affordable price.