Launching and pricing experiments got my first customers
1 month and 23 days. 14.5% of a year.
That’s how long it took to go from idea to first revenue in the bank for Inlistio, a tool for marketers to track job changes and get new contact info. I built it in my quest for a parallel revenue stream alongside of Toofr.
It’s an important reminder of how long it can take it get your SaaS company launched and making revenue.
A friend and entrepreneur I admire sent me an email on July 16, 2017 describing the idea that would become Inlistio.
He asked me, “Would you pay for a piece of software that tells you when a user or subscriber leaves the company, what company they go to, and their new email address, then gives you the option to auto-email them with a message?”
I told him I’d had a similar thought for one of my side projects and investigated it enough to discover some non-obvious ways to grab the data. “Wanna collaborate on that?” I asked. “Yes. Yes I do.” he replied.
Less than a week later I had a GitHub repository for my code, a Heroku account for hosting, and a very basic Ruby on Rails application live and running.
Almost exactly a month later, on August 22, I “launched” Inlistio on social media. It had actually been up and live all along, but this was the first time I said it loud and proud. He and I both posted about it on LinkedIn and Facebook.
I ultimately changed the pricing three times, and then finally on September 7, 16 days after that announcement, I got our first customer. It took us just under two months to go from idea to first revenue and for the next few months it averaged only one new customer every month. It took five months to get the first $1,000 of monthly recurring revenue.
The lesson here is this: even if you’re quick to launch, getting customers and traction still takes a while.
Part 1: The Launch
Here’s what I wrote on social media when we launched:
Today I released https://www.inlistio.com to the world with my friend and fellow sales tech entrepreneur Max Altschuler.
From idea (when Max sent me an email describing the problem) to launch it took just under 5 weeks! Record time considering we’re both occupied with other businesses.
Inlistio alerts sales reps, business owners, and marketing leaders when their contacts switch jobs.
Why does that matter? Job changes cause accounts to cancel or downgrade. Job changes also open up new business opportunities.
How do you grow a business? Reduce churn and get new customers.
Inlistio helps with both!
I like this post because it clearly states what Inlistio does (tracks job changes) and why it’s valuable (reduces churn and increases acquisition).
The problem was I got a lot of likes and registrations but no customers. Not a single one.
Part 2: The Pricing
I let people register for free and let them track up to 20 contacts. I wanted to give some free data so I wouldn’t have to do demos for everyone.
This was the pricing when Inlistio first launched:
- Bottom tier: $199 for 200 contacts ($1 per contact)
- Middle tier: $499 for 1,000 contacts ($0.50 per contact)
- Top tier: $999 for 5,000 contacts ($0.20 per contact)
We decided to launch with high prices. We were both anxious to get a meaningful revenue stream as quickly as possible.
Unfortunately, customers don’t care what we want. A couple of weeks later I lowered the prices:
- Bottom tier: $99 for 200 contacts ($0.50 per contact)
- Middle tier: $249 for 1,000 contacts ($0.25 per contact)
- Top tier: $499 for 3,000 contacts ($0.17 per contact)
I sent an email out to the 40 people who registered free accounts on Inlistio. Again, crickets. I noticed that of the 40 or so who signed up for free, only 25% of them actually used the free data.
That first week was off to a bad start but I kept going.
At the end of August, about a week after the last price change, I lowered prices again, this time by a lot.
- Bottom tier: $29 for 40 contacts ($0.72 per contact)
- Middle tier: $59 for 100 contacts ($0.59 per contact)
- Top tier: $249 for 1,000 contacts ($0.25 per contact)
The first customer came in, finally, about a week after that last price change. It was a $29/mo subscription but I didn’t mind. I was elated. The seal was broken!
It took another two weeks to get the next $29/mo customer and then I had my first big break, a $600/mo customer who had 18,000 contacts to track. She paid three months upfront and I texted my partner a picture of the receipt. We were both pumped!
The problem, I would find (and by the way, there’s always a problem,) is that the data providers I was using were expensive. Really expensive. I ended up spending nearly all of that $1,800 on servicing her account. That’s no way to run a business.
Part 3: Changing The Game
Two months lapsed before we had another customer. In the meantime, while on a Toofr customer call, I had a major insight.
I was doing Inlistio all wrong. I didn’t need these expensive data providers. There was a much cheaper way to get the data I needed.
I hacked my solution together and then ran the numbers. The cost was 90% lower so I lowered pricing again, one last time, and quickly got two more customers.
- Bottom tier: $19 for 1,000 contacts ($0.02 per contact)
- Middle tier: $149 for 10,000 contacts ($0.015 per contact)
- Top tier: $249 for 20,000 contacts ($0.012 per contact)
I lowered the bottom tier and raised the middle tier, but reduced the effective price per contact across the board by a lot, as much as 90%. Since most marketers have large lists, closer to 10,000 contacts, it makes it a lot easier to attract them now. I used to need to charge $1,000 for a list of 10,000. Now I can do it for a tenth that amount.
As a result, none of our most recent customers signed up for the bottom tier plan and no one has churned yet.
The churns will come eventually, but it’s starting to look like this can be a nice little business.