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What are some expenses specific to SaaS products that founders need to budget?

I am creating my business plan and want to make sure I am including everything!

4 Replies

Rafael Miranda
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Rafael Miranda Entrepreneur
Founder at Ultrahaus Startup Studio & Co Founder at QueroQuitar
Starting from tech point of view:
  • Servers (hosting + email + backups)
  • Payment tools fee (% based on your revenue)
  • Marketing tools (if you're not running on open source options)
  • Support tool(if you're not running onopen sourceoptions)
  • Taxes
There's a lot of other thinks, depending of your field, of course.
William Agush
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William Agush Advisor
Founder and CEO at Shuttersong Incorporated
Why anonymous? You're asking us for public answers so it would be appropriate to disclose who you are. That said, having worked in SaaS for years - never underestimate the customer acquisition cost and amount of churn.
Maurice Koks
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Maurice Koks Entrepreneur
President of Intercigar & Founder of Arcade CRM
Like Rafael already mentioned, it all depends on your field, being a little specific would help to answer your question.

For example, in addition to what Rafael Miranda already mentioned you might need to budget for things like,

Metrics & Analytics tools,
DB & stack Performance monitoring tools
Onboarding and retention tools
Transactional email services
SEO Tools

But all are negligible in comparison to the budget that you might need for staff (developers / marketing & customer support)
And also things like office space if your set up requires that.

So everything really depends on your specific set up, location (SV or ??) and of course your runway which in high degree determine your cash burn rate.

And last but not least,don't make positive calculations when it comes to CAC and Churn rate.

So base your calculations always on a worst case scenario.


Viet Anh Ngo
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Viet Anh Ngo Entrepreneur
Software
In general you will have initial implementation cost and then operating cost. For modern SaaS application, it likely you will use one of the cloud platform to host the services (eg: websites, databases, virtual servers etc), and this will be your main expense to get the app in business. There are cloud platforms like Amazon AWS, Windows Azure, Google Cloud, RackSpace etc and each of them have the cost calculator utility, which can help you estimate quite accurately you burn rate for each month.

For example, you plan to host your service on Microsoft Azure platform, so you can use the Azure estimating tool to calculate the cost and put on the business plan, this is the very common way that SaaS startups use for budgeting.
https://azure.microsoft.com/en-us/pricing/calculator/
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