What is Micro-SaaS?

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From Software to Software-as-a-Service (SaaS)

Before we dwelve into Micro-SaaS, let us take a step back and build some context on Software and SaaS.

The history of software begins in the mid-20th century, with the development of the first electronic computers. Initially, software was just instructions written for specific machines, aimed at solving mathematical or logistical problems.

As technology evolved, so did software. The 1960s and 70s saw the rise of mainframe computers and minicomputers, which required more generalized operating systems and software applications. This period marked the beginning of commercial software, where companies like IBM began selling software separately from hardware.

The introduction of personal computers (PCs) in the late 1970s and early 1980s by companies like Apple and IBM transformed the software industry

The 1990s introduced the World Wide Web, radically changing how software could be distributed and used. Initially, the internet was used to share software through downloads, but it soon facilitated the creation of web-based applications. This period marked the early stages of SaaS, where software could be accessed and used directly over the internet, bypassing the need for installations and physical media.

The concept of SaaS truly took off in the early 2000s, driven by the increase in internet speeds and the development of cloud computing technologies. Salesforce, founded in 1999, is often credited with pioneering the SaaS model by delivering enterprise applications via a website

Over the past two decades, SaaS has evolved from a novel idea to a dominant mode of software delivery, impacting nearly every software category from office suites (Google Workspace, Microsoft 365) to specialised business applications.

Micro-SaaS

Micro-SaaS is SaaS but for a small niche, often built solo or by a very lean time in a bootstrapped manner.. Most builders build micro-saas to build sustainable lifestyle businesses. Some builders also leverage Micro-SaaS to test waters and then go on to expand it horizontally or vertically, and some even raise funding based on the Micro-SaaS MVP

💡 Micro SaaS is a very specific solution for a niche audience, built in a boostrapped manner by a solo founder or a very lean team, and is profitable from Day 1

Think of Micro SaaS products as those which can be built fairly quickly and they often solve smaller problems.

Some examples of Micro SaaS

  • a Notion Page to Personal Site Builder Tool
  • an Invoice Generator for Freelancers
  • a widget to add social sharing buttons on any website
  • a tool to scrap all replies within a tweet
  • a chrome extension to get transcripts and summaries of youtube videos
  • a shopify plugin for displaying an offer wheel

Types of Micro-SaaS

Broadly two types –

  1. Platform Dependent – Products built to solve a specific problem for a platform and often relies on the platform’s APIs. Examples Twitter – TweetHunter, TweetAI; Linkedin – Taplio, Supergrow
  2. Platform Independent – Products that solve a particular problem but do not depend on any platform for its existence Examples – Invoice Generator, Voice Notes App, Resume Generator, B-School Application Assistance App

Ingredients of a good Micro-SaaS

Most Micro-SaaS products fail to generate any revenue or traction. I don’t want you to go through that. Should you choose to accept the mission, do so only when –

  1. Can be built within a time frame
  2. Product doesn’t require a lot of maintenance
  3. Customer Support is not a nightmare
  4. Profitable from day one
  5. Is Fun to build and run 🙂

Important Terms

  1. MRR: Monthly Recurring Revenue – Total active monthly revenue from subscriptions
  2. ARR: Annual Recurring Revenue – Total active annual revenue from subscriptions
  3. Ramen Profitability: Your micro saas makes enough money to cover for your basic living expenses 🙂
  4. TTM Revenue/Lifetime Revenue: Total Revenue generated since launch
  5. Gross Margins: (Revenue – Expenses)/Revenue

Business Models in Micro SaaS

  1. Subscriptions: Your users pay a monthly subscription fee to use your services
  2. One-time payments: Users pay a one-time fee to access the service or get credits for the product which may or may not expire in a specified time frame
  3. Lifetime Deals: Users pay once to use the app till the app exists

References and Recommended Readings

https://www.preetamnath.com/micro-saas

Micro-SaaS: Finding Problems, Buy or Build, XaaS

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