B2B vs B2C SaaS - Which Is More Profitable?

[@MicroConf]

Micro SaaS Products: Are They Actually Profitable?: kzbin.info/www/bejne/oomzd2SfaJ50oK8

[@gbatesy]

YNAB is a good example of B2C SaaS

[@RobWalling]

Nice, yes!

[@franklanham6936]

Additional comment - I just saw your third kind of business, B to both, and that’s actually what I’m planning. I am much encouraged now - thanks so much for your positive and energetic content.

[@MicroConf]

Thank you for watching, Frank.

[@deckerjake438]

Thank you🎉 that solidified a few things for me; at best a consumer option (free/reduced cost - self serve) but drive majority of the business towards B2B.

[@semigloss]

Brilliant. This is a topic I cover with early stage ed tech startups, and your comparative walkthroughs of the unit economics really drives home the differences. Incidentally, in ed tech we see a fair amount of B2B2C, where, say, an institution or department adopts software that users (students) are encouraged to purchase.

[@upsidedown3128]

Hey this is really interesting, edtech is a space I'm really interested in - would love it if you could point me to content where this is addressed, i.e how ed tech startups are selling to businesses.

[@lgchris1]

Nice video Rob! I'm both B2B & B2C would love to see more videos on monetizing dual funnels. Thank you for your content!

[@MarketingWithJeffCaldwell]

Absolutely love the duel funnel idea

[@willthomas7272]

Love your videos. I founded a b2c SAAS with £1m ARR. It's possible!

[@abdullahisaid4787]

Nice. What would that saas be if I could ask?

[@Emir-wr9ix]

@@abdullahisaid4787bro you think He is gonna Tell you how he made a Million pounds

[@CodingExpress]

As soon as you finished mentioning your resume, I subscribed immediately! 👍

[@MicroConf]

I appreciate that!

[@NormDoow]

That was great! can tell your making these great quality now!

[@MicroConf]

Glad you like them!

[@benjaminreed8640]

Love your channel and content! I've always been in B2B saas selling $10k/year minimum...makes for nice margins....although I've always been stuck in tiny markets.

[@benjaminreed8640]

Stupid question...how do you calculate pay back period and determine the viable cost to acquire customers?

[@MicroConf]

Venture funded companies talk about the 3:1 CAC:LTV ratio, with a cap of 12 months payback. But they have buckets of money in the bank. For bootstrapped and mostly bootstrapped companies I see 2-4 months as a common payback period for those who are cash strapped, and 4-6 months for those with a more mature funnel and a bit more money in the bank.

[@collax2613]

B2C saas here, we sell an online software that generate a cycling training plan and automatically adapt it week by week based on the user availabilities, goals, etc... Unfortunately the B2B path for us seems rather limited.

[@brahmabull4004]

Yeah, that's because your business would make no sense as a b2b

[@kevinosborn3258]

1yr late, but maybe you could offer it as a package to businesses to provide it in their healthcare plans

[@thecoachchris]

Who's the video editor? The production on this video is impressive.

[@JEROME_BLACKSTONE]

Interesting because I would have always thought Spotify or Netflix as a B2C Sass company.

[@mustacheman6000]

I wonder what the numbers look like on discord. They're another great example of a B2C saas that grew organically.

[@alistairgunnscott]

There are bunch of personal fitness B2C apps out there

[@utubetvux5170]

Thank you. I learn a lot from your videos.

[@MicroConf]

Glad to hear that! Thanks for being here!

[@franklanham6936]

Rob, To what extent do you think your techniques apply to startups doing B2C apps that support people in their lives? I’m working on a personal life manager as a single person start up, with an engineering and software professional background. Although after hearing your words about B2B versus B2C, I’m definitely going to emphasize the B2B aspects of the product.

[@MicroConf]

Some of the techniques still apply, but as I laid out in this video, B2C is really hard to do as a bootstrapped founder. If you can solve a pain point for a business there is a higher likelihood of success than with B2C businesses.

[@thepanafricanman]

Spotify is B2c but I agree with your analysis.

[@ags911]

Did he say it wasn’t? He said it’s not a SaaS.

[@rolfvanderkaaden]

It's more of a value thing I suppose. Consumers do not need sales tools, productivity tools or scheduling tools. For the most people the free alternative's will suffice - so why pay for a service that does a similar thing? Most of the cases I can think of that would provide value for a consumer are entertainment, media or fitness. I guess I would consider a gaming platform like xbox live, world of warcraft or any game that has a subscription based model B2C SaaS software.

[@RobWalling]

I would view that as a content/entertainment play, rather than SaaS. People aren't buying the s/w they are buying the content.

[@l0g1cb0mb]

The only problem I have with using a Game platform as the example of a B2C SaaS and comparing it to the typical SaaS model and expecting the MRR model to predict its rate of return for the amount of effort put in is not a good case. The Gaming industry is a different beast and players will do impulse purchases within that main SaaS framework that doesn't exist in others such as the Micro-transaction Model wherein purchases for silly little things like cosmetic skins for their avatars that cost money are on sale and the player "simply MUST have it!" So, they're willing to buy it, in tiers ranging from $1.99 to $500,000.00 depending on the game (In Star Citizen for example some purchased the Anvil Valkyrie, which sold for $500,000 real money and the game was still not 100% in production yet, but the crowd funding for it got up to $300 million so players were a bit psycho for it!). So realistically the range is $1.99 to $100 and some games will go to $200 or up to $1000 if they tack on bonus discount savings of additional credits for the transaction because the mechanism is done by using an in-game currency that allows a kind of exchange, that's usually one-way roach motel style that money checks it, but it doesn't check out! And just like Monopoly money, once converted, people will spend it as a sunk cost, vs. treating it like and investment. There are those that will go Meta with it and do just that game the system like a stock market, those are the Gaming Systems Economists, the ones that actually start it's economy going start figuring out how to make $ using the system and profiting from it in and out of game and help the game grow even when it breaks EULA (the Black Market Economists, #NotAll). The point is that Players spend loads of money in game on things usable only in game and revenue is generated from that that is not accounted for by the subscription numbers alone. They're not consistent, likely have stalls without incentives so sales an things have to be created to keep the Spice flowing, but the "Product" is all within the SaaS itself of the Game world, 100% control is in your hands execution, correction, revocation, sales, discounts, pricing, profit, everything! Even Ad space for external marketing partnering is a thing like adding a little Ad window or something and a pricing tier that doesn't have the window ( free/paid ) for example - while ads are not specifically my cup of tea as a consumer, as a business person, that's a different matter. The wisdom given is welcome and great, I hope the insights I've added are of value and further the discussion! But I ain't one to gossip... .

[@vnhg]

😁This was an AWESOME video!

[@MicroConf]

Thank you!

[@shivamanand6112]

"I might sound im down on b2c saas..." ok good now he'll talk about good so i feel better about my idea "...and i kinda am" LOL

[@danieltannor6647]

It's kinda sad that's it's so hard to profit of businesses for consumers. What're your thoughts on the dating space?

[@leadsurgee]

crowded space don’t even bother lol

[@johnhalley5063]

Is it a good idea to take inspiration from a successful SAAS product that is covering a wide variety of industries and build something similar that is more focused on one specific industry?

[@MicroConf]

This can be a good way to start. For example, there are generic CRM platforms out there, but if you can tailor your offering to a specific industry. BuilderPrime is a great example of this. They made a project management & CRM focused on contractors. In episode 630 of Startups for the Rest of Us I interviewed the founder about their story. You can check out that episode here: www.startupsfortherestofus.com/episodes/episode-630-approaching-1m-arr-as-a-niche-saas-founder

[@Luffeeland]

For the third type of business I would've used B2A, business to all instead of another B2B

[@kendrickstrickland9801]

Weight watchers for B2C Saas? My SaaS I am looking to build falls in that category.

[@MicroConf]

That would be B2C.

[@tytanyo007]

Canva is a SaaS? If yes, they are for B2C, i'm right? Nice video Rob.

[@MicroConf]

I’m sure Canva has some consumers as their customers. However, I’d bet the bulk of their revenue comes from businesses or freelancers who are using the tool to make money. So they are close to the Dropbox example I use in this video.

[@denizcirpan]

Bro, your B2C saas samples all about low ticket items and audience. If you sell fintech B2C SAAS products such as tradingview or stock market data saas products, trading bots ect... it could be more expensive than B2B saas products right? So it's all about target audience and topic.

[@MicroConf]

Could be. Do you have specific examples that you can point to? Typically at those high price points, the products are aimed at professional users.

[@losoncedemartino4454]

Hi Rob, Just started to read your book :) Suppose a saas idea for freelancers as the target customers, would you consider them 'Businesses" or "Consumers"? I think a freelancer is an implicit businees while doing their job, isn't them?

[@MicroConf]

This would be B2B. Since freelancers are generally working solo this would be considered Business to Very Small Business.

[@RationalDissonances]

so a workout app that I have on my phone with monthly subscription, that doesn't count as B2C SaaS? I'm paying for the software, there are tons of workout content out there in any form, but I'm paying this one because its a software that I can have on my phone + customization

[@RationalDissonances]

or all of this new AI generative things, like generate your avatar AI, aren't they a SaaS?

[@MicroConf]

I’d say the workout App is a rare example of a B2C SaaS. I’m curious to hear how much it cost per month? Regarding the Avatar AI type businesses, they are most times one-time sales, so they don’t have the subscription aspect of a SaaS.

[@paulgarcia2887]

Is B2Freelance a thing? Like business but an individual.

[@MrMaragwa]

Freelancers are more like consumers so same issues

[@MicroConf]

Yes, but those freelancers are small businesses, right? So that would be B2SMB (B2 Small-Medium Business).

[@yekar_ai]

This is a huge decision that I have to make, I'm developing a product that helps gym users train better with AI (analysing the recordings of their training sets etc.). Validation phase is going okay, but my problem now is that it has to be B2C or B2B2C. The second is more complex (with personal trainers/gyms) because of the nature of the product, and the profitability can be hard. I can do both B2C and B2B2C, but I give more value to the end consumer, what can I do?

[@MicroConf]

I would start talking to the trainers and gyms to see what problems they actually need solving and are willing to pay for.

[@yekar_ai]

@@MicroConf Thanks for responding, I'm talking to many people now, trying to see what problems I can solve

[@ankitkohli8264]

In B2C personal task management and budget planning apps work well … Any thoughts?

[@MicroConf]

It’s still B2C, so my thoughts in this video still stand. You aren’t likely to find many examples of a personal task management or budget planning app that charge even $50/month. As a personal expense $50/month is expensive. For businesses, $50 is a drop in the bucket if it provides enough value.

[@edhahaz]

Yeah no shit, the consumer would look at something like roll20 and ask themselves sensibly "why couldn't this be a one time purchase on steam that works p2p"

[@vitaliiivanov9514]

But what about education? There are many language learning tools that looks like doing pretty well charging consumers. If a tool really helps one build a valuable skills, why not pay like 50$ per month if you gain much more landing better job having this skill?

[@RahulKashyap-ij9re]

Is grammarly B2B or B2C?

[@MicroConf]

I’d say Grammerly is B2Both. It’s quite possible they have a dual funnel, a concept I talked about in this video: kzbin.info/www/bejne/jpa1h4yVYs-Fr6s

[@projavadevelopers]

What about Facebook isn't it B2C

[@applepeel1662]

Isn't notion b2c SaaS?

[@MicroConf]

Certainly there are consumers using the product, but I would guess that like the Dropbox example in this video, most of Notion’s revenue comes from businesses.

[@Mufaxsa]

Wouldn’t Canva and Photoshop be B2C Saas

[@MicroConf]

There may be some consumers that use these products, but the majority are businesses. I suppose it’d be most similar to the DropBox example I talk about in this video.

[@hypeeo8196]

PM for a 100M ARR B2B SaaS here... One thing isn't discuss in this cool video and this is.... Cost of acquisition. In the B2C example microconf mentioned the need of having 165k visitors to get 1000 paying users (aka $8k MRR) but those 165k visitors cost you what? may be $3.3k to 4k max, assuming some 20/25$ CPM in a not too crowded yet well defined niche? The same 100 B2B paying cutomers could cost easily $6k to $3k as you probably need at least one full time sales to nail those deals and you have close to no viral loop possible. In short, scaling in B2B is always very costly and the supply is smaller which means that if you do find a market, you better spend big time to conquere it fast or your competition will do it. B2C is far more easy to start and you can maintain it small and far more profitable if you want too.

[@grege6564]

How would 165k visitors cost 4k max on 25$ CPM? CPM measures cost per impression, not actual click-throughs to your site. The average CTR for most industries is less than 2%, meaning in a good month, that $4k brought in 3000 visitors to your site. To bring in quality 165000 visitors to your site through paid acquisition channels would usually cost over $100K if the niche has the audience for it.

[@hypeeo8196]

@@grege6564 I simplified to keep it short but let me elaborate: I didn't mean to have 165k people on your own website, this would of course be way too expensive I therefore considered a decent linkedin page or instagram page (depending on who your are targeting) and bring the 165k ''visitors'' there. Therefore having 165k impressions on your ''profile'' if you prefer not on a random ads. Assuming your profile is properly setup with a decent CTA (linkedin offer to custom yours), you can easily attract 165k people on your profile page for around $4k

[@hypeeo8196]

Getting someone to your own website is always 10X harder than simply getting it on your profile page. And just running an ad with a direct CTA to your signup will not land the conversion you hope, so the perfect in-between is to get the folks on a more elaborate page native to the platform. And between the organic actions and the paid ones, I do confirm that for about $4k, assuming the prep work is properly done, well... you get the 165k ''decently qualified profile visits'' lets call it like this.

[@grege6564]

@@hypeeo8196 Again, a “profile visit” or a site visit regardless of the destination should be measured in CPC and not CPM, because the user still has to click to get to your profile or site. Everything else you mentioned is fine, but that doesn’t change the fact that impressions ≠ visits. I head performance marketing campaigns for an enterprise B2B platform and what you’re claiming is 30-40 times cheaper than any industry average. The numbers just don’t make sense.

[@hypeeo8196]

​@@grege6564 You are right. (Sincerly). Somehow (for a product discovery I'm running) I do make it work (very low ads budget but still got high level of signups) Yet, I must admit that the organic part could be responsible for a bigger chunk of the signups (I do not track properly these parts Its on linkedin, we target job seekers (so stronger need) and our signup method is a linekdin signin as well... So the all funnel and the conversion linked to it is may be just specifc this niche and can't be applied to others industries? Idk, I will try to track better the organic vs paid effort to better understand what is responsible for the actual signups. Thanks for forcing me to the reflect on this.

[@0shaad]

how to make zapier, in which user have to sign up with email, password and pay $10, then they have to login with same credentials to access my web application (in short, i want only paid user to access my web application) love to see tutorial on this.....or please redirect me to any useful youtube tutorial on this

[@MicroConf]

Hi there, this kind of tutorial isn’t really within the scope of this channel. Best of luck with your project!

[@gavinwiener]

Do you have access to PayPal or Stripe? What you could do is handle the subscription with one of those. Then with Zapier, you monitor for new payments/subscriptions, and you could send the info along to your app. Feel free to reach out if you want a bit more help

[@showbikshowmma3520]

I believe u will answer my simple question: are facebook, twitter, instagram, snapchat, tiktok saas, b2b or b2c or paas

[@nitinsharmatheone2292]

They are marketplace...

[@MicroConf]

None of those are really software as a service. These are content/social media platforms. They are mostly B2C, though the ad platforms are B2B.

[@nimoria]

Roll20 has more than 10 million users and nearly 60 employees If you trust wikipedia, so your analysis is not quite correct I guess. (en.wikipedia.org/wiki/Roll20) But I understand your main point that there are many more successful B2B and it is easier to succeed with B2B. With B2C, it feels like it's go big or go home! Thank you for your content!

[@MicroConf]

Thank you for watching.