The zero MRR SaaS: What do you do if no one is upgrading to your paid plan?
50 users, decent usage, but zero revenue
Hey friends,
I recently came across an interesting reddit post that highlights a common challenge many early-stage SaaS have to deal with.
In this post I’m going to provide a detailed analysis of this challenge and provide you with the approach, tools and mindset for tackling it.
Let’s jump right in.
The reddit post: 50 users, some usage, no revenue
My analysis of the post
The first thing to know before we dive in is the nature of the SaaS being discussed.
The SaaS in question, SocialMate, is a social media schedular.
In tools like SocialMate, the user creates a post in the tool and assigns it to a social network (Facebook, LinkedIn, X, etc). Then based on time slots set up per social network, the posts are automatically posted on the user’s behalf.
The whole idea is that instead of you creating content every day and manually posting it, you spend a few hours creating content and the social media schedular posts them on your behalf.
The market leader in this space is Buffer, which I’ve mentioned in a few previous posts. I’ve also covered Postiz which is an AI-focused solution in this space.
Almost every week I’m coming across new solutions in this market. To say it’s become commoditized is an over statement.
The X thread below is an interesting discussion on this topic.
The entrepreneur behind the reddit post shared 6 points; let’s go through each in detail.
1. A little over 50 users, 900+ posts published through the platform.
Reaching 50 users is a nice little milestone and the 900+ posts being published is a decent sample size.
Unfortunately we don’t know the distribution of usage among those users. This is usually more important than totals without much context.
What I’d like to know is the following:
Out of the 50 users, what percentage published at least 1 post?
The answer to this question would help us understand if the SaaS has a user activation issue.
Lets assume only 5 out of the 50 users published at least 1 post. That would clearly indicate that most users don’t experience the “aha” moment that the SaaS provides.
Usage distribution is key in painting a clearer picture of how users engage with your app, and at what frequency. Adding time constraints (“within the first 7 days from signup” for example) makes it even clearer.
As a general rule, things happen quickly in SaaS or they don’t happen at all.
Before a user can publish a post they must first connect a social network to the app.
So before the question above is answered, what we really need to know is, out of the 50 users, what percentage successfully connected at least 1 social network?
I advice SaaS founders to think through user activation, usage, and conversion to paid within the framework of the “core funnel”. Every SaaS needs to know it’s core funnel and track it.
Below is a hyperthetical example of SocialMate’s core funnel.
In my hyperthetical example we can see a few important pieces of information:
Only 40% of users successfully connect a social network. This is clearly an onboarding issue.
Out of those that connect a social network, 60% publish a post. This isn’t bad but also not great. At least 80% of the users that can experience the “aha” moment should.
Since only 12 out of the 50 (24%) actually published a post (experienced the “aha” moment), the sample size is simply too small to understand how the end of the funnel performs. Only 12 people saw value, how many do we expect to pass through to the next step in the funnel?
A tool like Posthog would be great for recording key events which can then be used in an analysis to plot the core funnel’s numbers and conversion rates.
2. Over 1,500 visitors and 3,000+ page views in the last 30 days, all organic, zero ads.
This point sheds some light on the top of the funnel (traffic to the website). 1,500 visitors in 30 days is a nice starting point. I don’t really care about pageviews since it’s irrelevant.
The fact that all the traffic is organic is great, especially since SocialMate is being bootstrapped. There’s no revenue yet so there’s no profit left over for marketing.
If we assume a conservative conversion rate of 2%, we should expect around 30 new signups a month. This conversion rate would be affected by the percentage of new traffic, and the quality of that traffic.
3. Hit a single-day high of about 146 visitors yesterday
This point doesn’t tell us anything. The single-day high might have been a one-off that’s not in the control of the entrepreneur.
What is more interesting is the rolling 28-day sum of new traffic.
Since there is a ton of variance in daily traffic numbers we need a smart way to normalize the data and compare it over time.
I touched on the concept of a “moving window” in an old YouTube video which I’ve embedded below.
You’ll either need to use AI, a tool like Tableau, or do some manual work in Excel to build a rolling sum graph of your new traffic.
If the rolling 28-day sum of new traffic is not going up over time, then you aren’t actually growing your top of funnel. Ignore outliers and focus on growing your 28-day moving sum.
4. Traffic from Google, Bing, DuckDuckGo, and ChatGPT, which has been sending people for a while now.
The fact that traffic is coming from multiple sources is very positive, especially since some traffic is coming from ChatGPT.
Once again, I’d like to see a distribution. Does search count for 95% of traffic, leaving 5% from ChatGPT, or is it a 50/50 split?
There is also one obvious question that arises; why isn’t there traffic from social media? Does the owner not “build in public”?
![20 growth tactics used by Cursor, Gong, Intercom, Clay, n8n and other fast growing B2B SaaS companies [PART 2]](https://substackcdn.com/image/fetch/$s_!eKUL!,w_140,h_140,c_fill,f_webp,q_auto:good,fl_progressive:steep,g_auto/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F98661911-ad68-4e8b-8102-415addff6f33_1303x726.png)
Search engines are a great source of traffic since it’s usually high intent traffic, and with the right strategy, can be scalable.
At this point in the reddit post, the OP adds the follow:
The honest part: still pre-revenue. Pro is $5 a month, competitors charge $18 to $99 for less, and people are signing up and actually using it. Getting users has been going well. Getting paying users is the next milestone.
My read is that the product is solid and the traffic is real, and the thing I am weakest at is the part after signup, getting someone to see enough value to put down $5. I can build anything, but I would rather stay on building and hand growth to someone who specializes in it.
I have a few comments on this section of the post.
Firstly it’s a mistake to charge $5 a month for a social schedular SaaS. My guess is the entrepreneur behind this SaaS took a look at the market and decided to undercut it by charging just 5 bucks a month.
Unfortunately I wasn’t able to see what is included in the $5 a month plan but if you are going to charge $5, you might as well charge $12 or $15. No one is going to look at a $12 a month price point and say, “oh wow, if only it was $7 cheaper”. The OP even says that the competition charges $18 to $99 so why undercut yourself by over 60%? The OP doesn’t understand price elasticity.
The next point is that the OP mentions:
my read is that the product is solid and the traffic is real, and the thing I am weakest at is the part after signup, getting someone to see enough value to put down $5.
The issue with his statement is that 50 users isn’t a big enough sample size to understand how the end of his funnel is performing. He needs more users and more middle of the funnel data to determine if it’s reasonable to expect users to convert to paid.
His positioning, product bundling, and pricing all impact the free-to-paid conversion rate. The $5 price point may even be hurting that conversion rate.
The OP then posts 2 questions looking for feedback.
5. At 50 users and pre-revenue, would you focus on feedback or just more acquisition?
My answer to this question is “both”. Feedback should be a priority from day 1 for every SaaS and honestly, collecting feedback should never end.
The OP should be analyzing his user data, reaching out to every signup, and trying his hardest to get on video calls with early users to gather feedback.
User acquisition should also be a priority since more users means more opportunities to gather data and objective feedback.
There’s no way around statistics and without a big enough sample size of usage data, and how users progress through the core funnel, you’ll just be guessing.
6. For a $5 tool against $18-$99 incumbents, does the low price help, or does it signal low value? (I feel almost on par, if not better)
As I wrote above, I’m not a fan of charging $5 a month for a social media schedular.
Another way to think about it is if your goal is to get the SaaS to $1,000 in MRR, you’ll need 200 paying users. Converting 200 businesses to paid subscribers isn’t easy, especially for a founder working solo on nights and weekends.
At an ARPU of $12, that 200 number drops to 84 (to have $1k in MRR).
A social media schedular is a B2B SaaS. Businesses are a lot less price sensitive than the average consumer so charging rock bottom prices is usually a mistake.
An exception would be for a “nice to have” SaaS with a very low conversion to paid. I covered such an example in last week’s newsletter.
To answer the OP’s question, yes, a $5 price point does indicate low value.
He would need a lot of social proof and/or word of mouth to counteract the natural perception that his $5 SaaS is proving low value.
A business that will pay $5 will also pay $12. A business that won’t pay $12 but will pay $5 is probably a customer you don’t want anyway.
In summary
If you’re in the early days of your SaaS and not sure why no one is subscribing to your paid plan, you can definitely relate to the reddit post I shared above.
I hope my analysis of the post shed some light on how best to navigate the issue of having no paid subscribers.
The concepts of the core funnel, pricing your SaaS correctly, and understanding if your top of funnel is healthy and growing are all critical in the early days of a SaaS.
I touched on each of these topics in this post and provided you with the methods, tools and mindset for approaching each.
Often the answer to not having any paying users is to keep on going and to be patience. Having enough user data and insight into your core funnel helps paint a picture that will point you in the right direction.
If you like this type of post, please let me know in a comment below. If there is demand for this type of content, I’ll publish more of it.
That’s it for this week. See you next time.
Justin