Hey Eyal, awesome blog you've got here, I'm from NZ so has been even more interesting to me following along! I recently micro-acquired my first Shopify Saas as well and am working on that in a similar style to you at a smaller scale.
When you refer to pricing up and down, how do you approach/analyse this personally? My Shopify App currently has a single $29.99/month plan, and I'm leaning towards pricing down at free/$4.99 + % commission like you do with Batch (so people don't have as much fear of getting started) and pricing up to $49.99/$59.99 for extra functionality.
Would be interested though if you've got a better system of approaching this!
Hey Mark, I think the answer is deeply rooted in the psychology of your app's users.
The vast majority of merchants downloading apps from the app store are doing under $100k/yr in sales. A looooot of beginners. That means that something that costs $29/mo in base will have to deliver total monthly value of a few times that much (either in sales earned or in time saved).
When you introduce a transactional component (i.e. commission) that creates a whole new dimension to the user's expectations as they're being nickel and dimed each time they make a sale. At that point you'll find users are much more sensitive unless they value proposition is a no brainer.
On the other side of the spectrum, you have to recognize the advantage of having flat pricing plans and the impact of changing that to something variable. You'll lose foresight because your MRR will not be recurring per se and more of a function of how many merchants you have * how much more revenue you generate from them * how much commission you earn on average from each sale.
I think a flat approach is much more simple and nimble, but a variable approach has far more potential. You couldn't dream to bill a merchant $1,000/mo on the app store, but a merchant will happily pay you $1,000 in transaction fees if you make them an extra $50k in sales -- just as they would for a consultant.
Congratulations on the acquisition and thanks for the excellent post (and the rest of your blog, worth every penny of the subscription), extremely instructive and inspiring!
One thing I was wondering, does doing these "cross-border" acquisitions (ie. acquiring an APAC product whilst being based in Canada) add any complexity to the acquisition / asset transfer process in your experience?
And on a related note - is there any operational pain points with regards to sales taxes (ie. end customers of the app being based in APAC) or is it all taken care of by shopify?
Since these are asset sales, I'm not buying the companies (and their baggage) I'm just buying the products and rolling them into my own holdco (MicroAngel).
The advantage of doing this is that I can take advantage of R&D tax credits as a canadian federal corporation where I get 30-60% back for every dollar I earned. I couldn't do this if I kept the products within, say, Australian companies (though they have their own advantages that I can't reap).
Sales taxes are all taken care of by Shopfiy at the source of the payout.
I then have income tax at the corporation layer and then personal tax whenever I declare a dividend. The usual!
Hey Eyal, awesome blog you've got here, I'm from NZ so has been even more interesting to me following along! I recently micro-acquired my first Shopify Saas as well and am working on that in a similar style to you at a smaller scale.
When you refer to pricing up and down, how do you approach/analyse this personally? My Shopify App currently has a single $29.99/month plan, and I'm leaning towards pricing down at free/$4.99 + % commission like you do with Batch (so people don't have as much fear of getting started) and pricing up to $49.99/$59.99 for extra functionality.
Would be interested though if you've got a better system of approaching this!
Hey Mark, I think the answer is deeply rooted in the psychology of your app's users.
The vast majority of merchants downloading apps from the app store are doing under $100k/yr in sales. A looooot of beginners. That means that something that costs $29/mo in base will have to deliver total monthly value of a few times that much (either in sales earned or in time saved).
When you introduce a transactional component (i.e. commission) that creates a whole new dimension to the user's expectations as they're being nickel and dimed each time they make a sale. At that point you'll find users are much more sensitive unless they value proposition is a no brainer.
On the other side of the spectrum, you have to recognize the advantage of having flat pricing plans and the impact of changing that to something variable. You'll lose foresight because your MRR will not be recurring per se and more of a function of how many merchants you have * how much more revenue you generate from them * how much commission you earn on average from each sale.
I think a flat approach is much more simple and nimble, but a variable approach has far more potential. You couldn't dream to bill a merchant $1,000/mo on the app store, but a merchant will happily pay you $1,000 in transaction fees if you make them an extra $50k in sales -- just as they would for a consultant.
Hope that gives you something to think about!
Congratulations on the acquisition and thanks for the excellent post (and the rest of your blog, worth every penny of the subscription), extremely instructive and inspiring!
One thing I was wondering, does doing these "cross-border" acquisitions (ie. acquiring an APAC product whilst being based in Canada) add any complexity to the acquisition / asset transfer process in your experience?
And on a related note - is there any operational pain points with regards to sales taxes (ie. end customers of the app being based in APAC) or is it all taken care of by shopify?
Thanks Denis appreciate your support!
Since these are asset sales, I'm not buying the companies (and their baggage) I'm just buying the products and rolling them into my own holdco (MicroAngel).
The advantage of doing this is that I can take advantage of R&D tax credits as a canadian federal corporation where I get 30-60% back for every dollar I earned. I couldn't do this if I kept the products within, say, Australian companies (though they have their own advantages that I can't reap).
Sales taxes are all taken care of by Shopfiy at the source of the payout.
I then have income tax at the corporation layer and then personal tax whenever I declare a dividend. The usual!