The Real Economics Behind Running a Small SaaS

Alright, let's cut the BS and talk real numbers for your "small" SaaS. No fluff, just the cold, hard cash. --- ## The Real Economics of Your 'Small' SaaS. Spoiler: It Ain't Cheap. Everyone and their dog is launching a SaaS these days. You see the shiny MRR screenshots, the "I quit my job" posts, and the dream of passive income rolling in while you sip mojitos on a beach somewhere. Stop. Right. There. That's marketing porn. The reality of running even a "small" SaaS – the kind that pulls in $5k, $10k, even $20k MRR – is a fucking tightrope walk between revenue and a relentless parade of expenses that try to chew through your profit. If you think it's just about getting users and watching the money stack up, you're in for a rude awakening. Let's break down where your money *really* goes, beyond that sweet, sweet top-line number. ### 1. The Infrastructure Bill: It's Not Just a $5 Droplet Anymore You start with that cheap DigitalOcean droplet, right? Great for an MVP. But as soon as you get real users, real data, and real expectations of uptime, things get spicy. * Hosting: AWS, GCP, Azure, Vercel, Heroku (RIP free tier). You'll scale up. You'll need more CPU, more RAM, more storage. Then there are *egress fees* – that's the cost of data leaving their network. And trust me, users pull a lot of data. * Databases: Your basic PostgreSQL might be free, but hosting it, managing it, backing it up reliably, and scaling it for performance costs. Or you pay for a managed service (Aiven, PlanetScale, Supabase) – which isn't free. * CDN: Content Delivery Network (Cloudflare, Fastly). Essential for speed and security. Not free, especially at higher tiers. * Backups & Monitoring: You *will* lose data if you don't back up. You *will* have outages if you don't monitor. Tools for this cost money. The Reality: Your "server costs" are rarely just the server itself. They're an entire ecosystem of services designed to keep your shit running, fast and secure. And they add up quicker than you think. ### 2. The Software Subscription Hydra: You Need Tools, And Tools Cost Money You're a SaaS founder, you *get* the value of recurring revenue. Guess what? So do a thousand other companies who make the tools you need to run your SaaS. * Payment Processing: Stripe, Paddle. Essential. And they take a cut of *every single transaction*. It's a cost of doing business, but it's not insignificant, especially as you scale. * Email Marketing/Transactional Email: Mailchimp, SendGrid, Postmark. You need to talk to your users. Automated onboarding, password resets, newsletters – all cost money. * Analytics: Mixpanel, Heap, Google Analytics (though GA is "free," you still need to interpret it). Understanding user behavior is critical for growth and retention. * Customer Support: Intercom, Crisp, Zendesk. You need to talk to users when they have problems. Good support isn't optional; it's a retention lever. * CRM/Sales: Pipedrive, HubSpot (even the free tier becomes paid fast). Managing leads and customers. * Project Management: Notion, ClickUp, Linear. Keeping your team (even if it's just you) organized. * Design Tools: Figma, Sketch, Adobe CC. Unless you're a wizard with CSS and SVGs from scratch. * Legal & Accounting: Don't forget Quickbooks, Xero, or whatever you use to manage the books. Plus, actual accountants and lawyers for terms, privacy policies, and taxes. The Reality: Your SaaS is built on a stack of other SaaS products. Each one eats into your profit. Be ruthless about what you *actually* need. ### 3. Your Own Damn Time: It's Not Free, Even If You're Not Paying Yourself (Yet) This is the big one most solo founders ignore. You're working 60 hours a week for "free." That's not sustainable, and it's not how real businesses operate. * Opportunity Cost: What could you be earning doing something else? What's the market rate for a developer, product manager, and marketing specialist? Because you're doing all three. * Burnout Cost: The cost of hitting a wall, losing motivation, and potentially killing your business before it even takes off because you're running on fumes. * Future Salary: If this thing is going to be a real business, you eventually need to pay yourself a market-rate salary. That's a huge expense that needs to be factored into your long-term economics. The Reality: Your time is the most valuable, and often most undervalued, asset in a small SaaS. Don't build a business that can only survive if you work for free. ### 4. Customer Acquisition: Getting Users Isn't Magic (And Often Not Free) You've built it. Now they need to come. * Marketing & Sales Tools: Ads (Google, social), SEO tools (Ahrefs, SEMrush), content creation (writers, designers), outreach software. * Your Time (Again): Cold emailing, content writing, engaging on social media, networking. It's all part of CAC (Customer Acquisition Cost). * Referral Fees/Affiliates: If you're leveraging others to bring in customers, they expect a cut. The Reality: "Build it and they will come" only works in movies. In SaaS, you have to drag them in, usually by spending money or time (which is money). Knowing your CAC and ensuring it's significantly lower than your LTV (Lifetime Value) is non-negotiable. ### The Bottom Line: Profit Margin, Not Just MRR When someone shows you their $10k MRR, ask them what their *profit* is. Because $10k MRR with $9k in expenses is a very different story than $10k MRR with $3k in expenses. Running a successful small SaaS isn't about magical growth hacks or viral marketing. It's about: 1. Delivering immense value: So users stick around and tell others. 2. Being ruthlessly efficient: Question every subscription, optimize every process. 3. Understanding your numbers: Know your LTV, your CAC, and your churn rate intimately. 4. Pricing correctly: Don't undervalue your work or the value you provide. Forget the dreams of instant riches. Focus on building a sustainable, profitable business by understanding the *real* economics. Because if you don't, that dream SaaS will just become another expensive hobby.