I made $1m selling software (without SaaS)

I’ve sold over $1,000,000 of software that is not SaaS, ie. no subscriptions.

People keep telling me “it’s not a real business”

I sometimes drive around in my Lambo wondering if they’re right.

In all seriousness, the romanticisation of SaaS has lead me down a path of chasing SaaS products over the years.

I’ve spent the past year building my first proper SaaS and now I understand exactly what recurring revenue costs.

Let’s look at some common SaaS myths and separate the hype from the reality.

Myth 1: Recurring revenue is the best

People talk about recurring revenue as if it simply recurs forever.

Recurring revenue is just lifetime revenue paid in instalments.

Take my boilerplate as an example – at it’s peak a single customer purchased for $900. The full value was captured upfront.

Many customers also purchased new versions in the future or add-on products with some customers paying up to $2-3k over their lifetime.

Now contrast that to my SaaS - a customer paying $49/mo needs to stay for 18 months to generate the same upfront revenue, or 61 months to capture the same LTV revenue.

5 years. And they can cancel at any time.

It is 10x harder to retain a customer paying $49 for 3 months than to sell a $900 boilerplate.

Every month you need to “sell” the subscription to the customer again. Every month customers are re-evaluating if they want to keep paying you. If your product is baked deep into an enterprise workflow, churn may be low but those kind of products are out of reach for small developers.

Myth 2: SaaS margins are excellent

To sell a boilerplate, I pay Stripe a small 3% fee for the transaction and host the code for free on Github. My gross margin is 97%.

Unlike downloadable software - SaaS has continuous delivery costs and lower margins. For example: Stripe fees, hosting, external API providers, AI processing, transactional emails and a bunch of different tools and services needed to keep the SaaS running.

Myth 3: SaaS is a lifestyle business

SaaS is often like a screaming baby constantly demanding attention in the middle of the night.

Video demos, support, new features, dealing with integrations, outages or cost changes - it demands a lot of time and attention. It’s not something you just casually run on the side.

My boilerplate business is zero touch sales, maybe a quick email with a few questions. The support burden is low because customers use Discord to help each other.

Myth 4: SaaS has huge exit multiples

This one is not a total myth, but it’s exaggerated.

Venture SaaS can absolutely exit for 100x for a small % of founders.

Bootstrapped SaaS is unlikely to do so. 4x is the magic number that gets thrown around online but it’s oversimplified. Someone won’t just magically pay 4x revenue for your SaaS, it depends on a myriad of factors.

Myth 5: SaaS is easy

I find it 10x easier to repeatedly sell a high ticket $900 software product than to sell a $49/mo subscription.

With a one-time payment:

Customer pays → gets product → transaction complete.

SaaS is a never ending cycle of fixing funnels, activation, onboarding and churn.

You are fighting every month to keep customers.

I’m not suggesting one is bad and one is good, just that SaaS sales are more challenging and there is a lot more to learn.

Why did I choose SaaS then?

It’s a mixture of solving my own problems and letting the internet rank business models for me.

SaaS is a “real business.” A boilerplate is “just a boilerplate.” A course is “just a course.”

My biggest mistake was treating subscriptions as the only “serious” software business model and ruling out other product ideas and business models over the years because they weren’t subscriptions.

Alertly is a natural fit for subscriptions because it delivers ongoing value. I’m committed to building it, and I’m enjoying what I’m learning. The lesson here isn’t that SaaS is bad. It’s that SaaS isn’t inherently superior, or the only model worth pursuing.