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Talk to any club promoter and they'll tell you their margins are razor-thin. A huge club in Miami, or other large MSA (NYC, Chicago, etc.) is the exception. As we all know, basing a business model on the 'edge case' isn't a recommended thing to do. Let's do some math:
Using Songkick's API, there are 5,700 music venues in the US. Let's say this product gets 10% market penetration for non-paid users after two years. That's a huge success in terms of market share, about 570 venues. Let's say 10% of those users upgrade to the paid version, again, a huge success (and virtually unheard of) in terms of market penetration for these types of services. That'd be 57 paying clubs. Assuming 0% Y/Y churn (SaaS company average is 13%, btw), we're looking at $273,000 in revenue after almost complete realistic penetration. Remove hosting costs ($3,000/month), marketing costs ($6,000/month), sales staff ($5,000/month), enterprise-level support ($3,000/month) and you get: $204,000 in ongoing expenses. Those are the bare-minimum "virtual office" expenditures, too, unless you're assuming a "build it and they will come" philosophy. In other words, if you're a company of one employee, you might break even. Historically, for a SaaS company to succeed and grow sustainably, it needs to be operating at a >50% margin. Try to figure out how to adjust your expenses and potential market to hit that within two years of "Day 1" |
It is a valid observation we are tackling it head on. Thanks