Definitive Guide to Micro-SaaS: Build a Profitable Business

Software as a Service (SaaS) is a hugely popular business model – and for a good reason. The Internet allows businesses to sell SaaS online in many innovative and affordable ways.

What’s even more impressive about SaaS businesses is that they can be adapted for different functions, users, and working environments. Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) are some of these adaptations which are growing in the industry.

What is a Micro-SaaS?

The micro SaaS business model is an adaptation that differs from these fundamentally in one manner: it operates on a much smaller scale, having a narrow focus and a dedicated user base. (This is why it’s also called ‘Small SaaS’).

Main Differences Between Micro-SaaS and Traditional SaaS

A full-sized traditional SaaS can be a large-scale project involving multiple developers and fulfilling numerous functions. Micro SaaS businesses, however, are developed with minimal funding and costs by a small team or even a single individual to fulfill a hyper-specific purpose in a niche community. Hence the narrow focus and dedicated user base mentioned earlier. 

Developers highly appreciate micro SaaS solutions because they have the highest potential to create a fairly significant passive income. Part of a growing market, a micro SaaS application developed around one of the popular passive income ideas for software developers can generate revenue with minimal resources, widely perceived as a low-risk product. When well-developed, micro Saas solves existing needs, achieving customer satisfaction rapidly. Their build-in-one and sell-it-to-many SaaS recurring revenue model allows you to increase your ROI quickly.

Top 3 Micro-SaaS Features

Low Cost

A micro SaaS is a project that works without requiring expensive resources. Its development, because it takes place on a smaller scale, will also require significantly less funding than a traditional and more extensive SaaS.

Niche Market

If you are addressing a niche market due to the problem your micro SaaS seeks to solve, your user base will likely be part of the same industry or seek to perform the same task using your services. But even though your base may be small, these customers are more likely to be committed to using your micro SaaS business due to the alignment they feel. Therefore, it is highly likely to support its development in other ways, such as email feedback, beta testing, monetary donations, or even voluntary bug fixes.

Efficient Communication

Since an individual or a small team creates a micro SaaS, the development process is unlikely to be held up by delays in communication, task handovers, or waiting for approval from higher-ups. Smaller communication networks mean faster results overall.

How To Do Micro-SaaS Research in 5 Steps

Analyze Product Trends

You must be 100% certain that you are bringing something new to the micro SaaS table. Of course, you can present a much-improved version of pre-existing platforms or products, but remember, the keyword here is improved. This means that your SaaS solution needs to offer additional key characteristics that further answer the core needs of your niche market. All micro SaaS founders must constantly stay aware of the latest trends in the SaaS market. Product trends will help you connect to your customer base on a practical level, perhaps give you some interesting micro SaaS ideas, and encourage relationship building, a goal in all your marketing efforts. In the end, the same philosophy stands behind advertising micro saas companies as the one governing traditional SaaS marketing.

Determine Industry Standards and Benchmarks

No matter how niche your market is, there are existing standards and benchmarks for how tasks should be performed. For example, a SaaS like Autodesk’s AutoCAD was developed for graphic designers, architects, and engineers to create 2D and 3D models. Even though there were very few solutions like AutoCAD on the market at the time it was released, it still had to adhere to existing design and drafting protocols to be helpful to customers.  Always find the standards relevant to your industry segment and follow them carefully. In a technologized world like the one we live in, there are benchmarks and guidelines for everything.

Investigate New Technologies and Tools

Yes, you’ve guessed it. Innovation reigns in the micro SaaS journey. One of the most exciting things about developing new software is the chance to experiment and explore. How else can you offer your narrow market more features if not by using cutting-edge tools? Remember that, although your content needs to consider industry standards, you can be as innovative as you like with your framework. Some of the most usable and efficient software are those developed by drawing influences from external industries. The latest technologies and tools to build your product could simplify integrations with other next-gen solutions.

Take, for example, the modern project management SaaS. Older project management software models used linear timelines and calendar schedules to track projects. 

Newer SaaS like Asana, however, has revolutionized project and time management, as well as team communication by using the Japanese Kanban framework, initially designed to improve manufacturing efficiency in the Toyota factory. An instruction card is sent through a production line, allowing everyone involved to keep track of progress. Similarly, Asana uses ‘cards’ that are sent through a virtual production line and updated with progress.

Identify your Available Resources + 6 Examples

When thinking how to bring your micro SaaS idea to life, you need to do your research. The best place to start is where you are, so the first resources you need to take stock of are the ones you already have.

Identify Resources you have Yet to Acquire

Once you’ve itemized your existing resources, identify the gaps in your inventory. Make sure that your outside funding matches your projected expenses and that you have enough time and physical space to work on your product and access the necessary software to streamline the development process.

How to Test The Profitability of Your SaaS Idea’s Industry

Pick a Problem you can Relate to

It’s no secret that the more passionate you are about something, the easier it will be for you to have the vision and do the work necessary to bring it to life. For this reason, we recommend picking a problem you’ve witnessed in your professional experiences.

For example, struggling with social media communications or email marketing is not an isolated problem. So, a solution that could simplify and streamline the process and at least eliminate some of the associated costs is highly desired. Bannerbear is a company that saw the need and did just that.  They auto-generate social media images, banners, videos, and even dynamic emails through its API technology. 

Not all SaaS developers have an in-house designer who can quickly create social channels, and their app solves this problem.

Determine a Solution you would Want

Once you’ve identified a problem that is commonly faced by a niche community, brainstorm ways that you can solve this problem. And instead of trying to think up complicated solutions from the get-go, remember this rule in your micro SaaS guide: keep it simple. Successful micro SaaS focuses on addressing single variables at a time than every issue simultaneously.

Research Intent, Demand, and Competition

As we’ve said earlier, finding unsaturated market segments where you can easily thrive is pretty complicated. We’re lying now. It’s actually impossible. So, instead of hoping and dreaming, you need to be practical and understand who you are going up against. The same industry can seemingly have multiple Micro-SaaS platforms that address the same problem. However, you’ll notice that products will differ in some significant way, whether in terms of how they allow users to perform tasks or monetize their services to maximize accessibility. Indeed, there are a few key factors you need to look for. Use them to your advantage by creating that unique mix of elements to draw in users.

Create A Working Brand Persona

Customers buy products, but customers trust humans. A vital step in your marketing process will be the creation of your brand persona. Whether you decide on a playful or business-like persona, you’ll want this to show in more than just your marketing.

What’s more, don’t make the mistake of using a brand persona only for social media advertising. Inject aspects of this character or story into your software itself, and you’ll have a cohesive idea your potential customers are more likely to find captivating.

How To Build Your Own Micro-SaaS Product

Design a Prototype that Delivers your Solution

Using tools like Figma, you can create a wireframe prototype that shows your team or other stakeholders (such as beta testers) how the basic version of your product is intended to work. A prototype will allow you to check the logic of your solution and the platform's ease of use and catch any major issues before the actual development stage.

Make it Usable, Explainable, Simple, Scalable

When building a product, it is vital to keep two entities in mind: the user and the developer.

Specific User Experience (UX) concepts can help align your development method with your product goals: usability, explainability, simplicity, and scalability.

Usable

It’s important that customers can use the product's basic features without extensive research on the framework itself. The open-source Scribus app, for example, fulfills the same functions that MS Publisher does. They are both publishing and designing apps, but Scriber has a more involved user interface and requires trial and error to figure out. 

You must provide a helpful tool for developers that can then be adapted and replicated as necessary across various platforms to increase accessibility and revenue.

Explainable

Ideally, every software will have a help manual or tutorials to show customers exactly how to use it. But you don’t want to have your user wading through paragraphs of fine print to understand the functions of your software. Ensure that your user interface and the logical structuring of your software allow for intuitive navigation and use.

Simple

Your SaaS product may be the most effective and high-performing tool on the market, but that won’t count for much if it’s too complex for your customers to use. The key is to balance form and function: if the process is complex, make sure it is expressed simply. A good example would be the equation tool in most word and spreadsheet processors. Instead of listing every possible function, an icon that represents the equation list is provided, and upon clicking it, the user can access a specialized set of features.

Scalable

Making your SaaS scalable will give you a huge advantage in growing your business and revenue. This means you want to develop a product that doesn’t become more costly to maintain as its customer base grows. If your software can exist as is and draw increasing income without investing in more resources and extra funding, you’ll have a lucrative product on your hands.

Give Your Micro-SaaS a Working Name

The name of your product will be the first thing you sell, so you should consider this seriously with a lot of thought.

Creating Your Brand Persona

While customers buy products, it’s important to remember customers need to trust humans. A vital step in your marketing process is creating your brand persona. Whether you decide on a playful or business-like persona, you’ll want this to show in more than just your marketing strategies.

What’s more, don’t make the mistake of using a brand persona only for social media advertising. Inject aspects of this character or story into your software, and you’ll have a cohesive idea your target audience is more likely to find captivating.

Develop Your Marketing Strategy in 4 Easy Steps

SaaS marketing is much more strategic than traditional marketing because it focuses on building long-term relationships. Instead of solely focusing on making the purchase, SaaS developers need to ensure that they create solid SaaS retention channels. Retention creates steady revenue sources, providing devs with sufficient capital to continue improving products and developing new ones. That is the end goal.

Plan How You will Obtain Your First Paying Customers

One benefit of developing a Micro-SaaS in an industry you are already familiar with is that you will know where to find its most likely customer base. Suppose you are developing services for an unfamiliar industry. In that case, it will benefit you to search on forums and across social media for dedicated groups (such as Subreddits and Facebook groups) and people seeking a solution like yours to gain a complete understanding.

Once you’ve found your potential customer base, devise a basic but targeted marketing strategy to draw in those first customers. Remember that you can do this with beta testing or even an early access release, which will allow customers to use your software at discounted prices in exchange for feedback on usability.

Set your Marketing Objectives and Goals

If SaaS were a person, it would have been a data enthusiast. But before you can start using SaaS metric benchmarks to measure your progress, you need to know what you are tracking in the first place. SMART KPIs and OKRs are specific methodologies that SaaS developers love using.

The OKR methodology is goal-oriented. It allows companies to outline their key objectives and set realistic targets. It also allows for greater company transparency, allowing for better internal communication and big-picture understanding. OKR’s are being used in more companies after large tech businesses like Google popularized them. Whichever option you choose, make sure you set achievable goals and objectives before anything else.

Consider Inbound Marketing

Once you’ve identified your customer personas, it’s time to get started with their pain points. This might sound heartless, but it's meant to be helpful. You need to leverage those pain points and establish your product as a top solution. Position yourself as an industry expert by using inbound marketing to your advantage and providing your audience with consistent information. Your potential users need to know what your SaaS can do, and you can only achieve that by aggressively educating them.

Determine Your Contact Methods

You must take the time to optimize your customer engagement with user-activated communication (such as email reminders about abandoned shopping carts). If you simply send them frequent email advertisements, you risk annoying your customer and being dismissed to the dreaded Spam folder.

Remember: your customer isn’t interested in your product for its own sake; your customer wants to know how your services will benefit them.

Create a Competitive Pricing Plan

Before deciding on prices, the first thing to do is research industry standards. You will need to balance affordability with profitability while creating optimal product packages that give your business the margin it needs to survive.

Because a Micro-SaaS doesn’t offer a variety of solutions, it wouldn’t make sense to diversify your product packages too much. Instead, consider offering free trials for limited periods or a saas pricing allowing the unrestricted use of limited features. Be cautious, however, about setting your prices too high or too low. Overcharging will alienate your customers, whereas setting your prices much lower than competitors may lead to customers questioning the quality of your services.

And finally, remember that quality is valued more than quantity. Overloading your target customer with too many options is more likely to overwhelm them than convey a sense of flexibility. A pricing plan that offers two to three options is optimal for a Micro-SaaS.

How can PayPro Global Help?

PayPro Global’s robust subscription management system allows all Saas & software developers to effortlessly sell their products while securing steady revenue streams and eliminating the SaaS risk. By providing users with access to innovative reporting tools, you can segment and target your audiences worldwide, letting you adapt sales strategies. This way, you are bound to notice a significant conversion boost.

Additionally, PayPro Global equips your business with multiple sales models, anything from trials, usage-based billing, and freemiums to demos, giving you the opportunity to profile your niche audience and select the best-performing option. 

Because you are awarded multiple billing cycle customization options and manual and automatic renewal mechanisms, you can attract new customers constantly. In terms of nurturing, the upsell strategies we offer our users can easily upgrade existing customers to superior subscription plans, adding to the existing revenue.