Business Models

This weekend I had the opportunity to speak to a few more small school operators about what sort of tools they’re looking for to help them solve business problems. One of my personal goals for 2019 is to release a SaaS solution aimed at “neighbourhood education”, which typically consists of private tutors to smaller schools with fewer than 5 teachers. This is a group that generally runs their businesses either informally with handwritten notes in a book or with a number of Excel files. One of the areas of this project I’ve been thinking a lot about is the business model. How will the project pay for itself?

While it’s been incredibly easy to work out how much the project will cost from a technology standpoint, the more difficult question involves spreading that cost out across the people who might use it, while also earning a little extra to finance growth and development of the service. As with many of the projects I’ve started, having a free option is incredibly important. By giving people the option to use the service for a little while without investing any of their money, it’s easier for potential customers to get a feel for the software. Very few of the SaaS offerings that I’ve seen for smaller schools offer this. Starting with a free tier also makes it easier to separate features and add-ons into paid upgrades. A good example of this would be to offer calendar integrations or scheduling for $1 per month on top of the free option, and build them into higher tiers for simplicity.

But would something like this be feasible?

A lot of online services generally find ways to monetize the data they collect from people who use their services. I don’t like this idea as any data that people are putting into the system belongs to them, not to me. My job is to provide the software and a reliable platform, not sell aggregated lesson and student data to anyone who might want it. Having a large portion of free accounts would certainly provide a good deal of feedback on the system, but it would also mean that the operational costs would be coming out of my pocket. This is something I’d like to avoid long term, though I know the first year will operate at a loss.

Should free accounts come with term limits? Offering “Free for 90 days, no credit card required” would give people ample time to try before they buy, but this doesn’t really help volunteer tutors who bootstrap their own efforts. Should free accounts be limited to the core functions alone with additional options available via a subscription or one-time payment? It’s certainly a valid option.

The business model for any SaaS I create will be just as important as the software. I’ve not had much success with past revenue decisions but, if I seriously intend on earning some money with educational software, a solid business model and plan will be needed.