Re:Tell HN: Sendgrid increases price by almost 50%, weeks af...
by soneca on Thursday November 29, 2018 @06:53AM
(#18559563)
If every $1 becomes $3 ~ $4 in profit, makes no sense at all to "save" for equipment.
The progression with only investing in ads, each cycle multiply by tree your profit:
$1 -> $3 -> $9 -> $27 -> $81 -> $243 -> $729 -> $2187
The progression with "saving" the money
$1 -> $2 -> $3 -> $4 -> $5 -> $6 -> $7 -> $8
Re:Tell HN: Sendgrid increases price by almost 50%, weeks af...
by kohanz on Thursday November 29, 2018 @10:09AM
(#18560699)
I think they're saying that they are unable to meet the demand (lack of either equipment or people) for the new business those extra advertising dollars would bring in. So they can't just continually pour $ into that pump.
Although I agree it's unusual to see that metric used (revenue per ad-spend) for a product that seemingly can't be scaled very much.
Re:Tell HN: Sendgrid increases price by almost 50%, weeks af...
by quickthrower2 on Friday November 30, 2018 @05:16PM
(#18573228)
They probably could benefit from some finance. Or at least factoring.
1) We're services/project oriented. So for each $1 we spend, we receive ~$20 back on revenue. That unfortunately doesn't compound and isn't recurring in the normal SaaS sense.
2) That's $20:$1 on revenue but not profit. We average between 15-25% net profit. Not great and we're trying to focus heavily on increasing this but it's quite tricky. Incrasing this usually means very expensive equipment purchases for automation.
3) I wish we could pour more money into advertising but we have to save up for additional equipment to purchase to expand services or pay for future software projects that could help us generate recurring revenue. We don't have deep pockets to leverage since it's bootstrapped. Otherwise, we'd have gone in guns blazing on advertising!