I sold my AI tool for $35,000 (Reddit Post)

[Crissco]

THIS IS NOT MY POST. I just saw this on reddit, i thought I would share.
____________

I sold my AI tool for $35,000​

Hey Entrepreneurs, Marc here.
Last month I wrote here about how sold a habit tracker for $10,000 in October.
Earlier this month, I got $35,000 in my bank account after selling a landing page maker with AI. Here's the story:

- April 2023:
Just like everyone, I get massive FOMO with AI.
I played with GPT and decided to build a landing page generator with AI:
Input text and the AI prefills a template with copy and AI-generated images.
I'm working on it with a good friend of mine named Martin.
- May:
The product is called LandingAI. It's an MVP but we launched and made ~$8,000.
Unfortunately, Martin and I had different visions for the project so we forked.

- June:
LandingAI is the name of a big corp (bummer) so I rebranded it to MakeLanding.
I ditch 90% of the code because users want a very different product:
So here I am, building an entire website builder powered with AI...

- July:
I launched again, but made a BIG mistake:
I swapped the one-time payment for a monthly subscription and got $20 MRR for 15k visitors...

1. If you can avoid subscriptions, do it
2. New pricing means new positioning—users compared the app to Framer & Webflow

- August:
I removed the subscription and sales came back: ~$7,000 in 3 months.
But I realized this was going nowhere...
- September:

• I don't use the product
• The market is gigantic and crowded

As a solopreneur, nothing is more important for me than building cool stuff for people I care about.
And I didn't really care about this big market so...
- October:
I called my friend Dan and he said: SELL. He was right.
I bought my shares of LandingAI from Martin and listed MakeLanding on Acquire: Asking $38,000 for $14,000 TTM (3x profit)
Within hours, I received dozens of NDAs and a buyer started the process
After a few weeks of NDA, LOI, Escrow, etc. the buyer sent the money but...
Only a fraction of the transaction. Then he ghosted me. So I canceled the transition. Back to Acquire...
Luckily, in 24 hours I got another buyer!

- November:
Within weeks, the money was in my bank account.
The buyer and I never called, just a few messages. It's mind-blowing.

My takeaways:

1. Don't build AI products just because
2. Don't go on a massive market you don't care
3. Sell if you don't know how to grow the product

It's my 3rd acquisition this year. I love the freedom of build, sell, repeat.

https://www.reddit.com/r/Entrepreneur/comments/186nc6f View: https://www.reddit.com/r/Entrepreneur/comments/186nc6f/i_sold_my_ai_tool_for_35000/

 

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[circleme]

This was an interesting read, thanks for sharing the original content from reddit here.

I'm playing around quite a bit with SaaS pricing recently and it is one of the hardest things to get right imho. I wonder how others think about this topic, as the OP mentioned, that the subscription-route didn't work out at all for him, but the lifetime-deals do.

I personally do not like one-offs/lifetime-deals at all. They are bad from a cashflow-perspective and for the valuation as well, if you decide to swap to a subscription model later on BUT (!) I do understand the "hate" for subscriptions from the consumer side quite a bit, so I'm thinking about providing One-Offs as well. I do read this a lot lately and people, a lot of them on producthunt, do provide one-offs and ppl love it. It is kind of a value skew imho, as most other SaaS companies do provide subscription only (monthly or yearly). Of course, one-off doesn't work for every SaaS product, especially if there are usage costs, etc. involved, but I like the idea of providing One-Offs, maybe even higher ones, instead of subscriptions.

Let's assume I have a chrome extension which doesn't cost me anything as everything runs on the client side. The software provides ongoing value, on a daily basis. Every day it provides value to my users/customers. Currently I'm running a subscription model, but I believe a lot of people would more likely opt-in for the paid version if I would provide them with a one-off solution. Are there any people in this forum who tried both ways and can share their experience? I would love to hear it!

 

[MJ DeMarco]

As I said, there's a great opportunity in the next 6-18 months to just sell applications that are merely ChatGPT wrappers that leverage their API. Until the rest of the world catches up, most "normies" would never know.

 

[Choate]

See this currently with Bricks Builder in the WordPress community. It's getting a lot of steam as a one of the better, faster page builders for WordPress. Their "lifetime deal" has been pushed pretty hard the last few weeks for $250 for unlimited sites, and then it will switch over to a pricier annual subscription.

I think there's a benefit to this as it builds a loyal base who then feel great about the product and will advertise it for free because they are now riding on free updates and dev work since they were early adopters.

Back to the OP, I don't think there's any takeaway here that results in "subscriptions are bad." It's more a reflection of their failure to market the product IMO. One-time pricing -> subscription seems fine as well, as in the example above it helps build out those initial reviews, a userbase, faster feedback, etc.

There are tons and tons of web design agencies operating on this model. There are hundreds of these agencies alone in a Slack channel I'm in from a popular web hosting company. A cookie cutter $200-$500/month for a combination of fully managed hosting, maintenance, and 1-2 dev hours per month. Sure beats trying to sell one-off websites.

 

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[circleme]

See this currently with Bricks Builder in the WordPress community. It's getting a lot of steam as a one of the better, faster page builders for WordPress. Their "lifetime deal" has been pushed pretty hard the last few weeks for $250 for unlimited sites, and then it will switch over to a pricier annual subscription.

I think there's a benefit to this as it builds a loyal base who then feel great about the product and will advertise it for free because they are now riding on free updates and dev work since they were early adopters.

Makes sense, yeah. I currently do believe that an annual subscription for SaaS products that are <5$ p.m. normally would be also seens as more convenient for a lot of customers, as it's kind of a "one-time" payment - even though it isn't, of course - , as 12 months is quite a lot of time.

I guess, at the end of the day, the correct SaaS pricing depends 100% on the value you provide and how you provide it. Anyways, I can understand the frustration from a lot of customers who know that the software itself doesn't have to be monthly but the company still charging it, for cashflow reasons mainly.

I did look up a lot into this topic recently, as I'm in the monetization stage already and want to know which way works the best but it is definitely neither black nor white.

 

[johnp]

I launched again, but made a BIG mistake:
I swapped the one-time payment for a monthly subscription and got $20 MRR for 15k visitors...

1. If you can avoid subscriptions, do it

Haha tell that to the bootstrapped SaaS that I worked at making $35 million ARR from subscriptions.

For the founder I worked for who sold his SaaS for millions after building it for a decade

If i got rid of subscriptions with my SaaS I’d have no business

Worst advice. And spoken like a true indie hacker who just wants to sell their AI wrapper.

just my perspective

 

[circleme]

Haha tell that to the bootstrapped SaaS that I worked at making $35 million ARR from subscriptions.

For the founder I worked for who sold his SaaS for millions after building it for a decade

If i got rid of subscriptions with my SaaS I’d have no business

Worst advice. And spoken like a true indie hacker who just wants to sell their AI wrapper.

just my perspective

How damaging is it really to provide one-offs or lifetime-deals from a valuation perspective? The ones I'm learning from tell me that it is a big no-go to provide lifetime deals, as those are people that don't pay any longer but still need ongoing support and also tend to be more time-consuming (for support) than regular subscription based customers.

 

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[johnp]

How damaging is it really to provide one-offs or lifetime-deals from a valuation perspective? The ones I'm learning from tell me that it is a big no-go to provide lifetime deals, as those are people that don't pay any longer but still need ongoing support and also tend to be more time-consuming (for support) than regular subscription based customers.

Probably depends on goals and where you’re selling but my understanding is it’s very damaging for SaaS. I’ve talked to people about this. I know one SaaS person who buys companies who won’t touch anything that’s pure lifetime deals. It’s not sustainable unless there are other goals or it’s part of some strategic plan l

Just to put this into the perspective.

My SaaS isn’t massive yet. But it’s valued at least 10x higher than what they sold for. And the MRR supports it so I’m not desperate and can grow it.

 

[johnp]

And by the way, i did the lifttme deal thing with mine as a test. Made $30k real quick. Brought me the worse customers ever. Never again

 

[circleme]

And by the way, i did the lifttme deal thing with mine as a test. Made $30k real quick. Brought me the worse customers ever. Never again

That's another huge pro for recurring/subscription, isn't it? Basically, you can kick the customer at any time if he is a problematic one and refund his last month payment and that's it. With a lifetime-deal, that's kind of harder to do.

I seriously do not see any reason to provide it then. There are too many downsides. I do develop small pieces of software that provide solutions to small problems. (Because I'm not that experienced in this field and want to learn step by step; I had a few mini-exits back in the days, but wasn't involved with the technical things at all, so I had to start from scratch, kind of) The feature set isn't that big, because only a handful of them already solve the problem of my customer. Because of that, going freemium wasn't an option for me, going the subscription route per month didn't seem right as well. That's why I thought about lifetime deals. But I guess going the annual route would be an option as well. (comparing annual to monthly for example and giving them 2 months off or something)

 

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[Fastest Lane]

Keep up the good work!

 

[johnp]

That's another huge pro for recurring/subscription, isn't it? Basically, you can kick the customer at any time if he is a problematic one and refund his last month payment and that's it. With a lifetime-deal, that's kind of harder to do.

Yeah I’ve actually fired customers haha

But I guess going the annual route would be an option as well. (comparing annual to monthly for example and giving them 2 months off or something)

100% - I’d go annual. If someone doesn’t want to pay more than once for something that you built, maintain, and pay to host then they aren’t worth having as customers.

If you feel like there’s not enough value to justify recurring payments then just find a way to make your offer stronger. Add a cool feature, create an add on service, sky is the limit and you’re only limited by your own creativity


Lifetime deals could be an interesting way to test the market and validate but still, I wouldn’t bother.