Build a profitable micro-SaaS business in 2021

Why I built this
A curated glossary of the best resources on micro-SaaS ideas, examples, marketing, podcast, ebooks and more, all in one place to help you start a micro-SaaS business in 2020 or 2021.

Table of contents

What is micro-SaaS?

Exploring the meaning or definition of micro-SaaS in 2020.

Put simply, a micro-SaaS is literally a simplified version of a regular software-as-a-service business.

Instead of targeting a large market, a micro-SaaS focuses on a small niche. Large teams? Nope. One person SaaS is in, or perhaps a small team of 2-3 people.

Some call it a lifestyle business. My favourite analogy is that a micro-SaaS is a software equivalent of a mom and pop store.

There's going to be millions of such businesses across the world, serving small pockets of customers with small or specific needs, earning a profitable livelihood for its owners.

Micro-SaaS businesses are usually location-independent as you can serve the whole world from a laptop and internet connection, regardless of where you live. This has given rise to a whole new phenomenon of nomadic lifestyle.

Micro-SaaS revenues are typically lower than a larger SaaS idea. Ramen profitability could be achieved with as little as $700/mo in recurring revenue, but a typical micro-SaaS revenue range would be between $1000-$10,000/mo.

Many founders of micro-SaaS startups typically move to south-east Asian or certain European countries where the cost of living is lower. Nomadlist is an excellent resource to begin your hunt for the perfect nomad destination.

Identifying great micro-SaaS ideas

How to identify and qualify a micro-SaaS idea that can work for you.

It's really hard to nail down what's a great micro-SaaS idea. But there are some factors you can consider that will help you discover and identify good ideas.

Growing markets

Market drives everything, and picking the wrong market can be the death of your business even before you start.

By picking a market that is already growing (think no-code site builders, or the demand for product feature upvote tools as an example), you ride the momentum of the market and get customers more easily than in a stagnating market.

A defined audience

Following the very definition of micro-SaaS, a great idea is one one that targets a very narrow audience.

A lot of people think a niche idea is something obscure that only a few people know or care about. While you can chance upon truly niche micro-SaaS ideas organically during your journey, when you're at the beginning of of your journey you're better off looking at clever ways to splice a small pie from a large market.

For example, if you start with live chat, that's a huge market. What's a niche version of it? Live chat for e-commerce stores.

Nope, go further. Live chat for e-commerce stores on Shopify platform. Further. Simple and affordable live chat that's very clean design and light on resources. Yes, that's a defined enough audience.

In summary, a defined audience is one that's very easily identified from your definition to answer the question of who you serve (and equally important, who you don't).

Revenue potential

Also bear in mind that your audience can't be 1 or 10 people, as that wouldn't be enough for you to make a livelihood out of. While evaluating an idea, you need to consider what's the average customer going to pay you per month.

Suppose it's $15/mo, and your livelihood target is $3000/mo, then you need 200 customers. So when you define your market, try and validate that there are at least 10-100x that many available pool of customers.

You don't need a billion dollar market size like unicorn chasing startups. But it should be big enough that if you capture 1% of this defined narrow audience, you can hit your livelihood goals.

Product complexity

Let's face it, as a solo founder or two-member team, it will be really hard for you to build a fully-fledged marketing automation tool that takes on Klaviyo/Mailchimp, or a customer engagement platform like Intercom.

It's of utmost importance that you pick a micro-SaaS idea based on what's realistically achievable with your available resources.

If your MVP takes more than 2-3 weeks to build, you're on the wrong track.

If the MLP (minimum lovable) version of your micro-SaaS product for which you can charge money takes you more than 4-8 weeks of development, then you need to refine your idea or think more on the approach to building the product.

Code or No-code?

In my opinion, it doesn't matter. There's a bajillion money-making ideas that can be achieved with code, and without code. The most common example of a no-code idea is a jobs board, but have you ever thought of using your core skills in another way? 

What if you created a community of people who want to wake up at 6am and hit their workout and fitness goals as a group, and you can be their group coach and create content for them.

If you're an illustrator, you could create 2-3 unique illustrations a week around one theme, which you can initially distribute for free. In 3 months, you would have 24-36 illustrations, and in a year 104-156 illustrations, which can be monetised by one-time sales or perhaps a yearly subscription.

Coming up with micro-SaaS ideas

What are some of the top or best micro-SaaS business ideas. How to discover and identify niche SaaS ideas.

Picking the right idea to build into a micro-SaaS business involves many factors. The general principles listed out in the previous section would help you gauge any idea against its viability, most importantly to answer the question of "can and should you pick this idea?"

But what about finding actual micro-SaaS business ideas? Where does one start looking for them? Here are a few ways to go about it.

App marketplaces and growing platforms

The way I got started was by picking an app marketplace where customers were already hanging out and looking for solutions to their problems. SuperLemon was built on top of the Shopify App Store, but there are several other similar marketplaces like Atlassian Marketplace, Slack App Store, Intercom App Store, and others.

The way these marketplaces work is, the main platform doesn't cater to super specific needs of a few hundred or few thousand of its users, and a 3rd party developer (this could be you) could create a plugin to solve that super specific need.

Since discovery happens from the app store, you are ensured a steady stream of new customers almost from the day you launch. This doesn't guarantee success, but it does make the process of building a business and earning a livelihood easier as some aspects such as marketing are taken care of.

You don't necessarily need a platform with an app store. Platforms like Stripe or Twitter are also great places to build a micro-SaaS. It's the same formula, specific needs that the platform doesn't solve but there's people who are ready to pay for a solution. The difference here being, the onus on marketing would rest on you.

People might be looking for a solution on Google, so you will have to make the effort to write content, rank on the search engine and acquire customers in that manner.

Ideally you want to pick a growing platform, one that has a huge rate of sign-ups and adoption. This helps your business gain new customers more easily.

And you hit the jackpot if you enter an app marketplace that is nascent but poised to grow tremendously in the coming 3-4 years. Think Shopify App Store in 2016, or perhaps Webflow's app store today?

By the way, Jetboost is a really cool business being built on top of Webflow by selling real-time search, filtering and other nifty features as no-code addons to the platform.

Niche versions of existing large SaaS companies

The beauty of B2B SaaS is that it's not winner-take-all. You can enter an existing market, find one meaningful dimension in which to make a better product, and gain customers.

Userlist is a tool that lets you sent trigger-based emails and in-app messages for your app users. Intercom has the same functionality, but it's obviously ridiculously expensive. Also, you might be looking for just the customer messaging, and not the whole of Intercom's suite of products. They are pulling in

Snappa is a simpler, easier to use, and more affordable alternative to Canva. I've used Canva's product and it's gotten quite clunky over time, whereas Snappa's UX seems simpler and more intuitive.

Productised services

While not technically SaaS, I find productised services fascinating due to the predictable value delivery model and income model, which is subscription based. I'm not someone who will say "it has to be a SaaS and nothing else".

I think if you're already a freelancer or finding yourself looking for certain kind of work at a defined frequency, there's a business case to be made there.

Design creatives is a great example. There's many such players now, Draftss is one, ManyPixels was one of the early players.

Productised versions of freelance work

If you're a freelancer catering to a specific industry, you might come across requests that repeat themselves. That's how Tyler Tringas of Storemapper found his success.

The problems that your freelance clients want solved is a treasure trove of information on which you base micro-SaaS product ideas. If you find yourself in this situation, consider yourself lucky!

Scratch your own itch

This one's self-explanatory, or so I thought. Scratch your own itch is a great place to start, but you need to apply the itch, the idea, with the filters in the previous section. It cannot be an itch that you or only 10 people in the world have, because you cannot build a sustainable business with that.

Pieter Levels of Nomadlist is one of the most successful examples of scratching your own itch.

Dig into your work and discover, are there repeatable problems that you encounter and need to solve through ways that appear manual, or tiresome? Then ask whether solving that problem and making it easy will make your life significantly better. And finally ask if others might have the same problem that they are tired of, and who might be seeking a solution like you did but they haven't come around to building it.

How to launch a micro-SaaS

How to get customers for your micro-SaaS.

(coming soon)

Micro-SaaS marketing

How to get customers for your micro-SaaS.

(coming soon)

Buy and sell your micro-SaaS business

Where can you buy a micro-SaaS business, or sell your existing one and profit.

There's a growing trend where small private equity players are buying, holding, and growing micro-SaaS businesses.

This is good news for those building a micro-SaaS, because with more players means a higher chance that you could get an exit and a cash out.

Micro-SaaS for sale

Here are some of the best resources to find buyers for your niche business, or if you're an investor looking to buy a small software business.

Transferslot

Transferslot is a curated marketplace where side projects founders can expose their product to our Trusted Buyer community.

MicroAcquire

MicroAcquire has a simple promise - they  help you start conversations that lead to an acquisition in just 30 days – for free.

Indiemaker

IndieMaker is a curated community marketplace with 1000+ members where makers sell their side-projects, unused domains and online businesses.

Sideprojectors

SideProjectors is a friendly marketplace to sell and buy interesting side projects from other people. If you are a developer with side projects then this would be a perfect community for you to discover what others are building.

Whobal

A marketplace for buying and selling side projects & SaaS apps for free

Borderline

Borderline is a marketplace to buy & sell web applications, big or small, profitable or not, entirely for free.

Flippa

Buy & sell online businesses on the Flippa marketplace, which supports more than just the SaaS category.

FE International

These people are brokers who find buyers for your profitable business, and they are quite reputed in the industry. Additionally if you're serious about being an investor, they you can sign up with them to create a dealflow.

How much money can you sell your micro-SaaS for?

Now don't begin day dreaming that you can sell your SaaS product for 10x revenue multiple. Higher multiples are attained the bigger the revenue stream gets. That's why public SaaS companies attract the highest multiples.

If your micro-SaaS revenues is between $2k-$20k in MRR, expect somewhere between 1x to 5x ARR as your potential exit number.

Why would you sell your micro-SaaS?

Especially if it is making money?

Well, you might be bored and uninspired by the current business, and find yourself increasingly wanting to spend less time running and maintaining it.

You might have new ideas that you want to implement, which demand your undivided attention.

Or you might just want the cash of your next few years revenue in your hands today, in one go.

Podcasts, blogs and ebooks on Micro-SaaS

What are the best resources on the internet to follow for regular dose of micro-SaaS knowledge.

(coming soon)

Shopify micro-SaaS

Build a profitable Shopify micro-SaaS app and earn a side income.

Shopify is a thriving and growing app marketplace. I think it's a great starting point because unless you botch your execution or pick an problem that nobody faces, you're pretty much guaranteed the first few hundred or $1000 in MRR.

But Shopify is a maturing app store. The number of apps has nearly doubled in 1.5 years, and that number will only accelerate as more and more people are attracted by the market and the money. So bear that in mind if you decide to go in.

And if you do decide to go in, I've written extensively on how to build a micro-SaaS on the Shopify app store. Here are my best writings:

Guide: Make money building Shopify micro-SaaS apps

How I grew my Shopify micro-SaaS to $25k MRR and 20k users in 14 months

How I grew my Shopify micro SaaS to 2000+ users in 40 days

If you're serious about building a Shopify app, you should also join the Facebook group for Shopify App Developers where you can find others to help you through the initial challenges in your journey. The group is lively and full of helpful people.