What is Micro-SaaS? And why should you care?

What is a SaaS business?

It's possible that readers of this post are new to the world of software businesses. Simply put, SaaS stands for software as a service.

Not too long ago, people were buying software that came with license keys or one-time purchases. This was great in the beginning but it also meant that people would keep paying for new versions of the software each year, and developers were incentivised to release version 2,3...N of their software so as to keep getting people to buy. Something similar to the new Call of Duty title that comes out each year.

SaaS is a delivery mechanism where the software is licensed on a continuous basis. You may be paying monthly, or yearly, to gain access to the full software that is always on the latest version and almost always hosted in the cloud. You simply access it via a web or mobile app.

What's the meaning of Micro-SaaS?

A micro-SaaS business is a micro version of a regular software-as-a-service business. But that doesn't answer much.

What it means is, you can take the traditional SaaS businesses and narrow it down greatly to a point where it becomes a small business idea.

Building a micro-SaaS means that instead of targeting a large market, you focus on a small niche.

Some call it a lifestyle business. My favourite analogy is that a micro-SaaS is a software equivalent of a mom and pop store. It's similar to mom and pop stores in your locality, only you're located on the internet and you're selling software.

One Person SaaS

A micro SaaS isn't built by large teams. One, two or three people should be enough. This is also how the terms single person, one person or solo SaaS got coined. Solopreneurs refer to the same people but this term specifically identifies solopreneurs who are building a micro-SaaS business.

And that one person can be you.

Why should you care about Micro-SaaS?

There's going to be millions of micro-SaaS businesses across the world, just like there are mom and pop stores in every corner. These small businesses will serve small pockets of customers on the internet, with small or very specific needs, and earning a profitable livelihood from those customers.

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.

If you're someone who planned to travel the world or see new places but you have a job, a profitable micro-SaaS might just enable your dreams.

How big can a micro-SaaS business become?

Micro-SaaS revenues are typically lower than a larger SaaS business. A typical micro-SaaS revenue would range between $1,000-$10,000/mo.

At this point, I would like to introduce the concept of Ramen profitability, which is simply how much money you need to afford ramen and a roof over your head. If you're living in my side of the world (India) or somewhere in South East Asia, ramen profitability could be achieved with as little as $700/mo in recurring revenue.

According to me, hitting the ramen profitability number means that your micro-SaaS has legs and it is probably worth putting more time and effort in trying to grow it.

Many founders of micro-SaaS startups typically move to south-east Asian or certain European countries where the cost of living is lower. Of course, where you can travel and how you live depends on how much you are earning and how many business partners you have.

But if you're a two person team, it's not unfathomable to build a micro-SaaS business that makes $10,000/mo, which is enough to let you travel anywhere in the world.

Who should build a Micro-SaaS?

You, your friends, your partner, anyone and everyone looking to earn an independent lifestyle. It's not easy, but it's not extremely hard either.

When the target is small, like $10,000 in MRR, and if you're not a large or funded company that needs to hit milestones and raise the next round of capital, you can afford to take it slow.

Most people I know who are building a micro-SaaS business start while working their day job. This gives them both an escape from their day to day work, a project that they own and can work on it to their heart's desire, and a stable income or runway so that your micro-SaaS doesn't have the pressure of growing revenues fast.

I think the more important question is, what do you want out of your life?