🗞 What's New: The case for lifetime deals

Many founders are strongly against lifetime deals:

• LTDs don't have to be a business model, just a funding model. Also, LTD users tend to be your biggest advocates, and can kickstart future growth.
• Need clarity? Create constraints for yourself. Without rules, everything is a guessing game. Better rules mean better outcomes.
• $7.2K in revenue from an enterprise client. Once Russ Halilov clearly defined his ideal customer profile, he was able to tailor his tool.

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by Jay Tan

A lot of founders are anti-LTDs, as they don't believe that offering lifetime deals is a sustainable business model. But here's the thing: LTDs aren't a business model. Rather, they are a funding model.

The real deal with LTDs

Your customers pay upfront for your software in its MVP state because they want to invest in you and your product. They give you cash upfront, and ample feedback to get you to product-market fit. In return, you'll take care of them for the lifetime of your company.

That's it. That's the model.

Is it a good funding model?

Yes. It gives you liquidity upfront so you can invest in product development. It's superior to investor funding because:

1. You keep 100% equity.
2. Their feedback is actually relevant, since they're your users.

Many indie hackers who are stubborn about LTDs don't get very far as bootstrappers. You have to be pragmatic if you want to live to fight another day.

Get cash upfront in whatever way you can, ideally without investors. Revenue is the best funding source because it validates your offer.

What's the downside?

Well, you're on the hook forever, supporting a bunch of non-paying users. But is that such a bad thing?

These are the people who believed in you by paying upfront for an LTD when your app was at its worst.

Keep this in mind:

1. The marginal cost of serving each LTD user is near zero. Your servers are running anyway, and you're paying for hosting regardless.
2. Churn is very high in LTD users. When people aren't paying monthly, there's no urgency to use it. So, all the fears about LTD users overloading support are overblown.
3. Don't forget that LTD users have high net promoter scores. These are the people who will become your best advocates and your biggest affiliates. They write reviews, make videos, and spread the word about you.
4. If your product has baked-in viral loop, LTD users are free marketers for you.

Wrapping up

In conclusion, remember that the vast majority of businesses in the world rely on one-time payments. You can use it as a funding model, a business model, or both.

Don't worry about LTDs decreasing your company valuation, or any of those other things. First, worry about survival, then cross that bridge if you get there in the future.

If you enjoyed this, consider subscribing to my newsletter, where I send my top learning about entrepreneurship each week. I'm also currently running a LTD promotion for my product, Zylvie, here.

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by Kevin Bronander

Getting mad at a dog for not listening is like getting mad at a computer when we make a typo. We didn’t get the outcome we hoped for, but the fault is our own.

Dogs do what they think will get them rewarded, while avoiding punishment, in the environments we create for them. Our actions create the operating systems that define which behaviors are rewarded, and which are punished.

These principles also hold true in relationships, friendships, and the workplace.

Systems are clear, people are confusing

The same way dogs can’t speak our languages, other people can’t read our minds. We need to communicate effectively so others understand our expectations.

If we’re responsible for onboarding someone into a new role, communicating expectations and rules is essential. The first few times an employee engages with the system we create will define their behavior for years to come.

Despite the importance of the first weeks, onboarding is typically confusing and hypocritical.

All too often, new employees aren’t given clear systems or rules to follow because no one has taken the time to codify and refine them in the first place. Once they submit the work, managers review it and tell them everything they’ve done wrong.

As this pattern repeats, employees don’t learn to do their jobs effectively. Instead, they learn to comply with the system their manager has created.

The lack of well-defined rules creates risk-averse, overly reliant, handcuffed employees. The alternative, strict and clear rules, frees employees to create excellent work without the worry of seemingly random corrections and criticisms.

Better rules create better outcomes.

Discipline equals freedom

The more constraints we have, the easier it is to create. Counterintuitively, restraints liberate us.

Without rules, everything is a guessing game. Everything is a gamble when we don’t know what the result of our actions will be. With rules in place, we know exactly what our objective is, and how to accomplish it.

These are systems we should create for our pets, employees, significant others, and ourselves. This means communicating clear expectations and consistently reinforcing them.

Are there any areas of your life where you’re lacking a blueprint or system to follow? How can you ask for clearer expectations and rules?

Further resources

• Don’t Shoot the Dog by Karen Pryor.
• Discipline Equals Freedom by Jocko Willink.

Subscribe to the Prompted newsletter on Indie Hackers for new insights and prompts every week!

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🤫 Guide to evolving data privacy approaches in marketing.

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💲 Link to your product here. Our most affordable ad.

🔗 Winning at link building.

📧 Be cautious about using email open rate as a success metric.

📱 How Instagram became LinkedIn for millennials.

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by Russ Halilov

It's here. My first large SaaS deal! Bluedot is a four person team, and a year ago, all we had was a bad MVP. We didn't know our ideal customer, so we just blasted cold messages to all types of people.

How we found our ideal customer

We figured that our notetaker tool could be helpful for remote engineering teams. I wrote 600 messages to engineering leaders that had distributed teams across the US and Europe.

I found one particular company with 3K employees, and I randomly selected five people to DM on LinkedIn. One person agreed to join a research call with me. We also added this person to our private Slack channel, and started sending our product updates.

The trial

After a few months, the company agreed to trial the product with one free seat. Since our product was unstable, we didn't feel comfortable rolling it out to the whole team.

Fast forward three months, and Bluedot was in much better shape. The company wanted to onboard a part of the engineering team, so I requested $300 for a three month trial. I believed that the lower price would make it easier to start onboarding the team. I was wrong!

They had to make a case with all of the stakeholders in order to get approval. When I was informed of this, I realized that I should have asked for much more than $300.

Closing the deal

The trial went well, and many engineers liked the tool. We agreed to do a full rollout. Negotiating the price was quite fast. I asked how much they were ready to pay, and calculated our costs to transcribe the calls. Based on that, we mutually agreed to $7.2K.

It took us another two months to complete the full procurement and security process. Finally, the funds hit our bank account!

Biggest challenge

Our biggest challenge in selling large deals is that we are building a product in a new category, and there is no budget for it. People don't even know if they need it, so we have to get buy-in from the team.

It's not like selling a CRM or HR system, where the need is clear. But it's still possible, and I think we proved that!

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by Tweetmaster Flex

I post the tweets indie hackers share the most. Here's today's pick:

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Special thanks to Jay Avery for editing this issue, to Gabriella Federico for the illustrations, and to Jay Tan, Darko, Kevin Bronander, and Russ Halilov for contributing posts. —Channing