Solving the right problems

February 12, 2018

This is an update from Week 4 of my web app challenge. I challenged myself to build a software product and generate $1000 in real revenue in 3 months.

Validating a product idea

When I started my web app challenge about a month ago I thought I had a clear idea of the problem I was trying to solve. Since writing my last post I’ve had less time than expected to work heads down on my challenge for a couple of reasons. First, I started a new job at Association of Young Americans and second I moved into the new house I mentioned in my review of 2017. These events got me thinking about whether my original idea was the best option for my challenge and planted the seed of a new idea.

PaymentLink

Using my experience building Sail I planned to build a simple, affordable billing tool for people selling productized services online. In my previous post I identified 2 core problems that people were looking to resolve.

  1. Accepting client payments in a way that was convenient and flexible.

  2. Reducing fees incurred as a percentage of the transaction amount from payment tools.

Understanding your self-employment income

While I was looking for the next opportunity after Sail I took on a few independent consulting projects. One problem that I ran into was understanding how much of my client’s payment was mine to keep after taxes and expenses.

I know that this is a challenge shared by anyone doing independent work and is often not addressed directly by payment or accounting tools.

Here are the questions I asked myself to decide which direction to follow. Many of these questions are the same as those discussed by serial maker Mubashar Iqbal in his own series on Making a Side Project.

Will I use this product?

I particularly like this advice from Jared Erondu. Be your number one user. Building something for yourself can help test the user experience although it’s always important to remember that not everyone’s workflow will match your own. It’s also important to consider that you always have the most context for the solution you design and that new users will likely need different communication during the sales and setup process.

PaymentLink – Yes, I would definitely use a lightweight payment product for onboarding people to my productized services. Sail is great for accepting client payments but I can’t reuse the same link or embed it on my website.

Understanding self-employment income – Yes, I haven’t been withholding money for taxes on a payment by payment basis. (although I know I should). I want to keep track of how I’m allocating my income to reach my financial goals.

Do I know people like me who would use this product?

PaymentLink – Yes, in some cases. From my previous research, I know that people find accepting client payments painful. The market is very competitive however and the switching cost from existing tools is high.

Understanding self-employment income – Yes. I spoke to some of the people subscribe to my newsletter and the answer was a resounding yes. At Sail we also launched a freelance tax calculator on Product Hunt which resulted in more than 1000 downloads.

Are people already using products to solve this problem?

PaymentLink – Yes, there are many existing tools for accepting payments online, although only a few that offer bank transfer payments.

Understanding self-employment income – Yes, kind of. Painless1099 allows users to create a new bank account specifically for tax savings. There are also many tax calculators online that give insights on a one-off basis.

Will I be able to monetize this?

PaymentLink – Yes, especially for people who were looking to save them money on transaction fees. Many people I interviews said they would pay > $75/month for a solution with fixed monthly pricing that offered low and fixed transaction fees.

Understanding self-employment income – Yes, although not necessarily a subscription. Everyone I spoke to said they would pay for a solution that helped them understand their self-employment income.

A quick note on pricing:

My goal by April 10th is to have received $1000 in revenue from real customers. While I anticipated I would build a product with recurring revenue this was not a requirement. I’ve decided to charge a one-time fee for my initial release for 2 reasons.

  1. Reduced friction at the point of sale – there is less concern about how card information is being saved and no unexpected charges.

  2. One-time fees are easier to implement – I won’t have to worry about dunning or reminder emails and there are many tools for charging a one-time fee.

How long and how much money will this take to build?

PaymentLink – This is the kicker. The most differentiated product direction here would be to build for those who receive a high volume of payments each month. I know that the best way to help people lower the cost of getting paid by their clients would be to offer payments via bank transfer. The most frictionless way to do that is with Plaid (Venmo or Robinhood use Plaid to connect to your bank account). But, Plaid is expensive for bootstrapped products (plans start at $500/month) and I set a project budget of $100. Building a payment product also introduces increased scrutiny on security and code maintenance. Things that on reflection, I am not best positioned to do with my level of technical expertise.

Understanding self-employment income – Besides the domain name and hosting cost I don’t expect there to be any other costs. Given my current technical skills, this will likely take some time, but I’m confident I can build the first release in a month.

After considering my research PaymentLink is unable to check all the required boxes. The result is that I’ll be building a software product to help people understand their self-employment income. It doesn’t have a name yet or a landing page but I have included a Ship by Product Hunt widget in the bottom right corner to allow people to sign up for early access.

Week Summary

As I mentioned, I haven’t spent as much time on my challenge in the last few weeks as I would have liked. I worked on my Web App Challenge for a total of 20 hours in the past 3 weeks.

  • Planning (1 hour)

  • Copywriting (30 minutes)

  • Customer Research (3 hours 30 minutes)

  • Tech stack research/learning (15 hours)

I have 2 goals for the next week:

  1. To ship a landing page for my new idea. This includes purchasing a domain name, writing compelling copy, and creating a new page template.

  2. To write a new set of job stories and complete the high-level solution design needed to understand self-employment income.

I have just 2 months remaining to make $1000 before the challenge deadline on April 10th. I’ll need to keep the scope of the initial release as focused as possible and consider pre-sales to give myself more time to reach my goal.

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