We Increased Our Revenue By 2.5x By Experimenting With Pricing And Promotions
This is a follow up story for Draftss. If you're interested in reading how they got started, published about 4 years ago, check it out here.
Hello again! Remind us who you are and what business you started.
Hello Readers, Junaid Ansari here along with Amin Memon running Draftss.com successfully for the past 3 years.
Draftss is a subscription-based service for Design & Code. With design, we provide Logo & Branding, Web & App UX/UI, Illustrations & all other graphic design. WIthin code, we provide WordPress, Webflow, HTML/CSS, & no-code Page builders.
We cater to many categories of customers from brands, startups, small businesses, freelancers, agencies, & enterprises. The ideal customers from the above are Startups & Agencies who bring about the maximum amount of revenue to the company & their LTV is higher.
Since the last interview, we scaled up to a team size of 28 members at present. We increased our revenue by 2.5x to $160,000+ ARR with the highest revenue in the month of August 2021 of $17.8k MRR.
Over the past few months we experimented by offering a 7-day free trial (without a Credit Card) & it got us a 20-24% increase in MRR.
Currently, we are offering 50% off on the first month & trying to figure out what gets us a higher conversion rate.
Having to do day-to-day operations is a serious hazard to your company's innovation.
Tell us about what you’ve been up to! Has the business been growing?
The feature on StarterStory last year definitely helped us gain a slight momentum which is all a startup needs at the early stages. Apart from getting eyeballs on our platform, we also received some networking connections, guest posts, and backlinks from other platforms.
We increased our revenue by 2.5x to $160,000+ ARR this year. One of the strategies that worked best was upselling our existing customers for a higher value plan or a longer duration plan. This helped us increase the ARPU & LTV of customers resulting in overall growth.
We had some pitfalls which turned out to be advantageous in the longer run. We did some restructuring of the company where design managers were assigned to work on specific categories of projects instead of all categories of tasks.
During the early stages of Draftss, we had only one design manager who worked on graphic design & UX/UI category of tasks.
As Draftss grew, it was slightly complicated to find a person who is exceptionally great at both categories. So we reworked the structure & hired specialized design managers who only work on one category of tasks i.e. graphic design or UX/UI tasks.
This not only made it easier to find more focused design manager talent, but also helped us in optimizing the process & resource management. I am not sure if this is us converting stones to gold, or is it the advantages of this industry.
There are lots of upgrades that we plan to do to grow Draftss. Our current website is built on Python/Django making it difficult to optimize it for SEO. We are building a new website on WordPress so it can be easily optimized for better SEO. We assume that this will improve our ranking at least 3-5x of the current ranking positions .
We have fired a lot of non-performing resources from the company and replaced them with more capable resources. We hire resources in backup who train a month on internal projects before picking up live projects so that our customers have the best experience with every product that they use.
We tried a different sales tactic playing with pricing models, we did some great experiments with our productize service, which was one of a kind. I am sure no one else tried this. Here is a small case study of it.
I experimented with a 7-days free trial but without a credit card to see if it works for a productized service or not. We offered this trial only on the Design Plan.
We sent an emailer to our subscribers, published it in a few Facebook groups & added the offer on our exit intent popup on the website.
After completion of the experiment, here are some stats to understand more about how it went. Out of all the customers that signed up for the free trial:
- 34% of the customers liked the designs & signed up for a plan
- 22% of the customers didn't respond after sending across their first task
- 20% of the customers didn't sign up for any plan
- 16% of the customers liked the designs but haven't signed up yet
- 8% of the people never sent across their tasks
Here's what I learned from this activity:
The good part
- The overall conversion rate increased. (Not sure by how much compared to a trial with card)
- The overall MRR improved by 20-24% with the new customers. (I feel this could've been much more if I had more designers to accommodate the trials)
- The email list of our prospective customers increased.
- Some of our customers were using our competitors, after using our service they switched to Draftss.
- I was able to test out how far I can go with our current team strength.
The bad part
- Had difficulties in identifying which customer who signed up for a Free Trial was having an intent to purchase, & which customer just wanted to get free stuff.
- The capacity of output my design team could deliver ran out once we increased the customer intake by 2-3 times. (The output quality of my team was hit. For some designers, all projects were hit with slight decrease in quality across, for other designers most projects were done as per benchmarks & a few projects were hit extensively.)
We also wanted to invest time in paid ads as most of our competitors invest heavily into it. We just could not invest sufficient time & funds into it. We still have plans to do it sometime in the next couple of months. This is one big red flag that we need to fix right away to grow even faster.
If you are great, then the customers keep coming back. A lot of our customers churn in 2-3 months because they don’t have any tasks to give us, but once they have, they resubscribe so our reactivation is high.
I feel that we have cracked the secret sauce for writing good email campaigns. Here are stats of some of our best performing campaigns:
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What have been your biggest lessons learned in the last year?
The biggest lesson we have learned or I must say we are still in the learning process, is how to manage your focus as a founder. Doing a full-time startup is crazy. You have to look into all aspects of hiring, firing, marketing, sales, product, customer service, etc.
We have learned that as founders the focus should be on sales & product and not divulge into day-to-day operations. Having to do day-to-day operations is a serious hazard to your company's innovation. We have automated 95% of the company & assigned an operations manager to overlook the entire operations.
As founders we just keep an oversight on the subscriptions, accounting, email campaign, potentially big client calls, finalising the hired candidate, & strategic decision making. ** **
Apart from working on Draftss, we are also working on our SaaS product side by side and will be launching that soon Prospectss.com, I think we can say almost all agency founders want to jump into SaaS!
What’s in the plans for the upcoming year, and the next 5 years?
We are deciding and looking for talent so we can add Angular, React, Shopify & Motion Graphic to our list of services. We are looking to expand our white label model to help agencies use us and make more $$$ for them.
Rather than expanding to more categories of audience, we are focusing on acquiring more agencies as our customers.
We plan to launch a new website with a higher price point where we will be improving the turnaround time for everything by 50%.
The current portfolio on the website is almost 2-3 years old. We will add some fresh feel to the work that we have done since then.
Have you read any good books in the last year?
- Millionaire Next Door by Thomas Stanley, William Danko
My First Million Podcast by Sam Parr - Morning Brew by Alex Lieberman
Advice for other entrepreneurs who might be struggling to grow their business?
Do more, Do more, Do more. Stop worrying about getting things perfect, just keep experimenting and getting more stuff done.
Buy subscriptions if they help you save time. Do not waste time in saving some bucks. Invest that time in finding more customers.
Do not involve yourself too much in day-to-day operations. Create a process and delegate responsibilities to scale better.
Where can we go to learn more?
- Website: Draftss.com | Prospectss.com
- Blog: Draftss Blog
- Twitter: Junaid Ansari | Amin Memon
- IndieHackers: Draftss
- Email: [email protected] | [email protected]
If you have any questions or comments, drop a comment below!
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