Micro SaaS: What It Is and How to Build One

From the ever-changing Saas landscape, a new trend has come up: Micro SaaS.

This is a concept that started around 7 years ago but has grown in popularity since the pandemic. Now more and more people are taking their ideas and turning them into valuable Micro Saas ventures.

It is expected that SaaS revenue will reach $369.4 billion by 2024. There are opportunities for all of us in this rapidly growing industry.

And if you’re thinking “but what is a micro SaaS?”.

That’s what we’ll explore in this article. We’ll start with a definition of how it differs from a regular SaaS and then we’ll look at practical ways to build one.

If you’re ready, Let’s jump in!

What is “Micro SaaS”?

As its name suggests, a micro SaaS is a small-scope SaaS. Instead of thinking about a tool like ClickUp, think more about a Clickup plugin (which is called a “ClickApp”).

Tyler Tringas, the founder of Storemapper, popularized the term online.

:

“A small SaaS company from a solo entrepreneur or a small team that’s typically bootstrapped and going after a niche market. It’s also prioritizing profits and business sustainability as opposed to growth.”

As you can see, it’s very similar to a regular SaaS business except that the creator of a micro SaaS isn’t trying to apply for Y Combinator or build “the next big thing”.

This is a business model that is more in tune with the way indie builders work.

A micro SaaS can start as an experiment or a way to capitalize on a specific need from a niche. The idea here is to solve the need in the best possible way while making the most out of the available resources.

Where traditional startups are all about growth and scaling, micro SaaS companies focus on consistent profits, a loyal group of users, and a lean business operation.

It’s a much more “beginner-friendly” approach to building a SaaS product without taking on too many of the risks that a traditional startup would have.

Experts like Rob Wailing recommend this as a first step into the world of SaaS. As opposed to going all-in on a big endeavor that may or may not work.

And how is it different from a regular SaaS?

Both types of SaaS have a similar structure, focused on solving user needs through a software product. But one of the main differences between the two is the scope.

Traditional SaaS companies create software products that offer many solutions and try to address a wide range of users or clients.

A Micro SaaS company creates one product that solves one need for a specific market niche.

But while that’s the main difference, there are other ones we can talk about.

For example…

Target market

Micro SaaS: Focuses on specialized and niche markets. For example, document management for family lawyers.

Regular SaaS: Caters to broader market segments that have many users or clients with well-known use cases.

Product scope

Micro SaaS: A simple and straightforward product that offers a particular service. Think of an auto-DM app for Twitter as opposed to a social media scheduler.

Regular SaaS: A bigger product that has many features and provides different solutions. You might use a couple of them but it’s likely that you don’t use everything the platform offers.

Funding

Micro SaaS: Is bootstrapped or self-funded and doesn’t require outside investments. The costs associated with building or marketing the product are kept low.

Regular SaaS: Needs a substantial amount of funding for the product, marketing, sales, founding team, customer support, and so on.

Competition

Micro SaaS: They operate in untapped markets with limited competition, This is because of their particular niche.

Regular SaaS: They experience much more competition and fight for a “piece of the revenue pie”. Think about project management or note-taking tools.

Customer support

Micro SaaS: Oftentimes the founder is the person who talks directly with the users. This helps to develop relationships and prevent churn.

Regular SaaS: Has a dedicated person who handles this process or outsources it to another company that specializes in customer service.

Potential Growth

Micro SaaS: Can scale to thousands of users and bring in big revenue but it’s not concerned if the growth stalls as long as it keeps the users and the profits coming.

Regular SaaS: Faces constant pressure to increase month-to-month growth due to investors and external stakeholders.

Profitability

Micro SaaS: Being bootstrapped they can’t spend more than they have. This affords better control over expenses and profits. Most micro SaaS are profitable or at break even.

Regular SaaS: Doesn’t turn a profit in the first months and survives purely on VC funding. Proper allocation of funds is key so that it can start generating revenue from the product as soon as possible to avoid bankruptcy.

They’re quite different, huh?

Practical steps to start building a Micro SaaS

Now that you understand what a micro SaaS is and how it’s different from a traditional one, we can look at some steps for you to start your journey in the micro SaaS space.

1. Niche identification

The first step is to identify particular problems or pain points in niches that are related to your interests/areas of expertise. You’ll do better making Shopify or WooCommerce plugins if you have ecommerce knowledge, rather than making a Twitter AutoDM product.

Take a look at industries that are growing rapidly or going through many changes. These present great opportunities for building a micro SaaS that can serve unmet needs.

2. Demand validation

Even though a micro SaaS is not as risky as a regular SaaS, you cannot omit this step. Make sure there’s a significant group of people that have the need that you’re trying to solve.

You don’t need to get too fancy here. Browse through online groups and subreddits in a particular niche and see what people are talking about. You can also strike up conversations with potential clients and gather insights you wouldn’t get otherwise.

3. MVP creation

Now is the time to prove that the problem is worth your time. The way to do it is to build an MVP that people can use (and pay for). Since time is a key factor, you can build something with code boilerplates or no-code tools.

The main focus here is to do a good job solving the primary pain point even if the rest looks barebones. Make sure that you put out something that early adopters can use and get value from.

4. Constant iteration

This is the step that most people miss or don’t pay enough attention to. You want to have a direct channel of communication with your early adopters because they’ll be the best source of insights for improving and refining the product.

Embrace the “beta” status and keep improving. Whether it is the onboarding, the user experience, or the actual functionality to support more users, #AlwaysBeImproving.

5. Support & retention

Micro SaaS companies have a unique advantage when it comes to customer support. Since they have a small user base, they can communicate directly and develop relationships with the users.

When you talk to customer support, most of the time it is the founder (or founders) themselves. There’s the opportunity to turn users into raving fans that would do marketing for the product because they like it and find it so useful.

Also, issues with the product are an opportunity to show that there’s a real person on the other side who’s open to feedback and willing to change according to the user’s needs.

If you follow all these steps in order, you have much better chances of building something that specific people will find very useful and they’ll thank you for making it.

Making something that’s valuable and solves other people’s needs is awesome. And it is even better when you get paid for it on a recurring basis.

Once you have enough funds, you can invest in making the product better, adding one more team member, and expanding your market reach.

Here are some Micro SaaS ideas you can try

Translation plugin for WordPress: You can build a plugin that integrates with WordPress sites and makes it easy to translate or localize the content for a particular group of people, say Germans or Russians. You can also look into other sites that have marketplaces like Shopify and build the plugin for their sites.

Customer-facing chatbot for chiropractors or defense attorneys: The key here is to build a chatbot that caters to specific professionals (like the ones mentioned before) and can provide specific answers to customers' questions. This is what will differentiate you from the bunch of generic business chatbots out there.

Plugin to better manage SEO on Webflow sites: You can move over from the WordPress ecosystem to modern sites built on Webflow. The idea here is a plugin that will offer much more advanced features to make handling SEO easier for sites of business owners. And you can go even more niche and work with just a specific group(s) of people.

Applicant tracker for startup accelerators: There are many more startup accelerators and seed funding programs now than there were 5 years ago. And most of them use some sort of integration between Notion, Airtable, Google Sheets, and the like.

Your tool can seamlessly integrate with existing tools and then move into handling the data entry itself so everything is together in one place and gives people a broad overview of how their programs are doing.

Plugin for pricing pages with analytics and A/B testing: If you think about it, this would be a very useful tool and I can’t believe something like this doesn’t exist already. Most pricing pages come by default from the payment provider that the business uses (Stripe most of the time).

But none of these providers have such a service yet. They don’t allow displaying prices with different currencies or helping see if a $20/month price is better than a $19.99 one, or any other kind of experiments with analytics to see the difference.

Those are just a few ideas that you can take and get started with the steps I shared before. (And I saved you the work of doing the first step, you’re welcome.)

Conclusion

There you have it!

You now know what a “micro SaaS” is and why it has become so popular for solopreneurs, bootstrapped founders, and indie creators alike. You also know what steps to take if you want to get your feet wet in the world of SaaS and a couple of ideas to do so.

Remember to gain a thorough understanding of the needs of the people in the niche you want to serve. Be a part of that niche so you can gauge the demand, and keep iterating on your product. That way you’ll have much better odds at building a successful product.

The good thing about micro SaaS is that you can keep your costs low and can build more than one product. That way you will be able to diversify your portfolio of products and de-risk your building journey.

So, go ahead, unleash your creativity, develop your skills, and make an impact in your chosen niche with your own micro SaaS venture!

Thanks for reading. Hope you found it useful.

Don’t forget to subscribe on Hackernoon so you don’t miss future articles.