Why use upfront payment models for early-stage SaaS?

Juggling Product Development, Revenue, and Solution Validation Simultaneously: How to Master It? When you’re building an early-stage SaaS product, you’re frequently engaging with users and (potential) customers.

You’re still in the process of building your product. Therefore, naturally, you’d like to get an idea of which features users are missing.

But besides continuous development, you also want to onboard customers and secure the first revenue.

Sounds familiar?

The solution lies in letters of intent or an upfront payment model ✅

Let’s zoom in on the problem:

When you’re trying to sell your product, you might hear, for example: “Great product. I’m definitely interested, but I’m missing functionality X.”

Subsequently, you get to work and develop the functionality.

Great! A better product and a new customer!

Or maybe not… 😞

Your potential customer is no longer interested. They find it too expensive, or there’s still a missing feature.

That’s quite disappointing. No new customer added.

Later, you discover that none of the other users are utilizing the new functionality. You could just facepalm yourself…

Have users sign a letter of intent. This signifies that the product can be used for free, but payment will be required once the functionality is developed.

Another option is to have the user pay for the development of the functionality. This can be employed when it’s about a highly specific feature desired by only one or a few (potential) customers.

An added advantage is that letters of intent or upfront payments are the best methods for validating your product, or a specific feature.

After all, no validation holds as much weight as testing willingness to pay.

What approaches have you used to gauge the market demand for specific features before incorporating them into your product roadmap?