Comment by Anurag Kanoria on "I'm Arvid Kahl, I built and sold a SaaS, wrote Zero to Sold & The Embedded Entrepreneur, and celebrate indie founders in public — AMA"

Hey Arvid,

I'll be launching my SaaS(It's a B2C product) product soon and I had a few doubts and questions, I am so glad you are doing an AMA.

Is it necessary(or smart) to register an LLC or C corp for SaaS products?

If yes, would you recommend any service for doing so? (although I don't intend to raise VC funds, I have heard having a registered business makes taxes, payments, invoices, etc easier). I was thinking about registering in Delaware using Firstbase.

The other thing is a trademark. Do I have to apply for the logo to be trademarked? I have already validated my idea earlier this year but I don't know if(and when) I should file for LLC.

I have registered a (Wyoming) business using Firstbase, and it was a breeze. Mind you, I am also an investor in the Calm Company Fund that has funded Firstbase. I wanted a US business, and now I have one.

Why did I want it? I wanted to make sure my liability was covered. It makes it much easier to invoice enterprise customers, build business partnerships, and eventually hire people. It also comes with a lot of little goodies, from free AWS credits to a Mercury bank account — and you need that stuff when you start a new business, anyway.

For a B2B business, I highly recommend creating a business entity.

In fact, when I co-founded FeedbackPanda back in 2017 with my partner Danielle, I made sure we had a business entity (German GmbH, an LLC equivalent) before we got paid by our first customer. I wanted our business books to be independent of our personal financial records. I've seen too many people running into audit problems with those hilariously small first few months' worth of revenue. Strong separation from the start.

Having a company like this also helps you work on new business ideas. The "studio model" may have originated in the VC world, but it works for bootstrappers who are building a portfolio of small bets as well. Build your business from within your Delaware LLC, and if it flops, build another one from within the same company. No need to go through the formation of a business all the time.

Just to clarify: depending on where you reside, you might want to consult a local lawyer or tax advisor. Your local regulations might make this harder depending on what they look like.

I have not done anything with trademarks for myself. I don't have any advice here on this issue, but I'd gladly look into this for you. Reach out to me on Twitter, and we'll ask my audience there together.

Arvid Kahl Any particular reason why you chose Wyoming over Delaware? Also, how were the legal and filing experiences with Firstbase( since you reside in Germany)?

The other question I wanted to ask was regarding pricing plans. Ideally, how many pricing plans should you offer to your consumers, and is using the competitor's pricing plans as a reference a good idea?

Anurag Kanoria I chose Wyoming over Delaware because of expert exchanges like this one on Reddit. In the end, it depends on if you ever intend to turn this into something bigger or want a small self-operated and fully self-owned business. For that, WY seems to be the better choice.

This is not legal advice. Just my experience and what I read on the internet :)

Regarding pricing:

I wrote a lot about pricing — please check out the articles on my blog for very detailed excursions into each topic.

As a super-short answer, three options are usually effective (as most people go for the center price when there is such a choice), and it will allow you to figure out what the value metric is for your customer (what number goes up in your data when your customer makes more money). That should be the deciding tier split between those pricing tiers.

Using competitors' prices is a good starting point. Depending on if your business is more elaborate (price higher) or a less complex but still perfectly usable product (price lower), you should use the prices in your industry as an indicator as to what people are willing to pay.

A warning here, though: not every competitor in your field is a business. Competetive alternatives can take many shapes. Do your research into ALL the tools your prospective customers use right now, including tools that you wouldn't call competitors: notepads, post-its, Google Sheets… they all impact what people are willing to pay.

Pricing is a constant experiment. Your initial pricing won't ever be "right", but it's a starting point for those tests.

Arvid Kahl Thanks for the insights Arvid, I really appreciate you doing this AMA. It really helps noobs like me avoid a ton of mistakes.

I will dig into your blogs to understand pricing better. Thanks again.

Search Hashnode