Ask HN: Can a SaaS survive on a donation-based model?

3 pointsiio72y ago7 comments

We're a couple of guys who have build a SaaS (B2C) that provides a very customizable news aggregate with deep consideration for privacy and anonymity.

As such we have a lot of problems receiving payments because of VAT (we located in EU and have customers both in EU and outside as well). We do not require customers to sign up by name, address, etc.

We're thinking about switching to a donation-based model, but are worried about whether we can actually survive on that.

So, can a SaaS survive on a donation-based model or will people just generally free-load?

7 comments

nicbou2y ago

Donations don't work. If people can get something for free and without the hassle of sending money, very few of them will donate.

I have donations enabled on All About Berlin. About one in 15,000 visitors donates. The average amount is 8€. I regularly get reader mail that praises how useful the website was and how much they depend on it. Even the people writing those messages and asking for personal advice don't donate.

The revenue from affiliate links is 2-3 orders of magnitude higher, and I use them very sparsely.

People just don't give money easily. I'm at peace with that, but I chuckle when people talk about donations replacing ads.

iio7OP2y ago

Thank you. Very useful comparison.

bruce5112y ago

You think of it as privacy and anonymity, but unfortunately this makes the business start to smell fishy, especially to tax authorities.

Tax folk are naturally keen on diligent record keeping. It helps them understand you aren't cheating on your taxes. Part of that is you doing things like charging vat.

Typically this means some "reasonable" measure of knowing where your customer is. It's not really enough for them to just "declare themselves outside the EU". If anonymity is important for the customer, then they pay VAT.

And yeah, forget donations. Hope is not a business strategy. That's a quick approach to zero revenue.

quectophoton2y ago

Not exactly donation-based, but Sourcehut comes close: https://sourcehut.org/pricing

They seem to be able to afford paying a few salaries even when users don't really need to pay (I think needing to pay for the build service is a recent-ish change).

So, "depends on what your average user is like", I guess.

pryelluw2y ago

You’d be switching to a more difficult revenue model.

nektro2y ago

donations might be able to support one of you if you're lucky

aristofun2y ago

Nope.

Donations don’t work.

Mostly because of psychology - saas is considered a business, not dying child in afrika.

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