Black Friday

Black Friday is one hell of a drug.

The human brain is not conditioned to process millions of dollars in sales over such a short period of time (at least mine isn’t).

When it comes to Black Friday, most people probably think of large crowds lining up outside of malls on Thanksgiving night, discounted TVs, and every brand you ever bought something from sending you an email.

Black Friday has traditionally been associated with consumer retail. I have absolutely no data to back this up but it never felt super common for SaaS companies to participate in the spectacle… at least until recently.

Perhaps it’s due to founders blindly following generally accepted startup advice like this:

While I don’t totally disagree, I don’t think there’s a one size fits all approach to building a successful software business.

The argument for Black Friday?

Well, people (and businesses) love promotions and deals. If that’s what it takes to win over new customers and get them to upgrade… I’d prefer to have more customers paying slightly less than less customers overall.

Ultimately I’m making a bet on our product and team. The hardest part is getting that initial conversion, but I’m confident that once a user upgrades and experiences all that the platform has to offer, they’ll remain a loyal customer. And because our users typically grow with us, they’ll eventually upgrade again and pay even more at some point in the future.

I have no idea who this guy is, but I found this tweet while searching for the one up above and it seems like he came to a similar conclusion.

Congrats on the solid adoption, Arvid.

Black Friday or not, it’s fairly standard for SaaS businesses to offer annual plans at a discount. This might be second nature to a lot of you, but I’ll break it down nonetheless.

When we first launched beehiiv, we had an all-inclusive $99 /mo plan, which we also offered at $999 /yr (~15% discount).

• If a user paid monthly for 12 months = $1,188 in revenue

• If a user paid upfront for 12 months = $999 in revenue

Businesses offer the discounted annual commitment for a few reasons:

• It’s upfront cash ($999 in this case) that you can use immediately to reinvest into the business. The monthly plan is recouped only $99 at a time.

• Users on monthly plans have a purchase decision to make each month as to whether or not they want to continue paying or cancel (even with auto-renewal, they still receive receipts and reflect on their purchases). Alternatively, annual plans delay the next purchase decision for a full 12 months.

The upside of an upfront guaranteed payment outweighs the 15% delta in expected revenue.

Despite giving the advice to never discount the price of your software, Ankur does offer some alternative strategies in the thread above. One of them is exactly what we ended up doing at beehiiv.

Translation: if you’re going to discount, only do it for annual plans.

Here’s how it all came together…

Two years ago I didn’t really have an opinion on Black Friday. It was our first year in business and I was so underwater with other initiatives that I didn’t have a moment to even think about it.

EJ, who we hired earlier that year to lead growth, suggested it was something we should explore. He previously worked on the agency side of things, managing acquisition for dozens of companies, and had seen his fair share of successful BFCM campaigns.

I initially didn’t love the idea. We were already the most affordable option in the market and discounting any further felt a bit irresponsible and cheap. I hadn’t heard of many other software companies offering BFCM discounts and preferred to keep our team heads down and focused on building.

We brushed it off and kept moving for a few weeks until Noah, our CTO, dropped this message in Slack just 5 days before Thanksgiving.

It led to some productive conversations and the decision to offer an additional 20% off our annual plans during the promotion.

Black Friday is the single busiest day for email inboxes globally. To avoid launching this campaign amidst the chaos of actual Black Friday, we decided to kick it off the Wednesday before Thanksgiving. This is fairly standard now, as some brands kick off their promotions in early November.

Let’s just say I was very happy to be proven wrong; turns out promotions do work.

Prior to Black Friday we had generated $250k of revenue on year. To give a sense of scale, we generated just $2,000 of revenue that January.

In just those 7 days (Wednesday through Tuesday) we generated over $63k. When it was all said and done, BFCM accounted for nearly 15% of our SaaS revenue for the year. Not bad for something we decided to pursue just a few days prior.

Turns out just because you can launch something in a few days, doesn’t mean that you should. Last year we waited until just a few weeks before Black Friday to kick off the initiative and found ourselves scrambling up until the last moment.

It did however give birth to one of my more unhinged ideas.

Note: no one convinced me otherwise.

That email did some serious numbers. Overall we did over $500K in sales during Black Friday last year, which accounted for about 10% of our overall SaaS revenue on the year.

This year we actually began prepping in late October (I guess that’s what you call growing up). We have custom landing pages, banners, in-app notifications, amazing email copy and creative, a full paid acquisition strategy, redeemable coupon codes, etc.

As of this writing we’re quickly approaching $2M in sales with still a bit to go.

It’s totally valid to make the argument against discounting software, but this option just feels like a whole lot more fun.

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Some of my favorite content I found on the internet this week…

• In case you missed the 743,492 other people who had an opinion on it, here’s a great interview with Marc Andreessen (The Joe Rogan Experience)

• F1 is at an inflection point (No Mercy, No Malice)

• Elon Musk’s transformation in his own words (The Economist 💰️🧱)

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