How a Point-of-Sale SaaS Business Makes $900/mo

Hello! What's your background, and what are you working on?

My name is Trevor Fountain, and I'm a full-stack developer & designer. I've been working on Quail — a point-of-sale and store management tool for antique stores and vendor malls — since December 2016.

Vendor malls, if you've never encountered one, are retail SMBs where a store owner rents a large, empty space (usually abandoned by a mall anchor or big-box retailer), sets up a cash register, and rents out floor space to a bunch of "dealers" who provide the inventory.

The business model varies a lot: some stores charge a consignment fee (% of total sales), some charge a flat rent ($X / ft^2), and most are a mix of both. Some sell expensive antiques, some sell collectibles, some are basically just permanent, glorified garage sales — but they all have some unique weirdness that makes them hard to fit into a standard point-of-sale system.

As October 2017 I have 21 stores using Quail, generating $965/mo from subscriptions; last month those stores processed just over $200k of (mostly cash) transactions using Quail.

What motivated you to get started with Quail?

In December of 2016 I was at home for Christmas in rural Texas. Some folks in my family had recently rented a booth space in a local antique mall run by some friends of theirs. I went in to hang out at the store one afternoon, and while I was there one of the staff there asked me to help figure out a problem with the point-of-sale software they were using.

I went to look at it and was just floored by how terrible and confusing it was to use. I must have muttered words to that effect, because the clerk I was helping (who knew that in my day job I do "something with computers") joked that I could probably make them a better program in a weekend. The store owner — in full earnestness — chimed in with, "Oh! Oh, could you? That would be amazing!"

Of course, like every engineer pitched an idea by a non-software person ever, I responded with, "I'm sorry, I can't, programming is hard, blah blah blah," and spent the next hour desperately trying to extract myself as they complained about all the ways their software was terrible. They threw idea after idea at me for things that would help them, and I just completely ignored the amazing user interview I was having as I tried to escape the conversation and get away.

At the time I was living in Tokyo; on the long flight home I cracked open my laptop and, just to pass the time, started designing a little web app based on the things they'd talked about. By the time I landed I realized that I could build them a better program by the next weekend, so I called 'em up, apologized for my blatant rudeness, and we took things from there.

What went into building the initial product?

It took about a month of evenings and weekends to put together the MVP for Quail. (I was working full time as a remote dev.) The hardest thing by far was reining in the expectations of the folks I was working with in that first store.

I was still in Japan, so every iteration cycle with the first users (the clerks, managers, and dealers in the store) took at least a day. Every morning I'd wake up to emails from them full of so… many… ideas for things that the program could do, and just identifying the good ones and keeping their expectations reasonable was a constant (though super-fun!) job.

Some of the things they wanted to do were crazy-hard ("Can I take a picture of an item and have the system identify it?"), and some were dead easy ("Can I log in from home?"). People in tech forget sometimes that it's really hard to tell which is which from the outside! Software is magical to people who don't know how it's built.

The MVP had maybe three screens: one to log in, one to ring up sales, and one with a simple form for managing your dealers. I did everything else (user management, billing, generating sales reports) manually, just by bashing out SQL or through the Stripe dashboard. (Startup lesson #4: "do things that don't scale.")

The whole thing was very minimal and barely functional, but they loved it. Right before we went live I threw together a quick app where dealers could log in with an email address and check their own sales. I didn't really have many expectations for this, but it seemed like a good experiment and it was something that would have been completely impossible before they switched.

How have you attracted users and grown Quail?

Letting dealers log in and check their own sales turned out to be the best part of the MVP, because a few dealers in that first store I'd worked with also rented booths in other stores nearby.

A couple of weeks after we went live they started pestering the owners of those stores to switch over to the new program so they could check all their sales in one place. This has actually been my best growth vector: happy dealers (who get access for free!) go into the other stores where they rent spaces and push those store owners to check us out.

Since launch I've doubled down on these users, adding a bunch of useful features that help them run their booths. Happy dealers are an organic growth channel, plus they're the best moat against churn I can imagine having — if a store switches to a different point-of-sale system they'll lose all their reports and categorized items, and the alternative to Quail is often literally driving into the store themselves to pick up printed reports.

Beyond organic growth, I've actually had surprising (to me at, least!) success with bulk direct mail. In March I mailed flyers to 100 antique stores in two states where I had no presence, and for about a month I didn't see any results from that at all — but since then I've seen a handful of stores sign up who have confirmed that's how they found out about Quail.

For all my efforts at SEO and web advertising, an old-fashioned flyer has been my most successful marketing push so far. I guess the lesson there is to think more critically about where your customers are; in my case, they're often not on the internet at all.

Which is… tough.

What's your business model, and how have you grown your revenue?

I charge stores a tiered subscription fee based on the number of dealers they have: $35/$60/$120 per month for 30/60/unlimited dealers. Of course, the marginal cost of supporting those extra dealers is $0, but the way these stores are run almost always means that stores with more dealers have considerably more discretionary revenue.

Large stores do have a slightly higher support burden — they often have multiple clerks ringing up sales simultaneously, and tend to be less forgiving in the case of downtime or bugs.

80% of my customers for Quail are on the smallest plan, and I'm very forgiving if stores are near the boundary. I'm definitely leaving money on the table, but discounts and coupon codes are my best carrot for managing the relationships with my customers (shout-out to Stripe which makes this insanely easy to do).

If I see that a store's had a month with weak sales or they've just crossed the border between 30-31 dealers I often preemptively send them an email with a discount code and a quick, "Hey, hope this helps you get through to next month; wish there was more I could do to help!"

In exchange for letting go of a few dollars on their next month's subscription I get customers who are absolutely delighted with their point-of-sale software (Startup lesson #8: "Be a human") and therefore more forgiving if we have unexpected downtime or it takes me a couple of days to respond to a question or fix a bug.

For me this has been a great trade-off to help keep a growing side-project from eating my life. (I still have a full-time day job.) It's also a great touch-point for getting user feedback: they get a one-off discount, and I get to ask a couple targeted questions.

My monthly expenses are disgustingly low:

• Hosting (Linode): $40/mo
• Inbound email (Google G Suite): $10/mo
• Outbound email (Mailgun): $0/mo
• Subscription processing (Stripe): ~$35/mo

What are your goals for the future?

My main goal for 2018 is to grow the number of stores. This is a personal-growth goal as much as anything, because to hit it means I've got to get way better at sales and marketing than I am now.

I also want to spend some time exploring ideas for add-on products I can sell to the dealers using Quail. At the moment these are users who provide a defensive moat and some organic growth but no direct revenue.

Like the stores they're in, these are also folks running (very) small businesses on a shoestring budget and without much planning or forethought. ("Accounting? Yeah, I've heard of that.") I'm not sure what this might look like yet, but I'm constantly on the alert for ideas as I talk to them.

What are the biggest challenges you've faced and obstacles you've overcome?

I often read about B2B startups on Indie Hackers that are targeted at software engineers (like WakaTime) or other startups (like Baremetrics) and think how nice it must be to have tech-savvy users.

Case in point: when a store signs up I always offer to manually import their sales and dealer data from their existing system (Startup lesson #31: "Provide shockingly good support"). Usually this means they send me an Excel or MS Access file with a couple of tables, but on one memorable occasion a store owner took me up on my offer and mailed me a literal scrapbook in which she'd been cut-and-pasting the price tags from every item she'd sold for the last two years.

Talk about "do things that don't scale."

(She's still a happy customer, by the way. Totally worth it.)

Have you found anything particularly helpful or advantageous?

Other folks have said this before me, but use your size as an advantage. Nationally, I'm competing with giants like Intuit or Square — but I can move a lot faster and do things that, to the owner of a 5-person junk shop in Indiana, are kind of magic.

Need a slightly different report? Have one clerk who can't read English and keeps making mistakes? Cool, I'll just add that feature or localize that button and let you know it's fixed.

This has the double advantage of forcing you to talk to your users (Startup lesson #112: "Talk to your users"), which is never a bad thing.

What's your advice for indie hackers who are just starting out?

If you're an engineer, resist the temptation to use exciting tech. Quail is boring software (point-of-sale and sales reporting) built with boring technology (Java + Postgres on the server, Angular 1.x on the client), which leaves me free to focus on building the business instead. It also has the side-effect of being incredibly easy to scale and maintain.

If you're doing a startup because you want to experiment with sexy new stacks you'd be better off working on open-source projects; building a startup is about building the business, not building software. Leave the GraphQL-backed, server-less, Vue.js-in-Clojurescript nonsense to your day job.

Also, because the question comes up all the time: don't stress if you can't get the .com domain. It's obviously impossible to quantify, but I doubt I've missed a single sale through not having quail.com.

Where can we go to learn more?

You can read more about Quail at quailhq.com. I'm also rather active on Indie Hackers, so ping me with questions in the comments here, and I'll answer as best I can! "Shockingly good support" and "talk to your users" and all that :).

Thanks for having me, Courtland!