Hey,
If you wanted $4,000 a month, would you sell your time or build a subscription? Most advice says software. I ran the numbers both ways this week, and I'd rather show you what each one asks of you than tell you which to pick.
Let's start with selling your time. I'll use my own offer, a 60-minute consulting call at $150. $4,000 ÷ $150 is 26.7, so you'd need 27 calls a month. That's about 27 hours on the phone, and that's before prep and finding the clients. The upside is speed, because one person saying yes gets you paid. The catch is that you're the ceiling. Every extra dollar takes another hour or a higher price, and if you stop working, the income stops too.
Now the subscription. I used a hypothetical $19 a month tool, picked to keep the math clean. $4,000 ÷ $19 is 210.5, so you'd need 211 subscribers. Two things decide whether that holds up.
The first is churn, the share of subscribers who cancel each month. ProfitWell data reported by Lenny Rachitsky in 2022, covering about 13,000 SaaS companies, treated 2.5% to 5% monthly churn as good for small-business software. At 5%, you lose about 11 of your 211 subscribers every month, so you need about 11 new ones just to stay level. At 2.5%, it's more like 5 or 6.
The second is margin. Stripe's SaaS guide calls a gross margin above 75% typically good. At 75%, $4,000 in revenue leaves you $3,000 after direct costs like hosting and support. That's arithmetic on a made-up example, not a forecast.
The trade is that you earn nothing until you've built it and proven people want it. After that, your limit isn't your hours anymore. It's how many customers you can reach and keep each month, and what you own is the code, the subscribers, and recurring revenue that another buyer could value.
Here's what this doesn't show. Build time isn't in the 211 figure, and it could be hundreds of hours. And my own experience is one data point: my first paying client bought a service, and this newsletter hasn't earned anything yet. That's one business, so please don't take it as a rule. To be clear about where this stands, it's research and arithmetic plus that one data point, not a tested software result.
So which one fits you? If you need cash within 30 days and can sell about 20 hours a month, start with the service. If you have 200+ free hours to build, can reach 200+ likely buyers a month, and the problem keeps coming back for them, software is worth testing. If your answers are mixed, sell the service while you test the software.
You can test it cheaply before building anything. Write one paragraph describing the tool, put up a page with a price and a preorder button, and count real signups. This is my own rule, not an industry benchmark: ten preorders is a reason to build, zero is a reason not to.
Reply with which one you'd start with, service or software, and what your biggest constraint is right now: time, money, or customers. I read every reply, and they help me decide what to write next.
— Galaxy (Tony Long II) 🌏
Building from Cebu. Earning in USD. Sharing the math.
Sources: Lenny Rachitsky, Monthly churn benchmarks (ProfitWell data, Feb 8, 2022). Stripe, SaaS gross margin explained.
