How Nick Disabato built a profitable productized service

This series aims to help founders, like you, get profitable. Get all the case studies here:

Nick Disabato’s story

In 2009, Nick launched the 18th Kickstarter ever for a book on interaction design called Cadence & Slang. It successfully raised $12,206 with 258 backers. He was blown away by the support he received.

At the time, he was working at a design agency, and the Kickstarter experience gave him confidence. He’d self-published this book, and had earned an independent income.

In 2012, he decided to start freelancing. That year, his business made $47,000 in revenue. It was a difficult time; by November he only had $21 in the bank. His business was saved by stroke of luck: in December, he was hired to redesign  Chicago Magazine.

The following year, he started looking for a sustainable source of income. “What can I offer on a monthly retainer basis?” he asked himself. After evaluating a few options, he settled on monthly A/B testing. He called it Draft Revise, and initially prices it at $650 / month. When he launched the sales page, Patrick McKenzie found it and wrote about it in his newsletter.

“My server crashed, and I sold out of spots. I’ve been sold out ever since.”

From 2013 until 2016, revenue grew from $81,000 per year to $238,000 (pretty good for a one-person shop!).

Here’s what Nick learned about building a profitable business

  • Success hinges on the relationships you build. Each of Nick’s pivotal moments involved a relationship he’d built previously. He was one of the early Kickstarter projects because he’d met the founder in college. Right after he quit his job, he met Amy Hoy, who introduced him to the bootstrapping community.  See the Harvard Research Study.
  • It’s OK to go in over your head. “Here’s a secret,” Nick says, “I’d run two A/B tests in my whole life when I launched Draft Revise. I got better at it, but I was in way over my head.”
  • Pay attention to expensive problems that businesses want to solve. You don’t want to have to educate your customer about the problem; they should already be in motion. Focus on solving an expensive struggle that clients are compelled to solve.
  • Infuse your values in your business. Nick’s business been profitable (on purpose) from day 1. Draft’s business charter prevents him from taking outside investment or being acquired. Likewise, he only works with independent companies that have not taken outside investment themselves.
  • Have a “buy out” number. “If someone wants to hire me full-time for a year, upfront, no strings attached I have a “buy out” number,” Nick says, “it takes into account the opportunity cost of a year of lost business & attention. Currently $3.5M. I say it with a straight face and people laugh, incorrectly.”

Nick’s monthly expenses

Nick tracks all of his monthly expenses in a Soulver file. It looks like this:

Nickd's monthly expensesa

Draft’s annual revenue and profits

Nick’s financial picture is interesting, because a large part of Draft’s profits become his salary.

Draft Revise annual revenue and profit

In 2012, profit margins were 3.19% ($1,500 after expenses). As revenue grew, Nick also paid himself more.

This gave him some flexibility. In 2016 he deliberately took on more client work so that he could buy a house. He made $238,000 in revenue that year, and posted a loss only because he decided to withdraw $100,000 for his downpayment.

His plan for 2017 is to work less. He’s expecting to have $180,000 in revenue, $93,924 in expenses, and earn a profit of $86,076. That should give him a healthy profit margin of 47.82%.

2012 2013 2014 2015 2016 2017
Revenue $47,000 $81,000 $128,000 $160,000 $238,000 $180,000
Expenses $45,500 $71,000 $100,000 $140,000 $270,000 $93,924
Profit $1,500 $10,000 $28,000 $20,000 -$32,000 $86,076
Profit % 3.19% 12.35% 21.88% 12.50% -13.45% 47.82%

Actions steps for you

  • Being healthy is the best investment you can make in your business. “Sleep, improve your diet, exercise, drink a lot less alcohol, meditate and journal,” Nick says. (Watch the clip)
  • Track all of your expenses. Nick is a one-person shop, and he tracks all of his expenses, from the cost of his passport to his mortgage. This gives him a clear picture of his break-even point.
  • Raise your prices. Nick initially launched Draft Revise as a productized service that cost $1,950 / quarter. After the initial spots sold out, he realized he was very underpriced.
  • Keep 6 months living expenses in the bank. Nick’s goal has always been to have 6 months worth of cash in his bank account. It’s dipped down a few times, like when he bought a house, but he always tries to build it back up to at least 6 months.

The full transcript is coming soon! In the meantime, watch the interview with Nick here:

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