What Is the True Cost of Delayed Product Releases?

SaaS Product Management
May 13, 2023
What Is the True Cost of Delayed Product Releases?

Imagine working as a chef in a 5-star restaurant. Everything is going well except that you’re constantly late with your orders. The meals are delicious, but the customers are angry their steak took 40 minutes to cook. At the same time, the restaurant owner is furious that customers are going to a competitor who delivers amazing food, but more quickly.

This is what it’s like to work in a development or product team that moves slowly. You may deliver amazing features but if your customers and management are impatiently waiting for them, you need to do better.

But how much does a delayed product really cost your business? Let’s do some analysis.

Why do delayed product releases happen?

There are many reasons why you could delay shipping a feature. Here are some of the main ones:

  • Unclear product roadmap and feature prioritization
  • Understaffed team
  • An emergency happening (sudden downtime or major bug fixes)
  • Insufficient development funds
  • Prioritization of quality over speed
  • And many others

In the end, delayed product releases can happen to anyone for a variety of reasons. And whenever they do happen, it’s bad news for development, product, sales and ultimately, your customers.

Why is delay harmful to your business?

Taking too long to deliver features your customers need can be detrimental to your business for a wide variety of reasons. Here are just a few:

  • Additional stress on your dev, product, design, and other teams
  • Dissatisfied customers (especially if you made some promises and added a feature to your roadmap)
  • Potential churn (from customers who requested this feature)
  • Lower customer lifetime value (as customers may switch to a competitor who has that feature)
  • Slower growth (as your competitors already have a feature you’re looking to build)

Assuming you’ve done your feature prioritization properly, the cost of delaying a feature your product really needs goes way beyond just money.

But let’s talk numbers.

What is the true cost of delay with product releases?

Let’s imagine a scenario where you’re running a SaaS product - a marketplace that needs to launch a new dashboard feature. This feature would allow merchants to see how much their customers are spending across product categories and individual products. Needless to say, your customers would love to have this feature and they've been probably bugging you about it on your office phone system.

You run a development team of seven people - which is the ideal size, according to a few sources. Let’s not add any product/design/project management staff, for the sake of easy calculation.

There are two major costs of delay here.

  1. The cost of your workforce

Developers are one of the most expensive employees a modern business can hire. Salaries vary according to the tech stack, location, and many other factors. However, the average national salary for a developer is around $95,000/year which translates to about $8,000 per month.​​

the average developer salary

With seven developers in your team spending all of their time working on a new feature, you’ve effectively spent 7x8,000 or roughly about $56,000 per month working extra on a feature that should have already been finished. In other words, that money is down the drain.

Once you factor in product managers, QA testers, designers and everyone else involved in putting a feature app together, the figure can skyrocket very quickly.

Of course, real-world situations vary according to the team size, the time spent building, other ongoing projects, the location (whether you’re hiring in own country or outsourcing) and more. However, you can see just how much of a difference one month can make.

  1. The cost of lost sales

There are many ways to price a SaaS product, but for the sake of simplicity, let’s go with flat-based pricing of $100/month for your marketplace app. You have customers who are eager to try your app but they are waiting for the new feature to be finished before committing.

Now for some more math. The typical SaaS revenue growth falls anywhere between 15-45% year-on-year, so let’s say it’s 30%. With 1,000 paying customers, losing 30% annually translates to losing 25 customers in a month. Or in practical terms for your marketplace app, you just lost $2,500 of monthly recurring revenue because you took too long to ship a feature.

average monthly growth rate for SaaS by MRR

Once again, prices and numbers will vary greatly depending on how big your business is already, how important the feature is, how long it takes to finish it and many other factors.

And if $2,500 does not seem that bad, remember that this is monthly recurring revenue and if your lifetime value is just one year, that’s $30,000 in annual recurring revenue. And that’s provided you don’t lose any customers to churn because of a critical feature that is missing.

In other words, every additional month of delay with a feature is literally like throwing money down the drain.

What is the solution to delayed product releases?

Just pushing the release to a later date sounds like a neat solution but it’s not one that works for most businesses. With competitors closing in on you, customers demanding more from your product and threatening to leave and investors asking questions, you simply may not have a choice.

It’s a simple build vs. buy dilemma - whether to build a new feature in-house or buy it from a vendor who specializes in this type of development. 

In the case of an analytics dashboard, the math is pretty simple. Luzmo prices start at $950 per month and you can set your first analytics dashboard up within days. Not weeks or months - days.

So, how does $950/month sound compared to $56,000/month? The answer is clear.

No more delayed product releases - thanks to Luzmo

Want a dashboard inside your product but don’t have months to wait and thousands of dollars to burn? At Luzmo, we can help you add an embedded analytics dashboard to your product within days, not weeks.

Sign up for your free trial today and let us show you how quickly you can add more value to your customers and more revenue to your business.

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Experience the power of Luzmo. Talk to our product experts for a guided demo  or get your hands dirty with a free 10-day trial.