Practice by Numbers · B2B · software for dental practices
Charge a percentage of the practice's revenue instead of per-feature fees
What they did
In their words
How He Bootstrapped Dental Software to $16m
… a software that's outcome-based rather than buying up general practices. I don't think that's the right solution for somebody like us. DSOs have done that and they have built these organizations and they've actually, many of them have actually folded and failed. I think the game should be about building an outcome-based software, right? Which you become, you sell the full ecosystem of how to run a dental office, right? Includes all the software
needs that you need and be able to sell that thing as a, perhaps even as a percentage of their revenue, right? So in that way, what you're saying kind of does make sense that you're owning a part of the dental office, but not in the traditional sense that you actually literally own the brick and mortar dental office. You look at McDonald's, McDonald's is really a real estate company with a very efficient McDonald's that sits on top of it. A lot of these companies, Sears, Macy's that were founded way back in the day are now trading off the book value of their real estate holdings underneath. And so I just wonder, I'm searching, what's the modern day
analog to those kinds of companies? And I think it's going to be somebody like you and Aditi. Maybe you don't go buy the practices, but to your point, if you're helping drive all their revenue because of this great software you've built, service as a software, you're pretty darn close to being an owner. You are. And at that point, as I said, you should think about selling the services more as a percentage of the revenue than just the software, …
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More from this episode
- Grow on dentist referrals, great support and a few trade showsARR ~$2M -> $12.5M from 2021 to 2025
- Stay bootstrapped and grow 35-40% a year instead of buying revenue$12.5M ARR, 22-24% EBITDA, ~$1.5M free cash flow in 2025
- Add analytics on top of the software dentists already use, not replace itBecame the wedge for the later all-in-one platform
- Grow one tool into an all-in-one suite sold as packages~$12-13K per location a year on average; up to ~$18-19K
- Call existing customers to switch their card payments to you for a cut~$190M processed of ~$2B possible; profitable but switching is hard
- Answer a real business owner's data questions by hand before building
Tags: outcome-based-pricing, percent-of-revenue, service-as-software, ai-agents