My $5K/Month App Makes $0 Profit (Full Breakdown)

Summary

In this video, the creator breaks down the financials of their app, Yorby, which generates around $5,000 per month. They discuss the hidden costs of running a SaaS business, such as LLM, Superbase, email marketing, hosting, and scraping, totaling around $3,675 monthly. Despite the revenue, the app is not yet profitable, with all leftover funds reinvested into marketing for growth. The creator also highlights the challenges of building mobile apps, including platform fees and delayed payouts, while acknowledging the capital inefficiency at this stage. Overall, the focus is on growth over short-term profit, with cost-saving measures planned for the future.

Takeaways

• 😀 The app generates around $5,000 in monthly revenue, but the actual profit is much lower due to various operational costs.
• 😀 The speaker emphasizes the importance of transparency in financials, revealing detailed expenses behind the revenue of the app.
• 😀 LLM costs are significant, with the app spending $1,375 on language model usage each month.
• 😀 Superbase, used for authentication, storage, and database management, costs about $220 per month, but additional features could increase this price.
• 😀 Email marketing software (Resend) costs $270 per month, with the primary cost driven by the number of contacts managed, not the number of emails sent.
• 😀 Product analytics tool Post Hog costs about $60 per month, helping track users, feature flags, and product analytics.
• 😀 Slack is used for team communication, mainly for its integrations with other tools, costing around $70 per month despite having only two employees.
• 😀 Hosting with Vercel costs about $150 per month, with plans to migrate to a cheaper platform in the future, but no immediate action is being taken.
• 😀 Web scraping via Apify costs nearly $500 a month due to the complexity of handling proxies, bot detection, and large data scraping for users.
• 😀 Despite generating $4,500 in January and $5,000 in recent weeks, after all costs, the actual profit remains around $0 as all revenue is reinvested back into growth and marketing.
• 😀 The challenges of building a mobile app are discussed, including high fees from Apple and Google, who take a significant cut from transactions and delay payouts, which can lead to cash flow issues.
• 😀 The speaker acknowledges that the current approach is capital inefficient and could be optimized in the future, but growth is the priority at this stage of the business.

Q & A

What is the name of the app discussed in the video and what does it do?

The app is called Yorby. It is a social media marketing tool that helps businesses and creators create viral content by allowing users to upload social media posts and remix them to fit their niche, audience, and brand while maintaining the original viral format.

How much revenue did Yorby generate in the month of January?

Yorby generated approximately $4,400 in January, with a rounded estimate of $5,000 per month for simplicity in calculations.

What are the major operational costs of Yorby?

Major costs include LLM usage ($1,375), Supabase hosting ($220), Resend email marketing ($270), PostHog analytics ($60), Slack integrations ($70), Vercel hosting ($150), Apify scraping services ($500), and AI coding tools (projected $200).

What is the total estimated monthly cost for running Yorby?

The total estimated monthly cost for running Yorby is approximately $2,845, including projected AI coding tool expenses.

What is the gross profit of Yorby after subtracting costs from revenue?

The gross profit is approximately $2,155 per month, calculated as $5,000 revenue minus $2,845 total costs.

Why does Yorby have zero net profit despite generating revenue?

All the residual funds after covering operational costs are reinvested into growth activities, such as hiring freelance marketers and content creators, leaving the founders with no net profit at this stage.

Why does the founder prefer a web app over a mobile app?

Web apps allow immediate payouts through Stripe and avoid the 15–30% platform fees charged by Apple and Google, as well as delays in receiving revenue, making cash flow and profitability easier to manage.

What challenges are associated with running a mobile app compared to a web app?

Mobile apps face high platform fees (15–30% of revenue), delayed payouts (net 20–30), and possible conversion loss when users are redirected off-app to avoid the platform fees.

What is the primary reason the founder spends heavily on AI LLM services?

LLM services are heavily used to run the content remixing tool and other AI-driven features, providing personalized, viral-optimized content for users, which is central to Yorby’s value proposition.

What are some hidden or less obvious costs in running a SaaS app like Yorby?

Hidden costs include marketing email management (Resend), data scraping services (Apify), analytics tools (PostHog), Slack integrations for alerts and monitoring, and subscriptions to AI coding tools like Claude and ChatGPT Pro.

What strategy does the founder prioritize currently: cost optimization or growth?

The founder prioritizes growth over cost optimization. While there are many potential cost-saving measures, the focus is on scaling the app and acquiring users first, with efficiency improvements considered secondary.

How does Yorby enhance user experience during onboarding?

Yorby fetches information from a user’s website using Firecrawl, generating an initial system prompt for content remixing. This provides a personalized experience, enabling users to create their first remix quickly and delightfully.