Red flags to watch for when buying a SaaS account

SaaS sales can be attractive, but they carry real risk. These are the warning signs to look for.

Red flags

1. The seller shows revenue but won't share hosting or API costs. Every real SaaS product has running costs, so something is being hidden.
2. The user count jumped sharply in the last month or two. Those may be bot sign-ups created to push up the price.
3. Most of the revenue comes from one customer. In that case you're really buying a single contract that could end at any time.
4. There's no analytics history, or the seller won't give you access to it. A real product has traffic data, and without it you can't check anything the seller tells you.
5. The seller says "I'll keep the domain." The domain is the brand, so you'd be buying code without the business.
6. There's no source code. Without it you can't fix or move the product, and you depend entirely on whoever hosts it.
7. The price is far below what the revenue would justify. It's cheap for a reason, and you need to find out what that reason is.
8. The seller pushes for a quick close. Honest sellers know that proper checks take time.

How escrow protects you

With escrow:

• Take your time checking everything. The money is held until you confirm.
• Ask for analytics, payment processor records, the user database and the source code, and check them.
• Test the application properly before you confirm.
• If anything doesn't match, open a dispute before confirming.

On EPICSWP, Aegis, the site's assistant, also watches deal chats for scam patterns, such as a seller pushing you to pay outside the site.

The safe approach

1. Ask for 12 months of data: revenue, users and traffic
2. Check it against independent sources such as the payment processor and the analytics account
3. Get the source code and documentation
4. Test the application yourself
5. Pay through escrow
6. Confirm only when you're fully satisfied

Don't let the fear of missing out make the decision for you. A sound business at a fair price can wait a few days while you check it. A scam usually can't.