I feel like part of this stems from the fact that every service now wants to charge a monthly fee instead of offering a one time purchase.

If you want me to pay $X/mo, that fee has to correlate to the value you are providing me each month. The minute that equation changes, people start to consider other options.

One of the benefits to SaaS is that you can make more money and your revenue is more predictable, but on the other hand it means your market is more susceptible to competition because companies are comparing their options more frequently.

Nowadays businesses use this to create a constant revenue stream from what used to be a single purchase. It's not to service the product, its to continue to soak money from the people who do end up spending on it.

Aside from security updates most software I have, I just want them to stop. No changes, no design upgrades, no "we changed this tier of our pricing" etc. Most of that stuff is working against the customer not for them. Your SaaS model is so you can make money, I have no incentive to pay more than I have to.

You have to upgrade eventually, though. In theory, the SaaS product could be priced the same as the shrink-wrapped version, just divided by 60 months. I suspect it's more expensive, though.

All things being equal, if I ran IT, I'd rather have the SaaS model because I'll always have the latest version and not have to deal with the drama of upgrades every 5 years. I'd also prefer it as the vendor because I don't need to support multiple versions of the software long-term.

as a customer, i don't have the choice to not pay for such upgrades but continue using the old one.

And yet, the SaaS subscription cost is charged continuously whether the customer likes the upgrades or not.

So no, i don't agree with the SaaS business model. It's more extractive. The point of buying a piece of software is the same as buying capital equipment - purchase once, and have it work "forever" (and since software doesn't rot like real equipment, this should be even more true).

What i would pay a subscription for is live/in-person support.

Companies didn't switch to SaaS out of the goodness of their hearts or out of concern for low income people. If the old pay-per-version model were making them more money, they would have stuck to it like a barnacle on a ship.

The SaaS model has always been more profitable than pay-per-version because it took control of when to do a version upgrade out of the hands of the end-user.

Yea. That's how Enterprise SaaS has always worked.

I'm always going to prioritize F1000 customers over a small business.

And small businesses in turn will end up using MSPs.

I'm not going to change my entire product roadmap to retain a customer generating my $20k ACV when I can use the same effort for a company generating me 6-8 figures of ACV.

Everyone from Broadcom to AWS to Snowflake to Databricks does this.

I think the question is whether you're providing an actual service that has value, or just charging rent for the software and calling it SaaS. Software has a marginal cost of ZERO, so SaaS is often simple rent-seeking. A company might actually use the money to develop a better version of the software, but that's actually optional on their part.

This doesn't match my experience at all. To me it seemed that throughout the 00s both consumers and small businesses were unwilling to pay anything for the cloud software, but tide has definitely turned. Now, all smart small companies I know don't blink an eye to spend hundreds of dollars per month for various cloud subscriptions and consumers are starting to pay for software both on mobile devices and cloud SaaS.

Depends on what product, and my use case.

> To be clear I am not saying I want subscription based software, but I understand the business argument for it.

Has nothing to do with more supported X or better architecture, its just about money. In fact SaaS offerings are often compromised and worse of than when they were standalone (at least in my experience with software that made transition from standard releases to subscription).

Additionally in my experience with software that went that route (standard paid releases to subscription) that just signals that the customer milking has become, and pretty much any new feature is looked at from how can we milk it standpoint.

Or not improve it all - but charge you for continued access.

I don’t agree with this at all. I believe subscription models encourage laziness and/or introduction of unnecessary or complex features (to show that busywork is being done).

Sell a license for applications with support included for a year or whatever, like developers used to and still do. If you continue providing more value to customers, and if you aren’t too greedy to introduce new versions and upgrades for trivial updates often, why would the majority of your customers not purchase a paid upgrade every couple of years or so?

I feel there are many areas that are saturated and that developers struggle to figure out how to add more value...or rather, extract more money from customers (1Password in recent years is an example of this, in my experience).

This part is blatantly wrong. Saas enable on demand consumption and lowers tco by a great deal, i.e. indesign used to be 700$ each release, that now covers you 3 years of subscription and you don’t have to fear obsolescence.

Same with many many other software. Once you factor in obsolescence and upgrade cycles it’s very hard to keep the position of saas being more expensive.

The other point about losing control of your own stack do remain valid.

This is a very real argument though? Reliance of a core part of your saas on another company, who is liable to change prices at any time, is a real business risk. The Google Maps API pricing change is a big example.

I actually remember why one company I worked for moved from on-premise to SaaS. They told us that the market valued recurring software revenue at a higher multiple than it did one-time software revenue.

On-prem was a large one-time sale and a small recurring support contract. SaaS was almost all recurring revenue.

On the customer side, it is capital expenses vs. operating expenses.

Big yikes. That is a really intriguing idea.

Rent-seeking to me means that the seeker has exclusive control over some asset that they did not themselves create, and uses that to extract rent from people who want access to it.

Amazon selling free software SaaS doesn't seem like rent-seeking, because Amazon don't have exclusive control over anything. They just offer better value than their competitors, for various reasons.

MongoDB selling SSPL'd SaaS doesn't seem like rent-seeking, because they invested in creating the software, and they aren't stopping anyone else from selling it as SaaS either, just requiring them to do so on a sort of level playing field.

Even Oracle selling proprietary SaaS doesn't seem like rent-seeking, because they invested in creating the software.

What am i missing?

Google is infamous for shutting down services. And the same thing regularly happens even to large companies when they get acquired by even larger companies who then shut down their existing services and try to force migrate everyone to the parent's offering.

Conversely, stalwarts like Oracle and IBM will often continue providing a service indefinitely. For a price. Because once you're locked in they're happy to keep taking your money. All of your money. Forever. This is... differently terrible?

> the old model was - PS pay $600 once, then $200 for updates every 2 years or so.

But many people would just keep using the original version indefinitely. Paying $800 once is a lot less than paying $150/year until you die. It also lets you choose whether you want to pay more for the new features or save money because you don't need them.

And you can't use the Consumer Price Index for software because software inflation is negative. As more people get computers over time the size of the market increases but the fixed cost of developing the software is the same, so the amortized unit cost goes down and in a competitive market that gets passed on to the customer. In the 90s people paid money for Unix and zip utilities and web browsers and now they're all free because they have such a big market that the unit cost is effectively zero.

SaaS things remain not because they don't follow the same cost structure but because lock-in through proprietary formats and training costs and migration costs keep people stuck on the thing they started with, which in turn keeps competitors from achieving the scale needed to get prices down.

SAAS isn't exclusively a business service and many, many, many services have multiple pricing tiers. In fact, Zapier has multiple tiers... for businesses 'starting at 20$' and for teams 'starting at 250$' a month. They scale price based on how much you use the service.

With the free tier you are limited to two 'zaps', they run less frequently, you don't have access to multi-step, you have a rather finite limit on how many times they can run each month etc.

It's just bizarre there isn't a lower tier. I mean, it's even more than my squarespace hosting and squarespace has a 12$ and 18$ tier. Or evernote. Or any number of other services.

I'd happily pay 5$ a month for considerably more functionality but I'm not trying to automate an entire business and 20-25$ or more is nowhere near justifiable. Sure, if you make 6 figures maybe you're like "hey 20$ to handle some weird email situations for me and make some docs automatically, sure!" but for the majority of people it's a "well, guess I won't be giving them anything".

I wouldn't call subscription based software as anything close to "beautiful and pure".

> As a ~user~ customer, I like the idea of finding a few great tools that empower my work and paying for them directly. That gives me confidence the product will serve my needs long-term, because I’m the customer.

As an actual user/customer that has paid for software, i absolutely do not like the idea of subscriptions because it ends up placing too much control at the hands of the developer instead of my own hands. I'd rather pay for software once and then have control over it (this implies at least an offline native version of course and i mainly refer to desktop applications here).

> And this doesn’t mean a bigger budget for my tech product purchases overall: I can subtract these subscriptions from the money I previously spent on a new phone and laptop every two years, then buy new hardware a little less often.

So in other words, the only reason it doesn't mean a bigger budget isn't because this isn't an additional expense but because you cut some other expense from your existing budget.

But if you do not cut from any other expense (either because you do not want to or because you already do not buy a new shiny phone and laptop every two years, like for example i am - my laptop is from 2012 and works mostly fine and my phone is from around 2014 or so and while it is a bit sluggish nowadays, it does the main tasks i want from it to do, like receive phone calls, read ebooks and read some article now and then) then it absolutely does mean a bigger budget.

Anyway, these are the usual daydreams many developers have but aren't met with actual consumer behavior because, guess what, when you have literal decades of every big software company on earth commoditize and give away for free everything expensive to make so they can mine data for advertisement purposes on one hand and open source developers on the other hand making a ton of free utilities for all sort of mainstream and niche users, you essentially teach every single end user that software has no monetary value and as such they expect to get everything for free (and ads are already everywhere anyway, so they might as well be part of the environment).

Really? How many companies did you see do this? Because I see lots of companies still around who have been selling software for decades. Because the marginal cost of software is near zero it’s possible to make money off upgrades and new products because it’s not a linear function of labor to customers.

I think it’s more profitable to charge as a service. Adobe and Microsoft weren’t at any risk of bankruptcy when they switched to subscription.