Ask HN: Why is everything a SaaS product?
I understand the advantages of Saas - transparent updates, cloud based, redundancy, subscriptions, scaling, unicorns etc.
Why don't we have more businesses following the JetBrains model specially if the product is not a service that needs to run 24/7. I buy the product once and use it for perpetuity. If I want updates, I pay more.
As a consumer, my data does not leave my perimeter, my data is not sold or used for ads and I am not hooking into a subscription that I am going to forget soon.
1) Personal photos and videos backup and viewer. - Just give me a cheap cloud for backup and a desktop app for viewing. 2) Personal budget - Just give me a desktop app that connects to my different accounts and gives me overview.
186 comments
[ 0.24 ms ] story [ 285 ms ] threadThe two use cases you described don't work that way. Both of them have cloud components, which means they need frequent security patches, and they likely also need bug fixes and other updates.
"Connects to my different accounts" by itself is a huge undertaking that most people outsource to Plaid or a similar vendor.
So to answer your question: a lot (not all, but most) SaaS products are services because they are services. They are updated incessantly by developers and have rolling updates.
1. https://sales.jetbrains.com/hc/en-gb/articles/207240845-What...
Still, one of the most valuable softwares I pay for.
The reason is that you do not want to start over each month sales wise.
Again, as a consumer you can "consume" what is offered in the market.
I.e. if you have an option to not buy, the seller has the option to maximize its profit.
This is why I stopped using their software.
Most customers like it, it keeps the company able to push newer features and maybe up sell them.
You can't hire devs per project like in construction. Developing commercial software requires maintenance, knowing the codebase, etc.
Try adding an extra bedroom or 3 mid-construction on a house that had perfectly designed plans. One might be doable, seem easy even but 3 might require a new foundation or something to carry the load (scale).
What if the ask is to pivot to a commercial property. Now you have to physically move it to piece of land that is zoned appropriately. Or maybe just tear it down and start over (refactor).
Those aren't mistakes, they just weren't planned when construction began yet have insane implications to the builders. Planning and expanding software never ends like it would when you complete a tangible finished good.
Fixing their mistakes. Constantly adapting to new/expanding requirements doesn't require SaaS.
But the way it's worked out is that SaaS lowers production costs because code can be shipped fast -- with minimal testing and before there's any real reason to have confidence in it -- on the theory that you can just push out updates later for any bugs that customers find too annoying.
And it's literally impossible to make software without mistakes. Doesn't matter how much money you throw at it.
That said, your first argument is sound.
You're right of course. I should have written a more nuanced comment that I had time for :)
My point was only that in other types of businesses it's possible and common to hire the whole team per project or season.
2. As many point out, subscriptions are best for a business because it's recurring revenue and you can grow. One off sales makes this harder.
3. The Jetbrains model is basically subscription model now. They only allowed you to have perpetual license because of backlash. However, I liked their approach of you can have a peretual license for the version that was available 12-months before your subscription ended. It's what I'm going to be using with my product with a slight modification.
4. As you point out, you're likely to forget about a subscription therefore the company makes money while basically providing nothing.
5. Overall, the problem is that everyone is accepting the current setup and paying for subscriptions instead of buying things so more companies are getting in on the gig.
I get it from the business' perspective and also from a software developer's perspective.
Its unfortunate that there is so little option for a consumer here when they are just wanting to just simplify their lives without sharing their personal data and/or subscribing to a service.
And of course, the more guaranteed revenue you can demonstrate, the more valuable your business is going to be for potential acquirers. “Because a high percentage of the revenue of a subscription-based business is recurring, its value will be up to eight times that of a comparable business with very little recurring revenue,” claims Warillow.
https://www.techradar.com/news/how-recurring-revenue-can-inc...
It's terrible for users who value their money, security, and privacy, but vastly more profitable for companies so most companies will offer it increasingly leaving users with fewer options for anything else.
And now they have to deal with cloud leaks of sensitive data that they no longer control and various SOC2/ISO "certifications" increasingly look like security theater and a "feel good" measure because they don't guarantee anything.
Why? Lack of on-premise and offline based software. Consequently, the innovation today is almost exclusive to SaaS based products. On-premise and offline client software is just becoming an optional expensive side-product of every SaaS product.
But it's a pretty logical step forward. As for the value, SaaS eliminates administration, installation, hardware, technical support and security hastle and majorly cuts the costs for a client company. As for the price, we always praise the always blooming software industry, successful startups, awesome jobs with so many perks and benefits, but someone has to pay for it. I think people don't consider that software is just getting very valuable and too expensive to make and it just makes more sense for companies to rent it then to own it forever.
I've also been thinking about this from an ecosystem standpoint that it is now very difficult to develop a software product that is not SaaS.
If everyone else is SaaS, and you are not, your business will be:
- Valued lower than equivalent revenue SaaS businesses, because revenue is lumpy and comparatively unpredictable
- Have greater difficulty raising capital, because investors aren't used to valuing non-SaaS businesses any more
- Have greater difficulty hiring engineers, as they know the next job they have will likely be SaaS related
- Slower sales cycle due to higher upfront price required (IE - Doesn't automatically fit on an employee card for land and expand)
- Higher customer acquisition costs, as most customers, other than those on HN, are used to the subscription model and prices, and would encounter sticker shock at the high prices required to make a one time purchase work
This one has basically come full circle last year. [1] Many "customers, other than those on HN" have been burned by subscriptions in the past and are rightfully using pricing models assuming a 10x service spike in the future. We've found it easier to sell one-time units for $25000 than subscriptions of $250/mo
[1] https://news.ycombinator.com/item?id=28372532
So much for being risk takers and disruptors. Sounds a whole lot like the opposite.
What’s old is new again. Why do we continue to value people who do not do real work but, like a preacher, latch onto a meme that has others work for them?
All that being said, it stands to reason you could structure your business to be lean enough to ask for $10 or $20 or $120 licenses again, because it worked fine a decade ago, and nothing significantly changed to make it not work now other than all the sexier corporate real estate these companies have invested into across the US and expanding administrations.
You could take a share of that profit from license sales after paying your immediate overhead to set up some sort of trust that can pay out maintainers for that software long into the future. It can even be structured to outlast the development company if done correctly.
Payroll, POS, inventory, backup, etc and the owners can keep track of everything remotely. Setup a backup mobile internet solution, and your biggest IT problem becomes regional loss of electricity.
Nothing for employees or others to steal, nothing to spend on tech support labor, and being up and running again is just a matter of replacing the iPad.
1. The loop of just regular maintenance. How long is that version of Node supported? 2 years? Alright assuming you did literally nothing, no bugs, nothing else your software is already needing to be tested against a new major version in just 2 years.
2. External loops, integrate with XYZ platform? Oh version 1 is EoL in 2 years? Guess you need to get on upgrading to API version 2!
3. Someone uses your out of date software and runs into an issue, now they email you, tweet at you, complain that your software sucks and you should support it better. (My first job would get this all the time for software we released 6+ years ago) Oh you fixed that bug in the new version? "I should get it for FREE!!"
Who is going to do this work for free?
Even if you cut the support emails down to a minimum, that alone costs money to automate...
Another favorite of mine was complaining about price, "$5,000 for a perpetual license?!"
People get spoiled with so many free services and content provider around them and never consider that someone has to actually pay for it. Even tech people live in this ever-blooming software industry with above average paychecks, perks and benefits, but never think about who is really covering for that.
Software development is expensive, value it can provide is high, businesses provide SaaS to enable companies to attract them and pay for the value they use and get. There will always be attempts at price manipulations, but if software is used and business is profitable - the price is reasonable.
Software as a service becomes a rental property and owners can milk consumers for more money over time as well as introduce features to encourage lock-in. Basically, you're teaching frogs to boil themselves.
I don't know about the second part, but they sure are trying to push the first. As many others here have noted, the reason is money, or more precisely, greed and control.
What I haven't seen mentioned are scenarios with non-technical customers. In the extreme use case of resource intensive software with completely non-technical customers, who is going to man the ship? It's like selling someone a car who is incapable of driving.
Even if you provide an on-prem system turn-key, who is going to manage and maintain the system? Yes, you can sell perpetual licenses with support agreements, but the delimitation of responsibilities will be difficult for non-technical customers to understand.
SaaS essentially allows customers to outsource their IT operations.
Because not only is people not gaining income from their work (even if for example the Blender foundation exists.. how many people can live off it?) but we're also straining a lot of open source developers with support that really needs to be paid-for in some fashion.
I don't fault Stallman in this instance(not a fan in general), the GPL always allowed re-sales and I think he did see something akin to the shareware world even with free software, but what happened was the combination with the Internets ubiquity made everyone just jump to the source (kind of rightfully due to bad shenanigans by middlemen actors like SourceForge or worse) leaving potential supporting middlemen screwed.
My impression is that the key aspect revolves around freedom to participate in society. In theory anyone can run their own email, irc, matrix, etc servers. Anyone is free to use an off the shelf open source product, a paid product, or even write their own if there is need.
It's hilariously inefficient compared to cloud/SaaS, and no surprise that cloud and SaaS are eating this world's lunch.
How so? The only "benefit" you cite for the user is lower cost of entry, but the total cost of using the software over time is higher, so that's not a clear benefit.
From a user's point of view, SaaS does have some other benefits, certainly, but it also comes with some rather large drawbacks. So it seems to me that, on the whole, it all just adds up to software costing more.
1. Higher total revenues. If you compare the subscription fee with the sale fee and how often sales happen.
2. More predictable revenue. There are many reasons people want that.
3. The more information (metadata/telemetry) they have on you the more they can use that for something else. That could be details on how you use the app. If they host your photos they may use those photos to train an AI. Things like that.
4. Finding and tracking unlicensed users is easier to stop and manage. Everything is tied to a SaaS. Less stealing software which cuts into revenue.
There are other reasons, too.
In a capitalistic society where the goal is constant revenue growth, SaaS provides a means to do that more effectively. Look at the goals.
If you have a thousand different installs that you need to provide support for, that makes for a very challenging support and maintenance responsibility. People need to be able to operate the software themselves, and may not upgrade when you want them to.
SaaS on the other hand means you, the vendor, are in full control. Sure, it means you need to be able to scale it, but you and only you completely own the infrastructure, which makes things so much simpler.
You answered your own question.