SaaS Fatigue
sachagreif.com
sachagreif.com
For example, would it make sense to run Bingo Card Creator as a SaaS?
Some key criteria that matters to both parties:
- Difference in price/revenue between one-time and recurring: If the recurring revenue stands to significantly exceed the one-time fee (accounting for attrition and those who decide not to buy into the subscription), a SaaS model is attractive to the business, and not to the price sensitive customer.
- How steep would the one-time fee be (and who is the decision-maker, i.e. will they have the budget for this?): If the one-time fee would be so steep that a lot of IT managers (or whoever the buyer is) won't have authority or willingness to front the cash, a SaaS model makes sense. This is a case in which both the sellers and buyers prefer a lower cost (even if it results in a higher long term expense for the consumer since the buyer may be spending out of a bureaucratic budget that they don't want to under-use, i.e. when budgets are slashed for being under-used).
- Likelihood of renewal: If the seller does not think that you will renew (due to low switching costs, an inferior product, etc.), then an upfront fee maximizes profit. If you think you are likely to renew time and time again, the buyer probably prefers the one-time fee because that is likely lower than a subscription cost in the long run. So, again, the seller and buyer are at odds: buyers who will renew would rather an upfront cost to save money, sellers expecting buyers to renew want an ongoing subscription fee.
There are surely other criteria; what else would you add?
It seems like SaaS pricing model pits seller and buyer at odds because of conflicting incentives. But as the SaaS model grows more prevalent, it can be expected that buyers/consumers will basically just have to deal with it, as they have with exorbitant annual software licenses in the past. For SaaS startups this means opportunity; for consumers it seems to mean continually increasing costs under the guise of frequent updates, flexibility to cancel, and an easier ability to try out software within corporate budget limits.
Budget. The SAAS bill is probably paid from the Operations budget but the desktop software bill is probably paid from the Capital/Supplies budget. For a lot of companies, it's easier to get approval for money from Operations than Supplies. Learned this from an old boss who used to be a CFO at another company.
- I pay $100 a month for Harvest
- I pay $100 a month for Pivotal Tracker (though we're going to be replacing that shortly with our first SaaS product, http://projectorpm.com)
- I pay $49 a month for Basecamp
- I pay $39 a month for Flowdock
Are these worth it? Absolutely. I will gladly pay for products that kill the pain of running a company (invoicing, project-centric communication) and make me more money (ability to keep tabs on all of my receivables, etc.)
I don't even consider things like Redmine because I don't want to deal with managing my own infrastructure. For example, it's up to Harvest (in order to survive) to monitor, backup and provide a reliable service.
The SaaS model isn't going away anytime soon.
Sure, review your subscriptions periodically to make sure you are getting value for money. Don't subscribe to services that lock in your data. Aside from that, it is at the same level as "don't subscribe to magazines that you don't have time to read".
SaaS fatigue wish #2...add LDAP support.
Then you get to the punchline, "You have too many monthly costs. Now add me to that list so I can help you remove the others!".
Ironically, the least expensive plan on his monitoring service is almost double the most expensive plan on the list of his own SaaS subscriptions.
Every time the topic of SaaS pricing comes up, someone makes the point that 3-month-old startups with no revenue can't afford $10/$20/$50/$100 per month. That SaaS companies could set up a pricing scheme that would allow even 3-month-old startups to use their services. That this might pay off in the long run when a few of those companies make it big.
SaaS companies could do that, but if their service is truly valuable, they don't need to --- companies with traction will pay for value whether or not it comes with warm fuzzies attached --- and if their service isn't truly valuable, they should fix that problem, not their pricing table.
Totally agree.
I'm currently trying to move away from gmail to something else that also offers me caldav/carddav integration. I could run my own mail server, but I really, really don't want to ...
One perfect solution for me would be atmailcloud(.com). They offer a snappy webinterface and cal-/carddav for 2 USD/user. The problem: the minimum amount of users is 5. I could just change the http post and probably get away with just buying a single user, but I'd rather be able to pay for something I'd love to use without having to fake my way arround it.
* SnapEngage ($19/mo)
* ZenDesk ($9/mo)
* RepositoryHosting ($6/mo)
* PayPal Website Payments Pro ($30/mo + per-trans)
* Authorize.net ($40/mo + per-trans)
* Merchant account ($30/mo + per-trans)
* Softlayer ($600/mo)
* Linode ($19/mo)
* Kall8 ($2/mo)
I think that's about it for the monthlies.
If I didn't own them, I'd also be paying $9.95/mo for W3Counter, $69/mo for w3roi and $20/mo for DialShield based on my own usage.
Oh and don't get me started on Atlassian's products. They are hideously expensive when you hit 90 users.
SaaS is fine for a couple of users usually but it doesn't scale from experience. By then it's way too late to switch.