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Comment by chadash | Hacker News Reader

The link doesn’t talk about the SAAS model, which is probably the most profitable (and ubiquitous) one these days.

I know people like to rail against it, but I actually like the SAAS model. It keeps incentives aligned. It used to be that I might shell out $200 for a piece of productivity software. Now, I might pay $10 a month instead. The thing is that under the old model, a company was incentivized by make a sale but retention didn’t matter. Now, a sale is almost worthless, but retention is very valuable. Yes, over time I will pay much more with SAAS, but I also have companies that are incentivized to keep the software working. It doesn’t matter that I have a perpetual license on accounting software I bought in 2005… it no longer functions with my operating system anyway. SAAS helps solve this problem.

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This has not been my experience at all with SaaS.

I find SaaS products, including ones I have paid for, disappear at a much greater rate than the rate at which the desktop tools they replaced stop working.

There's also next to nothing I can do as an end user when they do disappear. If I'm very lucky, I get a limited window to be able to export a portion of my data. But we've eroded data formats to the point where even if I can export my data, there might be nothing to plug it into. What good is a CSV, even, when what I need is a tool that processes the data in the CSV? There's no option for me to keep an old machine or a VM around and self-support on a discontinued piece of SaaS.

That's to say nothing of the price hikes. $10 a month today becomes $14.99 next month, $17.99 in a year, and before you know it the proprietary system you've locked yourself into now costs five times what you originally paid. Sure, they might add some more features, but since it's SaaS, in many cases you have no choice to seek out a different vendor to provide the same feature, as again, your data is locked up in a format you can't easily extract and work with elsewhere.

SaaS from established firms seems to be more durable & maintained. The problem is all the flash in the pan ZIRP VC funded never-profit SaaS startups out there. Hopefully these get shaken out over the next couple years finally.

For example, I've used Adobe products for a very long time, and they get a lot of flack. I was an extensive user of Photoshop (PS) and Lightroom (LR) for a long time.

However, the old model was - PS pay $600 once, then $200 for updates every 2 years or so. LR was $200/100 as I recall. So your run-rate for both was over $150/year (factoring in the initial $800). This was in like year 2000 dollars.

For $150 2023 dollars.. I get constant feature updates, cloud storage & sync, licensed to run on at least 2 machines, etc. Inflation adjusted this is nearly half the price of paying $150 in 2000.

I'm also intrigued by how many very wealthy people are unwilling to pay $10/mo to stream music/video and/or share passwords, when I recall paying $20/CD at the record store in 1998 dollars. You can listen to basically every song you want for the year for the price of (inflation adjusted) 2.5 CDs purchased by my mallrat teenage self back then.

I think we are all just very spoiled..

If I'm buying a lifetime thing, it's an investition. I spent money and got thing that will never get old. As time goes on, I'm getting more things and I need to spend less.

If I'm buying a subscription, it's an obligation. I'll have to spend money from now until I die or I'll get reduced QoL.

Even if today I have spare $200/month, that might not be the case tomorrow. Maybe I'll get fired. Maybe government turn my cash into paper. Maybe I'll have to pay everything I have to doctors to save my live or health. I'll still have bought songs, but I'll no longer have access to the streaming service.

Lifetime thing is a rather large statement, especially with software though isn't it? Most of the pre-subscription model compares were never lifetime purchases. Software that needed paid purchase update every 3-5 years to get OS support / features. No software I used in 1995 will run on my current computers. Even 2005 or 2010 is dubious in some cases.

Content constantly changed delivery mechanisms and people had to buy new media/devices every 5-10 years VHS/Betamax -> Laserdisc -> DVD -> Bluray / HD-DVD -> Bluray 4K Vinyl -> 8 track -> Cassette -> CD

For many things there are cheap/free alternatives or you can opt for the fixed cost up front version.

Paper books/eBooks/CDs/DVDs/MP3s can still be purchased outright. Streaming services have ad supported free tiers. You can go to the library, turn on the radio or tune into over the air TV signal. You can buy an old version of photoshop/lightroom put it on an old computer, and don't expect updates. Etc.

> Lifetime thing is a rather large statement, especially with software though isn't it? Most of the pre-subscription model compares were never lifetime purchases. Software that needed paid purchase update every 3-5 years to get OS support / features.

For sufficiently valuable software, people will hold back on an older OS to keep using the software.

A lot of high-end film scanners will come with the 68k or PowerPC mac that’s used to run the software, because the alternative would be spending $20-30k for a new one. And industrial systems run on similar models.

When Saas software dies, your files die.

When Boxed software dies, you run it on your emulator and your files can be read.

> Content constantly changed delivery mechanisms and people had to buy new media/devices every 5-10 years VHS/Betamax -> Laserdisc -> DVD -> Bluray / HD-DVD -> Bluray 4K Vinyl -> 8 track -> Cassette -> CD

You can still find VHS players. You can't get data from SaaS app that died yesterday

> No software I used in 1995 will run on my current computers.

I'd be surprised if many SaaS products from today will still be available in 28 years time.

I'd assume that many 32bit programs from Win95 era still work natively on Windows 11, and for the rest (including 16bit and DOS programs) you can use compatibility layers (e.g. Wine) and emulators.

> Lifetime thing is a rather large statement, especially with software though isn't it? Most of the pre-subscription model compares were never lifetime purchases.

You should hang around more in retro-gaming and retro-computing communities. They invest a lot of time, blood, sweat and tears to get to run some old software on modern devices, or preserve old computing/games devices that is able to run this software.

> No software I used in 1995 will run on my current computers.

Then I'm sorry you didn't play SimCity 2000 (-:

> No software I used in 1995 will run on my current computers.

I don't think you have tried too much to run it.

> I'm also intrigued by how many very wealthy people are unwilling to pay $10/mo to stream music/video and/or share passwords, when I recall paying $20/CD at the record store in 1998 dollars.

Because everything is a recurring automatic charge to my credit card, and one more thing to try and keep track of and continually reevaluate if it's still valuable enough to me to continue paying for it.

When you bought a CD you didn't have to from that point forward continue to think about if you want to continue paying money to have access to the CD.

I personally find the subscription model in some ways better in terms of cognitive load - choosing between concrete things can be paralysing enough that the two most likely outcomes are failing to make a choice or choosing something and regretting it. The sense of now owning something that I spent hard earned cash on can feel a burden if money gets tight.

Subscriptions, on the other hand, match how consuming media feels to me - I spent time doing something I liked and the cost enabled that.

Looking on it from a pure economics point of view, clearly it makes more sense to buy a CD and have access to it forever from that spend. But psychologically it feels very different

> I'm also intrigued by how many very wealthy people are unwilling to pay $10/mo to stream music/video and/or share passwords, when I recall paying $20/CD at the record store in 1998 dollars.

I think when it was $10 or $15 a month for Netflix, and you got everything, that people did pay. The problem now is that it’s $20 a month for Netflix, and $20 for Hulu, and $25 for Disney plus, and $20 for HBO (ahem, “Max!”), and $15 for Amazon, etc. Fragmentation has meant we’re back to a cable bill worth of cost on top of the actual internet (and possibly actual cable), and half the time you still can’t watch the thing you want to watch (some seasons not currently in rotation etc).

(Also, the cable model was driven by bundling, you may not watch a bunch of discovery channel or scifi channel personally but you're paying for them regardless. Most people didn't buy that many optional extras, maybe an extra movie channel or sports or something, but, most people were never racking up $100 of ala carte services either. A lot of people would have spent a lot less on cable tv if they were allowed to unbundle.)

Anyway the “piracy is an availability problem” line isn’t always true. A lot of times it’s a price problem too. Even if Super Netflix came out with actually everything on it for $99 a month I don’t think you’d get a lot of takers. There is a number where it’s worth my time to pirate even if it’s available, it’s not like Best Buy didn’t carry music or movies pre-iTunes/Netflix, and you could always buy esoteric bands on the web etc. Netflix solved availability for $10/month and that last part can’t be severed while retaining the truth of the insight.

You might say it’s not just steam that ended piracy, but steam sales, and as they’ve slowed down so has my proclivity to spend. I’ll buy any old crap at $5 or $10 if it looks fun, and throw it on the backlog, but for $30 or $40 it has to be something I’m specifically interested in playing in the near future.

This summer sale was the first time prices have been decent in a long while, for the last 5 years the discounts have been meager and the base prices remained pretty high. 75% off a game you're still trying to get $60 for 3-5 years after launch isn't exactly the deep discount it's presented as. Konami and Capcom are awful about this.

> piracy is an availability problem

Isn't the line "piracy is a service problem"? That covers availability price, and even user experience (sometimes piracy is an even better experience than paying, like in games that use Denuvo)

> SaaS from established firms seems to be more durable & maintained.

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.

> 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.

The way around that was to change file format so if you're in industry using that file format (say .PSD Photoshop files), at some point you won't be able to open files from your clients...

But that was also a risk, because then companies would standardize on the old version because they didn't want to send files their business partners couldn't open. It also opened the door to a competitor because if you're going to make a compatibility-breaking change anyway...

> The problem is all the flash in the pan ZIRP VC funded never-profit SaaS startups out there.

The thing is those startups sometimes make very useful software while they're around. I ran Sparrow (an email client from > 10 years ago) for years after the company that made it was shuttered and acquired by Google. If Sparrow was a SaaS product it would be gone 30 days after the acquisition was announced.

> SaaS from established firms seems to be more durable & maintained.

I'm sure many other users have noticed this too. I wonder if it makes breaking into the software space as an upstart firm harder than "in the old days".

> I'm also intrigued by how many very wealthy people are unwilling to pay $10/mo to stream music/video and/or share passwords, when I recall paying $20/CD at the record store in 1998 dollars. You can listen to basically every song you want for the year for the price of (inflation adjusted) 2.5 CDs purchased by my mallrat teenage self back then.

I'm willing to pay $10/mo to play music but that gets me access to near-all music I want access to, on all devices I use. A CD can be just in one place at once and needs a specific player. So it's a terrible comparison.

My hypothesis is not that people are spoiled but psychologically anchored.

We buy thousands of items and for most people it’s impossible to know how much something “should” cost. So we anchor our expectations to what we know.

Web software was mostly free for years because it was either ad-supported or a speculative venture capital investment. Or a dev releasing it for free thinking that “if we get lots of users we can raise money and figure out monetization later”. The Social Network came out in 2009 and there’s a scene where Zuckerberg was made to look like a genius for rejecting monetization. People who wanted to be like Zuckerberg made stuff for free then hoped to raise money. Finally add in many developers made software for free for personal or ideological reasons.

The end result is that consumers are psychologically anchored to expect that web software “should” be free, an app “should” cost $1 at most, etc It’s not really about the $10 as much as people don’t like feeling ripped off and paying $10 for something that should cost nothing makes them feel ripped off.

An experience is burned into my brain when a friend who was an aspiring yoga teacher was doing a Twitch stream for 10k viewers as part of an online festival but at the last moment needed to stream to Twitch from his iPhone. There was an app that worked perfectly that cost $15 but he almost sabotaged his whole show frantically searching the App Store for a free alternative because $15 was a ripoff. He caved eventually and unhappily, then to celebrate the stream led friends and family to a sushi restaurant that was $200/person . It was never about his inability to afford $15 but his psychological feeling that a $15 app is a ripoff. But fancy sushi “should” be expensive so $200 is a fair price.

We are very slowly seeing this change as interest rates rise and everyone understands software monetization better but it’s a gradual process. For whatever reason it’s often devs themselves who push back the hardest against monetization, in their warped world view someone charging $10/mo for a SaaS is deeply unethical but going to work for some FAANG company and fighting hard to maximize TC is completely fine and in fact encouraged. That way your boss worries about monetization and you are free of any moral qualms about it. FAANG devs complaining about subscriptions, privacy , and paywalls are quite common and similar to vegetarians who only eat beef and pork but avoid eating cows or pigs.

saas is antagonistic to customers

It deliberately changes in the interests of the business at the expense of the customer.

Updates are forced, cannot be backed out, lock in the customer, degrade privacy, remove features, upsell, and more.

There needs to be a way to attract willing customers and maintain a respectful trustworthy relationship. Saas doesn't seem to do it.

> SaaS from established firms seems to be more durable & maintained.

coughPantonecough

Proprietary file formats are also a problem.

Sure, you can get versions of your data that are technically usable/readable by other software out of Google Docs or Figma, but you’ll never have a fully fleshed out original because nothing else can read those formats because they’re not documented and can change at the whim of their creators.

That's true, but at the point that you have to fire up a VM to use some software... That's pretty niche

Part of the issue with SaaS is when they're rushed to build using the "fastest" technologies or platforms. Then, when they get bigger, they end up having a much higher break even burden.

Building with boring technology on the other hand can remain very low in monthly costs and still provide a lot of scale and capacity for users.

supabase model of open source + saas might be better?

I avoid saas precisely because of the subscription model. Occasionally, I need to make a flowchart, but I don't need to make flowcharts every month. I used to be able to pay for a flowchart software once, and then use it occasionally. Now it seems that, to get quality flowchart software, I have to pay monthly for something I don't use monthly. So instead, I find some free flowchart software which may or may not be limited in some way that I just deal with, and no one gets my money. Or maybe I find something with a buy-me-a-coffee link, but they would still get more from me if I could just buy a perpetual license for a reasonable price.

Of course, the flowchart is just one example. The same can be said for a lot of utility software I only need occasionally.

Yes. I have some audio waveform generation software I use only once in a long while. I paid about $50 for it almost 5 years ago. If it were SaaS, I'd have paid a lot more than that over the last 5 years.

A long time ago I worked out an agreement with a local gym. To avoid a membership that I would only need for a few months (I was living in a hotel temporarily with no access to my own equipment), I paid $10 each time I showed up. This could be a useful model for rarely-used software.

> I paid $10 each time I showed up. This could be a useful model for rarely-used software.

But it already is. Pay for a month and then cancel. Repeat each time you need it.

I don't understand why people are assuming you have to pay continuously for years instead of just paying for the months you actually use.

It's a bit frustrating having to "subscribe" and cancel almost everything. I barely signup to anything and I still forget that I'm subscribed to things.

Companies are fully aware that many, many people forget about charges on their card and leech off those for extended periods.

Sure but it's also super cheap. That's the benefit. That's the tradeoff.

And it's as easy as setting a calendar reminder.

I do wish you could pay a month without auto renewal turned on, but it's also not a big deal. You can also often just cancel auto-renew immediately after paying, so no need even for a calendar reminder.

You can immediately cancel after purchase. It seems like legally they have to allow you to keep the software until the end of the current period.

Because the friction of signing up, going through any onboarding process and then canceling a month later (assuming cancelling isn't major hassle) is a pain in the ass that I don't want to have to deal with.

I don't think you realize that people willingly pay for convenience.

Some companies saw this issue by providing a read only client. The users can open files that they created but are not able to modify them without a subscription.

By the way, if you are on Apple ecosystem, I recently tried the newly included Apple tool, Freeform, and found it to be surprisingly capable.

Funny, your scenario to me seems like SAAS is an improvement.

If I only use flowchart software 2x/yr, I can just pay those two individual months and nothing else. Six times over three years is way cheaper than buying it outright ever would have been. Plus after three years I'd be needing something that the newer version introduced anyways.

So in your scenario SAAS saves a bunch of money and keeps your features and OS compatibility up to date.

You just have to remember to cancel it once you're done each month, but that's easy enough with a calendar reminder.

This way you get to save a lot of money over buying it outright.

It's constrained as to how it renders, but check out d2lang[0].

[0] https://d2lang.com

I feel it's the opposite. The incentive is to lock you in and provide as little value as possible for as much money as possible. Get you hooked, take your data hostage, and then jack up the price as much as possible while delivering little to no additional functionality. Bugs? who cares. Broken functionality? No big deal. You are locked in baby!

It reminds me of the dining hall at my university. The food would always be unbelievably good on parents weekend and any time there were tours that would eat there. Every other time it was mediocre at best. The check for the meal plan money cleared and the goal was to give back the bare minimum.

I don't think that the incentive to "provide as little value as possible for as much money as possible" is in any way unique to the SAAS pricing model. Theoretically, every optimized pricing model will attempt to maximize revenue at a given value level.

And in practice, what does "get you hooked, take your data hostage" mean? I can't think of many SAAS subscriptions in my personal life where this is a real issue.

Transition costs are prohibitive.

Some SaaS platforms bill just enough to stay under the cost of transitioning to a competitor (or building first party) to maximize revenue.

I don't think this is connected with reality. Most companies don't have such strong lock-in, and those that do often have extremely valuable products.

I dunno, this describes my reality pretty accurately. Apple, Figma, and Adobe all try to lock you in with cloud storage and proprietary storage formats: the more you invest in their products, the more you'd lose by not paying them. I used to run some websites off Squarespace, and there's no way to export them and move somewhere else, so you end up paying ~$200 a year to host a static web page, else recreate it from scratch. Gmail has me locked in by having all my emails from the last twenty years. Slack owns my conversation history with my friends. And so on...

> those that do often have extremely valuable products.

I agree with that. All those products above are valuable and useful to me. But, the price is not commensurate with the value of the product alone. The price only makes sense when you add both the value I get from using the product and the pain I would experience by not using the product anymore. The product developers work hard not only to make the product useful, but also to punish you if you leave. That's the gross part.

You can connect an IMAP client to Gmail and retrieve all your emails.

Which is something everybody should do before they remove that feature.

What exactly is the difference from paying up front?

There there's even less incentives to fix bugs, fix broken functionality and god forbid new functionality.

With SAAS, if the software is barely usable but lacks competition, vendor gets paid even if they don't fix bugs or broken functionality. When paying up-front, there always is competition - your own old version; so the vendor has strong financial motivation to make improvements since the recurring "maintenance" upgrade revenue is conditional on them, unlike in SAAS.

The difference is that with upfront payment developers are forced to actually add features that provide more utility. Otherwise customers don’t upgrade. With SAAS you have to keep paying, even with if the software is completely static with no new features or bug fixes.

As for bug fixes, do you think I am more or less likely to recommend your software to my friends if it is full of bugs and you don’t fix them?

In the case of Sage, the difference was about 500% cost increase for each of my two small businesses.

You buy what is offered (and a support period in most cases). Not a promise. No one buys a consumer car and expects it to run on water the next month.

People totally buy Tesla and expects them to be self-driving next month. Every month since 7 years.

Where have you experienced data lockin? That sounds like poor SaaS strategies from the 2000s.

Fusion 360 is one example off the top of my head.

I think I would agree for large traditional software companies like Autodesk or Adobe that charged large sums for software versions you typically don't update yearly (Creative Cloud), that a flat subscription model seems to be a bad fit.

Probably less so for software you use daily or make your living off of.

I use a text editor daily. I see no revolutionary methods being added to text editing that could ever justify me paying monthly. Even something as simple as a calorie counter has a monthly charge for features that never change (MyFitnessPal).

I pay for Bear.app. It amounts to something like $14 dollars a year. But it's a beautifully crafted app and while it uses a database instead of files, it has good export capabilities. I consider that a donation at this point.

SaaS works when not everything is atomized into micro-profitable businesses. The problem with SaaS is it enabled subscription hell and destroyed ownership. When I buy software I reasonably expect to own my copy. No different than when I go to the store and buy a book, or buy a CD of music, or buy food. With SaaS I own nothing. My data is theirs. My stuff is theirs. It is no different than your example where software no longer works with your operating system. If you squint, you can see that once the company changes their model/raises their prices/etc it's no different than my software suddenly not working. The real difference is at least I only paid the exact cost for my utility vs. 5, 10, or even 20x as much for the same utility.

There is a dramatic difference between a world where some software is SaaS but most is owned vs. our current environment where everything is SaaS. It's the gestalt of the SaaS economy you have to look at and not the isolated cases.

Moveover the issue isn't "productivity software" really. That enhances your life. The fact I can't even own some books, music, simple software, movies, etc is the problem. It creates an environment where the average person is tied down with so many subscriptions just for things they'd normally buy once that they become more poor than would be otherwise.

I am at the point where piracy now makes more sense again and I will basically refuse to purchase any more software. To be honest, I don't care who it hurts. I am tired of being victimized by companies. One of the only software I pay for is the Jetbrains product suite because they are a company whose SaaS model is actually cooperative. Sublime is another one who has more than acceptable terms.

You can add Alibre to that list. They do the JetBrains perpetual license plus N years updates for CAD software.

If you pay every month and never own it, that's rent. The landlord will try and lock you in and extract value while providing as little as possible. Sometimes you get a good one that takes care of all the issues, but the majority just want their money.

JetBrains figured this out already. Sell me a perpetual software license that I own and charge me separately to get the updates.

I dislike SaaS very strongly. I will not repeat the "why"s mentioned in this thread, just add one that I haven't seen yet: SaaS incentivize doing busywork that is visible but not necessarily useful.

For example JetBrain's products: Oh look, we have changed our icons/ updated UI/ improved UX/ etc! We know that nobody asked for this, but it will be shoved into your mouth anyway!

Pretty much sure you can find that everywhere.

Were people actually paying $200 for a piece of productivity software, though? I'm no expert but sort of got the impression that a lot of the consumer-facing software currently charging $10 a month used to retail for 2 figures, not 3.

Saas is a model that looks great for some cases but overall leads to shittification of many apps as the way it is often done, to make 100% sure nobody can just use a copy of a program they have, is by putting it in the cloud, which means higher costs to them and worse experience to user (even the best web apps feel pretty laggy compared to native).

I think subscriptions would be more popular if you could manage subscriptions on the bank's end.

How is it a company can give me recurring charges and I have no ability to turn them on or off?

SaaS is DRM done right.

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