Why SaaS prices are still going up when companies are spending less

They did this to me and I was shocked and disappointed, especially since their entire business model is to become the plumbing between your different systems. Seems predatory.

Someone like Google cannot ever lose data of any customer. So if you pay for 1GB of storage, they probably actually store 5GB of data or more for you. It will be redundantly stored within the datacenter across different racks, but also stored (also redundantly) in different datacenters in case of flood/fire. Theres probably a copy on tape incase of a catastrophic software bug that wipes all the drives. Or two copies on tape because if there were a software bug that wiped all the drives, the chances that every single tape was readable for a restore is low - so more redundancy needed.

However, if you go for a smaller player, they probably still keep multiple copies of your data, but it might be a RAID-5 -like setup, requiring only 1.3GB of storage for each GB you store with them. It can survive a drive failure, but two drive failures or a datacenter fire or an engineer fat-fingering an erase-all command and your data is all gone.

Thats (part of) why the big players charge so much for storage. I actually wish I could choose less reliable yet far cheaper storage option with a big player, but they don't want to offer that because of the PR hit when they do lose customer data.

We also used cheap supermicro and had no service contracts or warranties we had on site staff. Their salaries were included.

Small DC 2mw.

From the start though they offered more expensive to run features (a consistent list api, 1GBit transfer per file vs 100mbit for S3 at the time, Glacier-like storage with instant retrieval).

I think this pricing jump is mostly pricing it at what it always should have been. Plus a bit of the now being so focused on enterprises that the list price means less and its all about "call sales for more information".

S3 has built most of those features since then though, without a price increase.

You won't find any, not easily anyway. The world of enterprise SaaS follows a different business model that I refer to as «hiding the dead horse in the cloud» and holding the customer to ransom.

The premise: the customer is already locked into the wares the vendor supplies, and the customer can't easily migrate away from the product. Oftentimes, the product is also ridden with the technical debt, but it either has a feature critical to the business or there are multiple business (and technical) processes that have a deeply ingrained reliance on the product. It is either the data or the integration with the product. Regularly both.

The vendor repackages the product («the dead horse») as a SaaS, rolls it out into the cloud (the act of hiding the said dead horse), bumps prices up and slips the bill under the customer's front door (the ransom). Cloud costs are passed onto the customer at a markup. The product (and sometimes the customer) might get minor tangible benefits from the repackaged version, e.g. improved availability and reliability, although even that is not always the case. SaaS products typically do not use native cloud services, they run on EC2 instances (or their equivalent in Azure, less often GCP) and are cobbled together just enough to make them not fall apart.

SaaS, as a business model, is not about the engineering excellence most of the time. It is about squeezing the last drop of blood that there is left in a legacy product, now being offered as a shiny-shiny SaaS version («hey, lookie, we are also int the cloud!»). This is the reality.

The theory is somewhat different. In between 2000s and 2020 (approximately), vendors used to tailor their products to specific needs of each specific customer which increasingly became difficult to maintain, update and upgrade as there would be no single product titled «ABC», there would a «ABC customised/hand-rolled for customer 123», «ABC customised/hand-rolled for customer 456» and so forth. So the original premise of SaaS was to have a single version of the product for ALL customers that exposes simple data centric and whatever other technical interfaces that the customer would hook into. The enterprise world does not work that way, though.

There are positive exceptions in the world of SaaS, and almost all of them are in the startup universe and outside the enterprise.

Many (most? Except maybe asana) public SaaS companies have 20% cost of revenue AFAIK

I think this is why self-hostable solutions are becoming more common.

When a solution is self-hostable, both sides win.

The SaaS provider can operate the solution, which offers revenue. Customers like it because they can get going quickly.

Or the customer can host it. This allows them to control where the data goes and minimize costs. I like the way this tweet puts it "The real reason to buy SAAS is for someone else to do the ops work"[0].

In both cases the customer benefits from the continued development of the software (similar to how a library improving benefits all applications which depend on the library).

And the ability to self-host removes a business risk. If the SaaS vendor fails, well, we have to support it ourselves. If it is OSS or we have the code in escrow, all the better.

[0]: https://twitter.com/rickasaurus/status/1700697140492648454

I think that transition costs are high and they’ll find that some customers will stick with them even with higher prices.

This is such a frustrating perspective. I have so much respect for people who build projects and companies with a profit margin that lets them earn a comfortable living, without trying to extract as much as they possibly can from everyone around them.

A shame companies started being greedy in 2023.

Nothing? Well that seat would vanish pretty quickly.

This was after several years of using Google's tools (though not with the same level of commitment -- we still used Office, and had Exchange and AD on premises). Google jacked their prices for Workplace so that was the motivation to move to Microsoft. I fully expect Microsoft to do the same, in another year or two, but this time around I don't think we'll change -- this time we're too invested, it would be too big a project and have too many ancillary costs.

If we had been more "all in" on Google, we probably would have just paid the increase.

Price always has nothing to do with input costs. That is not unique to SaaS.

Now SaaS and cloud is free to squeeze as hard as they want. The lock in is strong.

Saw this coming miles away. Nobody listened of course. This industry worships fads. When the buzz becomes “everyone is doing X” it becomes truly hard not to do it too. All your bosses, employees, investors, etc push for it.

You’re not going all cloud? What are you? Old?

The whole phenomenon of huge SaaS companies with huge prices and huge workforces seems like a zero interest rate phenomenon.

Increased interest rates have meant an end to cheap credit and put a damper on stock prices.

Companies are trying to shore up their valuation by signalling to investors that they are driving towards profitability rather than debt-driven growth. This means raising the price of their product and cutting costs (ie layoffs).

Doesn't seem like it [0]:

> [...] so it printed about 8% of the currency. An approximately equal amount of currency was destroyed

> The reason for the sharp upturn in M1 in 2020 is that the measure was redefined in May 2020

[0] https://skeptics.stackexchange.com/a/53092