It’s time to get SAASy! It sure is an overused phrase, but… If you weren’t living under a rock for the past 25 years you’ve probably used at least one product that belongs in the SAAS category. Yes, the SAAS is everywhere, lurking from the shadows, trying to get your hard earned money. What once started as a great idea, now has become a dreaded enemy to our wallets.

What is a SAAS?

In its main form it’s software that you don’t buy, but you pay a subscription for. Like Spotify, or Netflix, or if we’re on the serious business side Microsoft 365, Jira, Dropbox, Hubspot, Salesforce, Zoom… the list goes on and on. Basically, you pay for your software as you would pay for a service, a monthly fee, hence the name Software As A Service, or SAAS.

So, who came up with it? Well, it’s a pretty old concept dating back to the old “communal computer” days, as I’d like to call them. You see, back then (and that’s some years before I was born actually), computers were pretty expensive, and also pretty big, unlike the smartphone that you probably use to read this blogpost.

This brings us to big and expensive computers on one side, and people that wanted to use them on the other. Engineers came up with something called timesharing. Timesharing meant that multiple people could share the same computer resources. They would use terminals which were “headless computers”, made up of only keyboards, screen and a small communication unit, connected to the actual computer by using a cable. Now, switch the terminal for a browser, and that cable for the internet, and you get the modern day SAAS concept.

The “modern” SAAS exploded nearly at the same time as “the cloud”. See, the cloud is just a bunch of computers put together and let us host web applications for lower prices, in multiple regions with almost no downtime. This meant that businesses could utilize it to host their (now web) applications on it, instead of on their on-premise infrastructure. Startups saw this and thought, “that’s a nice cloud you got there, it would be a shame if someone built software once, host it on it and charge people a subscription fee for using it”. And so, they did. They began creating what is known today as the modern SAAS paradigm.

Where did it all go wrong?

On paper the SAAS was the perfect solution. For developers it meant that they built the software once, deployed it once and they didn’t have to “manage” issues with different operating systems, CPUs, RAM, etc. They could do nightly updates using CI/CDs, apply bug-fixes with the speed of light, and roll-out new features as soon as they were ready.

For clients it meant that they would get software that was constantly upgraded and improved. The monthly fee was a real game changer because they could subscribe, pay a small amount, use it for a while, and then just cancel the subscription once they don’t need it.

The SAAS was revolutionary. They compared it to paying your monthly utility bills. It was supposed to be cheaper to pay a subscription than to build your own software.

Of course, businesses being businesses, tried to rig the game so the house always won (big). They first gave us the “free tier”, which was nice because we all want presents, and it felt like someone gave us just that, a present. This was nice, until… Until you realized that you are actually using this app, you invested some time setting it up, inserting initial data, maybe even shared it with a colleague or a family member.

For a while it was all good. Everyone was happy with the app, but there was this constant weird feeling that something was off. Then you started hitting paywalls within the app. Oh, you want this feature? Upgrade! You want that feature? Again, upgrade! Sometimes SAASes would give you a free preview of the whole app for just enough time for you to enter your data, and then lock it in. You want it unlocked?… Wanna guess?

Upgrade!

Don’t get me wrong. Developers, managers, designers, support staff… They all need to get paid. After all, they did their best to deliver you the product that you love using so much. Having multiple tiers has never been the issue. I’d even say that it’s the solution to our problem (in a way). Tiers gave us features granularity so we could subscribe to the “regular plan” for the regular features and some sane defaults, and the “pro plan” if you were a professional and you needed to tweak every piece of the machinery.

…but, this was not it. The SAAS model got broken. With so many dark patterns, sneaky marketing tricks, shifting pricing tiers, monthly vs yearly subscriptions… These are a tiny fraction of the reasons why SAAS users start to publicly express their dissatisfaction.

Why the users (and companies) rebel?

As stated, there are many reasons why users are unsatisfied with the current state of SAAS pricing models, but it usually boils down to one simple thing, users don’t want to feel deceived.

So how are SAAS products deceiving us?

• Pricing per user per month… What if not all my company employees need the same feature set? What if only 10% of them need the “pro” account, and 90% need the “regular” one? Not all firms have 100+ employees and unlimited budgets to spend on the pro tier. Migrating from one tier to another assumes that you move all your employee accounts.

• You need to onboard a minimum of X employees… $15 per user per month. Great deal right? Not really. You need to onboard at least 5 employees. For those with bad math skills 5x15=75. Yes, your month now is $75, and no this is not for the “special super-duper pro tier”, it’s for the regular one. Our security team is only two people, why would I need a 5 person subscription, and no, the free tier is not sufficient.

• We are changing our pricing, but don’t worry, we are adding more features so you are getting more bang for your buck! I don’t remember asking for more features. If I did, I would probably sign up for the more expensive tier… Oh wait.. Look… They just added a cheaper tier with the same features and price as the one I signed up for years ago. Only now, my tier costs more because I have all these “great features”. Yes, of course you can downgrade to the cheaper tier, but how many of you will?

• We are changing our pricing, because of the economy… I get it. We all get hit by “the economy”, and as I said previously, all the good people that worked hard to deliver this SAAS need to get paid. But a 100% increase in pricing?! Come on! Your last significant feature update was a year ago. You are not making a compelling case to keep me as a customer.

• Limited time offer. Get 50% off of your favorite XYZ SAAS this valentines day. Yes, they had the same offer for halloween, thanksgiving, black friday, christmas, new years, and will probably have it for easter… Most of the time they forget to mention that these 50% off are for the first couple of months, not a year nor lifetime.

• Sign-up for a free trial by leaving your credit card details How come it’s a free trial when you are asking for my billing info? Hmm… What’s a setup fee?

• Canceling a subscription as easy as one, two, three… and then jump on your left leg, with your right arm pointing east while singing the national anthem and eating spaghetti from a bowl that you balance on your head. I don’t understand your complaint.

Should I go on?

Is NoSAAS a better option?

No!

Ok, let me expand on this. Let’s presume that you cancel all of your subscriptions. You still need to use some kind of software instead of the SAAS that you’ve been using for the past 5 years.

Let’s start with the data. Over time the SAAS accumulated tons of your data. Now you are moving away, and you’re taking your data with you. You soon find out that the data export feature is not really complete because It doesn’t export all fields that you see in the UI, or maybe it exports in… MS Excel spreadsheet format?! OK, so you hire a developer to process the exports and convert them to something useful.

Then here comes the software itself. What would you choose? Guess what, all the software on the market is SAAS based, and as usual everyone copies everyone else’s dirty tricks. Oh, you found an open source version of the software? This is great! Just as long you spend a couple of months tweaking and adapting it to your needs by hiring an IT consultancy company that will do that for you.

I support open source projects (like real support, by donating time and money), but development speed is far better in commercial software. SAAS companies usually swim the red seas, so they compete with each other and often take suggestions from their customers on how to better their product (until they don’t). Open source projects often rely on the power and willingness of the open source developers that (ironically) usually have a 9to5 job at a SAAS company, and understandably they do the “open source thing” in their free time, out of the goodness of their hearts. Delivering features is no pressing matter. It’s done when it’s done.

The last part would be the hosting. You need a server administrator. Yes, and a DB instance. We need more RAM because the app Docker containers are sucking it dry. Did you patch the server? Uhh… a DDOS. What is a, CloudFlare? A new version of the software is out, should we upgrade? There are DB schema changes, we better backup the DB. Are we keeping the server backups on the server?!

I think that by now you got the point.

Running software on your own costs money, even when it’s open source. I am not saying that you shouldn’t, but you should be aware that nothing comes for free. And please remember that all these were the reasons why SAAS initially succeeded in taking over the software market.

So now what?

Luckily, there are different ways to gain back people’s trust.

Do you remember how at the beginning we said that one of the selling points of SAAS was that you pay for it like a monthly utility bill? Well, that just might be the answer. In the IAAS model there is another pricing model called pay-as-you-go, or in layman’s terms, you only pay for what you use. So, if you used a server only for an hour, you only pay for that hour. Not for a day, nor a month.

How can this be done with a SAAS? There are many metrics that can be used, but the easiest one would be a “server request”. So, what is a server request?

Each time you click on a link, or a button, or when data gets updated on a time basis just by itself, behind the scenes a server request (or multiple) is being executed. We can count them and based on that count we can charge users. If you made many server requests, we will charge you for how many there were, if you were not using the app and there were no requests, we charge nothing.

Of course this is an oversimplification of the pay-as-you-go charging model for a SAAS, but it’s a start. The prices per-request don’t have to be low, but the pricing is going to be fair. Maybe you can even create pre-paid tiers, where the user/organization can pre-pay for certain number of requests on a monthly basis by which it’ll get a lower price per-request.

On the other hand, the lock-in problem could be easily resolved by open-sourcing your SAAS. If it works for GitLab, Sentry, Odoo and many others, why not for you. You don’t have to open source the complete project (although that would be awesome), just open enough so the users who decide to use it on their own terms will find it usable.

And… maybe, just maybe, if it becomes their daily driver they will even start contributing or just switch to the SAAS (cloud) version of it.

There are many ways how money can be made, why not the fair and open way?