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tikhonjlast Saturday at 5:08 PM3 repliesview on HN

I remember seeing somebody summarize this as "SaaS is a pricing model" or "SaaS is financialization" and it totally rings true. Compared to normal software pricing, a subscription gives you predictable recurring revenue and a natural sort of price discrimination (people who use your system more, pay more). It's also a psychological thing: folks got anchored on really low up-front prices for software, so paying $2000 for something up-front sounds crazy even if you use it daily for years, but paying $25/month feels reasonable. (See also how much people complain about paying $60 for video games which they play for thousands of hours!)

It's sad because the dynamics and incentives around clear, up-front prices seem generally better than SaaS (more user control, less lock-in), but almost all commercial software morphs into SaaS thanks to a mix of psychology, culture and market dynamics.

There are other advantages to having your software and data managed by somebody else, but they are far less determinative than structural and pricing factors. In a slightly different world, it's not hard to imagine relatively expensive software up-front that comes with a smaller, optional (perhaps even third-party!) subscription service for data storage and syncing. It's a shame that we do not live in that world.


Replies

danjllast Saturday at 6:22 PM

Correct. SaaS is a business model, not a technical concept. But the real problem is that there is no equivalent business model for selling local first software. Traditional desktop apps were single purchase items. Local first is not because you just navigate to a website in your browser and blammo you get the software. What we need is a way to make money off of local first software.

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flomolast Saturday at 8:10 PM

It's the missing middle. A manager can just expense $25/mo, while $2000 requires an approval process, which requires outside sales, which means it really costs at least $20,000.

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apilast Saturday at 6:33 PM

SaaS is a business model. Cloud is DRM. If you run the software in the cloud it can't be pirated and there is perfect lock-in. Double if the data can't be exported.

Related: I've been incubating an idea for a while that open source, as it presently stands, is largely an ecosystem that exists in support of cloud SaaS. This is quite paradoxical because cloud SaaS is by far the least free model for software -- far, far less free than closed source commercial local software.

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