Because SaaS business models were built around operating at a loss in order to gain a monopoly and rent seek?
Why SaaS prices are still going up when companies are spending less
101–110 of 126 posts
Re: Why SaaS prices are still going up when companies are spending less
#102Price has little to do with cost. Price should be the maximum the market can afford while still beating ones competition.
> Price should be the maximum the market can afford while still beating ones competition. 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.
This approach has an actual name in my industry. “The Nonprofit Starvation Cycle.”
The basic premise is that in a very resource constrained environment, there’s never enough money to invest in infrastructure and the continuous improvement of process and product. This affects most vendors that serve the nonprofit market exclusively. The price you can charge your customers lets you earn a modest profit and pay your employees, but eventually your chronic lack of resources to invest in your people and product kills your business when a fresh product with fresh funding comes onto the market. The cycle then repeats as that new vendor is unable to make the investments needed to keep up with the broader industry state of the art.
So file this under one of those things that sounds nice in theory but kills your business as competitors eat your lunch in practice.
Re: Why SaaS prices are still going up when companies are spending less
#103We just told 2 big vendors where to go as a result of not just 20% rises, but one was an eye gouging 600%.
We spent 2 manic weeks scrambling to implement alternatives but we have now done so and in the process saved ourselves several hundred thousand bucks and got arguably better systems as a result.
Lean doesn’t have to mean poor.
Re: Why SaaS prices are still going up when companies are spending less
#104Earlier quoted context omitted.
If the published inflation rate is significantly less than the increase in price of a wide variety of goods, then doesn’t that indicate that the inflation rate isn’t being calculated correctly? My understanding is the inflation rate should generally reflect how much more expensive things are getting each year
The ever-more-tiresome issue is that the textbook, accepted-by-rote relationship of interest rates to inflation hasn't held up. The Fed has raised, raised, raised rates for what, a couple of years now? To negligible effect. That's because nobody is calling the administration to task for allowing the REAL cause of recent spiraling costs: monopoly and oligopoly. This is straight-up corporate profiteering and price-goug…
It’s just been one year and this has been one of the fastest raises in history. Give it some time to work.
Re: Why SaaS prices are still going up when companies are spending less
#105Because SaaS business models were built around operating at a loss in order to gain a monopoly and rent seek?
And also built in a time of free Fed money laundered through VCs.
Re: Why SaaS prices are still going up when companies are spending less
#106Earlier quoted context omitted.
The ever-more-tiresome issue is that the textbook, accepted-by-rote relationship of interest rates to inflation hasn't held up. The Fed has raised, raised, raised rates for what, a couple of years now? To negligible effect. That's because nobody is calling the administration to task for allowing the REAL cause of recent spiraling costs: monopoly and oligopoly. This is straight-up corporate profiteering and price-goug…
It’s just been one year and this has been one of the fastest raises in history. Give it some time to work.
When the four or so meat processors whine about a "labor shortage" and then report gargantuan profit increases, I'm not really keen on waiting any more. And meat is just one example.
https://www.whitehouse.gov/briefing-room/blog/2021/12/10/rec....
Re: Why SaaS prices are still going up when companies are spending less
#107It would be interesting to see what the corresponding figures are like for on-prem, although they would be much more difficult to calculate and would vary wildly between companies. The only thing that really stood out to me was the Google storage price increase, which seems rather large, as in way out of line in comparison to our 2023 spend and 2024 budgeting. It would also be nice to see what exactly is meant by Saa…
> It would be interesting to see what the corresponding figures are like for on-prem […]
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.
Re: Why SaaS prices are still going up when companies are spending less
#108Earlier quoted context omitted.
> So if you pay for 1GB of storage, they probably actually store 5GB of data or more for you The actual factor is most likely around 1.4-1.5x and for sure can’t be any more than 2.2x in this day and age. Dumbest possible implementation will be “only” 3x so no it’s nowhere close to 5gb Edit: looks like it’s public so i can actually tell you that google uses RS 3,2 which gives 1.5 replication factor. When i was there a…
Presumably Google also keeps backups, though, right?
And mirrors to at least one extra datacenter as they can lose bandwidth with a fiber getting cut, become unreachable due to networking snafu, or even burn down entirely.
Re: Why SaaS prices are still going up when companies are spending less
#109Earlier quoted context omitted.
I did a detailed price cost calculation of onprem vs AWS as I worked at a MSP. Our cost of compute and storage including DC construction over 10y was about half the cost of AWS. We also used cheap supermicro and had no service contracts or warranties we had on site staff. Their salaries were included. Small DC 2mw.
I think Cloud has never been a question of costs — it’s generally about not having to become operational experts in house and maintain that expertise as it’s not a core business function (hard for SMEs for example, to retain talent outside of overhaul and project cycles), overall desire by senior management to single source vendor management, and a “throat to choke” that keeps you from losing your job if problems ari…
The infrastructure the simplest little offering on a modern data center is so immense that honestly it’s a good deal often. If you’re a small-midsize company what’ll you do - put a bunch of computers in the office closet and get what uptime and latency?
Re: Why SaaS prices are still going up when companies are spending less
#110Price has little to do with cost. Price should be the maximum the market can afford while still beating ones competition.
> Price should be the maximum the market can afford while still beating ones competition. 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.
Capitalism ensures that can’t happen (in most cases)