Comment by torginus
8 hours ago
Imo the problem with SaaS products is that their revenue expectations are priced accordingly to the market they serve, not the money it takes recreating them.
If I wrote the best word processor in the world, I could probably sell it for a decent sum to quite a few people.
However if I expressed my revenue expectations as a percentage of revenue from the world's bestselling novels, I would be very quickly disappointed.
This is a great way of framing it that I'd never thought of before.
I worked in engineering software for a long time and because of who we sell to, there's always been a very hard cost-benefit analysis for customers of SaaS in that space. If customers didn't see a saving equal to more than the cost of the software in Y1 they could and would typically cancel.
That's because in the US it's common to see pricing based on "value", rather than based on costs plus a reasonable profit margin. This is one big reason why US products don't have much success in the rest of the world unless they're truly irreplaceable like the hyperscalers. Most of the world considers value-pricing as basically immoral.