SaaS costs are out of control
DHH posted about Coinbase paying DataDog $65m a year! And that’s not for their entire cloud, just for monitoring it. There’s no way that’s worth $65m! This problem affects all SaaS apps, not just developer tools.
In fact, even at an individual level, I’m paying a lot for SaaS apps every year:
Is Calendly worth ₹7,900 every year? No.
This is on top of of what I’m paying Microsoft 365 for my calendar. Booking a calendar slot does not justify an additional fee, any more than seeing a month view of your calendar justifies an additional fee. Many SaaS apps charge for overlapping functionality, which might make sense individually, but not in aggregate for the buyer. If you were to ask me what a fair price for Calendly would be considering its value, I’d say ₹999 a year. I’m not expecting everything to be free; I don’t mind paying, but it has to be a fair price for the value added, not an exorbitant price.
Indian companies were always sensitive to US prices, considering the cost of living in India: Calendly costs me the same as the two mobile connections in my household. But does it add as much value? Far less, so it should cost far less. Now, with the economic slowdown, US customers of SaaS apps are asking the same question.
This is not even considering dark patterns like Zoom offering me a 20% discount when I tried to cancel my account. Ripping loyal users off who never clicked the Cancel button and so never received the discount erodes goodwill. When the time came to renew Zoom, I asked myself, “Do I want to continue paying these manipulative assholes ₹16,000?” I let Zoom lapse and tried Teams, which I was already paying for. And it turned out to be no worse than Zoom.
SaaS has been a bubble for many years. It has become the default business model for startups. I was surprised for years as more and more SaaS startups kept getting founded. I never thought the market could support so many. And these companies are all underpinned by the high prices. Now that that party is over, many will go bust. In the first place, they never added enough value to justify their exorbitant charges. As long as the economy is booming, many people ignored the costs. Now people are paying attention, and lower prices will cause many startups to go burst. A part of me makes me sad, since that’s worse for me as a consultant. But as a user, I’m happy. And it’s good for the world for prices to be sustainable.