SAAS – Software as a “Service”, ahem Subscription, sucks. It’s really good for software companies and for the engineers that build the systems but as an end user it totally sucks. I’m going to talk about why, and what we can do better as an industry.
I believe that the world has to many subscription services in the world. The world is filling up with companies that want to automatically bill me for stuff I use or “services” they provide. As a consumer I’m tired of it.
Recurring charges is what it’s all about in business, getting to the automatic customer. Removing the buy decision from every purchase to the point where buying things is fully automatic. It’s a dream and a reality for many business. Netflix, Hulu, Disney Plus, Spotify, 1Password and even your public utility does it. When do I think it’s good as a consumer? Well, for things you have to pay for, my phone, mortgage, utilities; all on automatic payments. But I’m growing tired of the companies that have decided to take the monthly fee approach for their software.
Physical resources like where you live or natural resources you consume make perfect sense for automatic billing. Even mail order clothes like Stitch Fix. Digital resources do not make sense to me as a consumer for automatic billing.
The holy grail of software is to sell it as SaaS, it’s great for business. But recently I got a new Macbook Air. Lucky me, I’m complaining about a first world problem. I had a Macbook Pro from 2011 that had its second hard drive crash and is slow to turn on. I decided I wanted something new and could boot up in under 1 minute. So, naturally, I went to Costco and bought the pervious model that’s on clearance. Well, I go to move a bunch of applications to it, and I find out some applications that I’ve paid for, by purchasing a license, don’t run on this version of Mac OS and I can’t even find a download for!
One example I hate, 1Password
One of them is 1Password. I’m not a fan of cloud sync for my passwords, but that’s the only choice with 1Password. Pay $3.99 a month (billed annually) then access to it across devices, cloud sync etc… Well, if I’m going to have to pay monthly, I might as well get the family plan so my wife anyways. $4.99 a month; $60 a year.
Here’s the deal, we both have separate password vaults, I’m pretty sure my wife has yet to setup the cloud option of 1Password, or even registered her program. I on the other hand have a ton of old and new accounts in there on 1Password. I pay $60 a year for an application I use once or twice a month.
Sure, I could get KeePass, or something like that. That’s not the point. I like 1Password and I would gladly pay $50 for a license for each machine. But I get to use that one license for as long as I have that Macbook Air (My goal is new laptop in 2030). Thats perfectly fair, it’s how Microsoft made literally billions of dollars off of every version of Windows. Companies can make great money selling licenses of software.
Saas isn’t bad, but why does EVERYTHING have to be SaaS?
I hate the cloud. Why does all my data need to be in the cloud? 1Password, I do NOT want my passwords in the cloud! I don’t care if you claim they are encrypted, I do not care if they’re in AES 256 (ever heard about Quantum computer research?). There are some files I don’t want in the cloud; passwords, tax records and IDs.
1Password would be cool if they decided to offer a cloud sync upgrade. Here’s the license for $50, do you want to add cloud sync for $2 a month? That would be cool. That would be nice, to make the cloud optional.
In the cloud as an add-on is great, but why does Photoshop, Word, Excel, 1Password etc… all require a cloud based account?
It makes perfect sense actually
The cloud is a tangible service a software company can provide. It allows you to easily sync, back up and access the data anywhere, which is appealing, but honestly, I only access the data from my one same laptop.
The real reason that it makes sense is that it provides consistent cash flow for the company. It’s a great business decision. You get customers for the next several years who are wrapped into paying monthly or annual fees that automatically renew wether they use your stuff or not. It’s like the 24 Hour Fitness model of the gym, sign up 10,000 people at $19.99 a month, 1000 people will probably show up and the rest are profit. It’s great for the business.
Saas opens up an angle to the competition
I’ve been trying to figure out how to start my own saas company; building a cloud based product that I could sell. I don’t really have any ideas with a unique angle, but one thing I keep coming back to is I’d like to stop paying for so many subscriptions, I’d happily switch from 1Password to a competitor with a nice UI if I could pay per license per machine. If CDs weren’t such a pain, I’d probably buy a few of those because it’s nice to have copies of the best of Rafi so my toddler can listen to it for literally 10 hours a day.
Some products and services are better for both the consumer and the producer to be SaaS / subscription based. Take Netflix, Disney Plus or Hulu for example. Or New Relic. NR should be subscription, it makes sense for both parties. AWS, pay for what you use, great model. Office? 1Password? Traditional apps that should run mostly on just your desktop? They should not be SaaS / subscription based.
- Subscription based “SaaS” makes sense for true cloud services like AWS, New Relic etc…
- Subscriptions are good for cash flow and when it can provide real value to the client
- Not everything needs to be saas, eg, if it’s mostly client not client server, you should have the option to upgrade to cloud capability
- For apps like Sublime, 1Password, Word etc… Charge a license fee, then offer an annual add-on for cloud services, cloud sync, backup etc… but let me run locally offline if I want to