[Denzel]

All fair points, a mix of which some focus on customer benefit and others on benefit to the business. Perhaps the motivation behind my question was wondering whether there’s an opportunity to eat SaaS margins with products that compete by changing the distribution, and whether there’s any market data to support that hypothesis.

1, 4, and 6 align with the customer. 4 could be alleviated even with a local application a la Sublime Text. I concede 6 is marginally easier to manage, but then again represents a con from the customer perspective in that the software they’re using could disappear at any time since they don’t own it.

JetBrains model seems to represent the best compromise to the customer here: subscription fee for constant updates and support, cancel anytime and keep your current version with no updates or support.

2, 3, 5 benefit the business, not the customer. In fact 3 is probably the most beneficial to the business in that cost of support and maintenance isn’t aligned, they’re decoupled! Hence the 70-80% margins this company is touting.

5 is brutal as csallen said, but then again there are counterpoints to this in that people will certainly pay and not pirate for the right experience: iTunes, Kindle, etc. even when the pirated versions are readily available.

I appreciate your response.

[sanderjd]

A eureka moment is realizing that customers interests are actually aligned with businesses being profitable. If the business provides the customer with something they want - and they usually do, if the customer is willing to pay them money at all - then it is in their best interest for the business to continue operating, which means it is in their interest for the business to have a profitable business model. This is part of why you see a bias toward big companies winning sales, even at a higher price point: there is less risk that they will go out of business and leave you in a lurch. It isn't actually in the customers interest for a business to barely or not at all be able to make ends meet, which is what your proposed business model has often led to.

[Denzel]

I'm not disputing that customer interests are aligned with a business's profitability insomuch as they'll be around to continue to provide you the product or service you want. We agree here.

I'm simply wondering if there's a "your margin is my opportunity" play here where a company could devour SaaS companies by changing the distribution model. That's all. This thought has been banging around in my head for the past couple years due to a few data points, but I haven't had time to formally test the hypothesis.

That's all it is: a hypothesis that there's an opportunity here to change the distribution model to one that focuses on the customer and destroy a large number of SaaS models.

[sanderjd]

I think what you need to consider is how that opportunity looks different than the business models that SaaS overtook, and how it solves the problems that led to those models being overtaken. I'm sure SaaS isn't the last software business model we'll ever have, but your response to the list of questions read to me like it lacked understanding of why SaaS won the most recent battle.

[freehunter]

Number two certainly benefits the consumer, speaking as a consumer. Back in the old days you had the choice of paying hundreds of dollars for some software, then hundreds more for the next version, then hundreds more for the next one and so on. And if you wanted to try it but wasn't sure you'd actually use it, you either had to pray there was a demo or pay the full price and deal with the consequences.

Microsoft Office, for example. $250 license cost every three years, or $99/year for the SaaS model. If you want to try it, you pay $10 for a month and if you don't like it you lost $10 rather than $250. And if you subscribe long term, the SaaS version's pricing is very much on par with the old style of selling software.

[Denzel]

All of your concerns are alleviated with a simple return policy. (A customer-focused benefit.)

[freehunter]

How much software have you bought that has a return policy? Darn near every software product I’ve ever bought specifically says there is no return policy after the license key has been entered.

[scarface74]

Anytime a business model allows a company to profitably provide a product that a customer wants, its good for both the consumer and producer - barring negative externalities.

The alternative is the company going out of business and not providing the product or the company’s founders getting acqui-hired followed by a final “Our Amazing Journey” blog post before the product is cancelled.

[Denzel]

> Anytime a business model allows a company to profitably provide a product that a customer wants, its good for both the consumer and producer

I never said anything to the contrary?