A 2 person startup cannot provide a dedicated developer for your account, a personal contact for each of their thousand customers, is at high risk of being acquired/changing their business model/founders abandoning it, etc.
For enterprise, long-term stability and personal contact matters more than price. A typical SaaS contract is 0.x% of yearly revenue of big corps and nobody wants to be the one person risking the business for such miniscule savings. Another often overlooked part: Employees are the biggest cost center, much larger than any contract. So retraining a single team of 10 employees can often be more expensive and more disruptive to the business than just sticking with a legacy provider and established processes.
I'm not sure this matters. Enterprise is always slow to move anyways, and frankly, not usually worth the trouble for early startups.
What happens instead is that the new cheaper competitor proves themselves in the 1-10 seat company range for a few years. Then 5 to 10 years later, when the enterprise is evaluating renewals again, they go "Why are you so much more expensive? Look "X-two-guys" over there only charge 5% as much as you for the same product!" to the current SaaS they buy from.
Will they all move? No. But enough will, eventually.
You'd be surprised how little price factors into the equation for decisions like this. Anyone that tried to acquire customers as a fresh start-up knows that trust means a lot to established companies.
Yup. Engineers can intuit quality up to a point from very weak signals. Those signals become illegible _really fast_ the further you move in competence from the core domain of the offering - and after that all you have as a decision maker are _market_ signals such as known brand.
This is my take as well. Everyone (correctly, in my opinion) assumes that customers won't bother to recreate a SaaS themselves with AI because it requires at least some skill, time, and knowledge.
But SaaS doesn't die because of all the customers creating one-off solutions themselves. It does the "desktop program" -> "mobile app" pricing transition.
It drops monumentally in price because now a very small (sub five) group can clone an experience and charge pennies on the dollar.
Why pay $15/month/user if some other reasonably stable company offers you $1/month/user?
If the other company is "equally stable" then pricing offers leverage sure.
But there are lot of situations were _any_ license costs in some given range are so trivial nobody actually cares wether it's $15 / month or $1 / month.
There are B2B customers who are ready to pay license premium for known brand vendor, even if they would use just a subset of the available features. Change is always a risk, internal efforts are better spent than counting beans, etc.
This is absolutely true, but also not that important.
Again - I'm not saying "All SaaS products are going to immediately go away". In the same way that all desktop purchases didn't immediately dry up in response to mobile apps.
But some customers are extremely price sensitive. And some customers who aren't price sensitive now, become price sensitive at some point.
Most new entrants to an existing market explicitly don't win by trying to engage the large enterprise customers. It's a shitshow of misaligned interests, checklist style purchasing decisions, unreasonable demands, custom solutions, etc...
They win by being a decent product at a decent price point for the 1 to 10 seat company range. The people who are both buying and using the software personally. With their own money, not a corporate card.
Eventually, the SaaS catering to enterprise has to actually explain their value to those users, and often it's basically zero: they're more expensive because they have all that cruft enterprises need, not because they're a better value for solo/small business.
So the legacy player starts to see serious churn. Retention becomes problematic. New user growth slows. Prices have to go up to maintain existing profits, which just drives more small folks away.
And then a decade later you have an overpriced enterprise only solution, which may absolutely still have a couple of large customers who won't switch, but who is otherwise essentially a legacy product on the road to death.
And then the enterprise customers start looking at why they spend so much compared to the other vendors for a legacy product, and they start bleeding away too.
This is a tempting (and not completely false) shortcut, but often you don’t compete for customer’s wallets.
For many companies, a lower price is often not the reason they switch.
They stay because of the time invested in the current solution, the integration in their pipelines etc.