The SaaS honeymoon is over.
A decade or so ago, it was a revolution. For the first time, businesses could access an incredible array of tools and added functionality without large upfront investment, without needing an in-house tech team and at affordable monthly rates.
By contrast, building custom software at this time was often expensive, slow, high-risk and complicated. Unless you were a tech company or a large enterprise, custom development was often out of reach—both financially and operationally.
Fast forward to today and this has been flipped on its head. Whereas a decade ago, custom software was seen as a luxury, today, it’s best practice.
Custom solutions are cheaper. Custom solutions deliver higher ROI. Custom solutions are the only option that give you a competitive advantage.
What’s happened?
Between 2010 and 2020 SaaS funding was abundant. The market was booming. There was a flood of new SaaS products—accelerated by cheap cloud infrastructure and success stories like Stripe, Zapier, Slack and Shopify that inspired a generation of founders. The default model for all these companies was: get funding, capture market share and worry about profitability later. As a consumer of these services, the rates you paid were heavily subsidised by VC money.
Those days are over.
Two factors are at play:
- The funding landscape is no longer pouring cash into SaaS solutions. We’re out of the ‘boom years’. Today, SaaS companies can’t rely on endless VC cash—they have to maximise revenue, generate profitability and stand on their own two feet. What does this mean for you, the customer? You now need to pay full price. Your licence fees aren’t being subsidised by large funding rounds.
- The SaaS market has matured. The model was always: capture the market, then raise prices. Now, many of the platforms you’re using are in their fifth, sixth, even tenth year of operation. They’ve captured market share and now it’s time for them to implement the second part of the strategy…raise prices and realise the profits they’ve been working towards all these years.
What this looks like in your business
You may have started noticing three things:
- Price increases: SaaS inflation sits stubbornly high at about 10%+ per year. Over 70% of SaaS providers implemented price hikes last year. Especially around renewal, you will likely have noticed prices jumping.
- New functionality—or even features you previously had access to—now come with add-on fees. What used to be included is now upsold, forcing you into higher tiers just to maintain the same level of functionality.
- Changes to pricing structure, especially around usage-based pricing models, that drive up your costs. This could include charging for certain types of user, per action, per vehicle etc. It punishes growth, reduces flexibility and drives up your costs.
Simultaneously, the cost of custom development has plummeted.
While the cost of off-the-shelf solutions has risen sharply over the last decade, the cost of building a custom solution has dropped significantly. We’re now seeing custom solutions come in far cheaper over a 2-5 year time horizon than off-the-shelf options.
Why?
- Skillset. The ecosystem of developers, product experts, QA engineers, UI/UX designers etc has grown by approximately 3X. As with any other mature industry, you still need to work hard to find the top 0.1%-1% of talent but these skillsets are no longer esoteric.
- Open-source frameworks, pre-built components and third-party services now power most modern systems. There’s no longer any need to build everything from scratch. Tools like ABP.io allow development teams to move faster by handling foundational elements—like identity management, notifications and admin panels—out of the box. This means your budget can be focused almost entirely on the unique, high-impact parts of your system, rather than reinventing the wheel on standard functionality.
- Cloud platforms like Azure have eliminated the need to manage expensive physical servers.
- Advances in delivery methodology and working processes—often supported by better tech—have led to faster iterations, shorter feedback loops and less waste. The good teams have essentially figured out how to deliver custom software better.
The new reality
The result of all of this? You can now get a solution that is 100% tailored to your requirements and that your competitors have zero access to, for LESS than an off-the-shelf solution.
This is, of course, only true if you have a world-class tech team working on your custom solutions. To speak with Steer73 about your requirements, get in touch.