The pitch of modern SaaS is "don't reinvent the wheel." But every wheel you bolt on comes with some friction.
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It is Adam Smith’s “rent seeking” in a modern hyper-scalable form. It should be shunned and criminalized on a basis of anti-social economics. Now the other extreme of free software is, arguably, also (economically) bad, as it fails to reward the effort of the creators proportionally to the value gained by the user.
Let us buy our software, and separately, offer us a service agreement that actually has to provide value in its own right. The bundling of these in SaaS is what makes this obscene.
If you are so passionate about it then start a company that builds, deploys and maintains SaaS software on-prem for a comparable cost (say $10/user-mo). If you can provide the same service, guarantees and price points as the typical SaaS while letting companies keep control of their data and preventing lock-in then you'll have the largest market in the world.
It was just called software. People ran it on their own servers. It worked just fine.
By SpicyLemonZest 2025-06-0622:33 It didn't universally work fine. Every non-technical organization I know of in my circles remembers "the server" with huge disdain, and they're very glad that Google and/or Microsoft has allowed them to get rid of it.
and instead of a monthly license you paid an annual support contract plus salaries of staff to maintain your servers and on site support for staff.
By ozim 2025-06-0623:00 And when you had to update version and pay new version license you got push back from bean counters, because current runs fine - and bean counters didn’t like to hear now we have to pay 10x or 100x because no one wanted to spend money on incremental updates because it worked.
SaaS is often aimed at projects with low resources who come for the free tier.
But I can rent a dedicated server at hetzner, use ssh and set it all up. No need for a staff.
The difference is the dedicated server setup requires domain specific knowledge.
If the project needs to scale, a SaaS will become a huge cost in the overall operation and having a dedicated server is much better.
Hiring staff is still cheaper than paying a SaaS, at large scale.
You say no need for staff then describe the need for technical staff with specific sysops capabilities.
You can pay for a lot of seats with a $70k salary and that's on the very low end.
If you account for opportunity cost you have to be very large before on-prem becomes worth while or your time must be worth so little that you're probably better doing another business.
But there are tons of small businesses that use IT MSPs. That's how it used to be done for companies that aren't large enough for a full-time IT staff member.
Take for example my friend who works in a ~15 person office in a specialty finance field. Most of their software is SaaS, but they still need someone to manage that software. Plus, the eternal struggle of setting up, managing and supporting employee machines means they need IT services, they just use a local firm. Before SaaS, they would likely have a small on-prem server, but they would be hiring the same MSP firm and probably paying roughly the same amount. SaaS software is normally way more expensive, and that cost increase isn't often offset by a greatly reduced consulting fee for many small businesses.
I have a friend that works at an MSP, they have customers who need help setting up and managing a Square POS system. While that is easier to configure that a locally hosted windows based one from 20 years ago, it's still more than many people opening a restaurant are comfortable with. And is the monthly fee cheaper that a one-time purchase and setup fee plus occasional paid upgrades? I'd genuinely be curious to see an accounting breakdown for a restaurant's software & hardware costs now vs 20 years ago. Hardware is certainly cheaper, but I'm not that convinced that it's really much cheaper overall. Square POS is 69/mo + 50/mo/device for the minimum anything beyond a popup or food truck would need [0], and $828/year minimum isn't exactly free, damn near doubled to $1428 if you have a second register. Especially if you also need to hire the same MSP, just at a potentially reduced number of hours per year.
[0] https://squareup.com/us/en/point-of-sale/restaurants/pricing
By sanswork 2025-06-0723:13 You say before SaaS like you weren't there. As someone that was trust me there is a reason businesses jumped at the chance for SaaS. On-Prem is awful for just about everyone. Even when I was working with very large companies like PwC that had IT departments those departments spent half their time complaining about having to managing the office servers and random installs. Companies didn't just force SaaS to happen, clients moved to companies offering it then the rest of the companies followed.
SquarePOS is free. The monthly fees come from addons which you'd be paying for as multiple separate pieces of software previously. Stuff like Kitchen management/time roll/online ordering/etc. Plus your merchant account costs which if I remember right last time I got an actual merchant account about 15 years ago was $500-1000.
Also the monthly fee is per location not terminal so you've doubled up the fee incorrectly.
No need for staff for me, I can do it myself. Been doing it for many years, for small projects. On prem is worth it. A 35 euro/ month hetzner server beats any SaaS at the same price range and can host many projects.
And if I hit the jackpot and get millions of users, I prefer to pay employee salaries than vendor lock-in SaaS fees.
By sanswork 2025-06-0723:02 You are staff.
By fatata123 2025-06-0711:13 [dead]
SaaS is rarely cheap by comparison.
Start with a few services at ~10$/user/month and it doesn’t take a very large org before the numbers get quite high. And you generally still need some technical support in house.
Right but on-prem doesn't mean you escape SaaS pricing. It'll still be $10/user/mo but now you have to run it too. A lot of times you'll pay a premium on the hosted price to get an on-prem version.
Software pricing is a reflection of the fact that it's not a consumable good and the humans that make it have ongoing expenses like rent— not necessarily that it's hosted. Even in the bits in a box days the business was built around recurring revenue, you could choose to not buy the next version but it implicitly relied on most people not doing that.
By Retric 2025-06-073:55 That depends heavily on how competitive the sector is. Restaurant POS software covers a the largest array of different companies and businesses models I’m aware of. SaaS is generally quite expensive in that market.
In the bits in the box days, quite a lot of the world was skipping version numbers. That was a huge reason for SaaS pricing in the first place. Worse boxed software generally needed some improvement to justify upgrading, SaaS is heavily optimized for rent seeking.
By sanswork 2025-06-072:29 If you're a large org then adding dedicated staff to manage servers probably makes financial sense but you're also large enough that you're paying support contacts that are probably not far off that Saas price anyhow.
If you're not a larger company you are paying consultants and the licensing fees.
By theamk 2025-06-072:40 Until malware (viruses back then) came and data got lost.
Until hard drive died on that server and turns out backups were broken for the last 5 years.
Until someone tried to fix some (real or perceived) problem with the server and it suddenly became full of malware.
By pistoriusp 2025-06-0620:57 We should chat. We're busy building a store for source code.
Criticizing harmful practices doesn’t require building a replacement from scratch. Saying “just build your own SaaS company” is a deflection, not a real argument. We don’t demand people create alternative governments to criticize corruption or build new roads to complain about traffic systems. Some practices — like vendor lock-in or exploitative data handling — are worth rejecting simply because they’re harmful.
Also, markets often do come up with better, more ethical alternatives — but only after society pushes back against the harmful defaults. Ecologically, people used to say there was no alternative to burning oil or dumping waste into rivers. That didn’t make those practices okay — and change only came because they were first criticized, regulated, and in some cases outright banned. Progress doesn’t start with “there’s already a perfect alternative”; it starts with “this is no longer acceptable.”
Hmmm.. not everyone is talented in keeping software up to date. A selling homemade earrings can use something like shopify or paypal or stripe easily.
Do you use visa or mastercard? That is SaaS.
The main thing govts need to do is to force companies to allow export/import transparently . But then small SaaS don't have man power to do this (even if they truly believe in cause).
and also penalize or jail both programmrs/CEO that use subscription model with cancellation fee for even cancellations. Lots of people in HN would even be against this - as they claim - I wrote the code only - following orders.
By 7bit 2025-06-0822:44 Brother, no one here is talking about MasterCard SaaS. If you want to make a point, use an example from within the context we're discussing this.
By mindwok 2025-06-0622:04 This would be possible if we could commoditise the operational aspects of cloud computing and SaaS providers. Some companies are trying!
By luckylion 2025-06-0620:45 But you'll also compete with very deep VC pockets that don't mind burning lots of money to entrench themselves, so you usually can't compete on cost, until they start the squeeze.
By bravesoul2 2025-06-077:171 reply https://onestack.cloud are doing this
By seal-e 2025-06-086:30 [dead]
By Imustaskforhelp 2025-06-075:441 reply For what its worth, I always feel as if we could provide a binary and then let the binary run on things like aws/gcloud/ preferably cloudflare workers as cf workers feels genuinely good if you focus on typescript/imo sveltekit as well
Please, can anybody enlighten me I suppose? I build a lot of side projects, some of which are genuinely cool and I can genuinely see it being a "saas" but like you, I hate saas from a consumer perspective and I love saas as a guy wanting to earn money so my ethics are definitely questionable at the moment.
Also, let's say I want somebody to buy my software. How does that make sense? What if they just redistribute that software without my permission. Doesn't that just eat into the profits when Saas couldn't.
And also I personally am a foss advocate and as you said its economically bad.
I am kind of thinking of creating software which is just source available and that you need a permission / license which you can get by github sponsoring me but I saw this one project doing it and the people in hackernews were pitch forking the poor guy. Its so crazy and bizarre that once you actually try to provide "some" value. You are automatically the bad guy for not using MIT.
I am also thinking of such a license where its SSPL if you don't have a license or BSD/MIT if you have a license (sort of like redis-ish)
But I am not sure if people would buy them. Maybe I can support both I suppose? I am not sure lol, which is why I wanted to get enlightened
PS: I built a way to create your own cryptocurrencies for genuinely free (no jokes)(not sure how to monetize and if, If anybody can help, that would be great!) and a way to get blogs from youtube posts and a way to youtube community post and videos as an alternative to google photos for unlimited storage (though the privacy aspect for community post is a little bad but I guess I can fix that as well)
By jamestimmins 2025-06-0620:013 reply I don't quite follow this logic. Nearly all SaaS has ongoing costs from the provider: hosting, support, r&d, etc.
How is that rent seeking?
Most of that software could run on prem. The problem is that bundling hosting with the actual software in many cases translates into a way to confuse the expense of one for the other. Things that don’t incur operating expenses shouldn’t be charged as a monthly fee, that is rent seeking. Forcing someone to pay for “services” like hosting, “upgrades”, etc. to gain access to the software is what I find problematic. Now that the business model has become dominant, it is hard to find any software not on a SaaS-like payment plan. Adobe, Autodesk, Microsoft, etc. all sold software and now all sell subscriptions with little added value to the customer. But the cashflow of a rent model, as forewarned in “Wealth of nations” is so ensnaring it can only be avoided by law. Yet here we are.
But this is still such a bastardization of the term “rent seeking” that is is somewhere between disingenuous and flat out lying.
By this logic, my house cleaner is rent-seeking because I pay every week, but I could do the work myself. That’s not what rent-seeking is. That is a garden variety service.
All of the anti-subscription sentiment just sounds like “I want perpetual support and updates for a one-time price”, which is just silly. It’s actually bad for the customer because once the service provider has your one-time payment, they have zero incentive to keep you as a customer.
It leads to misaligned incentives as sellers seek to expand to new markets to reach new customers while neglecting existing customers who are nothing but expense.
Further, SaaS produces net lower costs because resources can be utilized more efficiently. Great, you can do an on-premise server, but you need to spec it to support the busiest second in the busiest day of your year. Most of the time it will be underutilized.
Sorry, this whole claim is such a massive misunderstanding of Smith and SaaS that it’s making be a bit crazy.
SaaS may not be a particularly good example because like others have mentioned, there are costs to it, and it's up to you to decide whether the price is worth the convenience.
The anti-subscription sentiment is not without merit, however. Software that just runs on your computer now has a fucking subscription for no reason. Adobe, games, etc. That is rent-seeking, because I want to pay for the goddamn thing once and own it. I don't care for support or upgrades; if I do, I'll buy the newer version.
Nobody cares about the costs to offer a product. People care about the value provided.
If I think a service is worth $20 month, that will not change if their cost structure changes and suddenly it costs them $1 or $100 per month to offer. It’s worth $20 to me either way. If their cost becomes $1, I rely on competition to create the consumer surplus.
By grg0 2025-06-102:08 Sure, but some of us are old enough to remember computing freedom, and for us, it isn't worth it.
By nkmnz 2025-06-0623:51 > Most of that software could run on prem.
No, because that would require everyone to own and operate their own servers. I am very happy I do not have to share my bedroom with a server rack so that I can operate my company - not to speak of the cost to deploy a 15gbit/s line to my apartment…
By theamk 2025-06-072:59 That's just called "over time, some products become worse and more expensive"
Every commercial company is free to charge whatever they want, it's not rent-seeking (unless there is a monopoly, but your argument is applies to small companies as well).
And yes, the fact that you cannot find the software you need for the pricing model you like sucks.. but it is not rent-seeking. And the fact that my local Home Depot does not have cheap, but reliable refrigerators is not rent-seeking either. At worst, it is collusion between manufacturers.
By jen20 2025-06-073:41 > Most of that software could run on prem.
Many companies don’t have a prem on which to run.
By tonyhart7 2025-06-0623:25 Yeah but who going to fund R&D and stuff like that???
The thing it's being compared to (desktop software) had the same functionality with none of those costs, and it was easier to develop. That's somewhat like a grocery store hiring a dozen egg-sitters to keep the egg supply emotionally supported or some other nonsense and then using that as a justification for the high prices they're able to charge, where an x% profit margin on the unnecessary job translates to significantly more money to the store.
By paulryanrogers 2025-06-074:051 reply Was desktop software easier to develop than SAAS? It was hard then and is hard now. Even using Electron doesn't remove the need for installers, upgrade paths, logging, diagnostic measures for client installs, troubleshooting when bad hardware is in the mix and only the client can change it.
By Imustaskforhelp 2025-06-075:461 reply I kind of wish if we could just slap a desktop software which just runs it on localhost. And that when I click on it, it opens up any of my browsers.
I kind of like this idea personally instead of electron
By seal-e 2025-06-086:24 [dead]
They presumably charge much more than their ongoing costs. Rent seeking doesn’t mean zero costs.
By victorbjorklund 2025-06-0621:591 reply Doesnt most companies in all industries charge more than their operating costs? Same with people, most work for a salary higher than their operating costs.
Yes, but the point is that rent seeking profits come from things which don’t contribute to economic productivity, which is the accusation being discussed. Having non-zero costs doesn’t imply that you’re not rent seeking.
By victorbjorklund 2025-06-0714:281 reply I know what rent seeking is. That is why it is wrong to claim any salary/profit above operating costs are rent seeking.
By tshaddox 2025-06-083:06 I didn’t claim that and neither did the commenter before me. The commenter implied that, because the operation has non-zero costs, it must not be rent seeking. I offered a correction.
By MichaelZuo 2025-06-074:511 reply So then what is the cutoff and who gets to decide it?
I doubt anything has literally perfectly zero contribution.
The market does. So competitors and demand.
The problem is that you have really only little competitors on the market.
Eg. Microsoft 365 namely being the one that has outgrown any competitors that can seriously threaten them. They can dictate the prices and they do it willy-nilly and there is no-one that forces them to be cheaper.
By MichaelZuo 2025-06-0720:35 The market doesn’t write comments on HN… clearly another entity must be typing out readable comments.
By satvikpendem 2025-06-0620:471 reply That's just profit, their incentive to actually build the thing in the first place.
Well yes, rent seeking is specifically profit from things that don’t create new wealth or contribute to economic productivity.
By theamk 2025-06-072:46 Most SaaS contribute to economic productivity though. I see the uptime of local services that our IT maintains, let's just say it's not good. By paying a monthly fee for Slack, we get a working communications system which much better uptime than what we could get from self-hosted.
This is very specific contribution in economic productivity, as the company gets no work done when the communications system is down.
By chermi 2025-06-0623:48 Kind of, but not really. I would instead say that the idea of "stickiness" or trying to make your software sticky is rent-seeking. Of course, most SaaS companies vigorously pursue stickiness, but it is not an intrinsic property of SaaS.
By mypornaccount 2025-06-0619:451 reply I sell my saas to willing buyers at the fair market price.
By missedthecue 2025-06-0621:111 reply But rent seeking implies some sort of external party enforcing a non-competitive environment that benefits you. Like tariffs or aggressive zoning laws.
Raising the price of your product isn't rent seeking.
You're right, but software does find itself in a non-competitive environment thanks to a sea of intellectual property laws that benefit incumbents. That external party is ever-present, and no doubt implied in discussions here.
By theamk 2025-06-072:50 Unless you mean copyright / trade-secrets specifically, then IP laws don't really help SaaS that much.
For example take Google Workspace - email, calendar, docs. Google has no particular patents for those, and I've never heard about startups in this area not getting traction because of IP troubles.
Same goes with Jira, or Github, or Slack, or AWS S3 - all of those don't have particularly many patents and in fact there are plenty of alternatives, self-hosted or otherwise. People still pay for them happily.
By csomar 2025-06-075:52 Nah, rent seeking happens when the customer is faced with little choice (ie: constrained market, can only live there, can't build more, etc...). This is not the case for most of SaaS where you can just signup to another service.
By missedthecue 2025-06-0621:09 Exercising available pricing power isnt the same thing as rent seeking.
> Now the other extreme of free software is, arguably, also (economically) bad, as it fails to reward the effort of the creators proportionally to the value gained by the user.
What’s the economic explanation then for why so much high quality (or at least, widespread and critical) free software exists?
By hiAndrewQuinn 2025-06-0621:03 Probably that free software never actually dies or even really degrades in the traditional sense. Given decades of time, even small incentives to make things better, like the reputational increase one gets from contributing to good FOSS projects, compound really heavily.
Take the Linux kernel as an example. If you were a kernel hacker, even a minor one, from the 1990s, it's quite likely you could parlay that experience into a good job today doing something similar. Those 50-100 hours decades ago have compounded quite nicely for you. But your contribution didn't decay over the next 30 years - worst case scenario, it stayed exactly as good as it was when you stopped, and best case scenario it's been substantially rewritten and incremented upon.
That's how I explain it to myself at least.
By AlienRobot 2025-06-070:08 That's only true for libraries because developers benefit from bugs getting fixed. FLOSS applications are far from high quality.
By opan 2025-06-0719:36 Strong start, but not a fan of the attack on free software. I think I agree with your last paragraph, but what would such a service entail then? Like a tech support contract?
By pistoriusp 2025-06-0619:46 This is exactly how I'm thinking of monetizing the framework.
By dilyevsky 2025-06-0620:39 so basically s/subscription/service agreement/ ?
By popalchemist 2025-06-087:03 This is a straw man argument, as evidenced by all the other comments replying.
I am curious, have you had any moment of insight following your initial comment?
OR is this the hill you die on?
By citizenpaul 2025-06-0620:362 reply IMO Vendor lock in is when you ask your boss why cant we use tool NEWTHING? Then they tell you its because they have a 5 year contract with Oracle/MS/IBM/Salesforce and that is what we are going to use. We aren't going to have 10 platforms.
Which means in 10 years they will really be locked in because no one is going to un-entrench that thing.
By pistoriusp 2025-06-0620:511 reply if you've made it to 10 years, that's a really nice problem to have (or maybe a really boring problem to have). But if you're just starting out, I want to prevent you from making all those decisions when you could really be focusing on your startup instead.
So I'm trying to encourage you to consider picking a platform and just sticking with the tools of the platform rather than bundling it yourself together.
You can stick with it without legally getting trapped by some shady BD getting their sales quota filled
By citizenpaul 2025-06-1420:30 Or like how atlassian suddenly started charging a "serverless event" fee for their various workflow automation tasks a couple years ago basically slapping a $5-$10k markup on a product you already own. Thats just for small companies I'm sure there are enterprise customers that are paying six figures for a previously free feature and shrug it off. Like you said a good problem to have.
It's still a good idea to abstract away these services behind a standardized interface. This way switching from one service to another is just a matter of providing an alternative implementation to said interface.
Granted this approach requires a little foresight...something many companies seem to not have nowadays.
By bigfatkitten 2025-06-0622:32 The problem is people don’t just store data on systems like Salesforce, they use them to build very complex applications.
Getting your data into and out of Salesforce is easy, it has excellent APIs. Rewriting your applications is the bigger hurdle.
By theamk 2025-06-073:03 Abstractions are not free either, so if you are creating this "standardized interface", the complexity price you pay is better be worth it.
Often it's less effort to lean in and use all features of the service than to limit yourself to a least common denominator between all competing services.
By bob1029 2025-06-0717:19 Minimizing dependencies is probably close to the #1 thing you can do to improve the survivability of your product and business.
In a prior role, I was responsible for figuring out the best way to deliver a docusign-style experience that integrated with our product. After having conversations with two of the biggest vendors (DocuSign/Adobe), we decided the constraints of their APIs were causing too much friction with how our product/customer wanted things to work. We went with a fully in-house solution.
In most situations, trying to reinvent something like DocuSign is a terrible idea. In this case especially so since often you are using it simply because it is trusted (not because it is technically superior). In our case, the product was already installed and deeply trusted by the customers. They would have gone along with DocuSign, but they also had no problem with us doing it first-party.
Ultimately, it was a lot of up front work to get this implemented, but the customer absolutely loves it. We had to make some minor tweaks to how it functioned and that really highlighted why this was a good path. If we had gone with DocuSign, Adobe, et. al., that minor tweak would have turned into a major refactor and hack around shitshow.
