Had the cost of building custom software dropped 90%, we would be seeing a flurry of low-cost, decent-quality SaaS offering all over the marketplace, possibly undercutting some established players.

From where I sit, right now, this does not seem to be the case.

This is as if writing down the code is not the biggest problem, or the biggest time sink, of building software.

The keyword is "building". Yes costs may have dropped 90% just to build software. But there are 1000 other things that comes after it to run a successful software for months let alone years.

- Maintenance, Security

- Upgrades and patches

- Hosting and ability to maintain uptime with traffic

- Support and dealing with customer complexities

- New requirements/features

- Most importantly, ability to blame someone else (at least for management). Politics plays a part. If you build a tool in-house and it fails, you are on the chopping block. If you buy, you at least can say "Hey everyone else bought it too and I shouldn't be fired for that".

Customers pay for all of the above when they buy a SAAS subscription. AI may come for most of the above at some point but not yet. I say give it 3-5 years to see how it all pans out.

[delayed]

To be fair, writing a SaaS software is like an order, perhaps two orders of magnitude more effort than writing software that runs on a computer and does the thing you want. There's a ton of stuff that SaaS is used for now that's basically trivial and literally all the "engineering" effort is spent on ensuring vendor lock in and retaining control of the software so that you can force people to keep paying you.

This is assuming the marketplace works perfectly... Which is an incorrect assumption. Reality is that the marketplace is highly controlled by algorithms. New platforms will struggle to get exposure... No exposure, no credibility, no word of mouth, no users, catch 22... You think the big players will allow small SaaS projects to gain traction on their platforms? Have you seen how centralized the Internet is these days? Have you seen how afraid people are of betting on no-name platforms? If they choose the wrong no-name platforms and tools, they will lose their (increasingly precious) jobs. As the saying goes "Nobody lost their job for choosing IBM." As for B2C; it's dead, consumers don't have money and will have less of it in the future; the mass-market game is over.

My bet is if there were a lot of great apps being built, even excellent quality, nobody would even hear about them. The big players would copy them before anyone even found out about them.

IMO, the market is not even a playing field anymore, this is why everyone is getting into politics now, though politics is also somewhat monopolized, there is still more potential for success because there is such an abundance of dissatisfied people willing to look outside of mainstream channels. It's much easier to sell political ideologies than to sell products.

It has dropped by maybe MORE than 90%. My sons school recently asked me to build some tools for them -- I did this over a decade ago for them, for free. I did it again using AI tools (different problem though) and I had it mostly done in 30 minutes (after I got the credentials set up properly -- that took up more time than the main coding part). This was probably several days of work for me in the past.

LLMs, long term, have killed most SaaS.

Most SaaS used to be killed by bespoke software engineers that would build some custom thing, and it was integrated perfectly into the legacy system.

Then all those people decided to be managers and go on "i dont care" autopilot mode and hired a bunch of teens that still do care, to some extent. But those teens suck at it, and the old guys just don't really care anymore.

Now with agentic code, instead of "buy splunk" or "buy jira" or whatever thing they are trying to do, they have one of those "teens now in their mid twenties" that are SUPER excited about Agentic flows, either write an agentic tool or simply use an agentic tool to code up the 300 lines of code that would replace their need for a Jira or a Splunk or whatever. Since most people only use 5% of the total features of any product, there's no reason to buy tools anymore, just build it for a fraction of the cost.

I don't know if the above is where we're at right now, but it's coming.

Well, because no self interested decision maker in any company of size is going to ever trust their business to an unknown company run by a one person operation.

And why would the benefits of being able to code faster accrue to a small independent developer over a large company that already has an established reputation and a customer base?

“No one ever got fired for buying Salesforce”.

I once had influence over the buying decision to support an implementation I was leading. I found this perfect SaaS product by a one man shop who was local.

Working with my CTO and lawyers, we made a proposal to the founder. We would sign with him and be 70% of his post signing revenue if he agreed to give us our own self hosted instance and put his latest code in escrow with a third party (Green Mountain) and we would have non exclusive rights to use the code (but not distribute it) under certain circumstances.

It is happening though internally in businesses I've worked with. A few of them are starting to replace SaaS tools with custom built internal tooling. I suspect this pattern is happening everywhere to a varying level.

Often these SaaS tools are expensive, aren't actually that complicated (or if they are complicated, the bit they need isn't) and have limitations.

For example, a company I know recently got told their v1 API they relied on on some back office SaaS tool was being deprecated. V2 of the API didn't have the same features.

Result = dev spends a week or two rebuilding that tool. It's shipped and in production now. It would have taken similar amount of time to work around the API deprecation.

Code isn't the moat and it hasn't been for quite some time. Data is the moat.

Something weird happened to software after the 90s or so.

You had all these small-by-modern-standards teams (though sometimes in large companies) putting out desktop applications, sometimes on multiple platforms, with shitloads of features. On fairly tight schedules. To address markets that are itty-bitty by modern standards.

Now people are like “We’ll need (3x the personnel) and (2x the time) and you can forget about native, it’s webshit or else you can double those figures… for one platform. What’s that? Your TAM is only (the size of the entire home PC market circa 1995)? Oh forget about it then, you’ll never get funded”

It seems like we’ve gotten far less efficient.

I’m skeptical this problem has to do with code-writing, and so am skeptical that LLMs are going to even get us back to our former baseline.

Your comment contradicts itself

You are saying there aren't more low cost alternatives coming out

You also say writing code isn't the big problem (which I agree with)

But both can be true and in fact the reason is because the second is true! You aren't seeing the alternate because marketing is hard. People generally don't care about new products and aren't willing to save a little bit of money risking their time on something new

> Had the cost of building custom software dropped 90%, we would be seeing a flurry of low-cost, decent-quality SaaS offering all over the marketplace, possibly undercutting some established players.

Don't forget the second-order effect of clients deciding they could do it in-house.

> Had the cost of building custom software dropped 90%

It definitely has for me. I'm creating toolS and utilities every week easily that I never would've attempted in the past.

> This is as if writing down the code is not the biggest problem, or the biggest time sink, of building software.

Lots of people can think logically and organize a process flow, but don't know all the ridiculous code incantations (and worse development and hosting environment details) to turn their plans into tools.

It's trivial to one-shot all kinds of impressive toys in Gemini now, but it's going to be an even bigger deal when Google adds some type of persistent data storage. It will be like the rebirth of a fully modern Microsoft Access.

I mean, we have had the tech to crank out some little app for a long time. The point of the Saas used to be that you had a neck to strangle when things went south. I guess these days that's just impossible anyhow and the prices aren't worth it so we're rediscovering that software can be made instead of bought?

There have been a lot of little blogs about "home cooking" style apps that you make for yourself. Maybe AI is the microwave meal version.

There is also the missing explosion of App Store app submissions and other such metrics.

"We use AI to build the tools because we use them in cursor or Visual Studio or code or wherever else people are making our stuff. I use AI a bunch." https://37signals.com/podcast/listener-questions/

"Today we’re introducing Fizzy. Kanban as it should be, not as it has been. [...] we’ll host your account for just $20/month for unlimited cards and unlimited users. [...] And here’s a surprise... Fizzy is open source! If you’d prefer not to pay us, or you want to customize Fizzy for your own use, you can run it yourself for free forever." https://x.com/jasonfried/status/1995886683028685291

For a lot of SaaS projects building the software is the simplest part.

I'd also expect to see a lot more AI-generated PRs on open source projects.

(Or at least AI-assisted to the point where the author feels like they should mention it.)

I found that the time (1-4 hours) is enough to build any SaaS for myself

Astute observation. From where I sit, the market (at least for business software; I am not very familiar with the consumer market) seems to be wide open, and businesses in the 5 - 200 employee range seem to be particularly underserved.

The marketplace for software for single-owner shops or 1-5 employee size places does seem to be quite strong, and then there's enterprise software, but small business seems to have a software marketplace that is atrociously bad. Here is the typical thing a prospective customer asks me to fix for them:

- They are using some piece of software that is essential to their business. - There really isn't much good competition for that software, and it would be a large cost to convert to another platform that also has all the same downsides below. - The software vendor used to be great, but seems to have been sold several times. - The vendor has recently switched to a subscription-only model and keeps on raising subscription prices in the 12% or so range every year, and the cost of this has started to become noticeable in their budget. - They were accustomed to software being a capital investment with a modest ongoing cost for support, but now it's becoming just an expense. - Quality has taken a nosedive and in particular new features are buggy. Promised integrations seem quite lacking and new features/integrations feel bolted on. - Support is difficult to get ahold of, and the formerly good telephone support then got replaced by being asked to open tickets/emails and now has been replaced by an AI chatbot frontend before they can even open a ticket. Most issues go unresolved.

There are literally millions of software packages in existence, and the bulk of them by numbers are niche products used by small businesses. (Think of a software package which solely exists to help you write custom enhancements for another software package which is used by a specific sector of the furniture-manufacturing business, to get an example.) The quality of this sector is not improving.

This is a field that is absolutely ripe for improvement. If the cost of building software really were dropping 90%, this would be a very easy field to move into and simply start offering for $6,000 a year the product that your competition is charging $12,000 a year for, for an inferior product. Before you bring up things like vendor lock-in or the pain of migration... why can't you write software to solve those problems, too? After all, the cost of writing a migration tool should be 90% cheaper now, too, right?

People vibe one-off solutions for themselves all the time. They just don't have the desire to productionalize them. Frankly, product knowledge is something LLMs are not that good at

barrier to entry is more problematic than anything else

make something decent in the same space as an existing mega-corporation's tool? prepare to get sued and they also steal your good ideas and implement them themselves because you don't have the money to fight them in court

[dead]

> Had the cost of building custom software dropped 90%, we would be seeing a flurry of low-cost, decent-quality SaaS offering all over the marketplace, possibly undercutting some established players.

NODS HEAD VIGOROUSLY

Last 12 months: Docusign down 37%, Adobe down 38%, Atlassian down 41%, Asana down 41%, Monday.com down 44%, Hubspot down 49%. Eventbrite being bought for pennies.

They are being replaced by newer, smaller, cheaper, sometimes internal solutions.