Has SaaS become commoditized?

I agree with a lot of what people are saying in the comments here. If you are looking for a basic SaaS that is able to solve a common problem, yes. If you are looking for a specific solution to a niche problem that isn't solved easily by existing solutions, then no.

The lesson here is that if you want a SaaS that can be successful you need to be approaching niche problems that haven't been addressed yet.

If you are leading a B2B SaaS business today, and you are successful, then your business is on its way to commoditization. The forces of commoditization are far more powerful today than they were five years ago and they are only going to get stronger.

Why is that? Well, let's take a look at what makes something a commodity:

1. There is no differentiation between products in the market.

2. The product has a low switching cost for customers.

3. There is an abundance of supply in the market.

4. The price point is driven by the lowest cost producer or distributor (aka "commodity price").

SaaS has not yet been commoditized.

The SaaS industry is still young, but we're already seeing prices for some products drop. This can be disheartening for people who are trying to break into the field and don't want to see their software as a service (SaaS) products commoditized. But there's hope! Commoditization doesn't always have to mean lower prices for everyone.

To understand why, we have to look at the way that business models change when the price of a product drops. At first, the average cost per customer decreases because companies can afford to spend more on user acquisition (UA) and still make money. But eventually, UA expenses start to outpace revenue growth, and companies are forced to change their business models or focus on different markets.

As long as your company focuses on providing value rather than simply offering low prices, you'll be able to withstand commoditization without losing money in the process—and that's good news for everyone.

It has been 60 years that at every decade, some predict the death of software due to radical innovation that should lead to a no alternative World.

I just see SaaS as a phase of this industry that will be replaced soon enough.

It's just the effect of the classic liberal Infinite loop (innovation -> consolidation -> innovation).

2 types of customers.

The cheap ones, they don't care about quality and will go with the lowest prices.

The ones who have money, they will spend 10x more on a solution that works better and saves them time.

Yes & No!

It depends on the problem you are trying to solve, and how your customer looks at the available solutions.

If you are solving a problem that’s easily solvable and the difference between the available solutions isn’t much. Then you are looking at a market that would be more likely commoditised.

In such a market it’s easier to enter because your buyer has already identified the problem and knows what to expect from your solution. But the risk is that your customers will always be on an outlook for the cheaper alternatives. Which means, it’s harder to scale. You can expect more people to create Knockoffs of your product, continuous Price wars with competition & associated Churn.

On the other hand, if you are solving a problem that’s not yet solved or at least not yet solved in a nice way. You are looking at a more exciting market opportunity.

In this case, since the market doesn’t already exists or is still building, you will find less competition. So you don’t have to worry about fighting them off, at least in the beginning. However, you will have to work much harder to find your PMF by building a need for your product. So the risk here is that you might not find your market.

In the end it’s your choice what kind of a problem you want to solve.

I wouldnt say it is. A SaaS company is easy to create and can be done in hours. But that says nothing about the quality of the product or product market fit.

Viable SaaS companies will continue to be uncommon.

There are millions of opportunities to start a new SaaS. The challenge is to find systems to interact with an audience. If you can build a audience by solving a problem, you are on your way.

I think yes; the more the barrier to entry lowers for something, the more it becomes commodified.