Why SaaS Pricing Is Broken (And How They Keep Getting Away With It)

SaaS pricing is killing small businesses, freelancers, and solo operators one sneaky invoice at a time. What started as a clever, accessible way to get software into more hands has mutated into a rent-seeking machine where vendors hold your data hostage while hiking your bill every twelve months. The subscription model was sold to us as freedom. It delivered a cage.

We’re not talking about minor inconveniences. We’re talking about SaaS pricing rising 11.4% in 2025 alone — nearly five times the general inflation rate. Meanwhile, your rent didn’t go up 11%. Your groceries didn’t go up 11%. But your project management tool, your CRM, your design app, your communication platform? All of them quietly got more expensive while you were busy trying to run a business.

This is an opinion piece, and here’s our opinion: the AI Or Die Now manifesto exists because software should work for the people using it, not the shareholders extracting from it. SaaS pricing has become a tax on ambition, and it’s time to call it what it is.

The Numbers Don’t Lie — SaaS Costs Are Out of Control

Let’s start with the numbers, because the numbers are genuinely alarming. SaaS pricing increased 12.2% in 2024 — the highest annual increase ever recorded for the category. In 2025, the rate barely cooled, landing at 11.4% year-over-year. General inflation across G7 nations was sitting at 2.7%. Do the math. SaaS pricing is running at roughly five times the rate of everything else getting more expensive.

The average SaaS spend per employee reached $9,100 by the end of 2025, up from $7,900 in 2023. That is a 15% increase in two years, per person, just to maintain access to the tools they were already using. According to Zylo’s 2025 SaaS Management Report, the average organization runs 112 SaaS applications simultaneously. Companies with under 200 employees? Still running 42 apps on average.

Small businesses get hit disproportionately hard. IT spending as a percentage of revenue averages 6.9% for SMBs versus 4.3% for enterprises. Smaller companies pay a higher technology tax precisely because they lack the negotiating power to push back on SaaS pricing. The vendors know this. They count on it.

And 41% of small business owners report that rising software costs are now a significant concern for their operations. Not a minor annoyance. A significant concern. When your tools cost more than your marketing budget, something has gone deeply wrong with SaaS pricing models.

The Subscription Trap — How You Got Locked In

Here is how the trap works. A SaaS company launches with a low, attractive price point. You sign up, integrate the tool into your workflow, import your data, train your team, and build processes around it. Six months later, a price increase email arrives. It’s only 10%. Totally manageable, right?

Except it happens again. And again. And every time you think about leaving, you remember that your data lives in their system, your team is trained on their interface, and your integrations will all break if you walk. That is not a product relationship. That is a hostage situation dressed up in friendly UX.

The “AI features” excuse has become the preferred weapon of choice in 2025 SaaS pricing strategies. Vendors slap a chatbot or a summarization feature onto their existing product and declare it an AI-powered platform upgrade that justifies a 15–40% price hike. Vertice’s research found that 60% of vendors deliberately mask rising prices by bundling AI features customers never asked for. You’re paying for AI you didn’t want to get access to software you already needed.

“SaaS has conquered too well. It has succeeded too far. We have now assumed that everything needs to be a subscription all the time, and it’s driving people nuts.”

— David Heinemeier Hansson (DHH), CTO & Co-founder, 37signals (Basecamp, HEY); Creator of Ruby on Rails

The switching costs are real and vendors engineer them deliberately. SaaS was originally positioned as flexibility — pay month to month, cancel anytime. What nobody told you was that “cancel anytime” doesn’t mean “leave without pain.” Your data is formatted for their system. Your team knows their shortcuts. Your automation is built on their API. The actual SaaS pricing model isn’t monthly. It’s permanent, with optional billing intervals.

The Graveyard of Unused Licenses

Here is a stat that should make every business owner furious: 44% of SaaS licenses go unused or underutilized. That is nearly half of everything you are paying for, sitting dormant while the subscription charges tick forward every month.

Zylo’s data gets more specific and more damning: 73% of provisioned users never utilize their assigned SaaS application licenses. Not underuse. Never touch. You bought seats, someone set them up, and three quarters of those people never logged in consistently. That is the graveyard of SaaS pricing — you keep paying, and the software keeps collecting dust.

78% of CFOs said they were blindsided by hidden fees or price hikes baked into SaaS contracts. These are the people whose entire job is tracking money, and they are still getting surprised. What chance does a freelancer or small business owner have when even dedicated financial officers can’t keep up with the complexity of modern SaaS pricing structures?

The psychological toll is real too. Professor Anat Keinan from Harvard Business School describes “subscription stack anxiety” — the creeping dread that comes from knowing you’re bleeding money across a dozen fragmented services, none of which you fully control. That anxiety is a direct product of broken SaaS pricing. You are not just paying more money. You are paying with your mental bandwidth.

The Price Hike Hall of Shame

Let’s name names. Because vague complaints about SaaS pricing are easy to dismiss, but specific ones are harder to ignore.

Salesforce is perhaps the most egregious case. According to SaaStr’s analysis, price increases account for up to 72% of Salesforce’s go-forward revenue growth. Not new customers. Not new products. Not genuine innovation. Just charging existing customers more. As Jason Lemkin, Founder of SaaStr, put it: “Vendors started to abuse their power in the downturn because they were having trouble finding new deals or didn’t have new things to sell.” DHH framed it even more bluntly: “Spending $15/month per seat on Salesforce’s Slack in a company of 2,000 people comes out at over three hundred grand per year. Just for a chat tool!”

Microsoft executed hidden 5–40% increases by shuffling billing structures and bundling services customers didn’t need. Google Workspace pushed through a 16.7% price increase and made AI features mandatory for tiers where users had no practical use for them. Atlassian hammered Data Center customers with steep increases after effectively forcing migrations from Server licenses they chose to discontinue.

And then there is Docker. Docker’s SaaS pricing for teams increased 67–80% in a single cycle. A tool that millions of developers had built their entire local development workflows around suddenly cost nearly double. The message was clear: we have you. Now pay.

In 2025 alone, SaaS companies made 1,800+ pricing changes across the top 500 companies — an average of 3.6 changes per company in a single year. This is not a market correcting itself. This is a market that has decided its customers have nowhere else to go. The arrogance baked into modern SaaS pricing is staggering.

The Open Source Escape Route

Here is the good news: the market is already fighting back. According to the OpenLogic 2025 State of Open Source Report, 96% of organizations are either increasing or maintaining their open source software usage. Of those, 53% cite cost reduction as the primary driver. People are fleeing bad SaaS pricing and running toward open source alternatives with their arms wide open.

The open source software market is projected to grow from $48.54 billion in 2025 to $95.38 billion by 2030 — a 16.5% compound annual growth rate. That’s explosive. For context, that growth rate is higher than the SaaS pricing inflation rate itself. Open source is winning the war that the marketing departments of major SaaS vendors are pretending doesn’t exist.

The alternatives are real and they are production-ready. LibreOffice replaces Microsoft 365. Mattermost and Matrix replace Slack. Jitsi replaces Zoom. AppFlowy and Outline replace Notion. Gitea replaces GitHub for private teams. Self-hosted WordPress — the world’s most widely deployed CMS — replaces a dozen SaaS content and commerce platforms simultaneously. When you lock down your self-hosted WordPress site properly, you have an enterprise-grade content platform that costs you a few dollars a month in hosting, not hundreds in SaaS pricing fees.

The moral argument matters here too, not just the financial one. Software that was built by communities, for communities, distributed freely and improved openly — that is software that works for the people using it. SaaS pricing is the opposite model: software that extracts maximum value from its users while giving them minimum control. Open source tips that equation back in favor of the person doing actual work.

Own Your Tools — The Case for One-Time Purchase Software

37signals — the company behind Basecamp and HEY — made headlines when they announced they had saved over $10 million over five years by leaving the cloud and buying their own servers. DHH documented the entire process publicly. A company that had been all-in on cloud infrastructure decided that the SaaS pricing model applied to infrastructure was just as broken as the SaaS pricing model applied to software. They built their own stack. They own it. No one can raise the price on them.

37signals went further and launched ONCE — a product line built entirely around one-time purchase software. You buy it. You own it. You run it. No subscription. No per-seat SaaS pricing. No annual renewals. The response from the market was overwhelmingly positive, because people are desperately hungry for an alternative to the subscription treadmill.

WordPress gives you real ownership of your platform in a way that almost no SaaS alternative can match. You control the code. You control the data. You choose the host. And when you want to understand exactly how your system works, you can understand what wp-config.php actually does and configure it yourself, rather than clicking through someone else’s locked-down dashboard.

This is why we built what we built. Our Arsenal of one-time purchase WordPress plugins exists as a direct rejection of broken SaaS pricing. We built Pirate Link Cloaker as a one-time purchase, not a subscription — because link management does not need to cost $49 a month forever. You pay once. You own it. The price doesn’t go up next year because we decided to call it “AI-powered.”

The one-time purchase model is not a nostalgic throwback. It is a moral position. Software that does a defined job well should be sold, not rented indefinitely. SaaS pricing has convinced the industry that permanent rental is the only viable model. It is not. It is just the most profitable model for the vendor — at direct expense to everyone else.

The era of accepting broken SaaS pricing as an unavoidable cost of doing business is ending — not because the vendors suddenly developed a conscience, but because the alternatives have finally caught up. Open source is production-ready. One-time purchase software is back. Self-hosted infrastructure is accessible to anyone with a basic understanding of how the web works. The tools exist. The only thing left is the decision to use them.

We practice what we preach at AI Or Die Now — every product in our Arsenal is a one-time purchase because we believe SaaS pricing should be a choice, not a sentence. If you’re ready to stop renting your software stack and start owning it, that’s where we start.

What’s the SaaS tool you’re most sick of paying for? Drop it in the comments — and tell us if you’ve found a real alternative. We read every one.