SaaS Is Dead. Here’s What Killed It.

SaaS is not dying because software got worse. It is dying because the business model that made it look like a sure thing for a decade was built on assumptions that no longer hold: cheap capital, infinite appetite for subscriptions, and buyers who would renew out of inertia. All three are gone. What we are left with is a market that still needs software, but has stopped tolerating the pricing, packaging, and go-to-market playbooks that SaaS companies ran on autopilot for years.

I have managed marketing budgets across more than 30 industries over two decades. In that time, I have watched SaaS go from a genuinely exciting category to one of the most over-funded, over-hyped, and now over-corrected markets in the history of technology. The obituary is premature. But the model, as it was sold to investors and buyers alike, is in serious trouble.

What “SaaS Is Dead” Actually Means

Nobody is saying that software delivered over the internet is going away. That would be absurd. What is collapsing is the specific commercial model that grew up around it: high annual recurring revenue multiples, land-and-expand at any cost, net revenue retention as the only metric that mattered, and a go-to-market playbook that assumed buyers would keep subscribing to tools they barely used because switching felt like too much effort.

That model worked when interest rates were near zero and CFOs were not scrutinising software spend the way they are now. It worked when “digital transformation” was a budget line that got approved without much pushback. It worked when you could grow headcount faster than revenue and still get a Series C. None of those conditions exist in the same form today.

The companies now struggling are not struggling because they built bad software. Many of them built perfectly good software. They are struggling because their entire commercial architecture was designed for a market that has structurally changed, and their go-to-market strategy never had to work that hard before. If you want to understand what a harder go-to-market environment actually looks like from the inside, Vidyard’s breakdown of why GTM feels harder is worth reading. It is not just vibes. The mechanics have genuinely shifted.

The Economics That Made SaaS Look Inevitable

For roughly a decade, the SaaS model had a near-perfect tailwind. Cheap debt meant that investors were willing to fund growth at a loss for years, because the promise of recurring revenue at scale looked like a machine that would eventually print money. Buyers were adopting cloud tools rapidly. Remote work accelerated that. And the switching costs built into most SaaS products, your data is in there, your team is trained on it, the integrations took six months to set up, created a kind of structural loyalty that had nothing to do with product quality.

That structural loyalty was often mistaken for product-market fit. It was not. It was friction. And friction is not a moat. It is a temporary advantage that disappears the moment a buyer decides the pain of switching is less than the pain of the bill.

Earlier in my career, I made a version of this mistake myself. I overvalued retention metrics that looked healthy on the surface but were actually just inertia. Clients were staying because leaving felt complicated, not because we were delivering something they could not get elsewhere. The moment a better alternative showed up, or the moment they hired someone who had used a different platform, the loyalty evaporated. What I learned from that is that retention built on switching costs is a liability disguised as an asset. You stop investing in the product because the numbers look fine, and then one day they do not.

SaaS companies did the same thing at scale. They optimised for net revenue retention and called it product success. Some of it was. A lot of it was not.

AI Is Not the Saviour. It Is the Accelerant.

The narrative you hear from a lot of SaaS vendors right now is that AI will save them. Add a Copilot button, charge a premium tier, call it a platform upgrade. Some of that is genuinely valuable. Most of it is a feature wrapped in a pricing story.

What AI is actually doing to the SaaS market is making it cheaper and faster to build software. That is great for buyers and terrible for incumbents who built their moat on the assumption that their product was hard to replicate. If a small team can now build a credible alternative to a mid-market SaaS tool in a fraction of the time it used to take, the pricing power of the incumbent erodes. The category does not disappear. The margin does.

There is also a more fundamental challenge. AI is starting to do things that point solutions were built to do. If your SaaS product exists to help people do one specific task, and an AI model can do a reasonable version of that task without a subscription, you have a product problem that no amount of go-to-market cleverness will fix. The companies that understand this are rebuilding their product strategy from the ground up. The ones that do not are adding AI badges to their pricing pages and hoping nobody notices.

Go-to-market strategy in this environment is part of a broader set of questions about how growth actually works. I write about those questions regularly at The Marketing Juice’s Go-To-Market and Growth Strategy hub, because the decisions companies make about positioning, pricing, and channel right now will determine which ones are still standing in five years.

The Buyer Has Changed More Than the Product

One of the most significant shifts in the SaaS market is not on the vendor side. It is on the buyer side. Procurement has got sharper. Finance teams are doing software audits that would have been unthinkable three years ago. The person who used to approve a $50,000 annual contract with a quick email is now being asked to justify it in a quarterly business review with a spreadsheet showing utilisation rates.

This is not temporary belt-tightening. This is a permanent recalibration of how businesses think about software spend. The SaaS category trained buyers to expect rapid deployment, measurable outcomes, and the ability to cancel if it did not work. That was the pitch. Now buyers are holding vendors to it. And a lot of vendors are discovering that their product does not actually deliver measurable outcomes as cleanly as the sales deck suggested.

I spent time judging the Effie Awards, which are specifically about marketing effectiveness. One of the things that experience reinforced for me is how rarely companies can draw a clean line between their marketing activity and a business outcome. SaaS vendors have the same problem, just expressed differently. They can show you dashboards full of engagement metrics and feature adoption rates. What they struggle to show you is a clear answer to: “What would have happened to your business if you had not used this product?” That is the question buyers are starting to ask, and it is a hard one to answer when your product has been embedded in a workflow for two years.

What the Survivors Are Doing Differently

The SaaS companies that are handling this well are not doing anything revolutionary. They are doing the things that good businesses have always done, which is to say they are being honest about what their product actually does, pricing it in a way that aligns with the value the buyer receives, and building go-to-market motion around real demand rather than manufactured urgency.

Usage-based pricing is the most obvious structural shift. When you charge based on what a customer actually uses, you remove the resentment that comes from paying for seats that sit idle. You also change the commercial conversation. Instead of defending a renewal, you are growing alongside a customer who is getting value. The alignment is better. The relationship is more honest.

The go-to-market motion is changing too. The old playbook was: generate leads at the top of the funnel, hand them to sales development reps, run a demo, close a deal, hand to customer success, and hope they renew. That motion is expensive, slow, and increasingly ineffective in a market where buyers have already done their research before they ever talk to a salesperson. The companies doing this well are investing in product-led growth, in content that actually helps buyers understand their problem, and in community that creates genuine peer influence. They are reaching new audiences rather than just recapturing existing intent.

That distinction matters more than it sounds. I spent too long early in my career optimising for the bottom of the funnel, capturing people who were already going to buy something. It looked efficient. The numbers were good. But it was not growth. It was harvesting. Real growth requires reaching people who have not yet decided they need what you sell, and that requires a very different kind of investment. The market penetration frameworks that Semrush outlines are a useful starting point for thinking about this, because they force you to be specific about which segments you are actually trying to reach and why.

The Go-To-Market Playbook That No Longer Works

For the better part of a decade, SaaS go-to-market looked like this: raise a round, hire a large sales and marketing team, spend heavily on paid acquisition to hit a pipeline number, show growth metrics to the next investor, repeat. The underlying assumption was that if you grew fast enough, the unit economics would sort themselves out at scale. For a small number of companies, they did. For most, they did not.

The problem with that playbook is that it is entirely dependent on the cost of capital staying low and the market continuing to expand. When both of those conditions reverse simultaneously, you are left with a business that has a large fixed cost base, a growth rate that cannot justify it, and a customer base that is actively looking for reasons to cut the contract.

I ran an agency through a period of significant growth, taking it from around 20 people to over 100. One of the things that experience taught me is that growth in headcount without equivalent growth in revenue quality is not a success story. It is a liability you are building. The SaaS industry ran that experiment at a much larger scale and with much more investor capital, and the results are now visible in the layoff trackers and the down rounds and the acqui-hires that are happening across the sector.

Scaling a business well requires a different kind of discipline. The BCG research on scaling agile organisations is relevant here, not because SaaS companies need to become agile consultancies, but because the principles around building capability that scales without proportional cost increases are ones that the best operators in any sector understand.

What Comes After SaaS

The software industry is not going away. The subscription model is not going away either, though it will look different. What is ending is the specific version of SaaS that treated recurring revenue as a business model in itself, rather than as an outcome of delivering ongoing value.

What comes next is harder to name but not hard to describe. It is software businesses that are more honest about what they do and who they are for. It is pricing that reflects actual usage rather than theoretical seat counts. It is go-to-market strategies that are built around genuine buyer problems rather than funnel metrics. It is product development that starts from “what does this customer need to achieve?” rather than “what feature will help us upsell?”

Some of the most interesting work being done in go-to-market right now is happening at the intersection of product, content, and community. Creators are becoming a legitimate channel for software adoption, not because they are influencers in the traditional sense, but because peer recommendation from someone who actually uses the product carries more weight than any sales deck. The Later webinar on going to market with creators is a useful illustration of how this is being applied in practice, even if the context is consumer-facing. The underlying logic translates.

The companies that will build durable software businesses in this environment are the ones that treat go-to-market as a strategic function rather than a sales support operation. That means understanding which markets they can realistically penetrate, what their actual competitive differentiation is, and how to build demand rather than just capture it. Those are not new ideas. They are just ones that a lot of SaaS companies never had to take seriously when the market was growing fast enough to hide the gaps.

There is a version of this that applies well beyond software. If you are working through how your own go-to-market strategy needs to evolve, the thinking I cover in the Go-To-Market and Growth Strategy section of The Marketing Juice is a good place to work through the fundamentals without the noise.

The Lesson for Marketers Working in or Around SaaS

If you are a marketer working inside a SaaS business right now, the pressure you are feeling is real. Pipeline targets that made sense when the market was growing at 30% a year do not make sense in a market where buyers are cutting tools and procurement cycles have lengthened. The answer is not to work harder on the same playbook. It is to be honest about what is and is not working and to make the case internally for a different approach.

That means investing in brand and demand creation, not just lead capture. It means being willing to say that some of the pipeline you are generating is not real pipeline, it is activity that looks like pipeline in a CRM but will not convert. It means pushing back on the idea that more top-of-funnel volume is the answer when the real problem is that the product is not differentiated enough to survive a competitive evaluation.

I have had those conversations with clients and with boards. They are not comfortable. But they are the conversations that actually move things forward. The alternative is to keep running a playbook that the market has already rejected and to be surprised when the results do not improve.

The SaaS market is not dead. But the version of it that ran on cheap capital, inertia-based retention, and growth-at-all-costs metrics is. What replaces it will be more commercially disciplined, more honest about value, and more interesting to work in. That is not a bad outcome. It just requires a different kind of marketing to get there.

About the Author

Keith Lacy is a marketing strategist and former agency CEO with 20+ years of experience across agency leadership, performance marketing, and commercial strategy. He writes The Marketing Juice to cut through the noise and share what works.

Frequently Asked Questions