We had an app we’d been reference customers for — for years. Our case study was on their website. We got them several of the largest customers in B2B via our direct recommendation. We were evangelists. We were part of their success story.
Then last year they told us we had to pay another $20,000 a year to brand the app.
I.e., just to add a JPEG. Which we’d already done for 5+ years. It wasn’t even a new feature. It was literally just putting our logo in the app interface.
“Why?” we asked the new CRO, who had implemented the new fee in an ambush call.
“Because we need the revenue,” the CRO answered directly. “So I’m forcing you to pay it.”
This is Why SaaS is Dying in 2025
Some of it is AI. We all know that story. ChatGPT and its cousins are eating into use cases that used to require specialized software. Some of it is vendor consolidation. Microsoft, Salesforce, and the other mega-vendors keep bundling more capabilities, making standalone apps harder to justify.
But here’s the uncomfortable truth: A lot of it is self-inflicted.
As growth slows, the leaders in SaaS keep sticking it to their installed base as the only source of reliable growth. They’re mining their customer base like it’s a coal seam that will never run out. They’ve turned customer success into customer extraction.
SaaS pricing is now up 11.4% year-over-year — nearly five times higher than the 2.7% average market inflation rate. That’s not inflation. That’s price gouging dressed up in quarterly earnings language.
Here’s what we’re seeing everywhere in 2025/2026:
➡️ Excessive and endless price increases.
Not 5-7% inflation adjustments. We’re talking 30%, 50%, even 100% increases. With 45 days notice. Take it or leave it. Salesforce’s recent pricing moves tell the whole story: price increases now represent up to 72% of their go-forward growth, not new customers or expansion. Think about that. Three-quarters of their growth comes from charging existing customers more, not from building things people actually want to buy.
➡️ The “AI Tax” on features you don’t want.
Sixty percent of vendors now deliberately mask rising prices by bundling AI features. The playbook is simple: add half-baked AI capabilities, bundle them into existing plans whether customers want them or not, raise prices 10-20%, and justify it as “innovation investment.” Adobe rebranded Creative Cloud to “Creative Cloud Pro,” added some AI features most users will never touch, and charged 17% more. You can’t opt out. You’re paying for AI whether you use it or not.
➡️ Threats on leaving.
The renewal conversations have become hostage negotiations. “If you don’t renew by Friday, we’ll have to shut off your access.” “We can’t guarantee this pricing will be available if you take time to evaluate.” The urgency is artificial. The pressure is real. And it’s burning whatever goodwill remains.
➡️ “Customer Success” calls that are only about forcing you to buy new products you don’t want.
Remember when Customer Success was actually about helping you succeed? Now it’s a sales team with a friendlier title. Every QBR is a pitch deck. Every check-in is a cross-sell attempt. “I see you’re not using our new AI feature that we just made mandatory at an extra $15K per year.”
➡️ The hidden price increases.
Beyond the headline numbers, vendors are getting creative. Credit multipliers that can change overnight — a service that costs 10 credits suddenly costs 20 credits, same subscription price but you burn through credits twice as fast. Migration “fees” of 5-15% justified by platform improvements you didn’t ask for. Microsoft’s 5% surcharge for monthly billing — not technically a price increase, just a punishment for flexibility.
The Dollars Aren’t There If You Are Just Raising Prices
Corporate IT budgets are growing at just 2.8% annually, while many SaaS vendors are hiking prices by 9-25%. You don’t need an MBA to see that math doesn’t work. Something has to give.
And what’s giving is customer loyalty. Customer advocacy. Customer trust.
The Quarterly Trap
In the short term, it works. The CRO hits their number. The CFO shows improving net revenue retention. The board sees the metrics moving up and to the right. The quarter is saved.
But they are slowly destroying their customer base. And themselves.
Because here’s what happens next:
- Customers stop being advocates. We used to recommend that app to everyone. Now? We actively warn people away. We tell them the pricing is predatory. We explain that the company has changed. One lost case study. Dozens of lost referrals. Hundreds of thousands in pipeline that will never materialize.
- Renewals become grudge purchases. Instead of renewing automatically because we love the product, every renewal becomes a full evaluation. Eighty-three percent of successful renewal negotiations now start at least 120 days before the renewal date — not because customers are being strategic, but because they need that much time to build a case for alternatives and create real negotiating leverage.
- The moat disappears. When you’ve extracted every dollar and every ounce of goodwill, there’s no switching cost except the product itself. And if a competitor comes along that’s 80% as good at 50% of the price? Your customers will sprint toward the exit. They’re just waiting for permission to leave you.
- Your best employees quit. The customer success manager who actually cared about customers? She left. The solutions engineer who took pride in implementations? He’s gone. The account executives who built relationships? They’re at startups where they don’t have to apologize for pricing every single call. You’re left with mercenaries executing a mercenary strategy.
The Real Cost of “Monetizing Your Base”
I’ve now watched this play out at dozens of SaaS companies. The pattern is always the same:
Year 1: “We need to better monetize our installed base. We’re leaving money on the table.” Year 2: “Net revenue retention is at 125%! We’re crushing it!” Year 3: “Why is our churn increasing? Why are deals taking longer to close?” Year 4: “Why is our NPS in the toilet? Why aren’t we getting referrals anymore?” Year 5: “Why is a startup with a worse product taking share from us?”
The answer is always the same: You optimized for the quarter. You lost the decade.
The Federal Government Showed Us the Truth
When the federal government negotiated with Salesforce for Slack, they secured up to a 90% discount. Ninety percent. Let that sink in. That 90% discount tells you exactly how much margin these vendors have been sitting on. It reveals the entire game.
The federal government demonstrated that aggressive negotiation can work — but only if you have massive purchasing power. For the rest of us? We’re paying 10x what the software actually costs because we don’t have the leverage to fight back.
The Uncomfortable Questions
So here are the questions every SaaS CEO and CRO needs to ask themselves right now:
Are we charging more because we’re delivering more value, or because we need to hit a number? There’s a difference. Customers can tell.
Would we recommend our own renewal pricing to a friend? If you wouldn’t tell your best friend to pay what you’re charging your customers, that’s a problem.
Are our Customer Success teams actually helping customers succeed, or are they a disguised sales team? If every CS interaction ends with an upsell attempt, you don’t have Customer Success. You have Customer Sales.
Are we building features customers want, or features we can charge for? There’s a reason customers are angry about paying $20,000 to add a logo they’ve been adding for five years. There’s a reason they’re frustrated about mandatory AI bundles they’ll never use.
What percentage of our growth is coming from new customers vs. squeezing existing ones? If it’s mostly the latter, you’re not growing. You’re harvesting. And the harvest will run out.
The AI Wild Card
Here’s the ultimate irony: the same AI that vendors are using to justify price increases could eventually disrupt the entire pricing model. If AI agents can truly automate tasks currently requiring SaaS tools, category pricing could collapse. We’re already seeing it at SaaStr — we’ve downgraded seat counts at multiple vendors now that we have 12+ AI Agents in production. We just have fewer humans and more AI agents doing the work.
So vendors are charging more for AI features while AI simultaneously makes their seat-based models obsolete. The math will catch up eventually.
The Only Way Out
Yes, growth is harder than it was in 2021. Of course it is. The zero-interest-rate phenomenon is over. AI is real. Consolidation is happening. Budgets are tighter.
But the only way out is new, happy customers. Not sticking it to your base, year after year after year.
The companies that will win the next decade are the ones who:
Build products customers love. Not products customers tolerate. Not products customers are trapped in. Products they actually recommend.
Price transparently and fairly. Publish your pricing. Make it simple. Don’t play games with “enterprise” tiers that are just excuses to charge whatever you can extract. Don’t bundle AI features customers don’t want and can’t opt out of.
Invest in customer success that actually creates success. If a customer isn’t getting value, help them get value or let them leave. Don’t just try to sell them more stuff they won’t use.
Earn growth through value, not contracts. If your customers would leave except they’re locked in a three-year contract, you don’t have a business. You have a prison.
The Real Question
The real question isn’t whether SaaS is dying.
The real question is: Are you killing it?
Are you the vendor that customers recommend, or the one they warn their friends about?
Are you building a business, or extracting from one?
Are you creating value, or just capturing it?
The answer will determine whether you’re here in 2030.
We’re not renewing that app, by the way. After years of partnership, after being their most vocal advocates, after referring millions in ARR to them — we’re done.
And we’re not alone.
Fifty percent of all software companies are now preparing to raise prices and cut back on discounts. The other 50% probably already did it last quarter.
The SaaS companies that figure this out will thrive. The ones that don’t will become cautionary tales about what happens when you optimize for the quarter and lose the customer.
Your move.
Final Note / Coda
Yes, we did renew with that $20,000 logo fee — once. Once. We had to pay to get SaaStr AI Summit 2025 done. So we did.
But this year? We’re gone. We’ve moved on to an AI-first vendor that isn’t just “better” — but didn’t rip us off.
But it took a year to switch. The CRO actually left since then, so perhaps, they got their win in the end.
And the vendor? A big loss.
