Why SaaS is becoming less relevant
Three things are happening at once. Customers can now build simple internal tools themselves with AI, so they stop paying for them. AI agents can do the work a tool was meant to help a person do, so the tool is skipped entirely. And new AI native competitors launch with a fraction of the cost base, so they can undercut on price.
Per seat pricing is under particular pressure. If an AI agent does the work of three people, a customer needs fewer seats, and a pricing model built on headcount shrinks with it.
The SaaS that is holding up
SaaS products that own something hard to replace are doing well. That usually means one of a few things.
- A system of record that holds a company's important data
- Deep integration into how a team already works, so switching is costly
- Proprietary data that improves the product and that competitors cannot get
- Distribution, through a marketplace position, a channel or a brand people trust
- Compliance, security or regulation that a quickly built alternative cannot meet
What to do if your SaaS is losing ground
Be honest about whether the product has one of the advantages above. If it does, the path is usually to rebuild around it, add AI to the product, and move pricing towards outcomes rather than seats.
If it does not, the value is in what you have already earned. Paying customers, an engaged user base and a domain that ranks are worth far more to a buyer than the code. Selling, or merging with a startup that has the advantage you lack, is often a better outcome than slowly running down the bank balance.
Selling a SaaS that AI has disrupted
Buyers of disrupted SaaS are mostly buying customers and distribution. Price your startup on what transfers, which is usually recurring revenue and users rather than the code itself. The startup value calculator gives a quick estimate on that basis.
If revenue has gone, see how to sell a SaaS with no revenue.
Common questions
Is SaaS dead because of AI?
No, but simple SaaS tools are losing relevance. Products that hold important data, integrate deeply into workflows or have strong distribution are still growing. Tools that only save a little time are being replaced by AI.
Will AI agents replace SaaS?
They will replace some of it. Agents can carry out tasks that used to need a person using a tool, which reduces demand for seat based software. The SaaS that survives tends to become the data and the rules that agents work with.
Should I still start a SaaS company?
Yes, if you can build an advantage that AI does not erase, such as proprietary data, distribution or deep workflow integration. A product that can be copied in a weekend needs something else to protect it.