SaaS as a service or fraud? Increased backlash on subscriptions

Over the past decade, Software As a Service (SaaS) has inverted software from what you own to what you borrow indefinitely. It was a gold rush. It’s recurring revenue and user convenience for businesses. By 2024, 75% of consumer companies offered subscriptions. According to Harvard Business School (HBS), the average American consumer spends $273 per month on an annual paid subscription (HB). Globally, 53% to 71% to 71% have been recruited over the course of five years.

From boom to burnout

However, that subscription fuel boom is currently facing serious resistance. According to a new survey by Bango, 72% of US consumers believe they have too many subscription services. The findings are based on a new survey of 2,500 Americans currently paying for at least one subscription.

“Oversubscribe: Almost three-quarters of American subscription users (72%) say they have “too many” subscription services today,” Bango reported.

That’s not all. According to another report, over a third (36%) are stressed out trying to manage all subscriptions. That fatigue has turned into behavior: Churn has increased by 23%, with two-thirds of consumers canceling at least one subscription in the past six months. One in four SaaS users will close within 30 days of signing up.

Consumers scream fouls: subscription fatigue and public anger

The backlash is most prominent among consumers where some well-known controversy has highlighted the growing frustration with subscription practices. Creatives and enthusiasts were the earliest people to oppose the new norm.

Adobe, BMW, Waves: Subscription Rage Case Study

Adobe is one of the early companies that move completely into subscriptions, and the rebound has not stopped. In 2013, we shifted our creative suites (Photoshop, Illustrator, etc.) to subscription only. Longtime users felt trapped. The complaints ranged from bugs to annoying background processes.

“The office is unbearably bad. Photoshop is now subscription-only. Now we’re stuck with spyware that auto-starts and runs in the background with over two dozen separate processes.

In 2024, the US Department of Justice sued Adobe, claiming the company had hidden cancellation fees and made the process “sick and complicated,” Verge reported. Veteran photographers like Northrups have denounced Adobe for failing to realize innovation despite years of payment (FSTOPPERS). Their message was clear. Their loyal customers feel they remain an expensive and overwhelming tool.

BMW’s 2022 decision to charge $18 a month for heated seats in some countries was another flashpoint. These were already built into the car. The owner had to pay to “unlock” them. Naturally, the customers were furious. According to Verge, a BMW executive later admitted, “People feel they’ve paid double… perception is reality.” By 2023, the company had abandoned the idea.

In the audio space, Waves Audio was available for subscription only in March 2023. Social media has erupted. Longtime customers accused the company of pulling cash grabs. The backlash was so immediate that the waves reversed the course in a few days, reviving the perpetual license and issued a public apology.

“A few days ago, Waves shocked users with the announcement that it would move to a subscription-only model. Well, the internet is talking and Waves says it will return a permanent license.

Devoted technology, the maker of professional tools, attempted similar things and got the same response: anger, walkback, and a return to permanent licensing options.

These moments show that they are not afraid to organize their tools, protest, and switch when they feel like they’ve pushed too much.

Inside the office: SaaS Bloat and CFO Revolt

It’s not just individual users. Businesses are also retreating. The average company used 371 SaaS apps in 2023. By 2024 it had dropped to 220. This is a 40% reduction as it reevaluates what companies are actually using.

“In 2023, the organization used an average of 371 SaaS apps, but by 2024, that number had plummeted to an average of 220 apps.

“More than half (53%) of organizations reported actively integrating duplicate apps in 2024.

According to another ComputerWeekly report, SaaS is the third largest operating expense for many organizations, after pay and rent alone. CFOs are not happy. In a 2023 survey, Finance Heads reported plans to trim software spending by 10-30%. We’ve discovered that many people are paying for unused licenses, redundant apps, or duplicate tools.

“Software subscriptions are often the third biggest expense for businesses after personnel and rent,” reported ComputerWeekly.

Meanwhile, small businesses were particularly hit, often spending between $250,000 and $1 million a year on 50-70 tools. Some people spent up to $9,600 per employee each year on SaaS.

Worse, 78% of CFOs responded that they were blinded by hidden fees or price increases burned into SaaS contracts. In addition to these issues (shelveshelfware headaches), it has urged buyers to demand clearer conditions and pay-as-you-go options. One CFO told CFO Dive that usage-based pricing will help you avoid bloated bundles and unused software.

Currently, 45% of SaaS vendors are moving to usage-based pricing from 34% the previous year. Products like Circleci and Algolia have switched and placed them in a more equitable position for customers.

SaaS Cancel

SaaS Companies are living or dead through retention, and the number of terminations indicates that users are leaving. On average, 4-6% of customers cancel each month for SaaS companies. Even “healthy” companies often lose 5-10% of their customers each year, and in consumer services like Blue Apron, Churn exceeds 70%.

“On average, 4-6% of customers cancel each month in SaaS companies.”

“Cancellations can be much worse with consumer apps. As stated, we’ve seen cancellations within a month and some subscription services like meal kits have seen cancellations of over 70% per year,” Penfriend.ai reported.

The cost is one driver. $9.99, $19.99 may not seem like much here, but they are stacked up. In streaming, another report from LendingTree found that 72% of subscribers think they pay too much, with one in three already cutting. With software, pricing can be even more vague. According to CFODive, 55% of vendors don’t publish their prices.

Meanwhile, some vendors have made it difficult to migrate data, which increases switching costs and deepens frustration.

What’s more, the promise of constant renewal is not always coming true. For example, Adobe’s creative cloud is supposed to bring about rapid innovation. Longtime users say that hasn’t happened. Instead, it feels like they’re paying for the same product every year.

And then there’s the lock-in issue. Using traditional software, you can stop purchasing the next version: Use SaaS to cancel your subscription and your access disappears instantly. Jason Fried, representative of 37, said frankly: “Stop paying and the software will stop working.

Alternatives to monthly SaaS subscriptions

Some vendors have taken small but meaningful steps. JetBrains introduced the Fallback License in 2015. This allows you to use the software straight for 12 months and keep that version permanent. This is the intermediate foundation between subscription and full ownership.

“In effect, you can purchase a permanent license. The catch is that even if your subscription expires, you will still have to roll back to the version you have the licensed.

Then there was 37signals, which was completely reversed. In 2023, the company released it once at a time. This is a set of payment, self-hosting tools. Their manifesto didn’t pull punches:

“For nearly 20 years, the SaaS model has made a spectacular profit for landowners. Regular prayers and repeated payers’ income, ratings shot by companies shot dead in the moon at a luxurious price of control, will require you to add Saas subscription last year.”

Answer: adjustment, reform and complete rebellion

Meanwhile, others are quietly tweaking prices. Some offer pause options. Others make users automatically drop to cheaper tiers when usage drops. On the enterprise side, Salesforce and Microsoft offer an all-in-one bundle for cushion cancellation, but some view this as just another form of lock-in.

One thing is that you need more than locking to keep your customers. Vendors are currently investing in better onboarding and support as the 5% improvement in retention could increase by up to 95%, as Harvard Business Review points out.

Regulators will intervene

The government has not ignored the issue. The US Federal Trade Commission wants to require the “click” feature. In Europe, new laws could fine businesses for failing to disclose renewal terms and making cancellations more difficult than signing up.

DOJ’s lawsuit against Adobe may be the first of several actions targeting subscription practices that feel predatory.

What’s next?

“Sirs as a service or scam?” It may sound like ClickBait, but it captures the actual turning point. Your subscription will not be gone. But the all-in approach, where everything is monthly fees, is thin.

Future successful companies will become companies that treat subscriptions like relationships. This means providing transparent, flexible, clear and continuous value.

it’s not? Expect more of your cancelled subscriptions. Bigger complaints.