The Great SaaS Reckoning: Why the Subscription Economy Is Broken
And what comes next for enterprise software
The Cracks Are Showing
Something major is breaking in the SaaS economy, and if you’re in enterprise software, you can feel it in every sales call, every renewal conversation, every board meeting where someone asks the uncomfortable question:
“What are we actually getting for all this subscription spend?”
The symptoms are everywhere. Organizations now use only 47% of their SaaS licenses, wasting $21 million annually in unused licenses (Zylo, 2025). CFOs are conducting “SaaS audits” with the intensity of cost-cutting surgeons. New SaaS purchases dropped from 20% in Q4 2023 to just 8% in Q1 2024 (Okoone, 2025).
Enterprise buyers are increasingly asking a question that should terrify every subscription software company: “Can you guarantee results, or are we just paying for access to tools?”
This isn’t just economic belt-tightening. This is a core shift in how enterprises think about software value, and most SaaS companies are completely unprepared for what’s coming.
The Perfect Storm
Four massive forces are converging to create what I call “The Great SaaS Reckoning”:
AI is commoditizing everything. The dirty secret every SaaS executive knows but won’t say out loud: enterprise software features can now be replicated by internal teams using AI in weeks, not years. 91% of companies using or planning to use AI in 2024 will hire new employees in 2025 – but they’re hiring builders, not buyers (AIPRM, 2024).
Why pay $100K annually for a specialized tool when your engineering team can build something equivalent over a weekend with Claude or Cursor?
Mega-platforms are eating specialized tools. Companies like ClickUp, Notion, and Microsoft Teams are systematically absorbing entire categories of specialized software. These platforms combine task management, document collaboration, chat, goals, and dashboards into unified solutions, eliminating the need for separate apps for project management, communication, and documentation.
What used to require 15 different SaaS subscriptions now comes bundled as features in a single platform – often at 80% of what you need, which covers 90% of use cases.
Economic pressure is forcing accountability. When money was free, enterprises could afford to be sloppy with software spend. Organizations handle an average of 247 SaaS renewals per year—roughly one per business day (Zylo, 2025).
Now every CFO is asking the same question: “Show me the revenue impact.” And for most SaaS tools, that’s a conversation companies desperately want to avoid.
The layoff multiplier effect. At least 95,000 workers at U.S.-based tech companies were laid off in mass job cuts in 2024 (Crunchbase, 2025). When companies cut headcount, they simultaneously cut seats and subscriptions.
A 20% workforce reduction often triggers a 30-40% SaaS spend reduction as companies discover they can operate with fewer tools and fewer users.
The Subscription Model Has Hit Its Limit
Organizations now use an average of 112 SaaS applications, up from 16 in 2017 (Backlinko, 2025), with enterprise firms averaging 473 applications and mid-market companies using 335 (Spendesk, 2024).
We’ve subscribed enterprises to death. The cognitive load alone is crushing productivity. The average knowledge worker toggles between different apps and websites 1,200 times daily, accumulating a shocking four hours of lost productivity weekly (Harvard Business Review via ClickUp, 2025).
Enterprise buyers are exhausted by subscription fatigue, and they’re starting to push back hard. Everything we’ve been taught about SaaS growth is becoming obsolete:
“Land and expand” doesn’t work when enterprises are contracting, not expanding. For the first time ever, SaaS growth stalled in 2024 (BetterCloud, 2024), with businesses realizing the value of software that already exists in their tech stack that offers multiple functionalities, eliminating the need for redundant tools.
“Sticky” software isn’t sticky anymore when AI can replicate core functionality. That integration moat you spent three years building? Your customer’s engineering team just recreated it in a couple of sprints using modern APIs and AI assistance.
Usage metrics don’t translate to value anymore. “We have great engagement!” means nothing when your customer can’t connect that engagement to business outcomes. Enterprise buyers are done paying for activity; they want results.
The churn reality: Churn rates in B2B SaaS have steadily increased over the years, peaking at 4.4% in 2023 before dropping to 4.2% in 2024, with the average churn rate across over 1,000 subscription-based businesses at 4.2% (UserMotion, 2024).
But these numbers mask the real crisis – churn jumps to 25% when the decision-maker leaves the company (UserMotion, 2024), and with ongoing layoffs, decision-makers are leaving constantly.
What Enterprise Buyers Actually Want
I spend a lot of time talking to enterprise decision-makers, and the conversation has changed. They’re not asking about features, integrations, or even price. They’re asking about outcomes.
“Can you guarantee results?”
“Will you share the risk?”
“What happens if this doesn’t work?”
Companies are done managing disconnected tools. They want outcomes—and accountability. That means shared risk, shared reward, and real partnership.
Most SaaS companies have no framework for answering these questions because the traditional subscription model is built on transferring risk to the customer, not sharing it.
The enterprises that are thriving right now are the ones working with vendors who can answer “yes” to those questions. They’re partnering with companies that have skin in the game, not just software to license.
The Performance-Based Future
Here’s what I see coming: a shift from subscription software to performance partnerships.
The companies that survive the next five years won’t be the ones with the best features or the stickiest platforms. They’ll be the ones that can directly tie their technology to measurable business outcomes and price accordingly.
Instead of: “Pay us $50 per user per month for access to our platform.” The future: “We’ll take a percentage of the new revenue we help you generate.”
Instead of: “Here’s our tool—good luck making it work for your business.” The future: “We’re your partner in achieving specific outcomes, and we only win when you win.”
Companies like Paddle are enabling flexible billing infrastructures that support usage-based and dynamic pricing models. Platforms like Outreach are using AI to connect sales activity to measurable revenue outcomes, while Gainsight has positioned customer success as a quantifiable growth driver.
These companies are building the infrastructure and frameworks that make performance-based partnerships possible—even if they still operate on traditional subscription models today.
This isn’t possible for every type of software, but for the companies that can make this transition, it’s a massive competitive advantage.
When you can offer results-based pricing, traditional subscription competitors become irrelevant overnight.
Why Most SaaS Companies Are Stuck
The truth is that most SaaS companies built themselves into a corner:
They’re optimized for usage, not outcomes. Their entire technology stack is built to track seats, sessions, and features used—not business results generated.
They’re funded by metrics that don’t translate. In 2024, 62% of all investment into enterprise software went to AI infrastructure, not applications (Sapphire Ventures, 2025). Try explaining performance-based revenue to investors who think in terms of ARR, MRR, and subscription multiples.
They don’t have direct value correlation. Most enterprise software provides indirect value—tools and platforms that might contribute to results but can’t definitively claim credit for them.
They’re locked into existing contracts and pricing structures. Even if they wanted to shift, they have thousands of existing customers paying traditional subscription fees.
The mega-platform threat is real. Leading consolidation platforms integrate with 1,000+ other work tools, centralizing data across the tech stack into single secure workspaces. When one platform can replace 10-15 specialized tools, those specialized vendors face an existential crisis.
The AI Acceleration
AI agents are moving from handling specific tasks to doing entire jobs, with Foundation Capital estimating a $4.6 trillion market opportunity in replacing human work (Marketing AI Institute, 2024).
This isn’t just about productivity – it’s about reshaping what software needs to do.
Small companies and enterprises will fuel the growth of composable software, and generative AI-centric “noApps” will leverage GenAI action modules to manage data flow, APIs, architecture optimization, security, access, and business requirement documentation (HFS Research, 2024).
Companies are building exactly what they need for their specific use cases, something traditional SaaS vendors struggle with immensely.
The Strategic Implications
If you’re building or investing in enterprise software, this shift changes everything:
For SaaS companies: Start asking yourself if your product creates direct, measurable value that you can price against.
If your product doesn’t create measurable value, you’re vulnerable to AI, consolidation, and churn
For enterprises: Start partnering with vendors who can share risk and guarantee outcomes. The companies winning in this environment are the ones with performance-based partnerships, not subscription relationships.
For investors: The next generation of enterprise software winners won’t look like traditional SaaS companies. They’ll have different unit economics, different growth patterns, and different competitive moats.
The 12-18 Month Window
Here’s the thing about paradigm shifts: they create narrow windows of opportunity for first movers. The market is shifting fast—but most vendors are stuck.
Enterprise buyers are tired of paying for tools that don’t deliver. They want outcomes, not logins—but very few vendors can offer that today.
AI makes it possible to build custom, results-driven solutions faster than ever. But the real challenge is turning that capability into a business model—one where value is tied to performance, not just product access.
At the same time, buyers are consolidating. They’re investing more in fewer, high-impact solutions rather than managing dozens of specialized tools (Okoone, 2025).
That creates a narrow window for first movers to define what the next generation of SaaS looks like.
The companies that crack this code in the next 12–18 months will gain a lasting competitive edge—before outcome-based SaaS becomes the new default.
After that, it becomes table stakes.
What This Means for You
If you’re in enterprise software and this resonates, here are the strategic questions you should be asking:
Can you directly measure the business outcomes your software creates?
Would you be willing to only get paid when your customers get results?
What would your business look like if customer success became the only path to revenue growth?
Can you become the consolidated platform that replaces 5-10 tools, or will you be replaced by one?
The answers to these questions will determine whether you’re building the future of enterprise software or just another subscription service that AI will eventually replace.
The Great SaaS Reckoning isn’t coming—it’s here. The question is whether you’re going to lead the transformation or get swept away by it.
The companies that thrive in the next decade won’t be the ones with the best software. They’ll be the ones with the best partnerships. And partnerships are built on shared risk, shared reward, and shared success.
If you’re building this future—or want help getting there—reach out.
RETHINKING YOUR SaaS STRATEGY?
If you’re an executive at a mortgage or real estate company and you’re tired of:
- Tools that don’t deliver
- Disconnected platforms
- ROI that’s impossible to prove
Let’s talk.
We’re helping companies explore a performance-based model that aligns software value with real business outcomes—shared risk, shared reward.
👉 Grab time directly with me here: savvycal.com/ap
Thanks for reading.
Andrew Pawlak, Co-Founder & CEO at rebel iQ
