SaaS Shrinkflation: How Usage Limits Are Quietly Changing
Plus: Sapiens for SaaS.
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SaaS Shrinkflation 🔬
One pattern I’ve seen across the SaaS landscape over the last few weeks is a general tightening of usage limits, which reminds me of a fun little term called Shrinkflation.
If you’re unfamiliar with Shrinkflation, it’s when a company reduces the size of a product while keeping prices the same. It’s a common strategy in the snack aisle at your local grocery store. Ever feel like your favorite bag of chips is getting taken over by air? That’s Shrinkflation.
In SaaS, it’s when you keep the price of a plan the same, but reduce the usage limit. The examples below from Rivery and ConvertKit highlight what I mean:
In both cases, these are free plans, and it’s hard to complain too much when the price is still zero — but the sentiment remains.
PS — The screenshots above are from my PricingSaaS dashboard. You can get started for free and get instant price change alerts for 5 companies.
Sapiens for SaaS 🦍
Over the past few weeks, I’ve been working on a long-form piece about PLG and Sales — a hot topic on my social feed. I’m not going to get into the debate here (TLDR, I think it totally depends on your resources, ambitions, and often believe the best approach is both), but writing the piece led me down a rabbit-hole of SaaS history.
At it’s simplest, the PLG vs SLG debate is about removing friction, which has been a constant theme in SaaS over the past three decades. Examples include:
Cloud Computing, which enabled software to be hosted and maintained in the cloud, shifting responsibility from the customer to the vendor.
Subscription Model, which shifted software costs from a one-time capital expenditure with ongoing maintenance fees, to a smaller, ongoing operating expense. This made buying software easier.
Videoconferencing, which enabled online demos, which, along with the lower upfront costs made customers more comfortable purchasing SaaS remotely.
Usage based pricing, which let made cloud computing way more affordable by allowing customers to scale AWS to their exact needs.
Consumerization of IT, where consumer apps like Uber raised expectations for digital experiences across the board. At the same time, end-users were frustrated with legacy SaaS apps, and started looking for new tools to make their job easier.
PLG, which arose from a combination of end-users looking for apps with a better UX, and a flood of SaaS startups targeting end users with self-service products. This bottoms-up, PLG model remains extremely popular today.
All of these steps have something in common -- reducing friction.
I expect Generative AI to continue this trend in two ways:
Making it easier for small teams to build great products.
Powering a wave of outcome-based products that do the job for you.
If you have thoughts, I’d love to hear them. Fire away in the comments.
Links 🔗
While researching the history of SaaS, Inside Sales, and PLG, I came across a couple gems from two of my favorite writers in the business.
PLG and Sales in 2023 by Kyle Poyar (sign up for his newsletter)
You should know by now that I am a big fan of Kyle, and this is one of my favorite pieces he’s written. So much gold in here about how to successfully layer sales over a PLG motion, which can be really hard. He also created a 2x2 that drastically simplifies account prioritization for AEs at PLG companies. It’s so good I shared it with a buddy in SaaS sales, but of course, he follows Kyle so he’d already seen it.
Consumerization of The Enterprise by David Skok
While writing about SaaS, PLG, and Sales, I had this recurring thought that it would be awesome if someone wrote “Sapiens for Software” — clear writing about the technological trends that have taken us from physical software installations to PLG.
I think David Skok is the person to write that book. This post breaks down the technological and cultural forces that led to the explosion of PLG, in clear, simple language that’s easy to understand for anyone.
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"sapiens for SaaS" is such a good idea. Pumped to see the full breakdown.