SaaS Predictions for 2023: Pricing, AI & Customer-Centricity

Updated on by Hayley Brown

SaaS continues to scale and evolve with cloud tech now ballooning in response to the demands of modern, digital work. It has been reported that 80% of businesses use at least one SaaS application. This means organisations can operate offsite and rapidly grow with minimal overhead. 

This continued SaaS momentum has expanded into other streams like PaaS, IaaS and embedded iPaaS

With all this in mind, let’s take a look at what trends are coming up in SaaS for 2023.

Cyclr’s SaaS Predictions

Value and Consumption-Based Pricing

The SaaS market is having to respond to the ever-evolving economic situation, as well as a  shift in power from SaaS providers to SaaS buyers. Why has this shift occurred? Well, SaaS buyers are watching their spending and want to maximise the most value from a product. Therefore, prior to even contacting a SaaS sales team they conduct in-depth research, evaluation and comparison before deciding to purchase a SaaS solution. 

Initially, the SaaS industry responded with cost savings and flexible packages in the form of the tiered pricing model. This model allows customers to choose a SaaS subscription based on their needs. However, it can result in apprehension from customers due to lengthy contractual agreements and not utilising all features in a package. 

As a result, SaaS applications have responded with value and consumption-based pricing models. These customer-centric pricing models are much more customisable and expand entry points and are better price-value aligned. This means the money customers are spending is directly tied to the value they receive by using the product.

SaaS Decoupling/Unbundling 

SaaS products are usually delivered in a bundled form and users get a certain amount of features depending on what pricing tier they have chosen. Typically more features included equals a higher price. 

Recently, SaaS providers have noticed that the bundled system presents itself as a challenge to customers who would rather select which features they find the most valuable. Therefore, if SaaS companies allow the mixing and matching of features and unbundling SaaS packages it can increase custom coupling. In other words, SaaS businesses will be able to retain and attract new customers with personalised value-based features and pricing. 

AI and ML is a Standardise SaaS Feature

AI and Machine Learning (ML) are becoming increasingly popular within SaaS solutions and even becoming standardised features. For instance, organisations can leverage AI and ML innovation to enhance their product and marketing customisation. At the same time, they can improve their understanding of their end-users and target audience needs through data-driven analysis. 

As a result, AI and ML are empowering SaaS solutions to self-improve, resulting in better operational efficiency and intelligence. 

SaaS Predictions 2023 image features a friendly AI robot

AI will not only become a standardise SaaS product feature but it will continually rise in use for content creation. Google has made strides to reduce the number of AI-written articles in their search results, the technology keeps evolving. With the latest iteration being Chat GPT (gaining a million users in its first 5 days), it offers a seismic shift in how content is created and an even bigger shift in how people interact with computers to gather information.

API-led for more Agility and Digital Transformation

The API economy and being API-led with SaaS will continue to be at the forefront of innovations and integrating digital assets into new products and services. As well as add agility to SaaS applications.

APIs are now a critical aspect of a business’s digital transformation strategy as a result of increased API usage. This has propelled SaaS organisations to not only continue their digital transformation efforts but accelerate them.

It is therefore important to make APIs accessible and give stakeholders access to core business capabilities. This can result in a quicker time to market and reduce costs. It has become an increasingly common trend for APIs to be designed consumer-centric, which means tailoring their design to customer use cases, and being consistent and reusable to ensure a good customer experience. 

As a result, APIs will still dominate and influence SaaS, drive digital transformation and will continue to add diversity to integrated SaaS solutions. 

SaaS Predictions 2023 image features 4 squares with an icon for REST API, SOAP API, GraphQL and Webhook

Customer-Centricity and Customer Retention for Growth 

Due to current economic conditions, SaaS businesses are shifting their focus from attracting new customers to retaining and strengthening their existing ones. 

This could look like improving customer experience with personalised messaging, and educational content like webinars and tutorials to maximise the value of the product. As well as keeping existing customers up to date with the latest features and news. Internally a SaaS can utilise its customer success teams to analyse an account and spot where a customer can upgrade to generate more revenue.

Ultimately, growing lifetime value (LTV) for customers.

SaaS for Verticals will become Dominant

For years SaaS applications have been rather generalised, until recently. SaaS applications have started or should I say continue to grow around SaaS verticals. SaaS verticals are a type of software as a service created for specific industries, common sectors include retail, banking, insurance, healthcare and the automotive industry. 

When a SaaS application becomes more industry-vertical specific it enables customers to adopt a system designed for their niche and needs. As a result, they will get more value from the product as features will be more relevant and they then won’t be paying for what they aren’t using on a general SaaS platform. 

SaaS Security is Driving Cloud Security  

Security is always a concern and continually evolving with new technologies. It is a major factor of consideration when contemplating a new SaaS product. For instance, in 2020 a report from Better Cloud noted that 43% of organisations cared more about security than other SaaS app features. This number has more than likely increased and means security is a key motivation for users to use SaaS apps to increase their security and keep their data safe. 

SaaS Predictions for 2023 image features SaaS Security

The increased need for enhanced security is a result of how enterprises have gradually become more vulnerable to threats due to the large quantities of unmanaged data. 

SaaS security has become a key objective and is now included in cloud security strategies, programmes and team focus. Why? Because SaaS providers can beat their competitors and stand out in the market by providing a greater security level for end-users. 

iPaaS usage for Digital Service Providers will increase

An iPaaS is a powerful tool in a company’s wheelhouse. This is because it provides a suite of cloud services that enable the development, execution and governance of integration workflows. It does this by connecting any combination of on-premise and cloud-based processes, services, apps and data within individuals or across multiple organizations.

Recently, integration has seen a boost in demand across many industries, especially in the digital service providers and eCommerce industries. This is because they have a strong need for real-time understanding and monitoring of how their systems are performing. Therefore, an iPaaS can not only provide additional value to, for instance, a Digital Service Providers clients but also an additional revenue stream for the agency. 

As a result, the use of iPaaS will continue to grow exponentially, The Insight Partners forecast the market to reach US$8.8 million by 2028 and grow 21% from 2021 to 2028,  especially increasing in usage across the digital service provider industry. 

Concluding our SaaS Predictions

SaaS isn’t going anywhere if anything it’s exponentially growing, Gartner has predicted that in 2023, end-user spending on public cloud services is expected to reach nearly $600 billion. The SaaS market is filling niche gaps, innovating to meet end-users needs and adjusting structures to reflect the economic climate. 

It has become and will continue to be an integral part of a business. 

What have we predicted in the past?

About Author

Avatar for Hayley Brown

Hayley Brown

Joined Cyclr in 2020 after working in marketing teams in the eCommerce and education industries. She graduated from Sussex University and has a keen interest in graphic design and content writing. Follow Hayley on LinkedIn

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