Some founders think AI will unlock massive value and create great margins and moats for the big winners. Others think the software is too expensive for most companies and that new efficiencies will decrease SaaS prices.
Will AI increase prices and margins for software companies—or reduce costs and prices?
Will AI be inflationary or deflationary in the software business?
Shalin Jain is the founder and CEO of HappyFox, a successful bootstrapped company that provides modern help desk management software for customer service, support, and IT management organizations.
Shalin and his small team in India built many successful products from 2000 to 2010, then focused on HappyFox and moved to the US in 2011.
HappyFox is a mid-market product that sells across industries and departments with an efficient product-led growth (PLG) approach.
The product has matured with successful add-on products for live chat, AI support, business intelligence, and workflows.
The company has over 2200 customers and $20 million in revenue, but only 110 employees.
Shalin plans to keep growing and leverage modern AI technology to become a much bigger company based on the disciplined product culture they have created.
He described his vision on my podcast this week:
“I think software and its pricing need to be deflationary, just like hardware, where memory, hardware, and server prices have all been deflationary.
“But we are now going through a phase where software is actually getting more and more expensive. With the advent of AI and automation, software will become cheaper and more usage-driven.
“So the best survivors in that phase would be the efficiently run companies that have not bloated themselves by charging more today to have more employees and spend more on ads.
“I believe software needs to get cheaper because it’s getting cheaper to run software every day; it’s getting cheaper to outsource to AI and build stuff with the help of AI as well. So software cost should not go up; it should go down.”
He’s thinking about the likely pricing trends in the future with AI, but he’s also influencing the trend by moving his company in that direction.
Trends in the software business are made up of how individual leaders like Shalin are guiding their businesses.
There is too much spending bloat and inefficiency in big software companies, partly driven by big VC funding with a revenue growth focus.
Practical SaaS founders with efficient approaches will help drive the future of the software business.
Check out this amazing interview with Shalin Jain on the Practical Founders Podcast.
