Why AI is important now:
Here’s the thing: we were dependent on manual work. Graphic designers were busy making complex designs step by step using multiple tools. Social media marketers were editing reels with less intuitive ideas. Companies were hustling in the traditional software landscape. Founders were selling minor solutions to customers and gaining huge profits. Software as a service (SaaS) was everywhere. Then we faced the huge shift in the B2B SaaS business model.
The AI has messed up the SaaS space. There is a significant wave of layoffs in companies. Even the biggest companies are facing threats now. According to Ron Williams. “There is a high expectation of a potential 12-15 % reduction in most SaaS software seats by 2026“.
This isn’t just about developing the pure SaaS business. Most founders are confused about adopting AI due to the uncertainty of the success or failure route. They consider which features can add more value to current and new customers. In addition to AI features, a big chunk of the budget will be scheduled with a lot of iterations. Then we have to consider ROI and business profitability.
There could be a hybrid approach by combining the subscription-based model with AI. The product we can sell with a powerful solution of AI. The integration of AI into the existing companies’ products offers a lot. One can see this as an opportunity or a challenge. We cannot overlook this. It will be interesting to see what the future holds for everybody over the next couple of years.
To understand this, we have to rewind,
Typewriters Vs Word Processors:
Back in the 1980s, typewriter machines were everywhere in the offices. These machines were crucial items for any company’s documentation. As the technology evolved, companies purchased personal computers for employees. This made a huge dent in the sales of the typewriter technology. The PCs had the application of word processors, through which it was easy to write, re-edit, design and print. To challenge the PC’s technology and the selling parties. Typewriter companies added screen features to their typewriters to stay in the league. Even by adding these features, the typewriter companies swapped away quickly.
The main reason for the downfall of typewriting machinery was core technology. The core technology was based on the hammering with a mechanical system. On the other hand, PCs had the additional software and upgrade options.
Traditional SaaS vs AI:
Now, think of the scenario of AI and the SaaS business model. if you are in this boat, then check for your core options or core integrations with AI to excel.
- Traditional SaaS: charging around $3500 annually per seat across the organisations
- AI tools: can replace entire job functions for <$100/month
Hence, more AI tools are damaging the high-priced seat-based models. According to the Product hunt, in the last 8 months from January to August 2025. A total of 1903 core AI products are uploaded, and 415 SaaS products are uploaded.
AI Integrations in the SaaS business model:
let’s take Canva as an instance. The team added the magic tool, which is an AI image generator using text. According to Sacra estimation, Canva hit $2.55 billion of ARR with 44% growth near Sept 2024. In 2023, the ARR was around $2 billion. So, with the acquisition of the foundational model company Leonardo AI. Canva is reinventing itself as an AI company with the 120 AI plugins in the app store.
But it doesn’t stop there; Adobe has also launched an AI product. Firefly that enables creators to generate videos and images from text. we can incorporate them into designs. According to Adobe’s expected ARR guidance in 2025, ARR is expected to be around $23.5-$23.6 billion.
And there is a big one, Roise, $1M ARR in just 8 months. A founder, Jordan Gal, created Roise, 24/7 AI voice services, after his failed product Rally. They developed Roise using the pivoting approach and look for the customers’ feedback. They added the most important functionalities, which added value to the customer. In this way, they hit the monthly revenue of around $83k. The journey of the Roise tells us the importance of AI and solutions towards problems.
And this is where the story flips. We know AI is booming, and every day, hundreds of AI products are launching. But only a few are reaching the hard $1M ARR. Even the teams are spending too much on link building, SEO, and digital marketing. Nothing is working out.
Conclusion:
This isn’t just about SaaS vs AI anymore. If we look from the start, we are working on something which adds value to the audience or customers. Small companies are now using AI tools to scale their business. They are focusing on giving a better experience to the customers. Similarly, big companies are making new tools. They are using their great resources and customers.
At this point, we are all still giving the solutions in the form of products and services to the customers. If your MVP is not designed to mitigate the primary issues of the customers. Then whatever AI you used, you’ll get doomed. Your customer will shift to another product or service.
FAQs
Q1. What is the SaaS business model?
The SaaS business model is a per-seat subscription-based model
Q2. How to start a SaaS startup?
You can start your SaaS using no-code platforms or coding platforms
Q3. What is the future of SaaS vs AI?
In the near future, you’ll see an overlapping situation
Q4. Is marketing necessary with AI?
Yes, marketing plays a crucial role in finding the right customers