Episode #22
The Real Cost of AI in SaaS
Traditional SaaS margins improve as you scale, because costs stay flat while revenue grows, but AI flips that model on its head, with costs that rise right alongside usage instead of flattening out. In this episode, we dig into why AI-based SaaS companies are seeing gross margins as low as 25–45%, compared to the 70–85% typical of traditional SaaS, and why cheaper tokens haven't actually made AI cheaper to run. We look at how companies waste money by defaulting to expensive, high-tier agentic AI for tasks that don't actually need it, and why "ship it and forget it" — the old SaaS playbook — becomes a costly habit once applied to AI features.Finally, we talk about the right way to use AI: as a fast way to prototype and test features with unclear requirements, while staying deliberate — even adversarial — about how much AI stays in the product long-term versus getting replaced with cheaper, traditional logic.
