Is saas too expensive?

@Ali: If the only thing that clients want to do is keep books then fine. But that isn't the way I see it. Keeping the books just isn't enough in this day and age and especially now that we've entered a recession where cash is king. Tell me how your book-keeping is going to help with that problem?

Sage Instant is about £100 which is about five to eight months worth of "rent" for a decent online accounting service. There's no need to upgrade ; I know clients who still use v7. Saas is probably more applicable to businesses turning over in the millions who need more powerful software and support but would rather not pay for feature-bloat or the extra head-count to manage and trouble-shoot things on a daily basis.

Clients wanting to do their own books, and who dislike Sage\Quickbooks, I'd turn towards VT Transaction. It's easily the best-kept secret in the UK accounting software market.

@Nigel - no idea. I presume they'd continue to add features at no cost

@Mr WS - and they enjoy continuing to pay for product that is supposed to be enhanced but is lucky to see significant development more than once a year?

Surely the main problem is just that people inherently don't like renting.

So when is FreeagentCentral announcing they are reducing their prices?

Nigel

Speaking for Less Accounting I think there is a perspective that hasn't been mentioned. Our users are small business owners and freelancers who do their own books. We wrote Less Accounting to be easy (perhaps even joyful) to use. That is worth paying for. Even if Intuit gave Quickbooks away for free, people would still pay for Less Accounting because it saves them time and frustration. And that has a value. People pay a premium for Apple's OS X because it is less frustrating, people who know the value of their time and and energy save money by paying for software like OS X or Less Accounting. These people are a growing, virtually untapped market.

I think most SAAS solutions' strength is the multi-tenancy capability. This helps drive down prices as multipel tenants share the cost. I would speculate that lessaccounting's own cost is still quite high and there are not enough paying customers to share the cost.
If someone figures out a way to offer SAAS for free yet still make a profit from it, existing vendors better watch out. Google can afford to give away almost all services for free because its business model is all about page views. The more traffic it drives to its websites, the higher chance someone will look at their ads.
Maybe we should thank Google for training an entire generation of users to expect getting things for free and in return, give up controls of their data and privacy.

Pay per use only works in certain scenarios. For core business processes, it is very hard to come up with a model and make it viable to both users and vendors.

Transparent pay-per-use pricing models such as those employed by Postcode Anywhere and TheWebService.com seem to fit the nicely IMO.

There is a way to do it for free and still make money and it doesn't involve advertising.