The Great SaaS Swindle
Why Does Software Licensing So Often Feel Like a Game You’re Meant to Lose?
Enterprise software has always been a complex beast, but the shift to Software-as-a-Service was meant to change that. SaaS promised simplicity, predictability, and transparency. It was pitched as the antidote to the Byzantine world of enterprise licensing. That was a world full of core fees, module fees, usage fees, and the ever-present fine print that only three people in the world could decode with confidence.
The hope was that SaaS would make things cleaner. More honest. Trust-based. And to be fair, at the SME level, it often has. Pricing is visible. Sign-ups are self-service. The terms are usually understandable without needing legal counsel on speed dial. But once you move into Enterprise SaaS (the "Call us for a quote" tier), the transparency erodes. I’m not sure some salespeople understand it.
Just like in banking, the part we think we understand (home loans, everyday accounts) isn’t where the complexity or the margin really lives in the finance sector. That’s not where the baks make their money. The real money is made in the corporate banking structures most people never see: the negotiated terms, the bundled services, the buried definitions.
And in that tech world equivalent, we haven’t just failed to simplify things. We’ve arrived at a new low.
Licensing in the age of SaaS, especially the increasingly common strain of what can only be called “faux SaaS”, has, in practice, become an unedifying game of strategic obfuscation. In my conversations with clients, it’s clear that despite all the talk of transparency and simplicity, many are no closer to understanding what they’re actually paying for. Instead, the language used to explain pricing has become more elusive. It is often layered with vague definitions, shifting entitlements, and just enough abstraction to make confident decision-making unnecessarily difficult.
In an era where trust is supposedly the foundation of enterprise relationships, the contracts that underpin them often tell a different story. It is usually one that appears to be built on confusion by design. That is not to say confusion is malacious.
Sometimes it stems not from a single bad actor, but from the fragmented nature of how these deals are structured. A customer might speak with an account manager one day, a solutions architect the next, a pricing lead later, and finally legal or procurement. Each may have a slightly different interpretations of the deal. What starts as a seemingly straightforward engagement quickly becomes a maze of handoffs, assumptions, and subtle contradictions. The result is the same though. A contract that lacks clarity, and a customer left wondering what they’ve actually agreed to.
At the center of this is the quiet emergence of faux SaaS models. You know. That software that claims the flexibility and elegance of cloud delivery, but is still anchored in the licensing logic of on-premise software.
These models often charge separately for software usage, hosting infrastructure, customer support, and storage, wrapping each in different terminology and pricing mechanisms. The vendor might technically deliver the application via the cloud, but they haven’t structurally changed how they profit from it. Instead, they’ve layered the language, masked the margins, and preserved their leverage.
The shift to this model is not accidental. It is, in many cases, a deliberate attempt to retain legacy commercial advantages under the guise of innovation. Customers are sold on agility and modernity, only to find themselves in long-term contracts that are just as rigid, and often more costly, than the systems they were meant to replace. The sticker price may say SaaS, but the total cost of ownership tells a very different tale.
Nowhere is this more apparent than in how vendors describe storage, compute, or usage. A customer might be told that a specific volume of usable storage is included, but what that actually means is obfuscated behind vague operational definitions.
It may include replication, backups, metadata, and some vaguely defined “management overhead.” The actual usable capacity? Often significantly less than what’s listed. And when you ask for clarity, the answer is usually a masterclass in avoidance. Responses full of performance analogies, references to hyperscaler best practices, or vague commitments to future improvements.
But the real risk is that those unclear definitions aren’t just theoretical. They’re often back chargeable. If your usage creeps over an ill-defined threshold, you may not find out until the invoice arrives. Or worse, during a compliance review. And by then, the only response available is to pay or escalate without the assurity of an on-premises instance.
Responses can be peppered with technical justifications, analogies to hyperscaler pricing tiers, and repeated insistence that you’re “paying for performance, not capacity.”
But let’s be honest, the customer is only partly paying for performance. They’re also paying for trust. And that trust is eroded every time the licensing model requires a decoder ring to understand.
What makes this worse is how often audit rights are weaponised as part of the strategy. While true SaaS environments should make licensing compliance easier, many vendors continue to embed ambiguous licensing metrics that only they can interpret. This creates fertile ground for future compliance audits, which can be triggered at the vendor’s discretion and often serve as the opening move in a broader upsell campaign.
The result is that organisations feel trapped in relationships where every misstep, every configuration change, every effort to innovate could result in a licensing dispute.
And yet, in public, these same vendors speak in the language of partnership. They describe their clients as “strategic allies,” they speak of co-innovation and trust. Their executive keynotes preach values like transparency, empowerment, and customer-centricity, while their contracts tell the opposite story. It’s not just ironic. It’s deeply cynical. I find it infuriating.
I don’t think this is a problem of bad actors. It’s a systemic failure rooted in incentives. The market rewards growth, not clarity. It values lock-in over portability, stickiness over service. So when a vendor can increase their annual recurring revenue by structuring their licenses just ambiguously enough to prevent comparison shopping, but not so ambiguously as to trigger backlash, they do. Because everyone else is doing it too. And in that race, opacity becomes a competitive weapon.
For customers, this creates an untenable environment. The burden of clarity now falls squarely on the buyer, who must reverse-engineer pricing models, challenge language, and anticipate how licensing definitions will evolve over time. Procurement teams must hire licensing specialists, map hypothetical usage scenarios, and build shadow pricing models just to participate in the conversation.
In the worst cases, customers are punished for assuming good intent. They trust that the pricing reflects reasonable assumptions only to find that they’re locked into inflexible agreements, paying premiums for support services they didn’t realise were optional, or facing backcharges based on metrics they didn’t even know were being tracked.
The psychological toll of this environment shouldn’t be underestimated. It erodes the foundations of partnership and injects skepticism into every engagement. It turns renewal cycles into battlegrounds. And it shifts focus away from what software is meant to do (you know, support the business), and towards what the contract allows it to do.
The irony is that we’re having this debate in the middle of the most dynamic period of enterprise innovation in decades. AI, automation, integration, and orchestration platforms are reshaping the future of work.
But while front-end capabilities continue to surge ahead, fueled by AI, automation, and orchestration, the commercial structures behind them remain stubbornly anchored in the past.
Too often, they actively discourage experimentation, making it financially risky to configure or scale software outside the narrow confines of the license agreement. Part of the problem is that many ISVs are building solutions atop increasingly complex service delivery architectures layered with third-party infrastructure, managed services, and abstracted PaaS components.
While the technology stack may be cutting-edge, the costing model often isn’t. Good old unit-based pricing that is simple, scalable, and predictable has a long way to go in the SaaS world. And when vendors themselves struggle to explain where the charges come from, it’s no wonder customers are left guessing.
At the heart of every enterprise technology relationship is a simple but fragile premise: mutual trust. But today’s licensing structures betray that trust. Vendors often expect unwavering loyalty, long-term commitments, and prompt payment. Yet at the same time withhold clarity, flexibility, and honesty in return. That’s not partnership. That’s asymmetry.
If enterprise technology is to be the enabler of digital reinvention, the licensing model must evolve alongside it. Not just in surface language, but in structure. That means abandoning the culture of obfuscation and replacing it with clarity by default. It means pricing that reflects value, not vendor advantage. And it means building contracts that trust the customer as much as the vendor asks to be trusted.
To fulfill its promise, SaaS licensing (and PaaS will fall fowl of this too) must be restructured to be transparent by design. Today it still operates like a hedge against the buyer, not a platform for mutual growth. Real partnership means a clear understanding of shared risk, shared truth, and shared opportunity. And until licensing reflects that, “SaaS” will remain a service in name only, and the doubt it breeds in our executive ranks will be justified.
PostScript
I've created a 99-point SaaS Licensing Clarity Checklist available to paid subscribers. I’ll push that out in the next few days. It's not a flashy tool, just a practical, plain-language checklist designed to help you cut through the fog and assess where a vendor really stands.
If you’re already a paid subscriber (just $50/year), you’ve got full access. Not just to this checklist, but to all future subscriber-only resources, insights, and procurement support content.
The checklist gives you a quick feel for where things land, from: “Transparent and trustworthy. Proceed with confidence” to “There’s some serious obfuscation here. Negotiate hard or reconsider.”
It’s designed for anyone who’s ever sat in a renewal meeting or procurement call and quietly thought: I feel a bit weird, are we getting the full story here?
Let me end by saying, I’m not anti-software vendor. I love business software. I work closely with many of the world’s best. And many, may I say, do excellent work. And many build remarkable platforms. What I am critical of is the shadowy, ambiguity-by-design approach to licensing and commercial clarity that has crept into far too many enterprise models and deals and contracts.
So I have to agree with the clients. I think we can do a lot better.