Question 1

Is SaaS or AI cheaper to build?

Accepted Answer

It depends on your user volume and time horizon. SaaS typically has higher upfront infrastructure costs that decrease per user as you scale. Pure AI has lower initial build costs but token and API costs scale linearly with every request. Use a cost analyser to model both scenarios with your own numbers.

Question 2

What is a hybrid architecture?

Accepted Answer

A hybrid architecture combines traditional SaaS infrastructure with AI capabilities, purpose-built from the start. It uses conventional software for predictable workloads and AI for complex, variable tasks. This approach balances SaaS's cost efficiency at scale with AI's flexibility for complex features.

Question 3

How do you calculate break-even pricing for a SaaS product?

Accepted Answer

Break-even pricing is calculated by dividing your total costs (infrastructure, build, and running costs) by the number of users over your chosen time horizon. SaaS break-even pricing starts high when user numbers are low and decreases as the user base grows, because infrastructure costs are spread across more users.

SaaS vs AI vs Hybrid — Lifetime Cost Analyser