"spending another $10K to make them even 10% more productive is a bargain."
$200K is not a good benchmark for what companies spend.
Median salary in the US is about $50K [1]
Average overhead per/employee is 18-26% [2]
So a $10K spend for 10% increase in productivity on someone earning about $60K ... is not a bargain.
But there's a problem with this, because SaaS can be
1) Individual productivity
2) Operational productivity
3) Product spending (i.e. like GMaps integration as a feature in your product)
So 1/2 and 3 represent a very different type of calculus to the point wherein that kind of spending should definitely fall into different buckets for accounting.
The parent of the parent comment clearly referenced engineering with his “If you’re already spending >$200k/year per employee then a productivity increase of 10%...”
> And the productivity increase using certain SaaS tools is not 10%, it can be an order of magnitude in certain instances
well... my productivity isn't always increased, regardless of what tools someone wants to buy. and... sometimes it's a drain on my productivity, but using tool ABC increases someone else's productivity (at the expense of mine). How do you account for the productivity increase of -5% for 30% of your employees, but 20% for the other 70%?
- Process mismatch / impedance : The software is unlikely to be able to do exactly what you want how you want. The human likely is able
- Vendor lock in: If the SaaS decides to change how it works, or the prices you now have a leaving cost
- Expenditure on someone else's competitive advantage: If you use tool X likely there is no reason your competitor cannot. You both use it, no net advantage gained over competitor. If you develop the expertise in house (likely the harder thing) then you have an advantage over your competitor. Of course this has to be balanced with what will be your competitive advantage and what will not
- Harder to manipulate: You cannot fire 1 of your SaaS and tell the other 2 to do the work
$200K is not a good benchmark for what companies spend.
Median salary in the US is about $50K [1]
Average overhead per/employee is 18-26% [2]
So a $10K spend for 10% increase in productivity on someone earning about $60K ... is not a bargain.
But there's a problem with this, because SaaS can be
1) Individual productivity 2) Operational productivity 3) Product spending (i.e. like GMaps integration as a feature in your product)
So 1/2 and 3 represent a very different type of calculus to the point wherein that kind of spending should definitely fall into different buckets for accounting.
[1] https://www.thebalancecareers.com/average-salary-information...
[2] https://beebole.com/blog/how-to-calculate-the-real-cost-of-a...