The Post-Margin Economy: When SaaS Eats Services and AI Eats SaaS

For decades, software was sold as leverage: automate tasks, reduce labor costs, scale operations. But beneath the clean promise of SaaS lies an uncomfortable trajectory, one that bends toward zero. Zero marginal cost. Zero human input. Zero room for traditional business models.

This is the dawn of the post-margin economy, a phase where the very structure of economic activity is being redefined by recursive AI, self-optimizing systems, and consumption that requires no incremental labor.

In this world, SaaS doesn’t just replace services   it eventually becomes substrate, and then is itself consumed by autonomous intelligence.

SaaS as Compression: The First Phase

The SaaS model was always a form of economic compression. Instead of hiring consultants or system integrators, businesses rent functionality:

• CRM instead of sales staff

• Accounting automation instead of bookkeepers

• No-code tools instead of full dev teams

Each new wave of SaaS collapses a layer of human labor into an API endpoint. This model created massive venture capital opportunities   but it also created fragility. Why?

Because when the marginal cost of delivery approaches zero, competitive differentiation disappears. The race becomes: who can give it away fastest?

The AI Feedback Loop: SaaS Becomes a Target

Enter AI. Once layered atop SaaS, AI doesn’t just enhance features   it begins to absorb functionality:

• Generative AI replaces email marketing platforms

• LLMs handle customer support more efficiently than human-trained flows

• AI agents write SQL, design dashboards, perform compliance reviews

This marks a second-order compression: AI eating the SaaS that once ate services.

Traditional SaaS pricing models   per seat, per user, per month   begin to break down. AI doesn’t need a seat. It needs access.

Value Redefined: From Margin to Motion

In the post-margin world, value is no longer defined by cost-saving or human replacement. It is defined by velocity, adaptability, and system motion.

New value principles emerge:

• Latency reduction: How quickly can insights be acted upon?

• Elasticity: How fast can systems reshape to new use cases?

• Recursive leverage: How many layers of automation can be stacked without friction?

The winners are not the biggest platforms. They are the most fluid and the most able to reconfigure their intelligence and infrastructure at machine speed.

Strategic Responses in a Zero-Margin World

Survival requires rethinking product and pricing entirely:

• Value-aligned billing: Usage-based, outcome-based, or hybrid pricing

• Ecosystem play: APIs and agent platforms become marketplaces

• Verticalization: Owning a full workflow or stack allows for sustained margin capture

• Data gravity: Control of proprietary or strategic datasets becomes the ultimate differentiator

In many ways, strategy returns to first principles: own the rail, not the train. Own the infrastructure of intelligence, not the interface.

Conclusion: Beyond Software   Toward Intelligence Infrastructure

We are no longer selling tools. We are enabling emergent economic behavior.

As AI continues to consume layers of human and software labor, the opportunity is not in protecting the past, but in designing the architecture of this post-margin future.

Because the next economy won’t be built on billing models. It will be built on flows   of intelligence, of energy, of capital   frictionless, adaptive, and sovereign.

About the Author
John David Kaweske is a Senior Industry Consultant with GLG Consulting, focused on AI strategy, SaaS compression economics, and operational architecture in post-scarcity markets. He advises founders and institutions navigating the collapse of legacy cost structures and the rise of autonomous intelligence.