The Paradox: SaaS Price Increases in an AI-Driven Market
The current SaaS price increases paradox describes how traditional subscription software firms are lifting headline prices even as AI-native competitors expand access or usage at similar or lower monthly costs, forcing users to weigh loyalty against value in an environment where automation should be making software cheaper, not more expensive. At its core, this is a clash between the classic SaaS business model—recurring revenue maximization—and AI’s deflationary pressure on software margins. Squarespace is raising prices on plans by up to 26% at the same moment AI website tools are multiplying, while AI coding tools competition is pushing players like Cursor to double usage limits instead of monthly fees. The result is a fragmented landscape where one group of platforms focuses on satisfying investors and another on locking in user attention.
Squarespace: Charging More While Users Ask for Less AI
Squarespace is the clearest example of the price-first playbook. Users report emails announcing SaaS price increases of up to 26%, depending on plan and payment choice. The annual Basic plan rises from the equivalent of USD 16 (approx. RM73.60) to USD 19 (approx. RM87.40) a month—a 19% jump. The Core plan, the go-to for many creators, climbs from USD 23 (approx. RM105.80) to USD 29 (approx. RM133.40), a 26% hike that adds USD 72 (approx. RM331.20) a year. According to one report, “Time and again, private equity-owned companies in the photo industry have increased prices. It’s a surefire way to boost revenue and appease investors.” Squarespace went private in a USD 7.2 billion (approx. RM33.12 billion) deal, and the pricing reflects that pressure. Photographers and filmmakers are openly asking for alternatives, feeling that everything from tariffs to inflation is raising their costs while AI features they did not request are cited as part of the upgrade. What is definitely true for most users is that they will be paying more at exactly the time they least want another subscription increase.
Cursor: Same Price, More Tokens – A Different Kind of Play
Cursor has chosen the opposite route: keep the monthly bill steady and shift the battleground to usage and model ownership. On July 16, the company announced it had doubled the included usage of its own models across Pro, Pro Plus, Ultra, and Teams plans. Cursor’s move gives paying users more room today: if you are on a USD 20 (approx. RM92) Pro plan and mostly use Auto or Composer 2.5, you get more working room before hitting limits. Claude, GPT, Gemini, and the free Hobby tier are excluded from the doubled pool, which is the tell. This is pricing pressure, not generosity. Cursor wants users in the cheapest lane—first-party models like Auto, Composer 2.5, and Grok 4.5—where it controls costs and margins. The company even temporarily doubled Grok 4.5 usage through July 21 and set pricing at USD 2 (approx. RM9.20) per million input tokens and USD 6 (approx. RM27.60) per million output tokens, with a faster variant at USD 4 (approx. RM18.40) and USD 18 (approx. RM82.80). In a crowded AI coding tools competition, with rivals shifting to usage-based billing, Cursor is trading margin for attention instead of headline subscription increases.
The AI Squeeze: Raise Prices or Expand Access?
These two strategies show how AI is forcing stark choices on SaaS platforms. Squarespace appears to be using AI as part of the justification for pricing hikes—users say the company has been adding more AI tools many were not asking for and are not interested in. That is classic SaaS business model behavior: add features, lift prices, assume users stay put because migration is painful. Cursor’s world is different. AI coding tools competition is fierce: other providers have doubled code-related rate limits or moved to usage-based plans with flexible allotments, and Cursor acknowledges its usage bump is about “pricing pressure,” not charity. As one analysis points out, when the monthly price stops moving, “the fight shifts to included usage and model ownership. And whether the tool can keep you inside its own cheapest lane.” Cursor’s permanent usage increase for its own models, excluding third-party ones, shows how AI-native tools are trying to grow by expanding access while steering users away from the most expensive calls. Squarespace, by contrast, is signaling that satisfying private investors outweighs the risk of churn among photographers and visual artists.
What This Pricing Tension Means for SaaS Users
The market is sending a clear signal: profitability and user retention are now in open tension across the SaaS landscape. For creators, Squarespace’s SaaS price increases land in a moment when “everything they buy is getting more expensive all at once,” which feeds anger and a wave of people exploring alternatives for portfolio hosting. For developers, Cursor’s doubled usage is welcome only if they spend most of their time inside Auto, Composer 2.5, or Grok 4.5; teams that rely on Claude or GPT through Cursor see little real change. So if you are already paying for Cursor, the advice is blunt: do not upgrade on habit, open your usage dashboard and check which pool you’re burning. When one set of SaaS platforms raises headline prices while another expands usage, users should respond in kind—by measuring real value, reading the fine print, and treating loyalty as a negotiable cost, not a given. The paradox will not resolve itself; customers will decide which pricing strategy survives.
