Rising AI Costs Squeeze SaaS Margins

Server prices have risen 4–5X in a year and AI usage is pushing up operating costs, with AI products averaging about 52% gross margin versus 80% for traditional SaaS. Zoho is freezing headcount for 18 months and pausing salary hikes, while Figma warns it may not return to its previous 90%+ margins.

• Server prices rose 4–5X in a year, Zoho cofounder Sridhar Vembu said
• AI products average ~52% gross margin vs 80% for traditional SaaS (ICONIQ, 2026)
• SaaS firms adding AI features see margins fall 12–17 percentage points
• Zoho will freeze headcount for 18 months and pause salary hikes