While software has become significantly cheaper to build, companies are spending more than ever on their software stack. This creates an opportunity for a “Costco for Software” - bundles of high-quality software tools offered at compelling price points.
The Bundle Opportunity
We’ve been living with the same basic interfaces of computing for the last 10ish years and design patterns have consolidated for most utility and creative software on desktop and mobile.
Why hasn’t it happened already?
In theory, G Suite or Microsoft 365 should have been this, But it seems that when you’re a large, vertically integrated organization, after building the first few tools at the head, you don’t really have the incentives to explore the tail of software.
There is often too much organizational pressure to align new tools with existing ones, which can diminish their unique value proposition.
For example, Calendly continues to thrive as a business, even though its features are fully integrated into Google Calendar. However, many people struggle to discover these features or configure them to the same level of effectiveness as they can with Calendly.
Perhaps what needs to happen is the creation of an umbrella business that acts primarily as a financial entity.
This business would enable several creators and brands to thrive and build software under its umbrella. Additionally, it would leverage collective bargaining power for distribution and pricing.
SetApp seems like the closest thing
The most similar bundle I can think of, although this one is for personal productivity, is the SetApp model. This model bundles many independently developed Mac OS apps into a $10 a month subscription, and its quite a nice set of individual productivity tools. What it doesn’t support is multiplayer, business software though.
The AI Perspective
In particular, a particularly compelling opportunity lies in the consolidation of AI features. As artificial intelligence becomes a standard offering in software tools, users often find themselves paying premium prices ($20+ monthly) for AI capabilities across multiple apps - even for relatively simple tools.
A bundle approach could pool AI resources across applications:
- Consolidated AI credits in a shared wallet
- Simplified billing for AI features
Beyond pricing, another reason for AI is Artifact Centric Computing — shifting from app centricity to file centricity. The old Unix philosophy of do one thing and do it well is more relevant in this world again,.
On the other hand, AI will likely destabilize the interface patterns a little bit again, which is worth considering.
The Malleability Counter-Argument
A counterpoint is that software’s increasing malleability makes rigid bundles less attractive. Modern tools are highly customizable and can often expand beyond their core functionality. Notion, for example, can be molded into a CRM, wiki, project manager, and more.
However, this flexibility strengthens the bundle proposition in some ways:
- Most organizations lack the expertise to effectively configure and integrate malleable tools
- The bundle provider can curate the best tools for specific use cases. You can imagine a service layer on top of the product layer to tune the suite to the specific needs of the business
Intersection with Open Source
One intriguing direction is incorporating open-source elements:
- Supporting open-source alternatives within the bundle
- Contributing improvements back to the community
- Enabling customization through open APIs
- Building a model to sustain and support open source financially
The Path Forward
The “Costco for Software” concept represents a new model for software distribution that goes beyond simple bulk pricing. It’s about creating thoughtfully curated bundles of high-quality software tools, optimized for specific business segments. While tools like SetApp have proven this model for personal productivity, there’s an opportunity to extend it to enterprise software and SaaS applications.
The model could be particularly powerful for managing shared AI resources across applications, addressing the growing challenge of fragmented AI pricing. By pooling AI credits and providing centralized management, it could make advanced AI capabilities more accessible and cost-effective for organizations.
While software’s increasing malleability might seem to argue against rigid bundles, it actually strengthens the case for expert curation and configuration. Most organizations need help optimizing malleable tools for their specific workflows. A bundle provider could deliver pre-configured solutions while maintaining the flexibility for customization.
Raw
However, to continue with the main point of "Costco for software," essentially, software has become much cheaper to build. While it is still expensive, you could combine quality at a much better price point. For example, consider software like Calendly and other tools—a bundle of software that a creative organization might use or that suits a particular class of companies, such as design studios and advertising agencies.
Bundle all of that, maintain high quality, and maybe start with fields where design is important because impressions matter to them. Basically, start there and keep expanding. Costco itself started as a company for auto resellers or something like that. Eventually, I think it could evolve with an open-source element, though that's a more nebulous idea. But yeah, I think there's something there.
One of the obvious things that could be done in this business model is to pool AI credits together in one wallet and then share them across all these apps.