The margins on software are incredibly high and perhaps this is just the cost of having maintainable output.

Also I think you have to consider development time.

If someone creates a SaaS product then it can be trivially cloned in a small timeframe. So the moat that normally exists becomes non existent. Therefore to stay ahead or to catch up it’s going to cost money.

In a way it’s similar to the way FAANG was buying up all the good engineers. It starves potential and lower capitalised but more nimble competitors of resources that it needs to compete with them.