The narrative in 2024 was that "wrappers" — thin UI layers over foundation models like GPT-4 — were dead on arrival. Investors claimed they had no moat. Twitter pundits mocked them.
They were half right.
Most wrappers are going to zero. But not because they lack "proprietary tech." They will fail because their unit economics are fundamentally broken in a way that traditional SaaS metrics fail to capture.
The Cost of Intelligence
In traditional SaaS, the marginal cost of serving a user is close to zero. A database row costs micro-cents. In the AI era, the marginal cost is compute.
"Intelligence is no longer an asset you build; it's a utility you rent. And the rent is expensive."
If you charge $20/month but your power users are burning $15/month in API credits because they're chaining agents together, your gross margins aren't 80% like Salesforce. They're 25% like a consulting firm.
The "Churn" Trap
The second silent killer is the interface churn. When a user interacts with a chat bot, they expect human-level nuance. When it fails (hallucinates), the churn risk is immediate. Unlike a button that doesn't work, a bad answer feels like a breach of trust.
- Traditional SaaS: User blames themselves ("I clicked wrong").
- AI SaaS: User blames the tool ("It's stupid").
Where the Margin Is Hiding
So, is the wrapper business dead? No. But the winners look different. The successful "wrappers" of 2026 are shifting from Chat Interfaces to Outcome Machines.
Don't sell "access to GPT-4." Sell "completed SEO articles." Sell "verified bug fixes."
When you sell the outcome, you decouple pricing from token usage. You can charge $500 for a completed audit that cost you $2 in API credits. That is where the margin is.