It applies to certain things but I don't think that applies to $5 SaaS. Because to be sustainable you'll need 1000-5000 customers, even though those numbers can be small in that big pie, it's still extremely hard to reach and support.

However you can easily get a smaller slice of the bigger pie in an enterprise market with 20 customers instead of 5000, and that's much easier to accomplish.

This model seems more suitable for "go big or go home" players.

Depending entirely on how you structure and how much you want to get out of it $5 a month with 2000 core customers is $120000, minus operation costs like servers and such. Not an unhealthy amount of money if the time you need to invest in the product each month is relatively low.