> what do you do when you've saturated the market?

If I want to continue active development on it, then I sell upgrades. If not, then I'll continue to do free maintenance releases, but my main business will be from different products.

> one-time fee only works if you have a constant stream of new customers into your niche that is sufficient to pay your salary.

You can continue to get income from existing customers. You just have to provide real value to them in exchange for it.