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The SaaS Business Model

Understanding the SaaS Business Model: A Clear Guide

Did you know that about 14 billion users leverage at least one Software as a Service product to streamline operations? Not just businesses, but individuals also enjoy SaaS products such as Netflix and Spotify. 
But what exactly is the SaaS business model? 

Let’s get right into it!

What is the SaaS Business Model?

A SaaS or Software as a Service business is basically a company that leases its software to customers in exchange for a small monthly fee (known as the subscription fee). This software is hosted via cloud infrastructure that operates using a web browser. 

Difference Between SaaS Businesses & Software Companies 

The primary difference between a SaaS business and a software company is that Software as a Service is hosted on cloud. The benefit that SaaS companies provide to clients is that they eradicate any need for licensing – all the paying customer would have to do is simply log in. This is beneficial for many businesses since they do not want to invest a large portion of their funds in IT software. What SaaS companies offer helps save businesses time, costs, and labor in this way. 

The 3 Main Phases of a SaaS Business 

A Software as a Service company goes through the following 3 phases:

Startup Phase
This is the beginning stage of the lifecycle of a SaaS company. In the Startup phase, the focus is on getting the SaaS business up and running, building a customer list, getting the necessary funds, and other things of that nature. 

Hypergrowth Phase
This is the phase where a SaaS company experiences rapid growth. A SaaS business enters this phase after acquiring a large number of customers and reaching the peak of its potential in the market. 

Stable Golden Goose Phase
A SaaS company enters the stable Golden Goose phase when it successfully survives the Hypergrowth phase by expanding its infrastructure. At this stage, the SaaS business starts generating a healthy profit and everything is nicely leveled. 

Successful Examples of SaaS Businesses 

Salesforce is a successful SaaS business that originally started as a software company back in 1999. This SaaS company has assisted various businesses in better managing their teams and prospects and following up with potential leads.

Zendesk is a SaaS company that facilitates customer service ticketing for mostly small to medium-sized businesses. It is even loved by giant-scale businesses for the plethora of customer service solutions it offers.

Meet Edgar
Meet Edgar is a SaaS tool offering social media automation services. Although not as popular as Sales Force and Zendesk, Meet Edgar is currently being utilized by many businesses to save time, plan ahead, and manage their social media accounts more productively. 


SaaS companies and products will only rise in popularity in the modern world in the years to come. 
So, if you are already a SaaS company owner or planning to become one, make sure you study your competitors, know your biggest challenges, and analyze your buyer profile for the best results.

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