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What is the SaaS business model

March 29, 2023
What is the SaaS business model

Do you want to know how the SaaS business model works? If you or your organization has a strong entrepreneurial profile, this will interest you, and thai is a business model you need to learn about. 

SaaS is a cloud technology wherein users can use the software without installing it on their computer, through the cloud. Updates, maintenance and security strategies are provided by the Service Provider or Owner of the SaaS software. A customer will only need to pay a periodic fee for usage. Usage options and time period of usage can be customized based on business needs. A very good example of SaaS is Stadioplus Tech.

What does the SaaS business model consist of?

To understand the SaaS business model you first need to know what exactly SaaS software as a service is. 

SaaS (software as a service) is a computer program hosted in the cloud that integrates a centralized database, different functionalities and applications. The great advantage of SaaS is that it does not require installation on the user's local computers, nor does it require maintenance, updating or security.

The customer pays a subscription for the use of the tool. The SaaS provider provides the customer with a username and password to access the software interface, from which different tasks can be performed or performed.

Some examples of SaaS are:

  • Enterprise software (CRM, ERP).
  • Entertainment software (Spotify, Netflix)
  • File storage (Google Drive)
  • Email account management (Gmail)

5 keys to the SaaS business model

Is the SaaS business model profitable to companies? What are the key factors of this business model? How are the needs of users met? How does this business model enable returns on investment or profits?

The 5 key factors of a SaaS business model are explained using StadioPlus Tech as an example. These address all the above listed questions.

1. Need based Solution:

Effective SaaS products always cater to the specific needs of a customer, these could be corporations (i.e. B2B) or individual users (i.e. B2C). 

For example: StadioPlus is a company that aims to bridge the gap between the sports industry and futuristic technology through its StadioPlus Tech, by adopting a SaaS business model.  StadioPlus Tech provides several sporting organizations like clubs, leagues, access to the digital universe by enabling NFT creation through their own customized platform in an agile manner, through blockchain technologies, along with payment process and NFT disbursal, with access to secondary marketplace and metaverses. 

2. Versatility to adapt the software and its cost to the client's objectives.

A good SaaS business model is one that has the ability to offer different solutions and pricing according to the specific needs of each customer user. Many customers need basic software functionalities, but as their project grows, they demand more resources and features. The provider must be able to respond to these needs quickly and efficiently.

3.     An experienced technical team

The SaaS business model relies on an experienced team of developers who can design a program tailored to the users' needs.  This team would also be in charge of facilitating the implementation for each client, keeping the tool accessible, correcting errors with updates and ensuring the security of the data of the companies and their clients.

4.     User-friendly design

It is essential to focus on guaranteeing the best user experience in a SaaS. The program must integrate a minimalist interface, simple to use and with documentation that makes it easy for users to use all the functionalities.

5.      Support and customer service

The best SaaS business models are those that respond to incidents quickly and efficiently. The customer should feel supported when using the program, and should have different communication channels open to resolve any doubts or receive personalized advice.

  • Shared storage and content creation like Google Drive
  • Music listening applications such as Spotify
  • Series and movie platforms such as Netflix

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