Should You Consider the Software as a Service (SaaS) Business Model?

There are various business models open to an online entrepreneur. Most people are looking for an enterprise that has great potential for growth, is sustainable, and could possibly be sold in the future. One option that ticks all these boxes is the Software as a Service (SaaS) model. SaaS, in most cases, is a business that offers a software product on a subscription basis, typically hosted in the cloud. There are many niches for a SaaS business, but common examples include content management, SEO tools, accounting, project management, and customer service. Before you launch a service, though, it is worth considering the positive and negative sides of this type of business.

Advantages of SaaS

Flexible Pricing

SaaS allows for flexible pricing, with the opportunity to provide various payment levels. Initially, your price might not be optimal, so you want the chance to test different options. It may be that consumers are willing to pay more than you first thought, or they may be encouraged by a free trial offer. Offering various levels also helps you appeal to individual consumers and enterprise customers.

Long-Term Customers

Single payment products might bring greater initial revenue, but a quality SaaS business should earn more over the longer term. If the product is fulfilling a need, customers will have little incentive to leave. The business owner, along with the employees, will get used to your product, so there will naturally be a reluctance to learn something new. While it is important to continually invest in new innovations, the same product might be used by customers for many years.

Predictable Revenue

Initial revenue predictions will be difficult, but gradually you will gain enough data to assess expected revenue.

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