What is SaaS?

SaaS is the abbreviation of Software as a Service, and refers to a software licensing model based on user subscription with monthly or annually payments.

The model dates back to 1960s where mainframe providers offered computing and database services from their data centers to big organizations such as banks. The whole model started as a secure data service, and now is available on a personal level as mobile apps.

That is purely due to the technological advancements and the release of Web 2.0, which made inputting data on the internet available for everyone. After that, small businesses started to use SaaS products called application service providers, primarily for data computing and storage.

The acronym’s first appearance was on 1985, which was mentioned by USPTO.

The percentage of SaaS businesses in the global market has increased over the years, and currently more and more new businesses whether B2B or B2C prefer to offer their services as SaaS rather than other business models.

What is SaaS business model?

The SaaS business model is a subscription based software service model. It is becoming increasingly more popular to select as a model.

The reason behind this popularity of SaaS business model is that since SaaS businesses operate as cloud services, they are available globally to anyone so the market is as large as it can be.

It offers a stable and a predictable revenue since there is a base of users expected to pay for the following months. The possibility of a sudden drop in revenue is nearly non-existent which gives businesses the freedom to experiment with different marketing strategies.

Also, SaaS business models are automated, which means sales can be made without even interacting with customers. The cloud based product or service offered will always be online, and when combined with other automation systems it can be maintained with minimal touch.

All these pros combined, establishing a SaaS business is easier to maintain and profit, hence the popularity.

What are the most popular examples of SaaS?

The SaaS approach to business has come a long way; nearly 50 years ago it was utilized by infrastructure giants to offer banks data storage services, today it is utilized for personal data storage and even movie streaming services.

  • Netflix: the company used to be a mail delivery subscription for movies, it could still be counted as a SaaS business. However, it only became full SaaS when the streaming service was launched. With unbelievably affordable pricing, Netflix gives you access to millions of titles.
  • Dropbox: the popular storage software on the market is free up to a point, then requires you to pay for a plan monthly. SaaS is still used for data storage and will keep being used in the future.
  • Slack: everybody’s favorite work communication platform is a SaaS business too. With a free plan consisting of the most basic functions and the subscriptions that could benefit the whole company, Slack is a SaaS that is here to stay.
  • Wix: coming down to the more complicated and professional tools, Wix is a website-designing tool that allows you to create websites without coding. Being no-code is a wide-spread trait in SaaS products, and Wix is one of the leaders of the movement.
  • Shopify: creating a website is not new, but creating a whole business using a SaaS Cloud product is new. With Shopify, it is possible to bring your business online.

These are the most popular examples of SaaS businesses and there are hundreds of SaaS products that has a place in our lives.

Selman Gokce

Selman Gokce is the Senior Inbound Marketer of UserGuiding. He is highly invested in user onboarding and digital adoption, especially for SaaS, and he writes on these topics for the UserGuiding blog. When he's not writing, you can find him either listening to LOTR soundtracks while cooking or getting angry because he lost in a video game.

Copy link