What are SaaS?, know what software as a service companies are

What are SaaS?, know what software as a service companies are

Claudia Roca

Jan 24, 2022

Jan 24, 2022

Jan 24, 2022

What are SaaS?, know what software as a service companies are
What are SaaS?, know what software as a service companies are
What are SaaS?, know what software as a service companies are

Have you ever used Google Drive, Dropbox, or Netflix? What do these digital platforms have in common? Well, they are SAAS.

The acronym SAAS stands for software as a service. These are companies that develop and commercialize software that are considered services. Whoever sells it is responsible for maintaining the entire software structure in operation, so that their customers can use it without having to worry about data security, storage, or the specific solution provided by each of these technologies.

In the digital era, there’s an increasing number of users and companies that need this kind of solution, in order to solve or optimize daily issues at work or at home. We can no longer even imagine what we’d be without Google Drive, for example. We can’t even remember how daily work used to be before we had this cloud storage capacity and this possibility of sharing files with other people on our team so easily.

Well, these business models are undoubtedly becoming all the rage in the last decades. That is why we’ve decided to prepare this article, in which we will talk to you about all of the advantages and disadvantages of SAAS, which sales models are the most common for this type of business, and some examples

Let's get started!

Advantages and disadvantages of SAAS

One of the main advantages of these business models is the number of benefits that are offered to the potential customer or user, which makes them very tempting and popular. 

1. They are very affordable

First of all, they are very affordable for customers if we compare it to buying software, getting the license, and having to use a computer specifically for that. In the case of SAAS, customers pay a monthly fee and can access the software from any device, without having to install anything or purchase licenses, because the software is in the cloud. 

2. Adaptability

Furthermore, another of the great advantages that makes SAAS so attractive to customers and also to developers is the capacity for adaptability. It is a business model that can be very easily adapted to the needs of different types of customers, we will come back to this later. 

3. Revenue stability

In terms of the business model, the greatest advantage is clear to see: revenue stability. Being a subscription, it has certain stable revenues every month, which allows planning and making better decisions. 

Now, let’s talk about the disadvantages of SAAS: 

1. The need for financial support to sustain growth

One of the main weaknesses of this business model is that, in the beginning, it needs a lot of financial support to be able to sustain growth. To start out with only a few customers, and charging a small monthly fee means it will take some time to recover the investment. 

2. It needs to constantly provide value

The second big disadvantage is that it must have excellent service and constantly add value to be able to win back the customer that has been acquired every month so that he/she does not drop out and the investment can be recovered. The focus has to be on keeping the customer with you as long as possible. 

The advantages and disadvantages of Saas (software as a service)

SAAS sales models

A SAAS company can use different sales models. Here we will discuss some of them, and surely some companies that use these models will come to mind. Let’s see…

1. Freemium 

This is one of the most common models. SAAS like Google or Canva use this sales model. The service is provided free of charge, but those who want to access premium options must pay a monthly fee. 

2. Free Trial

Another option that’s very commonly used by SAAS to acquire new customers is the classic free trial. That is, they allow users to take a free trial for a period of time. After that, users who want to continue using the tool, must subscribe. 

3. Self Service

This sales model is the one used by WIX, for example. It involves creating different service packages and, depending on the functionalities of each one, the customer chooses to pay a higher or lower fee. This model makes it possible to attract customers with different problems and to provide a solution adapted to each of them. 

Freemium, free trial, self-service are the sales models for software as a service

Examples of successful SAAS

Surely throughout this article more than one company with these features came to mind.  The fact is that nowadays there are really many successful SAAS and for the most diverse segments of performance. Today, almost everyone has a subscription. 

Let's take a look at some examples: 

1. Project management software

With teams working remotely, tools that allow companies to organize themselves and maintain fluid communication to bring each project to completion are increasingly essential. SAAS such as Monday or Clickup provide very interesting solutions in this regard. 

2. Streaming Platforms

The entertainment industry is one of the industries that has grown the most in recent years. There are many B2C SAAS that are a clear example of this. The most emblematic of course are Netflix and Spotify. 

3. Customer management software

Zen or Apptivo are some examples of SAAS that allow you to support customers, manage them, make satisfaction questionnaires, among many other options. 

4. Business communication software

Slack is a great example of this. It offers a simple way to manage communication in work teams through different channels so that information is not lost. 

5. Mailing software 

Mailchimp is one of the most successful SAAS of the last 10 years. It allows to manage e-mail marketing campaigns in a professional way and is a fundamental and necessary tool for any growing company. 

important companies that were developed as software as a service

These are just a few examples, there are many more. What other examples have you come up with? Do you use any of the SAAS we’ve mentioned in the article?

SAAS are here to stay and they have a lot of potential. Keep reading our blog, we have a lot more information for you to learn about them. 

What other successful SAAS comes to your mind right now? Let us know in the comments!