SaaS (Software as a Service)

What Is SaaS (Software as a Service)?

SaaS (Software as a Service) moves software from packages you install to services you access via web browser. Instead of buying licenses and installing software on your computers, you pay a subscription and access through the internet. Examples: Salesforce, Slack, Google Workspace, and thousands of others.

SaaS offers numerous advantages: no installation required (instant access from any device), automatic updates (always current software), scalability (service grows with you), and pay-as-you-go pricing (no upfront capital investment). Users benefit from simplicity; companies benefit from recurring revenue models and concentrated data.

SaaS economics are compelling: recurring revenue is predictable, customer lifetime value is measurable, and unit economics improve at scale. SaaS became the dominant software delivery model, with pure-play SaaS companies commanding high valuations. However, SaaS products must be excellent: competition is fierce and switching costs are low.