The Secrets of SaaS Business Model



Guest Writer

⏱ Reading Time: 8 minutes

In this day and age, most of the things that people do have been revolutionized. Almost everything can be done digitally, which has led business owners and marketers to succeed.

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One of the widely-used tools most companies use to grow their business is Software as a Service or SaaS. It helps the market give consumers what they need without having to go through a complicated process.

Before we delve deeper into the secrets of the SaaS business model, we have to define it first.

What Exactly is SaaS?

SaaS business model refers to internet storage to provide software delivery and convenience to clients. With a SaaS service or tool, you can easily access your data through “The Cloud” anytime and anywhere you need it. You do not have to download any software or application on your device just to access your files and data. This makes it easier for you to gather your data in real time.

Most SaaS services and tools will ask its users to pay a monthly or yearly subscription fee. However, SaaS models are often lower in costs compared to traditional software that is being installed on computers. If you are a small business owner, then paying for a SaaS tool would help you save costs.

Read How to Surpass Customer Expectations Using SaaS Tools

What are the Secrets and Benefits of the SaaS Business Model?

Now that we have discussed what SaaS is, it’s time to delve deeper into what its secrets and benefits are.

Easy to Set Up

With an SaaS tool, you only need a fast and reliable internet connection to install and use it. Pay for the premium service using your credit card and you are good to go. You can set up your new office and gather your team for a huddle on how to use the tool. Within just a couple of hours, your whole team can be given access to cloud-based data, storage tools, finance, and CRM.

Lower Costs

Getting an on-premise data center will cost you a lot more since you’d need to pay for licenses and permissions. This will be a lot harder to use and you’d likely need an IT guy to install it on your computers. You’d also want to train your team beforehand, as they’d need to learn how to properly use the tool. These costs can easily add up, which can make your operational costs go higher than expected.

With an SaaS business model, you only have to pay for the monthly or yearly fee. This usually would not cost you that much. You can also start using it even without a tech guy helping you out. As long as you have an internet connection and credit card ready, you can use your SaaS tool immediately.

Saas business model explained

The SaaS Business Model is Agile

With SaaS, adding new tools is a lot easier. You also have the option to try different tools so you can determine which one would be best for your tasks and projects. However, some tools might not work exactly the way you are expecting it to work. It is recommended to try it out first before paying for it.

Switching to a new or different tool is easier and simpler with an SaaS business model. Organizations are also highly unlikely to get locked out into particular vendors. This gives you the freedom to choose the right tool for your company and business.

Read Setting Small Business Goals


With the SaaS business model, you do not have to worry about maintaining the tool to keep it working properly. You can leave the maintenance and heavy infrastructure to the SaaS team. These people are always making sure that the tool is running smoothly to give you and your customers a great experience.

Additionally, you can expect the tool to run smoothly since most SaaS tools are regularly updated. You can also manually check if there are any updates so your SaaS tool will always run as smoothly as possible.

If you ever run into problems, which is highly unlikely, you can always contact their support center and you can expect to get a reply right away.

Collaboration is a Lot Easier

With the SaaS business model, collaboration is a lot easier since it is cloud-based. As long as you have an internet connection, you can access the tool straight from your laptop or even your mobile device.

This is extremely important for teams and people who are always on-the-go, as SaaS marketing tools are easier to access than on-site tools. Employees and sales teams can also get customer metrics anytime, anywhere. SQL ratios, churn rates, MQL, customer acquisition cost, trial conversions, and Net Promoter Scores are now easily accessible through SaaS tools.

Read Top 10 Collaboration Tools to Run Remote Company with Ease

No Need to Invest in Additional Backup

Since everything is stored in the cloud, there is no need to get extended or additional backup for your files. Computers and hard drives can crash, which can easily wipe all of your data away. This usually means that with on-premise tools, you’d usually need at least two or three backups to make sure that your important files will not be put on the line.

With the SaaS business model, everything is routinely and regularly saved in the cloud. Users can easily switch between devices without having to lose their work and data.

Saas business model concept

Access to Data and Analytics

Everything is run through a centralized platform, which means that it is incredibly easy to get the data that you need and use it for analytics. Most companies that take advantage of the SaaS business model are given access to the most crucial parts of the business. This includes intelligence, visualization, and reporting tools which can provide important insight into business operations. This will make workflow a lot more efficient, helping you save time and effort in the long run.

Read Cloud Infrastructure – How To Make The Best Of It

Small-Business Friendly

On-premise software usually requires a high-quality computer and the latest operating system for it to work properly. Server and network switches could also be required as a part of the general investment, and both can be quite costly.

With the SaaS business model, you do not have to worry about these factors, as you only need an internet connection to keep it working. This means that even start-ups and small businesses can benefit greatly from using it. Additionally, SaaS tools are scalable in a way that if you need to expand it to accommodate more people, you can simply adjust your plan.

With on-premise software, you’d most likely have to buy more hardware just to make the product usable for all your employees. This can easily make your costs go higher, which is not ideal for small businesses and start-ups.

Additional Things You Need to Know About SaaS

Now that we have discussed the secrets and benefits of SaaS, it’s now time to move on to three additional things that you have to know about the SaaS model.

Payments are Recurring

Most SaaS business models are bought through a subscription service. This means that you would have to pay for your subscription either monthly or annually. SaaS companies provide a service and not a product. This would mean that they would have to charge their consumers regularly to keep their business afloat.

Before you sign on the dotted line, make sure to ask your SaaS provider whether they will charge you on a monthly or yearly basis. It is also important to ask whether you’d need to purchase some add-ons for better usability.

SaaS Companies are Big on Customer Retention

Again, since SaaS companies are selling a service and they charge on a monthly or yearly basis, it is important for them to keep their customers paying for such services. What this means for you, the consumer, is that you will most likely get excellent customer services and proper assistance.

You don’t have to worry about waiting in line just to talk to a customer representative. You can simply email the company or call them and you will most likely get a response as soon as possible.

Read Customer Retention Strategies Guide

Provides Regular Updates

Most top-notch SaaS companies keep their tools up-to-date. They want to keep their customer retention at a high level. Updating their services to keep up with the trends is one way to keep their customers loyal to them.

Also, SaaS tools that are not updated regularly can be prone to hackers and viruses. Since everything is stored in the cloud, keeping their customers’ data private is one of their top priorities. Regular security checks and updates are usually rolled out to prevent hackers from coming in.


More and more SaaS tools are being introduced in the market, and the benefits are endless. This includes optimizing the processes, delegating activities, tracking statuses, handling recruitment, and even managing virtual and on-site teams.

Before paying for a premium service, you should make sure that the SaaS tool that you are paying for has everything that you need to run a business smoothly. Every company has different needs, but you surely will find an SaaS tool that is tailored to what your company needs.

Marice is a writer both by profession and by heart. She loves art in general, and is passionate about make-up artistry, films, and music. She has been a web content writer since 2012. Marice currently has 5 cats and 4 dogs, and is an advocate for keeping stray cats and dogs safe.

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The Secrets of SaaS Business Model was last modified: September 10th, 2020 by Martina Pranjic
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