The business model of SaaS is relatively simple – the consumer subscribes to a certain service and pays the respective fee every month. The different services have different models – some have one single price plan, others have four or five, as well as different paid add-ons.
Thus, the price may vary depending on how big the client is. In this context, I am often asked the following question: Don’t you think that it is unfair for those earning more to pay a higher price? And my answer is always one and the same – no, I don’t! The reason is that when a client is using your SaaS, you cover the expenses on the servers, system administration, support, development, internet traffic, and so on. When a client uses only 1% of your system, it is logical to pay less than another client using 10% of it.
When you sell software that is installed on consumer’s computer, for which they make a one-time license payment, you count on one sale at a relatively expensive price. However, every new month you have to realize more and more sales so as to keep your business alive, while at the same time the developed software will start losing its value because it is getting obsolete.
The situation with SaaS is just the opposite. With this type of software solutions, you receive subscription fees from the consumers every single month. The fees are cheaper, which allows more clients to afford a certain service. At the same time, the update happens online and automatically – each consumer receives the newest version of the service in real time, in small portions, but regularly. You can count calculate and plan your revenues and expenses accurately, while with every new client and every year passed they will be decreasing.
It sounds perfect and indeed it is but you should not forget that the initial investment in such a project amounts at tens to hundreds of thousands, or sometimes it can easily reach millions, depending on the sector you work in and the process you have chosen.