Ultimate Guide to Software as a Service (SaaS)

If you know what a software distribution model is, then it would be easier to learn all about SaaS which stands for Software as a Service.

Service as a Software is a general license and delivery method of software. In this process, the software is acquired online either through a subscription or through other means. This clearly means they are not purchased and installed on your regular machines.


As a business model, this is very advantageous and helps both i.e., developers and users. Presently approximately 33% of companies are actively using SaaS apps since 2016.

Cloud computing is divided into three main categories and those are SaaS (Software as a Service), IaaS (Infrastructure as a Service), and PaaS (Platform as a Service). SaaS is very popular amongst IT, business, and personal users.

Its products see a wide variety of shifts starting from entertainment such as Netflix to turning the dynamics towards IT tools.

Additionally, marketing of SaaS products is very frequent to B2B and B2C customers.

What is SaaS?

Software as a Service or SaaS is a very common and most useful method of easily delivering products on the Internet.


Therefore, you don’t have to walk through the hassle of downloading and installing the software, you can simply just access it via the Internet. This saves a lot of time from typical hardware and software management.

Software as a Service or SaaS is also known as Web-based software. Some of the other names are hosted software and on-demand software. Regardless of its name, the application works on servers. Apart from all this, you also get security, availability, and accessibility.

Why should you consider SaaS?

There could be many reasons why you can consider SaaS. However, here are some of the most primary reasons to consider SaaS

Launching Time

As stated earlier, every SaaS application is already configured and is installed in the cloud. Therefore, it becomes very easy to minimize the delays that happen usually because of deploying hardware components in the traditional time.

As soon as the development is taken care of, the software is available for use. Hence, there is no extra waiting time that you’ll have to put into for installing the software. in addition to that, it also saves time to resolve issues that might come in an unexpected way.


When you move to a SaaS model then it means there are lesser reasons to worry. Users no longer have to wait for capacity as the need for the software grows. Organizations are free to add users as they like without having to worry about any other components.

With the help of tiny button push, it becomes easy for clients to have additional storage space in their bucket.

Eventually, it all boils down to the product owner and the means they are likely to use to provide the required capacity. By all means, the cost we are speaking of here is way lower than it would be needed to upgrade hardware and see incremental growth in costs.


In many ways, costs of Software as a Service is lower compared to others.

Here is how they are segmented.

Total Ownership Cost

The total ownership cost is usually lesser. The reason behind the lesser cost is the hardware. Sometimes it also is a result of efficiency not being lost in the process.

Rates for Support

The best way to gather profit or to charge less fee from clients is when efficiencies are properly produced. When extensive support is provided, the cost reduces and thus, the product owner can take the necessary steps to work out on it.

Characteristics of SaaS

Let’s consider SaaS as a bank. The sole purpose of banks is to protect and keep the customer’s privacy. But also aims to provide services that are highly secure, reliable, and worthy. The customers of banks all have the same kind of financial system in front of them. They don’t need to worry about who would access their personal data without seeking their permission, right?

So, let’s say a bank meets all the characteristics of Software as a Service model.

Architecture – Multitenant

Do you know what a multitenant architecture is?

It is the one that allows all the users and applications to have a single functional code platform and infrastructure that is administered centrally.

The central maintenance is primarily because the vendors, clients, etc. of SaaS use the same coding platform and infrastructure. Therefore, it will become easy for vendors to come up with their innovations quickly and the best about all of it is, there would be no time that one will have to put through in development.

All the valuable time will be saved and users will be saved off their precious time too. Also, no longer time wastage on maintaining and looking after codes that are outdated and are no longer functional.


Customization is the best part of any application. With Software as a Service, users are given the ability to customize their applications in any way they possibly want. However, the customization needs to be done keeping in mind the process and flow of the business that doesn’t affect the regular flow and infrastructure.

The functional aspect of SaaS is what makes it unique. Upgrades on a regular timeline help in keeping this customization intact. Hence, this concludes that SaaS providers can make upgrades whenever they want and it will depend on the housing of their needs. All of this will require less customer risk and lower cost for adaptation.

Consumer Web

Do you know the basic user interface of Yahoo or Amazon.com? If you are familiar, then you definitely are aware of how a typical SaaS service looks like. The SaaS model lets users customize as easy as point and click.


With SaaS, it is comparatively easy to have access to your data, this is primarily because the device used are well-networked to serve the purpose. All of this eventually makes it easy to take care of privileges, monitor the usage of data every now and then, and also that everyone is open to information.

SaaS Trends

Have you heard of SIPs? If yes, then there are now organizations that are planning to develop SIPs or popularly known as SaaS integration Platforms. Now, ask yourself, what is SaaS integration? In regular words, it is standalone software with specific functionalities that pretty much takes the deal away.

Advantages of SaaS

So, by now it is quite evident that the purpose of Software as a Service is pretty neat. There is no longer a need of having organizations rubbing on our back to install and run applications either on our local devices or in the data centers.

Well, this eventually helps in cutting off costs and expenses like that of hardware management, provisioning them, and maintaining them too. All of this trouble is actually sorted out. In addition to this subtraction, there also is cost-cutting in areas like software licensing, support, and installation.

Let’s find out some of the advantages of using Software as a Service model.


All the applications on the SaaS model are very easy to customize. You can customize your application in any way you want to. Furthermore, these can also be easily integrated with other applications (business), especially with applications that come from a software provider which is common to both of these services.

Updates are Automatic

On our regular devices, we love how we don’t have to wait for upcoming updates, and everything works on its own. The same goes for SaaS models too. You don’t have to spend money on buying new software every time an update knocks in.

This is because SaaS providers take good care of performing regular updates. This also includes patching. All of this takes care of manual effort and reduces the trouble of in-house staff.

Payments are Flexi

Subscribing to a SaaS offering is one of the best things to do. This will help you avoid the trouble of buying some random software and installing it or you don’t need to go for having additional hardware either.

Many businesses can work in a flexible manner and exercise a budget that is convenient to everyone if transitioning costs are maintained. Likewise, customers who are using the SaaS offerings can cut it off and stop their payment cycle whenever they want so that these transition costs are reduced.


Having a device that has an internet and catches your location is pretty much all you need to access applications from the cloud. Since, it is known that SaaS vendors deliver all the resources over to the internet, having a device and location makes it much easy.


SaaS works clearly on Cloud Services and services like these have a lot to offer in terms of scalability. SaaS does that too by providing vertical scalability.

Now, what is vertical scalability, you ask? When you add resources to existing software or hardware to increase their capacity, it is referred to as vertical stability.

With the invention of vertical scalability, users and customers get a chance to access the resources or features in a way they want.

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Challenges and Risks of SaaS

Obviously, we cannot just keep talking about the good part of Software as a Service without introducing the challenges and risks that come along.

SaaS definitely possesses challenges and risks. This is primarily because businesses are supposed to work when outside vendors deliver the software. Further, running the software and keeping it available to run is a different story altogether. Apart from that, it is also important to keep a track of the billing that incurs. All of this needs to be done so that there is an environment that is secure for all the data.

No Control over Versioning

If you are a provider and are intending to get a new version of the application, then it is definite that your customers will receive it too. This is regardless of the fact that whether or not your customers are anticipating a change or a new version for that matter.

Therefore, this will need the organization to put effort, time, and management to train the resources.

Switching Vendors is Difficult

This is not just the case for the Software as a Service model, this is the story of almost all the service providers. Switching is very tough. There is a lot one has to go through if they are looking to switch. To switch your provider, customers and existing users will need to migrate huge chunks of their data.

What makes these transfers more difficult is the use of technologies and data types used by a few vendors. Transfers in such cases between different cloud service providers become laborious and complicated. This is where cases like vendor lock-in occur wherein it is tougher for customers to make a change between service providers.

Customer Control Issue

There could be many reasons why issues pop up. When cloud service providers go through disruptions in services, or there is a security breach, or unwanted changes are made to services. These are the cause for some of the issues that happen.

However, all these issues can directly impact the way a customer is using SaaS. Therefore, to avoid issues like these, the best thing to follow would be for customers to understand the working of the SaaS provider and further ensure that SLA is properly enforced. This is what will help in mitigating the issue.

What is SaaS Company?

Now that we have discovered all about SaaS, let’s dive in deep into some of the more details about what is SaaS Company.

A SaaS company is typically a business that aims to put efforts into focusing, creating, and therefore, maintaining software as a product.

There are many benefits that one can have if working for a SaaS company and some of them include scalability without having to worry about the cost of product delivery and almost instant access to the global market that happens to be unrestricted.

SaaS companies are known for creating their own products, developing their own products, and even maintaining their own product. Some of its areas extend to sales, marketing, and so on for better reach.

Before we jump to some other area, let’s figure out what is SaaS products and what are the different types of Software as a Service product.

Types of SaaS Products

SaaS applications are available in all kinds of variants. These applications of SaaS come in a variety of sizes and shapes. They also aim to serve different purposes. There are three different categories.

Packaged SaaS

Packaged SaaS are kinds of products that help in managing a specific process within an organization. Simultaneously, it also helps in boosting the way employees engage themselves, maintain and strengthen the relations with other customers, enhance effectiveness for marketing, and so on.

For Example: – One of the finest examples of a packaged solution is Hubspot. They offer all sorts of tools and stuff that different companies use to manage and regulate sales and enhance relationships between customers.

Collaborative SaaS

The main aim of Collaborative Software as a Service is to improve and enhance how teams work together. These platforms mainly put their focus to see how different teams connect with one another. Different modes like video conferencing, messaging, exchanging documents, and so on are some of the ways of collaboration.

Technical SaaS

These apps are of the best kind. These aim to provide tools and processes that help in the effective management of technical processes.

For instance, Cloudsponge is software that allows developers to have an importer installed in the products they are using.

What is SaaS Product? What is the process to build a SaaS Product?

Building any other product is similar to building a SaaS product. However, there is a requirement that you will need to put through to arrange the business model accordingly.

Here are the steps that will tell you everything it takes to build a SaaS product.

1. Is it Right For You?

This is the first thing you need to ask. To do so, you can refer to the above advantages, reviews, challenges, etc. to see how a SaaS model works for you and also the cases where it doesn’t.

Once you have the right knowledge and you are ready to proceed, get a buy-in from the members of your team. Okay, so getting agreement from your team is not the only thing you are looking for here, you also need to tell them to raise their concerns, doubts, queries, on the subject if they have any. This will help you to not only make a bold decision but also to proceed ahead without any questions in your head.

2. Designing and Switch

Once you start building yourself a SaaS product, there are three basic questions that you will need to ask yourself.

  • Is the model you are going to create going to bring a customer experience that is better than what they previously had?
  • What are the possible ways that you would use to change the SaaS metrics?
  • How are the products and their requirements going to help you gain a share in the market?

Once you have the answers, designing your own roadmap and switching to it with the right strategy will turn out to be effective.

3. Develop and Design

Now that you have the strategy with you and is effectively going to work out, you need to create a product that will cater to the needs of the people.

Also, one thing that you need to consider in such a case is the appeal. It has to be effective enough for the clients to be attracted towards it. For these clients, your pitch needs to be their best shot.

Once you too are satisfied with your design, you can start with the process of developing it. However, once the development phase starts, don’t be afraid to welcome new challenges or to put new ideas in place to jump on to new action.

4. Beta Testing

Well, we all know what happens when you don’t test your software. Beta testing has to be done and no software or app is ever complete without it.

It is impossible to know the needs and usage vibes of customers. Beta testing will help in understanding the patterns and then can go ahead to fix or take care of those problems. Once you are done with the fixing and the results are satisfying, you can pitch in new customers to join.

5. Welcoming Customers

In the SaaS business, bringing new customers have a huge role to play. When the customer starts using your product only then will they realize if your product suits their needs or if they need to opt for something new?

Onboarding customers means two things i.e. training them initially and providing them support. This needs to continue until the clients are fully accepting your products and are at a fruitful receiving end. By fruitful, we mean, if they are getting what they want and if they have a chance to use all the features in the right way.

SaaS Pricing

The first thing that a SaaS company needs to do is figure out how they are going to charge. This is important for two reasons.

Users will get an idea after looking at the pricing model and then will have the willingness to approach it. Second, it surely affects the way a company sees growth. Here are some of the pricing models for SaaS that can be used.


The Freemium model, as the name says, will have a lot of features for the users and for free. In addition to the features, it will also have packages like Slack, Dropbox, and so on. For everyone, this package will be completely free of cost.

However, when they look for something better, it is necessary to upgrade to the premium version as the freemium one will not guarantee all the features that are likely to be available in other leveled-up versions.

Flat Pricing

This pricing model usually connects to a single product that will showcase a standard feature. All of this will be available for a flat rate.

For Ex, Basecamp, a SaaS model, charges $99/month for every person who uses it and uses all the features.

Tier Wise Pricing

SaaS models usually opt for tiered pricing and are the most common practice for most of them. These tiered pricing aims to offer packages, more than one. All the different package will have their own set of features and will be available to cater to specific user needs only.

Hubspot uses this pricing model.

What is the cost incurred to build a SaaS Product?

It is not an easy thing to build a SaaS product. The cycle goes on and on and does never really end. It is a whole lot of development, strategy, and so on depending on the needs of the clients, obviously.

Here is a rough sketch of the whole process.

Direct Costs for Development

Depending on how long term you are targeting, the pricing varies. It is possible to acquire a product and have it handy within 2-3 months’ time. However, this is surely not the final product you are looking at.

Once this is released, continuous improvement is required until everyone including you is satisfied with whatever comes out as the final product.

Indirect Costs

Hosting and Support are some of the secondary costs that surely need to be a given though apart from the primary costs. The costs for hosting and support need to be diagnosed correctly. This is significant to figure out the costs so that the tracking is efficiently done.

Ultimately, it is not always possible for your client to handle everything through a single feature. Let’s say, for example, you wish to integrate with some old client of yours to figure out their billing, communication services, and so on, all of this needs to be built-in right into your pricing model otherwise there are chances these costs won’t be tracked at all.

Marketing Costs

What is SaaS marketing? Well, typically it’s client acquisition in a nutshell. It is one of the biggest expenses in software.

One way to reduce the marketing costs would be by being an expert in the niche. This will sway away all the competitors right away and in no time. But this is not the end of the road, since there are other competitors waiting for you and are already the best in what they do. This will need you to place your bets on customers that will help in expanding your customer base.

For businesses ranging from small to mid, a lot of investment is not usually the right trick. These businesses don’t need to invest a lot in marketing to gain profits. No. All you need to do is help your customers understand how effective your product is and how it is going to help them in the coming time. That is all.

Frequently Asked Questions on SaaS

Can I customize SaaS Software? If Yes, How?

Nowadays, it is very easy and convenient, and flexible for any software to be molded in a manner that fits the needs of a business as well as individual needs.

It is very easy to transform the UI to effectively manage the look and feel of the program. Additionally, users can also customize their work boards to shift the information so that it matches with their working style.

What is SaaS Software?

SaaS software is also a delivery model that gives the privilege to the users to use any application they want without going through the trouble of installing it. Furthermore, they don’t even need to manage it on their device.

Usually, customers and clients opt for thin clients or web browsers to use their software.

What is SaaS Sales?

The SaaS Sales model mostly takes in use sales application that helps staffs from the development team, customer services, sales representatives, and so on to access and effectively use their leads and contacts.

Where and how safe is my SaaS Data? Who is the owner of my Data?

Every company that thinks of hiring SaaS, this comes as the first question in their mind which also drives fear.
In a cloud-based system, you are the one who owns your data in most cases. In most cases, SLAs make sure that they confirm the ownership of your data to your company and the right to retrieve the data as and when required from the server of your vendor.

Therefore, make sure that you pay attention while negotiating terms and services with SLA.
Speaking of data security, which is one of the most essential aspects, since you are using other large companies to store your data and it surely can be critical for you and your business.

What are the OS limitations while using SaaS?

The biggest struggle while using SaaS is it needs a brilliant internet connection to operate. Wondering you have a business that is not fully remote, this shouldn’t be a big deal for you.

However, internet connection is not the only problem one has to go through. Another common issue that usually emerges is the compatibility with the OS in use. For most businesses, it is pretty functional to run their systems on Windows and Linux.


SaaS software is not getting popular because of its outreach. Quite often people ask about SaaS and how they work given their lack of knowledge on the subject. Sometimes the reason also is a developer who is forcing these products onto their clients.

The majority of market share is falling into their bucket primarily because of the way they benefit developers and clients. Therefore, if you are willing to switch to a SaaS model, it is a good idea, however, you might need to plan your business strategy in the format.

If you are planning to shift to SaaS, we hope you have thought it over. If not, then read the review to know how much help it is going to bring on your door.

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