SaaS Money – How to Make a Profit on Your Software

With the boom of the SaaS revolution, everyone is becoming curious about ways to easily make SaaS money. The web is tremendously accessible and easy to develop for, and with its cross-platform neutrality to operating system and hardware architecture, and with its omnipresence in a post-mobile culture, it’s becoming an platform of interest.

Traditional software development is a bit impenetrable, due to limitations SaaS gets past – the complexity of compilers and OS API, the variations of operating system and device, and the overwhelming nuisance of publishing and distribution. It’s a costly, difficult endeavor, where SaaS seems like a promising new way to market technology.

So, how do you make SaaS money? A lot of SaaS services are free, or at least have free model alongside a superior paid one (this is called a freemium marketing model), and only really utilitarian business software seems to really charge overall for access and use.

So, short of subscription plans that are paid, how do you make money with this? What if what you design isn’t really fit to be charged for, or charged for exclusively, or you want to abate the problems of churn and loyalty that paid subscriptions must balance wisely.

Well, there are a few ways to manage this, the biggest one being well-implemented advertising. There’s been a lot of talk internet advertising, and there have been more than a few common approaches implemented, some far more obnoxious than others.

These can include banner ads, interstitial ads, text ads, and a number of other things. Social networks, which are a sneakier example of SaaS taking hold, make a lot of their money from sponsored posts, in combination with very mildly-implemented web advertising.

It is advisable to avoid pop up ads, new tabs, interstitials and forcing completion of surveys or “trying one offer below”, because these all tick everyone off royally!

Now, along with this, let’s talk about that freemium model a little bit before we close. Freemium us a popular middle ground between relying on ads, or forcing payment for everything.

But, Freemium has its problems, because the free customers are going to incur overhead, which ultimately winds up passed on to customers, which isn’t something they’ll tolerate.

Unfortunately, it also brings in contending with churn, worrying about loyalty, and the balancing act between free and premium being distant, but not too distant, for both versions to satisfy demographics and retain a cycle.

However, your best bet is going to be freemium, because in spite of its problems, it’s the most balanced approach to making money in this industry, and what blows it brings over from pay-only are softened by its design a good bit.

You may find that, as a startup, going with ads for a time, and then introducing a freemium model later (perhaps initially differentiated by ad removal and maybe one or two extra perks.

Once you’re established enough, you can wean yourself off of freemium completely, and go pay only, to ensure you make proper SaaS money for your effort. This stepped process of evolving revenue acquisition is the best bet for new industries, and freemium’s practicality is almost entirely around SaaS.

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Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
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