3 Successful Saas Business Models Worth Considering

The SaaS business model is a contemporary, popular and successful software delivery and marketing model utilized heavily in modern times.

Allowing for cross-platform interface, ease of delivery and affordability, it’s no surprise that software as a service is quickly replacing older models for software deployment.

It also allows deployment of updates and patches to be instantaneous and completely spanning of the entire user base, and makes ease of troubleshooting exponential. From a user experience standpoint, it’s the most obvious choice in modern software design.

There are multiple forms of SaaS business model to choose from, and ultimately, it depends on the type of software in demographic one is aiming for. There are too many models to really list here, some are going to take a look at three SaaS business models that are successful, and should be considered closely.

Hopefully, we can learn a little bit more about the SaaS model, and how diverse the concept can be in looking at these.

Number 1 – Freemium

The freemium model is one of the more popular forms of SaaS in use, and there is definitely a reason for this. With freemium, a user doesn’t have to pay for the core functionality of the software. They get the basic, fully functional system at no cost, requiring only a free login and account.

Profitability is reached when additional features inconveniences are purchased two at onto the account. The benefits for user experience with the freemium model are that the user will feel like they’re only paying for things they desire to pay for, and will feel that any purchases they make are more rewarding considering the software works without the purchases.

This garners respect in the eyes of the user for the company in question as well. This is an SaaS business model to closely consider, especially for gaming.

Number 2 – Flat Rate Subscription

Flat rate subscription is one of the older models of SaaS in which a monthly, or yearly fee is charged for access to the software system. This is slightly less popular in modern times, as freemium has rapidly stolen its thunder. But, for more complex software that offers a lot of valuable functionality out of the box, flat rate SaaS is a viable, respectable alternative. It also ensures profitability, not requiring users to opt for optional purchases.

Use discretion with this model, as exorbitant prices will turn users off, and they will not want to pay for updates or additional features on top of the monthly or yearly flat rate. Still, this is a successful SaaS business model.

Number 3 – Ad-Powered SaaS

Google pioneered the ad-powered SaaS business model. Basically, all of the features are 100% free, not necessarily even requiring a user login. Where profit is obtained is through viewed ads on the site, or integrated into the client side software.

The more a user interacts with the software, the more ads they will view and perhaps click, adding up to significant amounts of revenue for the developer and company in question.

This is similar to freemium, but it omits the optional purchases, as ads and purchases together will turn off a user. It simply depends on the nature of the software whether are not this is a better alternative to freemium, as it needs the users to refresh pages and move around quite a bit with and the software, rather than looking at a single page for long periods of time.

As the technology behind Internet advertising shifts, however, this may not be an issue in the long run.

So, we’ve looked at three of the more successful SaaS models out there, and we looked at why they work, and maybe a few caveats regarding each as well. Ultimately, freemium and ad-powered SaaS business model concepts are the better of the three. Flat rate subscriptions are quickly declining in popularity, and this is largely due to the fact that the other two alternatives are far less irritating to users, and when it all boils down to it, user experience is gospel.

One important thing to point out above all else is that when a model is chosen, that model should be adhered to, as hybridization is unwise!

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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.