Software as a service (SaaS) is a business model for software development which makes use of cloud-based infrastructure rather than a single software package or server. It’s becoming the most popular way to create software products and services, with a growing number of businesses making their software available as a service.
The businesses offering software as a service are called software as a service (SaaS) businesses. SaaS businesses have a variety of advantages over the traditional software development model, because they can offer their software to customers more easily, without being constrained by the cost of acquiring and running a software installation on a suitable server. This flexibility is one of the reasons why almost every major business has at least some software as a service software on its website.
And yet, there are many misconceptions about software as a service, which is why it’s important for SaaS businesses to understand the benefits and limitations of their business model, and how to make sure they’re getting everything out of it that’s possible. In this post, we’re going to take a look at the most common misconceptions about software as a service.
. Software as a service is the same as software-as-a-service
Software as a service and software-as-a-service are not the same. Software as a service refers to the model for creating and delivering software, while software-as-a-service is one of the models for deploying that software on the internet.
Many people use the term "software as a service" to describe any company that has web-based or cloud-based software. But it's important to keep in mind that many companies offer their software for download or installation on your own server, without using any type of internet hosting.
. SaaS is a flat monthly fee
One of the most common misconceptions about software as a service is that it’s a flat monthly fee. This isn’t true. Software as a service can be composed of many different parts, so while there may be some elements, like storage or processing power, which are fixed costs per month, other things could change with time.
For example, if you offer your software as a service on a monthly subscription basis and want to change the features available, then you may need to charge more for it in order to incentivize people to sign up for it. This is one of the disadvantages of software as a service: because customers don’t pay up front for it, they have no upfront cost to consider when deciding whether or not they want to use your product.
Similarly, if you offer your product on an annual basis and want to make some changes to how much it costs or what features are included in the package, your customers will need to know ahead of time before they commit to keep paying for their subscriptions at old rates. However, these risks can be mitigated by including automatic renewals in your terms of service agreement and altering them periodically so that people know what's happening in advance.
. You don’t need to know SaaS development
One of the most common misconceptions about software as a service is that you don’t need to know how it works in order to use it. This couldn’t be further from the truth; as a SaaS business, you need to understand the technology behind your product, and how it can be improved.
In order to improve your SaaS product, you need to understand what features are lacking and why potential customers might find them unappealing. You also need the knowledge necessary to make sure your product has the security features necessary for modern software development. And because there are so many moving parts in any successful SaaS product, you need to have expertise in all aspects of its operation.
. SaaS is a great way to attract new customers
In an era where more and more people are looking for convenience and efficiency, software as a service products have much to offer. The advantages of SaaS can help businesses grow their customer base by attracting new customers who may not be interested in downloading and installing software themselves.
The most common misconception about SaaS is that it’s only compatible with computer-related services, but this isn’t the case. There has been a major shift in how many industries do business today, which means that a variety of industries now use SaaS for their business needs. If you use any type of product or service that could be delivered digitally—such as books, music or even groceries—there’s likely an app for that!
. SaaS apps are better for B2C than B2B
While it’s true that software as a service is ideal for B2C, because they usually have more customers than companies do, this misconception is often reversed. In fact, software as a service is better for B2B businesses, because they don’t have to worry about managing their own servers, and can use the computing power of the SaaS company instead.
. SaaS is only for startups
SaaS businesses are often associated with startups, but that doesn’t mean that they can’t be used by more established companies. Software as a service is not only for startups; it’s also available to mature businesses looking to keep costs down and reach new customers.
. SaaS makes your product obsolete
The common misconception is that because a product becomes a service, it’s no longer necessary for you to update it.
In reality, the opposite is true: software as a service makes your product more valuable.
This misconception comes from the idea that when you offer your software as a service, you’re no longer offering an up-to-date version of the software. However, this simply isn’t true. In fact, in many cases, the SaaS model requires more regular updates than traditional software does because SaaS products can be accessed by anyone who logs in.
So if customers are expecting updates and new features on a frequent basis, then an SaaS business will have to provide them or risk losing clients. This means that it’s actually more expensive to offer an outdated version of your product with SaaS than with traditional software development. In fact, some businesses will find that they need to provide additional services and support to keep up with consumer demand for regular patches and updates to their service.
. You have to work in the cloud to make your software as a service
Many people think that you have to build your software as a service in the cloud, but this isn’t true. Many SaaS providers offer software on their own servers, which means they don’t need to be reliant on third-party providers. This doesn't mean you should avoid working in the cloud if possible though, because it offers a number of benefits for a business. For example, it's easier to scale up and out when you work in the cloud than when you use an internal server. The prices are also much lower as well.
. You can’t make money from SaaS
The first misconception is that you can’t make money from SaaS. In the past, this might have been true, but it’s not an issue anymore. Nowadays, there are many different pricing models available for software as a service businesses to offer their products and services to customers. One such model is in-app purchases, which allow customers to pay for upgrades and additional features they want with the purchase of the base product. This pricing model is popular because it allows customers with small budgets to purchase a basic product and then add more features as they grow their business.
Another popular pricing model is subscriptions. Subscriptions allow people to use your software for a set time period or until you cancel your subscription. You’ll receive regular payments for your subscription, and the customer will get access to all new features you release up until the end of their subscription term.
There are many other ways that SaaS businesses can make money from their products; there’s no one way that works for every company on every market niche, so it’s important for each company to figure out what works best for them.
Software as a service is a model that many businesses are turning to, but it bears the responsibility of ensuring they’re getting everything out of it that they can. In this post, we’ve looked at some common misconceptions about software as a service and how to avoid them. We’ve also discussed some of the most important benefits and limitations of the software as a service business model.