6 Tips to Help You Create a SaaS Business Model That Works


The SaaS business model is still quite young and certainly unique in many ways. In order to create a plan for your company’s growth, you’ll need to understand the basic principles of how SaaS works. 

Ever since the term “SaaS” back was coined back in 2005, the software-as-a-service industry has been on the rise. With more revenue pouring into SaaS than ever, now is the perfect time to join the SaaS bandwagon. 

What is SaaS?

Software as a Service or SaaS is a cloud-based service where instead of downloading, maintaining, and managing software, you access an application via the internet. The software application can be anything from eCommerce to office software. With SaaS, service provider partners maintain responsibility for performance, security, and availability. 

Let’s take a look at some stats that illustrate the current state of SaaS:

  • In the first quarter of 2019, the enterprise SaaS revenue passed $100 billion run rate. In addition, the SaaS market continues to grow by about 30% a year. 
  • Nearly 75% of companies indicated that almost all their apps will be SaaS by 2021.
  • 85% of small businesses will invest in SaaS solutions by 2020.
  • Nearly 90% of CIOs are planning to adopt cloud SaaS.
  • By 2021, the corporate mobile market within SaaS is expected to be worth $7.4 billion.
  • The average employee uses at least eight apps and the company spends an average of $2,8 in SaaS subscriptions on them.

6 Tips to Help You Create a SaaS Business Model That Works

1. Get Ready to Wear More Than One Hat

Get ready to multitask a lot in the early phases of your SaaS startup. You will most likely be on your own or have only a handful of people to support you, so besides being a CEO and founder, you’ll also have to stay on top of a variety of other tasks like marketing, sales, content creation, lead generation, hiring employees, and whatnot.

Remember to keep your priorities straight. Although you’ll be mainly focused on attracting new customers, make sure you don’t forget about your existing ones. You also need to keep developing and improving your product to meet your customers’ requirements.

2. Try Different Pricing Models

When creating your pricing model, think about your customers. What do they value? What is their behavior? Communicating with your existing customers can help you figure out why they want to use your product. 

Try several different pricing models, with a strong emphasis on annual plans in order to reduce early customer churn and make some cash. Also, ensure that there is a balance between users and revenues. 

3. Security is Everything

The security of your SaaS product can either make or break your business. You need to ensure that all customer data is kept safe. Customer usage and project data also has to be backed up and safely stored. Your data infrastructures and centers should have the latest security upgrades.

4. Focus on Customer Relationship 

Customer relationships are vital for any SaaS business. Unlike traditional software companies that rely on one-time revenue, the revenue in SaaS is recurring and depends on subscription renewals. This means that if your existing customers don’t renew their subscription, the stream of revenue will stop and your business model will fall apart. 

For that reason, it’s very important to develop and maintain strong relationships with your customers. But you can’t just interact with your customers during the renewal period. You need to be there for them all the time, explaining how your product works, answering their questions,  learning about potential problems, etc.

This will help you secure repeated revenue but also give you an opportunity to resolve any issues with your product and make the necessary improvements.

5. Value Your SaaS Company

So, you’ve implemented all the tips and did everything right. But how do you know if your Saas company is actually successful? How do you determine what your SaaS business is worth in case you decide to sell it? For that, you need a SaaS company valuation

Knowing how to value your SaaS business empowers you to make better decisions about its future, regardless of whether you’re considering a sale or you’re simply curious how you stack up against the competition.

6. Hire Professional Help

If the valuation results did not meet your expectations, it’s probably time to think about professional strategic consulting.

A professional SaaS consultant can help you with onboarding, team structure, development, and marketing to make sure that your SaaS company is successful.

There’s a number of benefits to hiring a good strategic SaaS consultant for your company’s growth. A good strategic consultant will:

  • Handle market research and come up with a specific plan to strategically position your business;
  • Develop growth strategies tailored for your business’ unique needs;
  • Advise you on opportunity costs and budgeting;
  • Create processes and a product development life cycle.

Some SaaS consultants may specialize in just B2B SaaS, others in just B2C. It’s important that you find one with the ideal background to what you are looking to improve in your business. 

Final Words

The SaaS business model offers huge value and can scale quite fast provided there’s enough demand. Standing out in a crowded SaaS industry is definitely not easy, but if you manage to understand your customers and their pain points, you’ll be able to offer efficient solutions and start off on the right foot.


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