The term “SaaS” (Software as a Service) is often used in different ways, but it generally falls into three main categories:

SaaS as a Delivery Model

SaaS refers to cloud-based applications accessed via the internet through a subscription. These programs require no manual setup, are accessible anywhere with an internet connection, and are regularly updated by the provider. Think of tools like HubSpot or Zoom that businesses rely on daily.

SaaS as a Business Model

SaaS businesses typically use one of two pricing models: usage-based or subscription-based. Usage-based pricing aligns cost with how much a customer uses the software, while subscription pricing offers a predictable fee, often billed monthly or annually.

SaaS as a Payment Structure

SaaS models rely on recurring payments, which benefit both businesses and customers. Customers receive consistent, high-quality service, while businesses enjoy predictable revenue streams that support better resource planning.

Interestingly, while SaaS literally stands for “software as a service,” the principles behind it (such as recurring revenue) can be applied to non-software businesses. By adopting SaaS-style revenue models, service-based businesses can build dependable cash flows and align their go-to-market strategies with modern revenue architecture principles.