Understanding SaaS Architecture, Their Pricing And Profitability

As today’s digital landscape continues to rapidly evolve, businesses are constantly seeking new technologies to stay ahead of the competition. One such solution that’s been recently taking the workplace by storm is Software-as-a-Service or SaaS programs.

The SaaS model has revolutionized how modern employees work, remote or not. They provide cost-effectiveness, scalability, and flexibility, among other benefits. 

If you’re unaware of SaaS, you’ll be surprised at how prominent they are today. Keep reading below to learn more about this model. In this guide, we’ll explore all the crucial information you need to understand how SaaS solutions can help you.

Understanding the SaaS Model 

The SaaS architecture is a popular software delivery method that relies on cloud computing. In this model, a vendor or provider hosts an application on a remote server, making its features accessible to online users. That means instead of installing and running programs on individual devices and servers, users can access an application and its components on their web browsers or through a downloaded application. 

Because of its online nature, shared access within an organization is possible. Unlike traditional software, these solutions provide easy access to company data and various intelligent features without relying on specific operating systems and configurations.

SaaS is prominent across multiple workplace processes, including project management, payroll and accounting, and communications. Some of the most famous examples of SaaS solutions are the Google Suite, Salesforce, HubSpot, and Slack.

Learning the SaaS Pricing Models

One of the many benefits of SaaS solutions is how they’re generally economical. There’s no need for pricey installations because programs are accessible through web browsers or are free to download from app providers. Recurring costs like maintenance and upgrades will no longer be a factor because SaaS companies handle and provide their own.

Additionally, the pay-as-you-go or subscription-based pricing models of SaaS solutions eliminate the financial risks of expensive software. It’s also worth noting that all of these companies offer free trials of their programs to help customers gauge if they want to use more features, helping them save money from unnecessary purchases of incompatible or unhelpful products.

SaaS companies also offer many pricing models that fit every budget and needs. Generally, customers must only pay for what they need, or a provider will charge depending on use.

We’ve listed these SaaS pricing models below so you can understand them better.

Flat rate

SaaS companies use flat-rate pricing to offer one product and the same features at a single price. Customers have the option to pay for a program monthly or annually. Many providers offer discounts for those opting for an annual subscription because it ensures longer customer partnerships.

The most popular SaaS solution that provides this single pricing model is BaseCamp. BaseCamp is a project management application that caters to small teams. Hence, it’s reasonable pricing.

Pay-as-you-go

The pay-as-you-go or usage-based model is where the SaaS company charges users depending on their consumption within a given period. If customers use more of the program, their bill goes higher. Otherwise, it decreases when they use less. This pricing model is standard in development and infrastructure tools like Agolia and Twilio.

Tiered

Tiered pricing is the most common model that many SaaS companies implement. They use this to offer multiple packages with different feature combinations at numerous price points. The best thing about this model is that it caters to various needs, allowing customers to choose a package or plan that suits their requirements.

HubSpot is one of the many SaaS companies that perfectly implement tiered pricing. They offer three tiers: Basic, Pro, and Enterprise. These packages provide solutions depending on user size and needs, from beginner marketers to marketing teams.

Per user

The pay-per-user model is famous for its simplicity. It involves a single user who pays a fixed monthly price to access a SaaS solution. If this user wants to add another individual, the price doubles, and so on. 

The online design platform Canva offers a variety of pricing, including their pay-per-user model, Pro. Pro includes every premium solution that Canva provides minus the features built for big teams.

Per active user

This pricing model is a variant of the per-user setup. Through this model, the SaaS company only charges customers depending on the number of active users on the platform. This is common with solutions targeting large enterprises, ensuring businesses don’t waste money on inactive users. 

The communication company Slack is the most famous example of this pricing model. Regardless of how many users customers pay for, the company only charges for people who use the software.

Per feature

Much like the per-user setup, the per-feature pricing model charges customers depending on the functions they want to acquire. SaaS companies that offer this model create packages that include more features as the prices increase. That means customers must pay more if they need access to additional tools.

An example of this model is the note-taking platform Evernote. Evernote provides three different packages: the Basic, Plus, and Premium, with features unlocked at each plan.

Other Benefits of SaaS Solutions

Aside from being cost-effective, SaaS solutions offer excellent flexibility to users. And because a third-party provider hosts the software online, customers can change their plans anytime depending on their current needs, whether scaling up or down. 

SaaS programs don’t require particular operating systems or other device configurations. Users can access any application without issue if they’re connected to the internet. Because of that, companies can quickly mobilize their workforce anytime and anywhere, boosting their productivity rate regardless of their project, from marketing to web development. 

SaaS applications also elevate workplace collaboration. Certain features like file-sharing, simultaneous access, and communication allow employees to relay ideas better and ensure everyone is working with the latest information.

All these benefits and more help companies enhance their processes. Because of that, they improve their services, ultimately leading to better profitability.

Leverage the Right Tools 

The SaaS model is an innovative architecture that enables the company to improve their overall processes through different programs. With numerous benefits like cost-effectiveness, scalability, and high compatibility, organizations can achieve more and strive in such an aggressive digital landscape, regardless of their industry.