SaaS (Software-as-a-Service) companies make money by charging customers for the use of their software applications or services. The revenue model for SaaS businesses typically involves a subscription-based pricing structure, where customers pay a recurring fee for access to the software.
There are several common pricing models used by SaaS companies, including:
- Per-user pricing: Customers are charged a fee for each user that accesses the software.
- Tiered pricing: Customers are offered different levels of service or access based on their needs, with higher tiers typically costing more.
- Usage-based pricing: Customers are charged based on the amount of usage they generate, such as the number of transactions processed or the amount of data stored.
- Freemium model: Customers are offered a basic version of the software for free, but are charged for access to additional features or functionality.
In addition to these pricing models, SaaS companies may also generate revenue through other means, such as advertising or partnerships with other companies. However, the primary source of revenue for most SaaS businesses is through the sale of subscriptions to their software applications or services.