The software industry has gone through many changes in the last few years. Software as a Service (SaaS) is booming in this internet age.
SaaS has become an important aspect of running a business in the internet era. However, SaaS technology refers to an application that is hosted by a provider on the server’s side and accessed by clients through a secure internet connection.
With SaaS technology , there is always a growth in the Monthly Recurring Revenue (MRR) and Customer Lifetime Value (CLV) which helps to lower the Customer Acquisition Cost (CAC).
“In the future of SaaS will largely depend on buyer and consumer choice. Businesses are taking note of buyer behavior and switching to subscription-based business models.
From a company perspective, the goal is to provide many different applications to satisfy consumer needs and buying behaviours.
The future will also depend on creating an ecosystem that will allow businesses to integrate into a partnership-driven community.
The integrator will be the winner.”
– Grant Goodwin, President, AllRoads
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The model of the SaaS industry largely depends on retention and you can keep your customers paying month over month for a longer period of service.
Retention depends on customer engagement and both are the lifelines of every SaaS business.
Along with faster and more reliable internet, including lower barriers to entry in the multiple markets, this has paved the way to a new generation SaaS tools. The audience that needs these new solutions reaches out to these SaaS companies.
According to SaaS benchmarking survey, let’s have a look at the difference between new customer acquisition cost (CAC) and the cost of upselling to existing customers (per $1 of New Annual Contract Value),
In SaaS upsells, it’s all about the value. If the customer can see the value of the upsell compared to his or her current subscription or purchase level, then they will understand why they need to buy.
Neil Patel, Co-Founder of Crazy Egg
Market Estimations
According to Forbes by 2018, 27.8% of the worldwide enterprise applications market will be SaaS-based, generating $50.8B in revenue up from $22.6B or 16.6% of the market in 2013. From IDC study data, you will find
You can refer to the below image of the SaaS success achieved by these largest SaaS companies of 2021 and 2022 by delivering SaaS tools..
(Source: BMC.com)
- Salesforce, Intuit and Oracle controlled 35% of the worldwide SaaS market in 2013; this could continue to decline as other companies have now established a strong foothold in the market.
- The worldwide SaaS operations and manufacturing applications market will reach $5.8B by 2018 – In 2013 7.3% of all applications were SaaS based and this is set to increase to 10.30%
- Cloud applications will account for 90% of all worldwide traffic data by 2019 an almost 10% hike seen from usage stats at the end of 2014.
(Source: drip.com)
“Organizations are advancing their timelines on digital business initiatives and moving rapidly to the cloud in an effort to modernize environments, improve system reliability, support hybrid work models and address other new realities compelled by the pandemic,” said Brandon Medford, senior principal analyst at Gartner
It’s the right time, to go for SaaS application for a rocking business as the future being bright.
Coming to betterbuys SaaS Report 64% of small and medium businesses today rely on cloud-based technology to drive growth and boost workflow efficiency and 78% percent of businesses indicate that they plan to expand the number of SaaS platforms.
Research analysts forecast a growth to $12 billion in 2016, a jump to $16 billion in 2017, and a continued growth year over year to a whopping $55 billion by 2026.
The subscription models now account for more than 50% of new software implementations over traditional on-premise licenses.
It’s estimated that by 2020, about a quarter of organizations in emerging regions will be running their core CRM systems via SaaS, a 10 percent increase over 2012.
More than 1,400 SaaS companies were founded in the last five years.
Among every industry, marketing comprised nearly 4 in 10 of these relatively recent SaaS startups.
Application pricing is always a hot debate and customers or users are looking more and more convenience regarding this.
Usually subscription and transactional models are used by the SaaS vendors.
In subscription model a periodic (monthly, yearly, or seasonal) payment to gain access to products or services where in transactional model you pay as you use the products and services.
The subscription-based pricing model works for services that deliver true value to users, now and in the future.
Why SaaS Subscription Is The Future
1. Provides Regular And Sustainable Income
SaaS subscription model gives regular and predictable revenues to the SaaS vendor though for a specific period of time.
As a vendor, you can track your monthly revenue to get your estimated income rather projection.
The subscription price can be easily paid by users and customer as it is cost effective and broken into smaller payments.
Wakeupsales CRM Tool Pricing Model
2. Scalable And flexible Pricing Model
SaaS subscription pricing model is scalable and flexible in nature with a long-term plan. Traditional pricing model may create problems in the competitive and fluctuating market.
SaaS provides a balanced and adjustable pricing which can be easier for buyers and users to afford. The regular billing cycle also helps users a lot.
Orangescrum Project Management tool Pricing Model
3. SaaS More Focuses On Towards Retention Of Existing Customers
A business owner always relied on new customers but in SaaS relief the burden of focusing more towards new leads and prospects.
Serving better to existing customers with high-quality support and update them to the paid membership is the basic rule of SaaS.
Quality service to existing users is the key reason for its popularity. It is secure, solve wide ranges of business problems and improve your profit margin.
4.SaaS Provides Data And System Security:
As any subscription billing service handles a large amount of information of their customers, information such as credit card details, address and sometimes even bank account and their social security numbers. And the cybercriminals always look for chances to exploit any weakness.
Hence, to resolve this issue the providers are always equipped with all the latest in network and data security that includes up-to-date encryption protocols and strong defense against the known hacking techniques.
I’ve worked with the team at Andolasoft on multiple websites. They are professional, responsive, & easy to work with. I’ve had great experiences & would recommend their services to anyone.
Ruthie Miller, Sr. Mktg. Specialist
Salesforce, Houston, Texas
It is not only applicable for the actual billing servers, but it is also for the security of the connection from the customers.
5. Subscription Billing Integration:
The major factor that implements growth of Saas companies for the future is when the clients can smoothly integrate the subscription billing service in their operations. With a quality subscriptions billing provider, makes it easy for it’s clients to customise the appearance and feel of the billing application that fits perfectly in what they are going through. It provides customizable billing portals which can be easily embedded in the existing website’s of the client
Conclusion:
No doubt software as a service has bright future and it is grabbing the attention of both consumers and vendors.
The subscription-based pricing model is more effective than the traditional. It is delivering true results to the end users with cost-effective price.
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