What is Software as a Service? : Basics of SaaS in Cloud Computing


SaaS stands for software as a service. SaaS is one of the cloud computing services models. The other two are IaaS (Infrastructure as a Service), and PaaS (Platform as A Service).

Cloud computing is the method to deliver computing, software, hardware, and platform facilities as per the requirements and demands of the consumer or user. Which include hosting, data storage, application or software, and development or designing tools, security, reports, and communication channels as a service subscription plan.

What is SaaS?

Software As A service is a method to sell, distribute, or give access to the user to use the software. Consumers or customers have to pay monthly, quarterly, half-yearly, and yearly subscription fees to use the software. The licensing, features, and accessibility of the software are based on subscription packages.

Examples of Software as Services:

  • Google Drive – Storage, Google Docs, Google Slides, etc.
  • Microsoft 365
  • Hot Star & Netflix
  • Amazon Prime
  • Adobe Creative Cloud
  • Wix Website Builder
  • Hosting and Data Storage
  • DropBox


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RelatedTop 10 powerful ways to learn Cloud Computing (SAAS) (IAAS) (PAAS)

In other words, it’s like a monthly or yearly pre-paid/post-paid mobile phone data or TV recharge plan. When the subscription plan expires, then you have to pay again to use that software.

We can also say that SaaS (Software as a service) is a rental scheme. Like website hosting package is also a rental scheme.

The use of software for user become costly. And it becomes a fixed cost and liability for the business or users or subscribers for many years or as long as they use it.

And SaaS becomes a recurring revenue for the software company, distributor or seller.

How Software AS A Service Cloud Computing software distribution model work:


  • Subscription Plan:

You pay upfront to buy the subscription of the software through a credit card or another payment method. Most of them only allow payment through credit cards. (Note: The use of credit cards only as a payment method is a business strategy and it reduces the cost of the company to retain the customers).

  • Download the Software or Use it on the Web or through Web Browser:

If you purchase a subscription plan then you will get an email. In which you will find a link to download the software. And if it’s based then you will also get access through user-id and password.

  • Activation:

Once installation or login is done, now you have to activate your subscription. Mostly it’s through licensing key.

Types of software as a service subscription plan:

Software as service subscription plans is based on the selling strategy of the company. In most cases, it’s based on monthly, quarterly, half-yearly, and yearly plans. SaaS companies use pricing or selling tricks and techniques here to make it looks like subscription plans attractive and buyable.

The SAAS/IAAS/PAAS subscription plans are created based on the following things:

  • Pricing is based on per-user access.
  • Pricing is based on the selected features.
  • Pricing is based on the on-demand extra feature requirements.
  • Real-time billing means to access and use.
  • Pricing is based on the use of the services. Such as different plans for students, business owners, and professionals.

RelatedPowerful Uses of Cloud Computing

Cloud computing and Software as a Services software business model or subscription plans are promoted or marketed with the following lines or engaging lines:

Software is always up to date, has 24/7 Support, Easy to access/Accessibility expansion etc. While SaaS-based application provides a free trial version of the application for the customers that help to decide to buy or not to buy the software subscription plan.

These days, almost all software development companies, software developers or IT companies think and plan Software AS A Service distribution or business model. And many of those software startups or software development companies market, promote, and sell their software through licensing or subscription plans.

Following are the advantages and disadvantages of using Software AS A Service:

  • Advantages of SAAS for Software Development Company/Startup and Distributor:
    • Cost deduction in software distribution, management, support, and updates.
    • Recurring monthly and yearly revenue is important especially important for startups to sustain and become profitable. And SaaS is just for that.
    • Attracts more funding for the SaaS startup because the investor gets assurance that if the product worked, then the company will become profitable very soon and they will start getting the returns on their investment fast.
    • The SaaS cloud computing model decrease or reduces software piracy and illegal use of the software in the computer and market. Due to that more sales and profit are generated by the company.
    • Through SaaS product/service/updates gets to the customers fast.
    • Data is generated, analyze and automate in real time. User behavior data gives so much power to the company to promote and add new features and create new pricing and business strategy.
    • It makes the business competitive and modern.
    • SaaS cloud computing use helps software development company to expand their reach fast and become bigger in quick time.


  • Advantages of SAAS for consumers or users:
    • Easy to access the software on all devices (mobile/computer/tablet).
    • Single-channel data storage. I mean 1 file in one place and it can be accessed from any device.
    • Auto Scaling. It means features and services of the software scale up automatically if more users start accessing the application for visiting the website or app. Like auto-expansion of storage capacity when the 20 GB limit is reached.
    • SaaS software subscription increases productivity because less time is invested in software installation, maintenance, and development/work environment set up in the computer.
    • SaaS increases collaboration and quick communication and accessibility to the apps/software between team members.
    • SaaS enables the business owners/admin to control/limit/expand the software access to a specific team member and group.
    • Data analytics and reporting. It means software user gets reports as per the uses of software and user behavior.

 Disadvantages of SAAS for software development companies/startups/distributors:

    • Competition is based on quality. That means it’s very important to provide the highest quality, support, and features inside the software. It increases pressure for creativity and innovation on employees and teams. And due to that productivity suffer. And it also becomes tough to retain the employee due to work overload.
    • SaaS required a higher standard of customer support because people are paying each day. It’s because users can get various types of errors in real-time, it might be due to their own computer, but they will always think it’s because of the software but it will also increase the cost for SaaS.
    • Most of the common users and small business owners think to use open-source software or one-time cost software. Due to that SaaS software sales decrease.
    • Due to alternative tools or increased costs in business operations, small business owners prefer freelancers who have the required software instead of buying that software on their own. Due to that it reduces and decreases subscription sales.
    • Pay per click advertising cost of SaaS gets increased or gets loss in advertising if the landing page visitor is not able to pay 1st time or not able to understand the concept.
    • Difficult or negative customer retention rate.
  • Disadvantages of SaaS for consumers or users:
    • Have to pay each month as per the user access. Is a fixed cost and liability. The alternative is open-source software or one-time payment software.
    • Required internet access all the time to use the software. Along with the highest speed or high-speed internet connection. And this also increases the cost or doubles the cost of the internet in business.
    • Many times, the user only needs to use 2 or 3 features more but they have to pay for 20 other features extra.
    • Not in all 12 months, did SaaS users use the software. For example, you get only 1 project in a month but to remain profitable you needed 5. Due to that, your income in that month decreased. But you have to pay (already paid for this month in the subscription plan) not to matter, whether you use it or not. Just like an office or house rent.
    • Auto deduction for a credit card or unable to remove the credit card details from the software.
    • Many times, SaaS companies use complex structures to remove the subscription and credit card details from their software.
    • Security of personal and business information is also a big issue. It’s because data is saved or stored on third-party platforms. If that gets compromised then it’s a direct loss or competitive disadvantage for the business.

 So, this is all about the basic things that you need to know about Software as A Service. I want your points of view on this. What do you think is Software as a Service is the necessity of the time or is it useful or good to use the Software as a Service method?

Please share your points of view (as per consumer or user or developer or software company or business owner or manager) in the comments.

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