MY ONE BLOGby Manishdai
Cloud & DevOps

What is Software as a Service?

Quick answer

A model in which software is hosted in the cloud and delivered to users over the internet, usually through a subscription.

Software as a Service, explained

With software as a service (SaaS), you do not install or maintain the application yourself. You sign in through a browser or app, and the provider handles hosting, updates, security, and backups. Common examples include email platforms, office suites, customer relationship management tools, design apps, and project management software.

SaaS businesses typically earn recurring revenue through monthly or annual subscriptions, often priced per user or by usage tiers. Important metrics include monthly recurring revenue, churn rate, customer acquisition cost, and lifetime value. For customers, SaaS lowers upfront costs and simplifies maintenance, while raising concerns about data ownership, outages, price increases, and dependence on the vendor. Many SaaS products integrate with each other through APIs and webhooks.

Related terms

Annual Recurring Revenue

The yearly value of a company's subscription or contract revenue that is expected to repeat, a key metric for SaaS businesses.

Churn Rate

The percentage of customers or subscribers who stop using a product or cancel a subscription during a given period.

Cloud Computing

Delivering computing resources such as servers, storage, databases, and software over the internet on a pay-as-you-go basis.

Customer Relationship Management

Software and practices, known as CRM, for managing a business's interactions with customers and prospects in one shared system.

E-Signature

An electronic way to sign documents and agreements online, legally recognized for many transactions in most countries.

Online Booking System

Software that lets customers see availability and book appointments, tables, rooms, or classes online without calling the business.

Platform as a Service

A cloud model that provides a ready-to-use environment for building, deploying, and running applications without managing servers.

XaaS

Anything as a Service: the broad trend of delivering products, tools, and capabilities over the internet as subscription-based services.

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