Software as a Service, or SaaS, is a new way of delivering software for companies that need them to run their business operations. Traditionally, software was delivered as a package. This meant the company had to buy the software, pay someone to learn how to use it (including the cost of the course and travel expenses) and pay that person to manage the software and maintain it over time. This was costly and many times the company never realized any return on their investment from the software.
SaaS is a new delivery model that allows companies to use software only as they need it an in increments that they need it. But there are different ways to price the software that is being used. Here are 5 pricing models that you’ll see with regard to SaaS.
- Periodic fees – These could be weekly, monthly or yearly. In this pricing model, you are a subscriber. You pay the fee periodically no matter how often you use the service. Use it more often and your cost per use is lower.
- User fees – Some SaaS providers charge you according to the number of users who will access the account. This can range from free to thousands of dollars.
- Feature fees – With some software you pay only for the features that you use. For instance, a particular software package might offer you 20 features but you are only interested in 10 of them. You pay for those 10 features and gain access to those 10 features any time you want to use them.
- Unit fees – Some software is deliverable by unit. You can pay for each unit that you use. For instance, you might use a particular amount of bandwidth. You’ll pay only for the bandwidth that you use and nothing else.
- Time logged on – You may pay for software as you go in time increments. Instead of paying a monthly or weekly subscription fee, for instance, you might pay a usage fee by the minute or the hour. For every unit of time you are logged on you’ll pay the agreed upon service price.
Traditional pricing models won’t work for SaaS. When you deal with on-demand services like SaaS, be prepared to pay as you go.