What is SaaS
SaaS (Software as a Service) is a software distribution model offering products on a subscription basis. Users access via browser or app, with no installation or maintenance on their side. Examples: Slack, Notion, Stripe.
Definition
SaaS products are built on multi-tenant architecture (shared infrastructure for all clients with data isolation), include built-in billing (subscriptions, usage-based, freemium), self-service onboarding, and analytics. Revenue is recurring (MRR/ARR), making SaaS attractive to investors.
How It Works
SaaS lifecycle: MVP (2-3 months, $25-50k) — core feature, basic billing, auth → Product-Market Fit (3-6 mo) — retention iteration, feature expansion → Growth (6-12 mo) — enterprise features (SSO, audit logs), infra scaling → Scale (12+ mo) — multi-region, SOC2 compliance.
When to Use
SaaS fits when: you have a repeatable problem across many companies (HR, accounting, CRM), can deliver value through self-service (without enterprise sales), are willing to invest 6-12 months until profit, and the market accepts subscription model.
When NOT to Use
SaaS does not fit when: market prefers one-time purchases (mobile games, content), needs deep customization per client (this is custom development), or has a narrow market (<100 potential customers).
Related Terms
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