What is a SaaS Business? (Software as a Service)

In the past, we used to buy CDs of software programs and install them on our computers. Now, we prefer to use services on the internet by paying a subscription instead of installing software on our devices. This growing trend is known as SaaS or Software as a Service.

A Lady in 90s, installing software using CDs

But why is SaaS becoming so popular? Because SaaS has completely changed how software is delivered and used. This model offers flexibility, scalability, and significant cost savings.

In this article, I will break down the key points you need to know about SaaS businesses, covering what they are, how they work, and why they’ve become so popular.

What Exactly is SaaS?

SaaS stands for Software as a Service, and the name says it all—it’s software offered as a service. Think of it as renting software instead of buying it. Unlike traditional software that you purchase and install on your machine, SaaS applications are hosted on the cloud and accessed over the internet. This means you don’t need to worry about installation, updates, or technical support—the SaaS provider handles all of that.

For example, you might already be familiar with Netflix, Google Docs, or Slack. These are all SaaS tools. The software is housed on a server owned by the provider, and all you need is a device with internet access to use it. The provider takes care of maintenance, security, and updates.

How SaaS Works

In simple terms, everything happens over the cloud. Here’s a breakdown of the most important features:

Subscription-Based Payment

SaaS operates on a pay-as-you-go model. You usually pay a monthly or yearly subscription fee, making it more affordable than traditional software. There are no large upfront costs, and you can often cancel or change your subscription at any time.

Cloud Hosting

SaaS software isn’t stored on your local device. Instead, it’s hosted on the provider’s servers, typically managed by large cloud service providers like Amazon Web Services (AWS) or Microsoft Azure. The SaaS provider takes care of everything from storage to backups, security, and performance updates.

Remote Access

One of the major advantages of SaaS is that it’s accessible from anywhere. All you need is an internet connection, and you can use the software on multiple devices, whether you're at the office, at home, or on the go.

A great example of this is Google Workspace (formerly G Suite), which includes Google Docs, Sheets, and Drive. You don’t have to install anything on your computer. You simply log in via a web browser and start working.

Challenges of SaaS

While SaaS offers many benefits, it relies on the internet. Here are some challenges you should be aware of:

Internet Dependence

Since SaaS apps are cloud-based, you need a reliable internet connection to access them. If your internet goes down, you might lose access to essential tools, which can disrupt your workflow.

Security Concerns

Your data is stored on the provider’s servers, so you’re trusting them to keep it safe. Most reputable SaaS providers have strong security measures in place, but it’s still important to research a provider’s security protocols before signing up.

Limited Customization

SaaS tools are designed to cater to a broad audience, so they might not meet all of your specific needs. Some businesses might require more customization than what a typical SaaS platform offers. Traditional software that you install locally might offer more control, but it comes with the added complexity of managing and maintaining it yourself.

SaaS (Software-as-a-Service) is generally categorized into two main types:

1) B2B

2) B2C

Let's understand what these mean.

What is B2B SaaS?

B2B SaaS stands for Business-to-Business Software as a Service. In this model, the software is designed to serve other businesses, helping them streamline their operations. For example, Salesforce is a B2B SaaS product that helps sales teams manage customer relationships.

In B2B SaaS, your customers are companies rather than individual consumers. These businesses pay a subscription fee to use your software, which helps them solve a business problem, whether it’s customer management, collaboration, or accounting. One major advantage of B2B SaaS is that companies often have higher budgets, making B2B SaaS potentially more profitable than B2C SaaS.

What is B2C SaaS?

B2C SaaS stands for Business-to-Consumer Software as a Service. Instead of selling your product to other companies, you sell it directly to consumers. Popular examples of B2C SaaS include Netflix, Spotify, and Dropbox.

B2C SaaS products are usually designed to solve personal, everyday problems. For instance, Netflix provides streaming entertainment, while Dropbox offers personal cloud storage. Since your customer base is individual consumers, the pricing for B2C SaaS is generally lower than B2B SaaS, but you can reach a much larger audience.

B2B vs. B2C SaaS

Feature	B2B SaaS	B2C SaaS
Target Audience	Other businesses	Individual consumers
Revenue Model	Higher pricing, fewer customers	Lower pricing, larger customer base
Sales Cycle	Longer and more complex	Shorter and simpler
Customer Support	Requires dedicated support teams	Typically more automated support
Marketing	Often requires personalized outreach	Can rely more on broad marketing

In B2B SaaS, businesses often sign larger contracts, allowing you to generate more revenue from each customer. However, acquiring new customers can be slow due to longer sales cycles, as decisions often need approval from multiple stakeholders. On the plus side, once businesses integrate your software into their daily operations, they tend to be more loyal, resulting in lower churn rates.

In B2C SaaS, it's easier to scale quickly and gain many users, as decisions are faster. Consumers can sign up instantly, driven by user-friendly marketing and quick onboarding. However, revenue per customer is lower, and churn rates are higher, as individuals can easily cancel or switch to competitors. Freemium models can also lead to users exploiting free tiers by signing up with multiple emails.

Examples of SaaS Businesses

Here are a few well-known examples of both B2B and B2C SaaS businesses:

B2B SaaS Examples:

HubSpot: A marketing, sales, and service platform that helps businesses attract leads, convert customers, and automate marketing tasks. HubSpot is popular among businesses of all sizes for its CRM and inbound marketing tools.

Asana: A project management tool designed to help teams organize tasks, track progress, and collaborate more efficiently. Businesses use Asana to streamline workflows and ensure better project execution.

Trello: Another project management tool that helps businesses and teams visualize and manage tasks in a card-based system. It’s used for organizing projects, task tracking, and collaboration among teams.

B2C SaaS Examples:

Spotify: A popular music streaming service that provides users with access to millions of songs and podcasts. Spotify operates on a freemium model, offering both free and premium subscription tiers.

Canva: A graphic design platform that allows individuals to create professional-looking graphics, presentations, and social media content without the need for advanced design skills. Canva is widely used by both professionals and casual users alike.

Duolingo: A language-learning app that offers interactive lessons in multiple languages. Duolingo uses gamification to engage individual users and provides both free and premium versions.

SaaS vs Traditional Software

To better understand the value of SaaS, it’s helpful to compare it to traditional software:

Feature	SaaS	Traditional Software
Payment	Subscription-based	One-time purchase
Hosting	Cloud-based, provider-managed	Installed and managed locally
Maintenance	Handled by the provider	Handled by the user
Updates	Automatic and seamless	Manual updates
Access	Anywhere with internet	Limited to specific devices

Is SaaS Right for Your Business?

You might be asking yourself, “Is SaaS right for me?” Here are some factors to consider:

Budget: SaaS is generally more affordable in the short term. If you want to minimize upfront costs, SaaS can be a great option.

Flexibility: If your business is growing or you need tools that can scale as your needs change, SaaS provides the flexibility to upgrade or downgrade your plan.

Ease of Use: If you don’t have a dedicated IT team or don’t want the hassle of managing software updates and security, SaaS is a perfect fit.

On the other hand, if your business requires highly specific software that isn’t easily customized or has strict data security needs, traditional software might be a better choice.

That was the general perspective; now let’s understand SaaS from the builder's perspective.

Building a SaaS Business: A Builder's Perspective

Now, if you're thinking about building your own SaaS product, there are specific things to keep in mind. Building a SaaS business isn’t just about coding a great app—it involves planning, scalability, and understanding your customers’ needs.

1. Identify a Problem

A successful SaaS business starts by solving a specific problem. What gap in the market can you fill? For example, Slack solved the problem of team communication across multiple platforms by providing a unified workspace for messaging and collaboration.

2. Market Research

Once you identify a problem, validate it with thorough market research. Talk to potential customers, study your competitors, and make sure there’s a demand for your solution. Use forums, social media groups, or surveys to gather real data.

3. Define Your SaaS Model

How will you deliver value? What pricing model will you adopt? Most SaaS businesses use a freemium model (offering a free version with paid upgrades) or tiered pricing, where users pay more for additional features. The key here is to provide enough value upfront to entice users into upgrading.

4. Develop the MVP (Minimum Viable Product)

Building a full-featured app from the start is expensive and time-consuming. Instead, create a minimum viable product (MVP)—a version of your product with just enough features to attract early adopters and validate your idea. Platforms like Bubble.io or Webflow can help build an MVP without extensive coding experience.

5. Choose Your Tech Stack

Decide on the technology you'll use to build your SaaS. For a scalable, modern app, cloud services like AWS or Google Cloud are popular choices. You also need to consider the front-end (what the user interacts with) and the back-end (where all the data processing happens).

6. Ensure Scalability

Your SaaS should be built to scale. As more users sign up, your infrastructure needs to grow without affecting performance. The cloud makes this easier because you can simply add more server capacity as your user base grows.

7. Security & Compliance

Trust is key in SaaS. Your users will be entrusting you with their data, so make sure you have strong security measures in place. This includes encryption, secure login methods, and regular security audits. Compliance with laws like GDPR (for data protection) is also critical.

8. Launch & Iterate

Once your MVP is ready, launch it and start collecting feedback from your users. A SaaS business is never “done”—you need to continually improve the product, add new features, and fix bugs based on customer feedback.

This is the typical process of building SaaS if you are a technical person. But what if you are non-technical or don't have much time and budget? You can choose no-code platforms to build SaaS.

Build SaaS with No-code Platforms

If you decide to use no-code platforms, you can skip four steps: security, deployment, tech stack, and scalability. Really?

Yes, platforms like Bubble handle everything, including real-time deployment, security best practices, and scalability as your app grows. It is also 40-60% cheaper and faster than the traditional development process. With Bubble, you can build anything using its drag-and-drop editor. However, mastering best practices for app architecture, workflows, and responsiveness may take a few months of learning.

If you don’t have enough time or expertise, don’t worry. Zeroqode is here to help. Our expert team of Bubble developers and designers have successfully built over 300 apps on Bubble, and some of our projects have even been selected for Y Combinator’s batch of 23.

When you partner with Zeroqode, you can focus on market research and marketing while we handle all aspects of your app development—from initial design to final deployment.

Check out our portfolio and 700 Bubble plugins.

That’s a Wrap

In the end, SaaS will always be in demand as long as there are problems to solve. Identify the best problem and solve it. Building SaaS with no code is a good choice to save time. Although it may take some failures to build a successful SaaS, it is worth the effort.

That's all for today. See you soon in the next articles in our SaaS series.

Can Solo Entrepreneurs Create SaaS Solutions? Best 6 No-Code Web App Builders

Pratik M

Pratik is a technical writer passionate about AI, no-code tools, and the SaaS ecosystem. He enjoys building creative side projects and sharing his insights to help others explore the limitless possibilities of no-code and AI.