Software as a service (SaaS) is a business model that gives people access to an application on a pay-as-you-go basis. It enables businesses to drive stable recurring revenue while being more affordable to people.
Examples of SaaS companies:
- Adobe CC
Before SaaS, companies like Adobe used to sell lifetime licenses. For example, Photoshop used to cost a few thousand dollars. When Adobe switched to the SaaS model, Photoshop was less than $30/month, and the whole creative suite was less than $100/month.
Even though it was more expensive for people, most of them could afford it in the long run. This opened Adobe to a broader market and increased long-term revenues.