A Startup is a newly formed business with particular momentum behind it based on perceived demand for its product or service. The intention of a startup is to grow rapidly as a result of offering something that addresses a particular market gap.
Startups can adopt various business models depending on their industry, target market, and the value they offer to customers. Some common types of business models that generally startup founders adopt are E – Commerce , Subscription or SAAS, On Demand, Marketplace, Freemium, Peer-to-Peer, Licensing, Affiliate, Data Monetization, Hybrid Models etc.
A startup can also innovate and create new business models tailored to their unique value proposition and market conditions. The choice of business models depends on factors such as the target market, industry dynamics, competitive landscape, and the startup’s core capabilities.
One of the most popular models in Startup’s is Subscription based model or SAAS (Software as a service model) model.
• What is SAAS Model ?
The term “SAAS” stands for Software as a Service. It is a business model in which software applications are provided to customers over the internet on a subscription basis. In the SAAS model, the software is centrally hosted and managed by the provider, who delivers it to customers via the internet.
• Why Startup adopt SAAS model?
Startups that adopt the SAAS model develop software applications that cater to specific business needs or provide solutions for various industries. Rather than selling traditional software licenses, these startups offer their applications as a service, accessible through web browsers or dedicated client software.
• What are the Features of SAAS model ?
Some key features of the SAAS model are :
- Subscription-based: SAAS startups typically charge customers a recurring subscription fee to access and use their software. This model provides ongoing revenue for the startup, ensuring a steady stream of income.
- Centralized hosting: The software is hosted on the provider’s infrastructure, which allows users to access it remotely via the internet. This eliminates the need for customers to install and maintain the software on their own servers.
- Scalability: SAAS startups can easily scale their software to accommodate the needs of their growing customer base. Since the software is centrally managed, updates and enhancements can be deployed to all users simultaneously.
- Lower upfront costs: SAAS startups often offer their software on a pay-as-you-go or monthly subscription basis, which reduces the upfront costs for customers. This makes the software more accessible to businesses of all sizes, including startups themselves.
- Continuous updates and support: SAAS providers are responsible for maintaining and updating the software, ensuring that customers always have access to the latest features and bug fixes. They also provide customer support to address any issues or queries that users may have.
The SAAS model has gained popularity among startups due to its flexibility, cost-effectiveness, and ability to reach a wide range of customers. It allows startups to focus on software development and innovation while leaving the hosting, infrastructure, and maintenance aspects to the provider.
Author : CA. Sahil Lalit Jain
Designation : Partner
Mobile No. : 7597550036