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SaaS Economics

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SaaS vs The Perpetual License Model. Founded in 1998, VMware went public on August 14, 2007.

SaaS vs The Perpetual License Model

Founded a year after VMware in 1999, Salesforce.com held its initial public offering three years earlier on June 23, 2004. From a temporal standpoint, then, the two companies are peers. Which is one reason that it’s interesting to examine how they have performed to date, and how they might perform moving forward. Another is the fact that they represent, at least for now, radically different approaches to the market. VMware, of course, is the dominant player in virtualization and markets adjacent to that space. SaaS vs. Traditional Software Licensing Model – StartupNorth. Global software vendors are starting to feel the disruptive effects of the software as a service business model (“SaaS”).

SaaS vs. Traditional Software Licensing Model – StartupNorth

The SaaS model is growing at an annual rate of 15%-20% and will likely represent approximately 25% of the overall software market in the next 5 years. Although this trend is starting to call into question the viability of the traditional software business model, we are quickly reminded that today 95% of software businesses still earn most of their revenues and profits from traditional perpetual licenses and maintenance revenue streams that continue to experience year-over-year single digit growth. For the large global vendors, it is difficult to transition from a traditional license to a subscription-based model.

The Economics of Software as a Service (SaaS) vs. Software as a Product. Practical Training.

The Economics of Software as a Service (SaaS) vs. Software as a Product

Proven Results. Alumni Resource Center Login 1-800-816-7861. SaaS Revenue Models Trump Licensed Software Revenue ModelsCloud Strategies - Making SaaS Businesses Work. The SaaS subscription business model trades high upfront (license) payments for a greater Customer Lifetime Value.

SaaS Revenue Models Trump Licensed Software Revenue ModelsCloud Strategies - Making SaaS Businesses Work

This increases the SaaS vendors overall value resulting company valuations over twice those of Licensed Software companies of the same revenue (Software Equity Group 2013). The transition from Licensed Software Models to SaaS Subscription Models for software vendors is challenging, but the long term benefits are great; particularly higher growth and higher company valuations. The greatest benefits are derived from the fact that customers are demanding SaaS and the majority of new applications are SaaS based.

The growth of the SaaS market is much greater than the Licensed Software market. Like other computing paradigm shifts: Mainframe>Mini>Client Server>Networked Computers>Internet Computing>SaaS - the transitions took time, but were unstoppable. SaaS 101: 7 Simple Lessons From Inside HubSpot. It’s been a little over 4 years since I officially launched my internet marketing software company, HubSpot.

SaaS 101: 7 Simple Lessons From Inside HubSpot

(The “official” date is June 9th, 2006 — for those that are curious about such things). So, I’ve had about 4 years on the “inside” of a fast-growing, venture-backed B2B SaaS startup. Quick stats: ~2,900 customers, ~170 employees and $33 million in capital raised. But, this is not an article about HubSpot, it’s an article about things I’ve learned in the process of being a part of one of the fastest growing SaaS startups ever. (I looked at data for a bunch of publicly traded SaaS companies, and the only one that grew revenues faster than HubSpot was Salesforce.com). In any case, let’s jump right in. 7 Non-Obvious SaaS Startup Lessons From HubSpot 1. Quick Example: Lets say it costs you about $1,000 to acquire a customer (this covers marketing programs, marketing staff, sales staff, etc.). 2 Retaining customers is critical. 3 It’s Software — But There Are Hard Costs. How to Project Cash Flow in a SaaS or Subscription. (3) What is a good per user per month pricing model for a SaaS Application?

Stop Per User SaaS pricing; You're Killing Growth. In the early 1990s USI said, “let there be the ASP” and at that very moment the cloud was born, fulfilling the dream of IBM’s 1960s experiments with utility computing.

Stop Per User SaaS pricing; You're Killing Growth

For the first time, the small seeds of SaaS began to grow. Developer collaboration reached new heights and features could be delivered almost instantly, leading the charge for Salesforce, Oracle, and the ever ironic "No Software" movement. There was a hitch in the steps of progress though - pricing. How should we price software that requires no physical delivery and deploys so quickly and cheaply that competitors and costs no longer matter? Well, unfortunately, most companies punted and followed what they knew best - per license models, which translated to per user models, causing a flurry of per user pricing that plagues SaaS to this day. KnowledgeStorm - The Enterprise Software, Hardware, Services, and White Papers Resource. Welcome. Salesforce (NYSE:CRM) estimates adding analytics and Business Intelligence (BI) applications will increase their Total Addressable Market (TAM) by $13B in FY2014. 89% of business leaders believe Big Data will revolutionize business operations in the same way the Internet did. 83% have pursued Big Data projects in order to seize a competitive edge.

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Despite the varying methodologies used in the studies mentioned in this roundup, many share a common set of conclusions. The high priority of gaining greater insights into customers and their needs, more precise information on how to best simplify sales cycles, and streamline customer service are common. The most successful Big Data uses cases illustrate how enterprises are getting beyond the constraints that hold them back from being more attentive and responsive to customers. Presented below is a roundup of recent forecasts and estimates: The global Big Data market is projected reach $122B in revenue by 2025. The Vision Lab®