SaaS Business Model: How Software Companies Make Money
Learn how the SaaS business model works, which metrics matter, and which public companies use it.
Primary Query
SaaS business model
How This Model Works
Software-as-a-Service (SaaS) companies deliver software over the internet and monetize via recurring subscriptions or usage-based pricing. Revenue quality depends on retention, expansion, and pricing power, while margin quality depends on gross margin discipline and sales efficiency.
Companies On Visuwire Using This Model
Metrics To Track
- Recurring revenue growth
- Gross margin
- Net revenue retention
- Free cash flow margin
Required Internal Links
- Parent sector hubs: Cloud Computing, Enterprise Software
- Related comparisons: MongoDB vs Datadog, Shopify vs Salesforce
- Supporting glossary: Gross Margin, Free Cash Flow, Operating Margin