SaaS

Also called Software as a Service

Software as a service: software delivered over the internet on a subscription, rather than installed and owned. The dominant model for business software.

Why it matters

SaaS brings recurring revenue, high gross margins, and constant improvement, which is why it drives so much startup value. Its economics, MRR, churn, LTV, CAC, are the metrics much of the startup world is built around.

For example

Instead of selling boxed software, Zoho delivers its tools over the browser on a monthly subscription, updated continuously for every customer.

Go deeper

SaaS Metrics 2.0: Detailed Definitions For Entrepreneurs · guide SaaS is defined precisely in David Skok's reference on SaaS metrics, with the formula and the mistakes to avoid. Open forentrepreneurs.com →

Related terms

Also in Starting Up

See how founders actually handle this on Building the product, part of the Starting Up hub.

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