SaaS Monetization Strategies
Can SaaS really make money? Or put it another way, what are the different ways SaaS vendors can monetize their offerings. I came across an interesting blog post by Gur Kamal Singh Badal here where he talks about monetizing software as a service (present trends and future outlook). I have summed up what he says with my views and have thrown in some ideas of my own.
1. Ad Revenue - Give the service for free and capitalize on ad revenue.
Personally, I am still not convinced about serving ads when customers are using a business software. Sure, Google has done it with Gmail, Apps etc. but they are still consumer technologies. We are thinking of serving ads on the DeskAway free plans but haven’t made a decision yet. Would people like seeing ads when working on projects or collaborating with teams? Which one would you choose - a vendor serving ads or a vendor not serving ads?
2. Subscription Revenue - Let users access your service for a monthly/yearly fee. Variations include fixed vs. usage/tracking, volume, component-based pricing.
Subscription revenue is very predictable - obviously, once you have been in business for some time (generally 6-8 months) you have also calculated the churn rate (how many people drop off). Personally, I prefer fixed subscription fee coupled with an a la carte type of offering where users could pay more for exclusive features.
3. Enterprise Version
With 2 versions - Small Business & Enterprise, SaaS vendors can charge more for larger accounts that need more security, support, customization (though I don’t recommend having multiple code bases) etc.
4. Service on top of Software
Complimentary services could also fetch a premium. I think SlideRocket (you can create presentations on their platform) offers research/market data when creating your slides. Interesting.
There are probably more out there that people are trying out. If you have/are implementing any cool strategies, please feel free to share your views.
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