# What is SaaS? > What is SaaS? Software as a Service explained: subscription model, benefits for businesses, SaaS vs traditional software, examples, and building a SaaS app. Canonical: https://app369.com/glossary/what-is-saas/ [← Back to Glossary](https://app369.com/glossary/) Quick Answer **SaaS (Software as a Service) is a software delivery model where applications are hosted in the cloud and accessed via the internet on a subscription basis, eliminating the need for local installation and maintenance.** **SaaS (Software as a Service)** is a software distribution model in which applications are hosted on a provider’s servers and delivered to customers over the internet, typically through a web browser. Instead of purchasing software outright and installing it on local machines, users pay a recurring subscription fee and access the application from anywhere with an internet connection. ## How SaaS Works SaaS applications run on a **multi-tenant architecture**, meaning a single instance of the software serves multiple customers simultaneously while keeping each customer’s data isolated and secure. The SaaS provider handles all infrastructure, maintenance, security patches, and updates. Users simply log in and use the product. **Subscription pricing** is the standard SaaS revenue model. Plans are usually tiered (Free, Pro, Enterprise) with monthly or annual billing. This makes software accessible to businesses of all sizes because the upfront cost is low compared to traditional software licensing. **Automatic updates** are a defining trait. When the provider ships a new feature or fix, every user gets it immediately. There is no need to download patches, run installers, or coordinate upgrade windows across an organization. ## SaaS vs Traditional Software Traditional software requires purchasing a license, installing the application on each device, managing your own servers or infrastructure, and handling updates manually. If something breaks, your IT team is responsible. SaaS eliminates all of that. **No installation** is needed because everything runs in the browser. **Lower upfront cost** because you pay monthly instead of buying a perpetual license. **Automatic updates** mean you always have the latest version. **Access anywhere** because any device with a browser and internet connection works. **Reduced IT burden** because the provider manages servers, security, and backups. ## SaaS Examples SaaS powers much of the modern business world. **Slack** handles team communication. **Salesforce** manages customer relationships. **Notion** organizes documents and knowledge bases. **Zoom** provides video conferencing. **Shopify** runs e-commerce stores. **HubSpot** automates marketing and sales. These products range from free tiers for individuals to enterprise plans costing thousands per month, but they all follow the same core model: hosted software, accessed via the internet, paid for by subscription. ## Benefits for Businesses **Lower IT costs.** No servers to maintain, no software to install, no manual updates. **Scalability.** Add or remove users as your team grows or contracts. Plans scale with your needs. **Accessibility.** Teams can work from any location on any device. **Automatic backups.** Data is stored in the cloud with redundancy, reducing the risk of data loss. **Faster onboarding.** New employees can start using the product immediately without waiting for IT to provision hardware or install software. ## Key SaaS Business Metrics If you are building a SaaS product, four metrics define your business health. **MRR (Monthly Recurring Revenue)** is the predictable income you earn each month from subscriptions. **Churn rate** measures the percentage of customers who cancel in a given period. **LTV (Lifetime Value)** estimates the total revenue a customer generates over their entire relationship with your product. **CAC (Customer Acquisition Cost)** is how much you spend to acquire each new customer. A healthy SaaS business has an LTV-to-CAC ratio of at least 3:1. ## Building a SaaS Product A SaaS application typically requires several core components. **Authentication and authorization** manage user accounts, roles, and permissions. **Subscription billing** integrates with payment processors like Stripe to handle plans, upgrades, downgrades, and invoicing. **Admin dashboard** gives you visibility into users, revenue, and product usage. **Analytics** track engagement and help you understand how customers use the product. Most successful SaaS products start as an [MVP](https://app369.com/service/mvp-development/) with only the core value proposition and one or two pricing tiers. Additional features, integrations, and enterprise capabilities are added after the product has validated demand with real paying customers. ## Typical SaaS Development Cost The cost of a SaaS MVP depends on complexity; see our [fee structure](https://app369.com/fee-structure/) or the [app cost calculator](https://app369.com/tools/app-cost-calculator/) for a range. A simple SaaS tool with basic CRUD functionality, authentication, and Stripe billing sits at the lower end. A platform with real-time collaboration, complex permissions, third-party integrations, and advanced analytics will approach the higher end. ## Build Your SaaS with App369 At [App369](https://app369.com), we help founders and businesses turn SaaS ideas into launched products. Our [web app development service](https://app369.com/service/web-apps/) covers the full stack, and our [MVP development service](https://app369.com/service/mvp-development/) is designed to get your SaaS to market fast with the architecture needed to scale. [Contact us](https://app369.com/contact/) to discuss your SaaS concept. ## **Related Terms ** [what is mvp](https://app369.com/glossary/what-is-mvp/) [what is api](https://app369.com/glossary/what-is-api/) ## **Related Services ** [web apps](https://app369.com/service/web-apps/) [mvp development](https://app369.com/service/mvp-development/) ## **Prefer a fixed price?** Fixed scope, fixed price, paid upfront. The work happens in writing; no call needed. - [**Web App MVP Sprint**from $6,000A scoped web app MVP in Vue/Nuxt or React, with a fixed quote after a $450 written scoping.](https://app369.com/fixed-price/web-app-mvp/) - [**App Fix Ticket**from $450One reproducible bug in an existing mobile or web app, diagnosed and fixed.](https://app369.com/fixed-price/flutter-firebase-bug-fix/) - [**Monthly Dev Subscription**from $1,495/⁠monthOne development request at a time, most back in about 2 business days. Pause or cancel anytime.](https://app369.com/fixed-price/monthly-dev-subscription/) Start here ## **Need help with SaaS (Software as a Service)?** App369 specializes in building custom applications. Get a detailed estimate by email, usually within one business day, or book a consultation ($100 per 15 minutes, paid upfront). [**Get in Touch **→](https://app369.com/contact/) [**Get an Estimate**](https://app369.com/instant-quote/)