Market & Business
SaaS
Software as a Service — cloud-delivered software accessed via subscription, generating recurring revenue. The dominant business model in modern enterprise software.
SaaS (Software as a Service) is a software delivery model where applications are hosted in the cloud and accessed by customers via subscription — rather than installed on-premises with a one-time license fee. SaaS became the dominant enterprise software model in the 2010s, displacing traditional on-premise software. Key characteristics: predictable recurring revenue (ARR/MRR), high gross margins (70-80%+), scalable infrastructure costs, network effect opportunities, and high switching costs once integrated. SaaS unit economics are evaluated on metrics like NRR, churn, CAC, LTV, and ARR growth rate. The SaaS model is highly attractive to VCs because of revenue predictability, scalability, and the potential for net dollar expansion (charging existing customers more over time). Salesforce pioneered enterprise SaaS; Slack, Zoom, and Datadog are more recent exemplars.