SaaS (Software as a Service) sales have grown tremendously over the last few years and Apple launched the first generation of the Apple I store basing its success on this concept. It is no surprise that SaaS sales are growing rapidly.
It is becoming more and more apparent that SaaS is a business model which combines different business models. SaaS is dominated primarily by businesses on the small to medium size side, however, this does not mean that there is nothing for large businesses.
SaaS choices have taken over the market because they offer a lower total cost of ownership than on-premise solutions. However, you may not be getting all of the cost savings you believe you are if your team isn’t making the most of these apps. That’s why SaaS spend management and spend management platforms are so important in terms of cost control.
Types of Hybrid Approaches to Saas Sales
SaaS sales can come in a number of different forms. A hybrid sales approach to SaaS sales can be thought of as a mix of several different business models.
Recurring billing
Recurring billing is when a user pays for a service on a monthly basis. This is most common with subscription-based businesses.
For example, Netflix is a subscription-based business. You pay a monthly fee and get access to the content you want.
On the other end, Game subscription services allow you to download games to your device and play them on the go.
SaaS with a fixed cost
The second type of sale is a fixed-cost SaaS sale. This type of sale occurs when a customer pays for a service up front but pays a monthly fee for the service.
For example, a software membership which costs $50 a month.
Free Trials
SaaS products that use free trials draw in customers. Often customers will use a SaaS product for free for a limited time, the aim of this is to test out the product and make sure it is right for them. For example, a sales CRM (Customer Relationship Management) or any other sales software that offers a free trial.
For example, a CRM (Customer Relationship Management)Â or sales software that offers a free trial.
Open-source
Open source sales allow you to sell SaaS products through a different route. Rather than having a cost per install, you have to pay for a license.
For example, Open source CRM software.
Some companies will try to sell you on SaaS apps that are designed to be independent pieces of software. However, if you scratch the surface you will see that in most cases SaaS apps are actually add-ons or revisions to other existing software. For example, if you are researching a CRM app, the CRM app may be designed as a standalone app but in most cases, the CRM app is actually a subscription to a CRM system that is already existing.
For example, you could have a CRM system that costs $100 a month but with the addition of a SaaS app that allows you to sync your Facebook and LinkedIn profiles, your CRM system can increase to $200 a month.
The beauty of SaaS apps is that they do not have to develop their own software. The companies developing the app already have the infrastructure in place which they then sell as subscriptions.
Services as a Service (Saas)
Services as a Service is the second type of service which is inherently linked to the software.
For example, if you are researching a CRM app, the CRM app may be designed as a standalone app but in most cases, the CRM app is actually a subscription to a CRM system that is already existing.
Advantages
The advantage of recurring billing is that it makes it easier to generate recurring sales. If a customer signs up for a year, they will then continue to pay that monthly cost every year.
The advantage of a fixed-cost sale is that the customer is paying for the service upfront, so they will know exactly what they are getting.
The advantage of open-source sales is that potential customers who are against the idea of a recurring bill, for whatever reason, will find open source sales more appealing.
To decide whether you should use recurring billing or a fixed-cost sale, you need to take into account the customers you target.
For example, if you are trying to sell your SaaS product to an SMB (Small to Medium Business), then you are likely to make more sales if you use a recurring billing model.
On the other hand, if you are trying to sell your SaaS product to a larger business then you are likely to make more sales if you use a fixed cost sale.
You have to decide what your customers will respond well to.