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Announcing Byte: a design subscription assisted by AI

Announcing Byte: a design subscription assisted by AI

Is the SaaS model right for your product?

Some of the pros and cons to consider in SaaS business models

Some of the pros and cons to consider in SaaS business models

Giustino Borzacchiello
Giustino BorzacchielloApr 26, 2023

Building a product is never simple. We know!

There are so many markets to reach, ideas to evaluate and methodologies to follow…

For that reason, we want to look at SaaS products and examine some of the pros and cons behind them.

What’s SaaS

SaaS, or Software as a Service, is a software delivery model. In the ancient ages of software (more or less 25 years ago) you had to purchase a physical copy of the software (on CD, mostly) install it, and manage it locally on individual devices.

With SaaS applications are hosted, maintained, and provided to users over the Internet.

SaaS providers take care of infrastructure, updates, and security, allowing users to focus on utilizing the software to meet their specific needs.

Let’s review what other pros and cons are there to it.

1. Scalability

SaaS products naturally lend themselves to scalability.

Scalability offers the chance for teams to work in an agile manner. By working on features and shipping them more quickly to customers, teams can be freed from traditional methods that can create longer production times with extreme deadlines at the end (e.g. if this product fails, this will end the company).

Scalability also frees your investors who can feel more in control of the entire process. By testing each new feature with customers, the whole process becomes more reactive and allows for changes in direction (large and small).

Another great advantage is that the addition of new features over time gives new value to users who are paying monthly. This in turn can help build loyalty and, when communicated in the right way, generate excitement with your user base.

In order to make scalability work for you and your company, it’s important to plan the order of your features and what each release will contain. Users expect high-quality products and market competition is high, so you need to make sure that your product brings value to customers right from the get-go.

2. Remote Access

Remote access is a double edged sword and really depends on your users’ habits.

If your users are always connected to the internet, remote access can give your audience freedom of access. They just need a device and an internet connection in order to access your platform anywhere from anywhere in the world!

Think of Spotify, Google Suite or Microsoft Office. SaaS products can let you work or relax anywhere so it can be a huge offering to users.

However, if you have users who don’t have (stable) internet access, then you’ve got a big problem. If they can’t access your platform, they can’t use it.

The way to solve this dilemma is through research. Understand your users and their needs to determine whether SaaS is the right offering for them.

You could decide to implement offline support in your SaaS or go for a different distribution model.

When in doubt, always come back to the user!

3. No need to install software

While we know that different people have varying levels of comfort with technology, it can be surprising how uncomfortable it is for some. A survey of over 200,000 people showed that 26% of the adult population cannot use a computer at all and 14% cannot do simple tasks, like deleting an email.

That means around 40% of the adult population struggles to do almost anything on a computer.

SaaS products help this pain point by removing the task of installing new software. SaaS products can be opened easily in a browser and some offer the possibility to download their app as a side offering. This removes a huge entry barrier for many users who are already uncomfortable with technology.

While SaaS products do require compatibility with a user’s browser & operating system, they still offer an easier point of access for all users which is not to be ignored.

4. Data Security

This is a big worry for many users and companies. From a company’s point of view, a big question is “How can we protect users’ data?”

While there are no guarantees in life, there are a number of steps you can take to protect your users’ data and the company’s reputation. These can include setting up firewalls around both hardware and software, using VPN when accessing remotely and implementing policies that require strong passwords.

For users, you need to keep in mind that they are being asked to put trust in a new organisation. They need to know that they are in safe hands and that you have the right security in place to protect their data.

5. Easy upgrades

Not only are new software releases easily upgraded in SaaS platforms, but they also allow users to change their access/payment plans more simply.

Gone are the days of having to phone up a company and enter a lengthy discussion in order to unlock a new upgrade.

Now, with a single click, users can upgrade within a few minutes when they feel ready. This allows them to start on a free or smaller model and upgrade as their needs change, allowing for trust and loyalty to be built over time.

6. Limited customization

SaaS products generally offer very limited customization. This might seem like a small matter when you are looking at the global scale of a new product but they can be extremely important:

  • Salesforce have found that 84% of consumers say being treated like a person, not a number, is very important to winning their business,

  • Segment reported that 71% of consumers feel frustrated when a shopping experience is impersonal,

  • While SmarterHQ writes that Millennial brand loyalty increases by 28% if they receive personalized communication.

Take a look at your target audience and your market: how do they respond to customizations? If the answer is “highly”, then you’ll need to consider whether there’s a way that a SaaS version of your product could optimize customization for your users.

These are just a few of the many pros and cons to consider before launching a SaaS product. There is no “right answer” because it comes down to your product and audience. What are you offering and to who? Would a SaaS structure be the right path forward? Learn about your user base and what their needs and habits are to find the answers!

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