SaaS · Definition
A plain definition of Software as a Service, how it works, how it compares with other models and how SaaS businesses earn revenue.
Last updated: October 2026. Written by Athar Ahmad, Certified Bubble.io Developer and Tech Architect, Simple Automation Solutions.
Quick answer
SaaS, or Software as a Service, is software hosted by a provider and delivered over the internet, usually through a browser, and paid for by subscription instead of being bought and installed. The provider maintains and updates it, and each customer’s data is kept separate within one shared application. Common pricing models are flat, per-user, tiered, usage-based and freemium.
Key takeaways
- SaaS = hosted software, accessed online, paid by subscription.
- Multi-tenancy lets many customers share one application with separate data.
- SaaS differs from PaaS, IaaS and on-premise software by who manages what.
- Pricing models: flat, per user, tiered, usage-based, freemium.
- SaaS MVPs can be built with no-code platforms.
In this guide
What is SaaS?
SaaS stands for Software as a Service. It is software delivered over the internet, usually through a web browser or app, and paid for by subscription rather than bought once and installed. The provider hosts, maintains and updates the software, and customers access the latest version whenever they log in.
How does SaaS work?
- The provider builds and hosts one application in the cloud.
- Customers sign up and pay a recurring fee, monthly or annually.
- Each customer’s data is kept separate, though they share the same underlying application. This design is called multi-tenancy. See how multi-tenant architecture works.
- The provider updates the software continuously, so every customer benefits.
- Customers can usually cancel or change plan as their needs change.
What are examples of SaaS?
| Category | What it does | Typical customers |
|---|---|---|
| Communication and collaboration | Messaging, video meetings, shared documents | Teams of every size |
| Customer relationship management | Track leads, clients and sales | Sales and service teams |
| Accounting and finance | Bookkeeping, invoicing, payments | Small businesses and accountants |
| Project management | Plan and track work | Agencies, consultancies, product teams |
| Industry-specific platforms | Clinic management, legal practice tools, property management | Specific professions |
| Client portals | Secure shared space between firms and clients | Law firms, accounting practices, consultants |
SaaS vs other cloud models
| Model | What you get | Who manages what |
|---|---|---|
| SaaS | Finished software you use | Provider manages everything; you manage your own data and settings |
| PaaS (Platform as a Service) | A platform for building and running apps | Provider manages infrastructure; you manage your app |
| IaaS (Infrastructure as a Service) | Raw computing, storage and networking | Provider manages hardware; you manage the rest |
| On-premise software | Software installed on your own servers | You manage everything |
How do SaaS companies make money?
| Pricing model | How it works |
|---|---|
| Flat subscription | One price per account |
| Per user | Price grows with each seat |
| Tiered plans | Basic, standard and premium bundles |
| Usage-based | Price follows volume, such as documents or transactions |
| Freemium | A free tier with paid upgrades |
What are the advantages of SaaS?
For customers
- Lower upfront cost and no installation.
- Automatic updates.
- Access from anywhere.
- Easy to scale up or down.
For the provider
- Recurring, predictable revenue.
- One codebase to maintain.
- Direct insight into how customers use the product.
- Easier to reach many customers.
What are the disadvantages?
- Ongoing subscription costs add up, especially per-user pricing.
- Dependence on the vendor’s roadmap, pricing and availability.
- Limited customisation compared with software built for you.
- Data lives with a third party, so security and data protection terms matter.
How is a SaaS product built?
A SaaS product needs user accounts, separate customer data, roles and permissions, subscription billing, onboarding, admin tools, email notifications and analytics. These can be built with custom code or with no-code platforms such as Bubble.io, which many founders use for MVPs. See how to validate a SaaS idea, what an MVP costs and our Discovery Sprint. Builds at Simple Automation Solutions start at $3,500.
Frequently asked questions
What does SaaS stand for?
Software as a Service.
What is the difference between SaaS and traditional software?
Traditional software is bought and installed on your own machines. SaaS is hosted by the provider and accessed online, usually for a subscription.
Is SaaS secure?
It can be. Security depends on the provider’s design, access control and policies. Review a vendor’s data handling and terms before storing sensitive information.
What is multi-tenancy?
A design where many customers share one application while each sees only their own data.
Can I build my own SaaS without coding?
Yes. No-code platforms can build many kinds of SaaS products, especially MVPs and multi-role web apps.
Thinking of building a SaaS?
Email us your idea and target customer. We will help you scope a lean first version.
Athar Ahmad, Certified Bubble.io Developer and Tech Architect, Simple Automation Solutions
About Simple Automation Solutions (SA Solutions)
Simple Automation Solutions is a Bubble.io development studio led by Athar Ahmad, a Certified Bubble.io Developer and Tech Architect. It builds web and mobile apps, client portals and SaaS products for founder-led businesses such as law firms, accounting firms, boutique agencies and consultants. Services include a free 30-minute Idea Audit, a $345 Discovery Sprint (a Product Requirements Document delivered within 24 hours, credited toward the build) and builds starting at $3,500. Website: sasolutionspk.com.
