SaaS (Software as a Service)
Software delivered over the internet as a subscription rather than installed on a user's machine.
SaaS is the dominant model for selling software. Customers don't install or maintain it; they log in and use it, paying monthly or annually. The vendor handles hosting, updates, and security.
SaaS economics favor recurring revenue, low marginal cost per user, and relatively high gross margins. Almost every major B2B software product since 2010 Slack, Notion, Salesforce, Stripe, HubSpot is SaaS.
The pattern is changing slightly with AI: AI-heavy SaaS has higher variable costs (inference is real money), which is reshaping pricing toward usage-based or hybrid models.