SAAS is all the talk these days. Given the prominence of technology in an age driven by digitization and the Internet, the SaaS model is extremely popular. SaaS simply means that you have a software product and you’re selling it as a service rather than as a one-time commodity sale. SaaS (software as a service) is best described as a “hosted solution” or “web based solution.” The software application is accessed via the internet by the end user.
Like any subscription-based service (think gym memberships, newspapers, etc.), with a SaaS product, people subscribe to and pay a monthly, quarterly, or yearly fee depending on the business model. The pricing strategy is an essential component of a SaaS product, so you’ll need to carefully consider yours.
The SaaS business model is still relatively new and many entrepreneurs fail to completely grasp how it works. This often leads them to believe that they can make huge profits without realizing how tough it is to get through the initial periods. Furthermore, it’s even harder explaining this concept to potential investors. That’s why you really need to focus your business plan on ensuring that the investor understands the concept and why you’ll sustain losses in the beginning. Your business plan should be aimed at building investor confidence.
Your business plan will require careful planning and detailed analysis of all facets of your business. Unlike plans for other types of businesses, the company overview for a SaaS business must include a detailed breakdown of your software.
This will go a long way in explaining your prices as well. The investor will want to see what your software brings to the table and if the price you’re planning to charge will be acceptable to the market.
Next, you need to decide how you’ll position yourself in the market. In the document, explain what exactly your software does and how it’s different, what kind of support services you’ll provide, and how you justify your pricing strategy. This is different from your product explanation mentioned earlier. This is where you quantify your software and your services.
In conclusion, if you’re looking to raise funding to launch a SaaS-based business, you’ll need a well-thought-out business plan to put your best foot forward and impress potential investors. Once you’ve done your research on the competitive landscape and determined your pricing, you can start crafting your business plan.