Podcast: Play in new window | Download | Embed
Today we unpack a business model that perhaps has the most potential for your business, the SaaS business model. The SaaS, or Software as a Service, is full of all kinds of advantages and perhaps a few challenges, but you can’t deny it’s earning potential if done right. Join us as we discuss all of this in our final installment of Business Models for WordPress products.
SaaS Business Model
In the SaaS business model, the processing side of rendering the service is handled by you on your own server(s), and the customer or client accesses your service there. Sometimes the customer or client connects directly to the service, sometimes they install a product or plugin that connects, sometimes they build everything on your site then implement it on their website via a javascript snippet or similar for the service to work.
Examples:
- Optimizely
- Akismet
- Optin Monster
- WordFence
- Manage WP
- iTheme Sync
Advantages:
The key advantage to a SaaS model is that it is not confined to a single space in the market such as only WordPress sites; it can be implemented anywhere, meaning you have reach into 100% of the possible market.
With a SaaS model you have full control of your code base. Since WordPress plugins by nature are open source, anyone can take your code, relabel it, and sell it as a competing product. With the SaaS model your code is fully proprietary.
Also with a SaaS model, you retain full control of your server environment. With a plugin, you don’t control the environment that your plugin is installed on. With SaaS, you control your own server environment and can optimize that environment to your service’s needs.
FInally, gives you greater insight into how users are using your product: because everything is handled on your own site, you have full flexibility for A/B testing and observing how your product is being implemented.
Disadvantages:
Complexity, responsibility, and scalability. You need to maintain your own server infrastructure and ensure as close to 100% uptime as possible. Handling this task means you’re going to need a team behind it and likely a more expensive managed hosting plan.
Marketing. You must be able to market outside of your own community. You have to be a great marketer or willing to invest heavily into marketing.
Background: The SaaS model’s nature lends itself best to businesses with an already established team, knowledge base, support system, and hosting service. You can jump in new, but it is much harder than if you’re already established.
Which of These Models Should You Begin With?
There’s not a one-size-fits-all answer to that question, though it’s a question every fledgling business must answer. Jean and James have some good advice to help guide you into finding your own answer to that question:
- Consider beginning by building for an existing product (like Ninja Forms or EDD) or marketplace (ThemeForest, CodeCanyon) to see if the product idea will be well received by consumers.
- Be flexible and be ready to change models on the fly
- What are your goals? What kind of lifestyle do you want? Ask yourself this and the select the business model that will support the lifestyle you want to lead.
- What kind of initial funding do you have?
