Gartner Research

Monetize Digital Business Opportunities by Mastering SaaS Business Model Principles

Published: 02 January 2019

ID: G00378000

Analyst(s): John Santoro, Bill Ryan

Summary

Many companies lack the expertise to implement a SaaS business model. Technology product managers must develop the necessary skills in order to monetize their organizations’ digital business opportunities.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Master SaaS Pricing, Packaging and Subscription Levers
    • SaaS Customers “Rent,” Not “Own” the Application
    • Pricing Metrics and Packaging Are Used to Monetize SaaS Subscriptions
    • Term Length and Contract Terms Are Also Key Business Model Levers
  • Create Realistic Financial Projections
    • SaaS Has a Higher Marginal Cost Than Traditional Software
    • SaaS Subscription Revenue Is Recognized Over the Term, Not at Time of Sale
  • Use SaaS-Specific Sales and Compensation Practices
  • Build Robust Development, Support and Service Delivery Capabilities

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