SaaS (Software as a Service)
A software delivery model in which the customer accesses the application over the internet on a subscription basis, with no local installation. The vendor hosts, maintains and updates the software. Key metrics are ARR, churn, NRR and CAC payback.
In practice
SaaS transformed software economics: a traditional publisher sold a one-off licence at 100,000 euros; the same product as SaaS bills 12,000 euros per year, building an ARR that grows with add-on modules. Over ten years at 5% churn, the economic value far exceeds a one-time licence sale. The gross margin target for a mature SaaS is 70-80% once hosting and support costs are absorbed.