--- title: SaaS - Business & Revenue Model Considerations description: SaaS - Business & Revenue Model Considerations --- [![e-Zest logo\_An accion lab company\_Colour](https://blog.e-zest.com/hubfs/images/Logos%20with%20Tagline/Corporate/SVG/e-Zest%20logo_An%20accion%20lab%20company_Colour.svg "e-Zest logo_An accion lab company_Colour")](https://www.e-zest.com/) - [WORK](https://www.e-zest.com/our-work) - [SERVICES](https://www.e-zest.com/our-services) - [Product Engineering](https://www.e-zest.com/digital-product-engineering-services) - [Enterprise Data Services](https://www.e-zest.com/enterprise-data-services) - [Digital Commerce](https://www.e-zest.com/digital-commerce-services) - [Digital Operations](https://www.e-zest.com/digital-operations) - [Digital Consulting](https://www.e-zest.com/digital-transformation-consulting-services) - [Digital Experience Design](https://www.e-zest.com/digital-experience-design) - [INSIGHTS](https://blog.e-zest.com/) - [CAREERS](https://www.e-zest.com/careers) - [ENTERPRISE DATA SERVICES](https://www.e-zest.com/enterprise-data-services) - [GENERATIVE AI](https://www.e-zest.com/generative-ai) - [Healthcare](https://healthcare.e-zest.com) - [Contact Us](https://www.e-zest.com/contact-us) - ![Elevating Product Engineering with AI and ML](https://blog.e-zest.com/hubfs/Elevating%20Product%20Engineering%20with%20AI%20and%20ML.jpg) [BLOGS](https://blog.e-zest.com) #### Elevating Product Engineering with AI and ML As technology evolves and customer choices broaden, there is an increasing ... 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Having seen successes and failures with different revenue and business models of product engineering companies (ISV’s), I would like to highlight key learning’s around business, service delivery and revenue model - Product companies, including license software companies, recognize revenues immediately upon sale and delivery of the product. SaaS/cloud companies sign customers up front but recognize revenue over time as the service is delivered - For a product company, a ratio like sales and marketing expense, expressed as a percentage of revenue, is a meaningful approximation of sales efficiency. For SaaS/cloud companies sales efficiency can be measured by ratio of sales and marketing expense (for a quarter) to the change in revenue for the following quarter - In SaaS/cloud environment, growth and churn in users both create pressure for reducing total cost of service - User experience is critical aspect of SaaS/cloud products. If users are not happy with user experience they can swiftly change the vendor. In SaaS/cloud environment vendor change costs are significantly lower than packaged solution offerings - Boundaries of SaaS, PaaS, IaaS and other subscription offerings will merge eventually. Products need to be scalable and extensible to support it - Single feature in license product might become successful independent SaaS/cloud product(e.g. Box, DropBox for file synchronization) in multi-device and internet mobility access environment - Building Minimum Viable Product(MVP) and collecting customer feedback is essential before big-bang product releases for SaaS/Cloud products - Every product is not worth SaaS/Cloud enablement. SaaS is more relevant for companies and solutions targeting - Large numbers of end users - Users must access the application from outside the “four walls” of the corporation (sales force automation, collaboration) - Cloud computing enables new functionality (web conferencing, web analytics) - - - ### Similar Blog [![Top global technology trends to watch this week - Week 20, 2019](https://blog.e-zest.com/hubfs/blog-files/Slide20.jpeg) Top global technology trends to watch this week - Week 20, 2019 **Experimentation has increased due to cloud computing, says AWS** By Corporate May 24, 2019](https://blog.e-zest.com/top-global-technology-trends-to-watch-this-week-20-2019) [![Tech Highlights - Week 34, 2018](https://blog.e-zest.com/hubfs/Tech%20digest%20week%2034.jpg) Tech Highlights - Week 34, 2018 **Mobile Phones to be a major driver for e-Commerce** Online shopping has gained momentum thanks to many apps created to make ... 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