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What are the Different Types of SaaS Billing?

D. Nelson
D. Nelson

Software as a Service (SaaS) is a kind of software that is accessed through the internet. A SaaS provider runs software online in a user's network so that it is protected by a user's firewall, which regulates access and prevents non-network users from viewing privileged information. This kind of software is used in a number of different industries and allows users to access necessary or helpful software without having to install it or download it, meaning that it is often less time consuming and much more efficient than conventional software models. There are two primary kinds of SaaS billing: subscription billing and fee billing.

SaaS billing that is based on a subscription model allows users to access software without having to make numerous payments. Subscriptions are often paid up front and allow clients a predetermined amount of access. The amount of access may be determined by the amount of time a client has access to the software, such as for one year. In some cases, a client may pay for a certain number of hours of software usage.

Woman doing a handstand with a computer
Woman doing a handstand with a computer

Users who prefer subscription based SaaS billing believe that it is convenient because they don't have to keep track of payments and may receive reminders when a subscription is about to expire. This billing model often works best for those who know that they need access to certain software for a length of time and that they can depend on accessing the software again and again. Also, those who choose to use this model of SaaS billing normally are confident in the services offered by the provider since they are committing to a term of usage.

A fee model of SaaS billing normally requires that clients pay each time they access software. This method is preferred by those who may only need to access software a few times. Others who are searching for the best provider may choose fee based billing because they don't feel that they are ready to commit to one provider for an extended length of time.

Some SaaS software is designed to be used as tools for businesses and organizations that are selling products and services. In these cases, SaaS providers may choose to collect a certain percentage of revenues from client businesses. The percentage that the provider expects depends on a number of factors, such as the size of the client business and the nature of the industry in which the client operates. These services may also require subscription payments or usage fees to supplement the commission taken from revenues.

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