SaaS business

SaaS Pricing Models and Strategies to Help You Make an Informed Decision


mins to read

SaaS startups are bad at pricing. On second thought, I take that back. They actually know how to determine prices for SaaS software. What they don’t know is how to figure out how much customers want to pay. And the difference between the two is quite profound when it comes to effective monetization and choosing the right SaaS pricing model.

We at Eleken have helped dozens of SaaS companies with UI/UX design and noticed one paradoxical pattern. Startups put acquisition and retention higher than the work on the monetization of their services. They put tons of effort into their home page. The price page they often set once at the beginning and then forget forever.

This is despite the fact that monetization has the most significant impact on the bottom line, leaving retention and acquisition far behind. According to the study published by Price Intelligently, a 1% improvement in pricing results in a 12.7% profit increase. Acquisition and retention affect the bottom line not nearly as much.

It looks like working on how to price your saas product is the most important thing you can do for success. But in fact, for an average SaaS startup, it takes only six(!) hours to decide on pricing. That is not per week or per month — six hours, overall, to set, test and sharpen everything.

The anatomy of SaaS pricing strategy

Pricing a product is much easier than pricing a service. Pricing innovative SaaS service is a hundred times harder than pricing any everyday stuff. No wonder that the SaaS pricing process often reminds of picking numbers out of the air. Guesswork doesn’t count as a SaaS product pricing strategy.

Whatever price you guess, it will fall somewhere between one that is too high to generate any demand and one that is too low to cover expenses. You’ll hardly know if your customers appreciate your service more and you are leaving money on the table. You’ll figure out that you were overpriced only after you scare away a bunch of potential customers.


SaaS companies need some tools to narrow down the pricing search. In this article, we’re providing three SaaS software pricing strategies for you to come to the rescue. Each of them has its place in business, but (spoiler alert) SaaS companies need to pay particular attention to the latter one.

Cost-plus SaaS pricing strategy

This strategy embodies what people basically mean by business — selling items for more than the cost of production. It is the most widespread strategy for manufacturing and retailing companies.

Cost-plus pricing's advantages are its simplicity and predictability. It requires no formulas, it doesn't need a deep understanding of your market or your customer. You spend $2 to brew some coffee and want a 50% markup that makes $1. Slap the numbers together and voila, you get $3 and put it on a price tag. You're guaranteed to make that $1 with every sale.

The cost-plus pricing model lacks the flexibility to fit SaaS companies. What if you need to intensify marketing or hire a new employee? The cost may change swiftly. Subscription prices can't be modified all the time to absorb every cost fluctuation, which means the margin will take a hit.

Cost-plus pricing collapse
Cost-plus pricing collapse

And by the way, why do many startups put so much emphasis on internal cost when determining price? Customers are not interested in your costs. Just like they don’t think about the price of components when buying a bottle of cola, they don’t care about how much you spend on development. Cost-plus pricing may be convenient for a company, but it has nothing to do with customers’ expectations.

If you sell software as a service, the value your products deliver is probably much greater than the cost to produce them. Start looking beyond your product to stop missing out on money.

Competitor-based SaaS pricing strategy

When you enter a new market, you don't usually know how to price SaaS. You don't want your price to look ridiculous when compared to similar offers. You look left to find the lowest price, then you look right at the highest price and take a safe place somewhere in between. Your monetization is competitor-based.

The main advantage of the strategy is, again, simplicity. It takes half an hour to browse the competitors' websites and a bit of math in your head (or a spreadsheet for advanced users) to have the price ready. “So, my competitor’s price is $3, and I will charge the same because they probably did their homework and know that $3 is what the market used to sustain, right?”

Yes and no. On the one hand, it’s a good idea to bear in mind what your competitors charge. Businesses that compete in a highly aggressive space may depend on this strategy completely since a slight price difference defines the users’ choice. Consider you decided to open a coffee-to-go shop. You won’t attract many customers with the price twice as high as the coffee shop next door.

On the other hand, no one ever made a major breakthrough by copying someone else's (not necessarily correct) decisions. You’re probably offering a service that differs from others somehow and has more value than your competitors’ service. Otherwise, why would you stay in business? Putting a price tag based exclusively on matching your competitor, you’re losing an opportunity to stand out, to separate yourself from the others. You’re losing your chances for rapid growth.

Competitor-based flatline
Competitor-based flatline

Value-based SaaS pricing strategy

It's the process of systematically identifying the best opportunities to deliver your audience what matters most. The truth is that the journey has no endpoint. You can never have a good enough understanding of your prospects.

Therein lay the biggest downside of value pricing — its сomplexity. You don’t have all the needed information ready, as in the case of cost-plus. You also have no opportunity to gather all the data in 30 minutes of going through competitors’ sites, as we’ve done with the previous strategy.

Yet, the value-based option is highly recommended for SaaS.

This SaaS model pricing strategy gives you two significant advantages. Firstly, you can charge more than your competitors, given that the audience is ready to pay for the value you’ve prepared for them. While healthy SaaS businesses have a lifetime-value to a customer-acquisition-cost ratio (“LTV:CAC”) of at least 3:1, value-based pricing can kick that ratio far beyond, skyrocketing their growth rate and profitability.

Let's take an example of a social media marketing tool HootSuite. Its cheapest plan was $4.99/month in 2010. Since then, they've updated their pricing year after year to reach the price of $19/month for a starting package, it's almost four times costlier.

Secondly, you can raise prices as you develop new features and add more value to your services. Development costs may stay the same, but as customers appreciate your services more, they will be ready to pay more. Who really cares that Dropbox went from $9.99 to $11.99 per month if the shift was followed by four times more storage offered?

Profit with value-based pricing
Profit with value-based pricing

This strategy assumes that you’ve learned your audience and can split it into buying personas to offer every persona a feature mix of its dream. Let’s see how it works for a real-life B2B SaaS pricing strategy.

Slack is one of the most successful SaaS businesses in the world, that hits 12.5 million users, including ourselves.  Slack uses freemium pricing to offer a basic set of features for free plus three more upgrade plans. The company splits its offer into packages to fit a wide range of customers: for small and medium, large and very large businesses. Slack knows what features each group cares most (and least) about and includes the list of killing features to each package.

  • The Free plan exists to convert interested users. Here you pay $0 but get limited by up to 10 app integrations and only 10,000 last messages available.
  • In the Standard plan, you pay $6.67 per person per month to get app integrations and message searches unlimited.
  • In the Plus plan, you pay $12,50 per month per person to get enterprise-level services in terms of security, compliance, and administration on top.
  • The Enterprise Grid is for companies too big to work in a single workspace. It allows the creation of multiple interconnected workspaces. Pricing for Enterprise Grid is open-ended to fit any company too big for a pay-per-person approach.
Profit with value-based pricing

The essence of the value-based strategy is the continuous work on your target persons' profiles. The results you get are useful not only for pricing but also for product, design, and marketing. A deep dive into the values of your audience will help your team stay focused and make consistent decisions. It will help you prioritize product updates. It will help you avoid feature creep.

7 Types of SaaS Pricing Models 

Many SaaS companies we've worked with to design their products struggle to find the right pricing model. We want to help people like them understand the difference between the most popular pricing models and make an informed decision based on the industry's best practices. 

We have analyzed seven of the most common SaaS pricing models on the market. Let’s see which models Zoom, Zapier, Zendesk, TextMagic, Active Campaign, PreCog use to charge their clients.

1. Freemium

One of the most common SaaS pricing models is Freemium. You let your customers use your software for free offering them a basic set of features. In other words, you let your users see what your service is capable of without making them pay for it.  To go to the next level and get the most experience of your SaaS they will need to upgrade to a paid plan. Freemium is not used as a single pricing model on the market and is usually combined with Per Feature or Tiered Pricing (will cover them further). 

Zoom is a good example of a well-integrated Freemium pricing model. The most popular video and audio communication SaaS platform is widely used not only because it has an awesome set of features but also because it offers a Basic Personal Meeting plan. You can sign up for free and get access to an unlimited number of 1 to 1 and group meetings on Zoom platform with additional video conferencing features (screen sharing, recording). This plan is quite popular among single-users and small teams. 

Zoom pricing model


  • Usually, it costs a pretty penny to attract customers to a business. Freemium pricing model will help you acquire leads faster and cut marketing costs. 
  • You will build a big customer database. Collecting emails of Freemium users will help you further interact with them, test your marketing funnels, and convert them to use your additional features or sign up to one of your paid plans. 
  • Awesome tools with useful free features become viral very fast among users. It nurtures word-of-mouth marketing and PR.  
  • Freemium plan is a viable playground to test your SaaS features on different buyer personas. 


  • Serving an unlimited number of freemium users can affect your financial, operational, and time resources. 
  • You may struggle to qualify your customers and establish the value of your service. What used to be free at the beginning, hardly becomes paid in the future. People like freebies and will try to get the most of them. 

2. Flat Rate

It is a simple SaaS pricing model. You have one price for one product with the same features offered to all of your customers. The only choice you give is to charge monthly or annually to use your SaaS product. 

One of our clients, Precog implements a Flat Rate pricing model. Precog is a data preparation solution that simplifies the process of data analysis. It provides software for letting business teams, as well as data engineers, access any data regardless of source, size, or structure and turn it into analytics-ready tables in minutes. The customer is only offered to choose between Monthly or Yearly subscription plan, no trials, no complex pricing structure. 

precog pricing


  • 3Es - easy to communicate, easy to market, and easy to manage.
  • Communicating value. Choices are good but people sometimes struggle to make decisions. Flat rate pricing offers one option and a clear end result for everyone.
  • Allocating marketing resources. You concentrate on one product and build clear funnels to promote and sell it. 
  • Managing revenue. You can automate all your financial operations and build an accurate financial strategy.


  • The Flat rate model limits the diversity of buyer personas you can attract. For example, if you price your product for the enterprise market, that price might be too high for mid-sized businesses.
  • Upsell and scale is not your story. In other words, it deprives you of additional revenue streams and decreases LTV (Lifetime Value), as your customer can overgrow your SaaS. 
  • Acquisition becomes a lifetime battle. You will have to invest a lot in ads to find your audience.

3. Usage-based

Usage-based Pricing Model is pretty clear and fair for your customers. They pay only for the volume they use. An alternative name is “pay as you go”. It is like a regular utility bill with a counter but for SaaS companies. You can charge for the number of transactions, requests, data used, scheduled posts, issued invoices, calls, messages. It works well with Tiered and Freemium SaaS pricing models.

Usages Based pricing model was the best option for our good client TextMagic. It is an all-in-one text messaging service that has been successfully helping small businesses around the world do mobile marketing. They offer to create a free account and use all features. You only pay for the number of outbound text messages (sent from personal or business email, virtual, or existing mobile number). Inbound messages are free of charge. So by the end of the billing period, TextMagic customers only pay their bills.

SaaS company that uses usage-based pricing


  • A transparent financial model helps you avoid miscommunication with your clients and makes them responsible for charges. 
  • Price is not the key criterion for your customers. The price for usage is usually low. You can attract your first clients pretty fast.  
  • A wide audience. Usage-Based pricing fits all business sizes, as a result, your market share can be pretty high from startups to huge corporations. 


  • Your business growth becomes highly dependent on your customers. The scale is only possible if your clients’ business grows. 
  • Unpredictable revenue. MRR (monthly recurring revenue)  or ARR (annually recurring revenue) are fluctuating metrics for your SaaS product. It will be difficult to forecast and manage them.

4. User-based

One type of “pay as you go” pricing strategy is based on the number of users actively or passively operating your SaaS platform. There are two types of this pricing model: user-based and active-user based. You charge clients either for the total number of signed up users or for only for active users. With a user-based pricing model every time they create an account and assign it to an employee, they have to pay a monthly fee. Active user-based is more convenient for your clients as you only charge them when their accounts are used (employee is logged in, makes calls, checks reports, schedules posts, etc.). They do not have to keep track of inactive users (those who do not work anymore or on a sabbatical vacation). The user-based pricing model can be combined with a Feature-Based or Tiered one.

Zendesk, a CRM (Customer relationship management) system to manage customer relationships and contacts databases, uses an Active User-Based pricing model. They charge per active agent on a monthly or annual basis. Besides charging for a number of accounts, Zendesk also offers to choose between different tiers and features. You can choose the Essential plan and pay $5 per month per agent who will be able to communicate with customers via emails and social media messengers, keep the history of communication, create clients’ cards, and use widgets. Or you may pick Team plan and pay $19 per agent/monthly, and in addition to all Essential features provide access to dashboards and integrate additional apps for each active agent. 

SaaS company that uses user-based pricing

Eleken worked with Clientjoy, a client experience platform for freelancers and agencies that allows them to build sales funnels for potential clients, prepare proposals, track the project stages, issue invoices quickly and easily. They implemented a clear User-Based SaaS pricing model and also created different tiers to serve customers of different-size. Features are the same for each plan, the numbers of users differ only. If you are a Solopreneur, then the Basic plan is your best option, if you run a small agency or work as a team of three professionals, you may choose the Plus plan.

SaaS pricing models examples


  • It is easy to get your head around the User-Based pricing model for your clients as they pay for the number of accounts/people who need access to the SaaS platform. 
  • You can gain control over RRM (Recurring Revenue Management) and forecast revenue based on the number of users. 


  • Upsell is not an option if you choose to charge per User. Unless you actually combine it with multiple pricing models, add tiers, or offer additional features. 
  • Cheating is possible. Very often users share their account information with other people instead of adding them as users. Log in abuse significantly decreases product value. 

5. Feature-based

If you offer a wide range of features, then your best option would be to stick to the Feature-based pricing model. You can combine this model with Tiered pricing and create multiple plans with a set of features for different customers. 

ActiveCampaign, a platform for marketing automation processes, email marketing, and customer support, uses a Feature-based pricing model. Their customers can upgrade as they scale their business or need additional features. Active Campaign also integrates user-based and usage-based SaaS pricing models. You can choose the Lite plan for $9/mo (provided with a yearly subscription) and send an unlimited number of emails (newsletters, forms), provide chat and email support to your clients for 3 users. If you also need to communicate with your Facebook audience, to manage your content and leads, to integrate other apps and grant access to a SaaS platform for more than 3 users, your better option is Plus plan which is $49/mo. 

SaaS company that uses feature-based pricing strategy


  • Customers pay only for relevant functionality and can choose from clear offers. You build several plans for businesses of different sizes (small, medium, big) and suggest choosing the one which fits their needs. 
  • When you have multiple predetermined plans you can divide your audience and adapt your marketing and communication strategy to each of the groups. 


  • You will need to work with buyer personas meticulously to understand which features can be combined together in a way that benefits their business at the different growth stages. 
  • Customer acquisition is tightly bonded to your plans. If you don’t combine features in relevant plans you won’t hit the target and lose the lead. It is obvious when a client can’t find what he needs, he/she chooses your competitor. 

6. Tiered

Tiered Pricing model combines all the possible features of your SaaS in predefined packages and allows your customer to choose what better suits his or her needs. You create from two to five plans at a specific price with a set of functions for each. With the Tiered Pricing model, you serve B2C (business to customer) and B2B (business to business of different sizes). It is usually combined with Freemium or Feature-Based Saas SaaS Pricing Models. 

Zapier is an online tool that connects apps and atomizes repeated and time-consuming tasks. They offer to choose among tiers that are developed for different types of customers (Starters, Professionals, Teams, Companies).  What is even more interesting, they combined the Tiered Pricing model with Feature-based and Usage-based and Freemium. 

tiered pricing SaaS example


  • Increased market share (B2C and B2B) due to a bigger audience: individuals, small businesses, and enterprises. 
  • High Lifetime Value (LTV) because you can offer more useful features to your customers as they scale. They will be loyal to your business, prolong their subscription, and do not consider shifting to your competitor.
  • Qualified database of clients to upsell and interact with for further development and SaaS growth.


  • You will need to spend a lot of financial and time resources forefront to run detailed research of your targeted audience to carefully combine features in tiers.  

7. Blended

The better you know your product the optimal pricing model you will be able to choose. For some market players, it is difficult to fit all functionality into one template. Therefore, they mix a few SaaS pricing models to sell their products to different people. With a blended pricing model, gains are pretty clear, but losses are great as well. You have to manage your Pricing as separate Products and engage immensely in controlling and forecasting (if it is possible) your revenue streams. 

Vimeo, a streaming platform, is hitting that road. They combine Feature-, Usage-, User-based, Tiered, and Freemium SaaS pricing models to get the most of what they can offer to their clients. Despite it is a bit unclear from their pricing on a website but you can try a plan for 30 days for free or start with Vimeo Basic plan - Freemium pricing model. Then they offer different tiers (Plus, Pro, Business, Premium) with predetermined sets of features for each package. We can see Tiered and Feature-based pricing models combined here. Each of the plans also offers different storage to your business size and number of users who can access the platform and work with videos. Pretty awesome! 

blended pricing example

The key takeaways:

  • You can not copy-paste the pricing model of your SaaS competitor. Even one different feature you offer may influence the choice of pricing model. Put on the table all that you can offer to your customer and see how you can deliver your market value, meet customer needs, and make your business profitable long-term. 
  • If you can’t measure it, you can’t improve it. Your SaaS Pricing Model directly influences your total revenue. There are important metrics that you have to work with to understand whether this model fits your SaaS business or not. We have mentioned LTV (Lifetime value - the amount of money which you can receive from customers over their usage of your service) and CAC (Customer Acquisition Cost - how much will you need to invest to attract clients). Churn ratio (percentage of revenue you lose due to subscription cancellations or downgrades) and Expansion MRR (earnings from upsells) are also connected to the type of pricing model. 
  • The SaaS pricing model is not a rigid choice for your business. You may change it as your service develops additional features or scales on the market. 


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SaaS business
min read

Product Lifecycle Management and UX Design: Meaning, Stages, Examples

“The concept of the product life cycle is today at about the stage that the Copernican view of the universe was 300 years ago: a lot of people knew about it, but hardly anybody seemed to use it in any effective or productive way” 

Theodore Levitt wrote this complaint half a century ago. He noticed that even though many people in some way understand the product life cycle management (PLM), they don’t use it. 

Theodore Levitt should've been pleased to see the progress we’ve made in the recent decades. We now have product PLG conferences, product lifecycle management tools on product lifecycle management, and project managers casually use the lifecycle concept to develop the product vision. Eleken UI/UX agency can see the progress from the experience — design decisions that our clients make are often based on their companies’ product lifecycle stages.

PLG has definitely moved from theory to practice. The next shift should be from practice to best practice. The goal of this article is to look at some examples of successful product lifecycle management in the UX context, so you can emulate them.

But before we start, let’s briefly review the concept of the PLM process, to make sure we are on the same page for the stories that would follow later.

What is product lifecycle management (PLM)?

SaaS startups often have either of the two strategic planning pitfalls:

  1. They concentrate on their vision and forget about market dynamics that influence the business. A planning funnel gets too long and narrow, leading to so-called “tunnel vision.”
  2. They solve the here and now problems, getting a short and wide planning funnel, also known as “a failure to see the big picture.”

The functions of product lifecycle management are to help companies avoid these two pitfalls. 

First, PLM refers to handling a complete journey along a product’s lifecycle and makes managers consider their product over a long perspective.

Second, PLM splits the product development process into four phases: 

  • Introduction — the point when you get the business off the ground
  • Growth — climbing up the curve challenge
  • Maturity — a battle for maintaining your position
  • Decline — time to innovate or die

The key component of the four phases is agility. You can’t have the same product all the way through — with every new stage, the company faces new challenges that require new approaches.

What is product lifecycle management (PLM)

Effective management of a product's life cycle connects together all the parties involved in product creation. It encompasses product design and development, marketing, sales and more.

As designers, we can't tell you much about the development, marketing, or sales of SaaS products. But if you want to learn about UX design and its role in the product lifecycle management process, you've come to the right place.

Through the introduction stage with a little blood

The introduction stage of product lifecycle management is an endurance game. You don't earn anything yet, but you spend a lot on the product manufacturing process and go-to-market strategy implementation.

Success at this stage depends on the ability to reach product-market fit before the attempts would leave you drained of resources.

 introduction stage of product life cycle

Market validation is achieved when you have a product that solves a real problem and know how to get it to the people who need it. So you need to start with the MVP (minimum viable product). And MVP requires a design. Product design, that would be good, fast and cheap at the same time. 

The chances to get such a design for a SaaS startup are approximately equal to the odds of meeting a unicorn. No wonder 92% of SaaS startups fail smashed by the introduction stage.

PLM experience with a Habstash MVP 

Eleken designers have found a way to help startups with MVP design in a fast, affordable and efficient way. We design MVPs without reinventing the wheel, by using common UX/UI patterns. Let’s take an example of product life cycle management of the MVP design we created for Habstash to see how our approach works.

Habstash is an introductory stage fintech startup that helps people navigate the savings needed to buy homes. The company wanted to test its idea by building a minimum viable product and came to Eleken for an MVP design.

When we started working with Habstash, they already had some prototypes that they were looking to develop into an MVP. We came up with an alternative user flow — more logical and easier to implement.

For instance, our clients wanted to make onboarding in a form of a calculator designed from scratch. But the app required gathering a lot of user information. We understood that placing all the fields in a calculator would result in a confusing user experience.

We suggested using a Wizard design pattern that divides all the parts of the data into steps and shows the sequence of steps on the top. As a result, the client got faster design implementation and a better user experience.

habstash mvp design case study
Habstash's omboarding process management

PLM solutions help a growing startup to grow even faster

When the market validation is achieved, the manager’s aim is to reach cruising speed and climb up the lifecycle curve as high as possible. The growth stage is a chance for underdog companies to strengthen their positions in a market.

The difficulty arises when weak product design becomes a bottleneck, limiting the startup’s growth. This problem once made Enroly our client.

PLM solutions help a growing startup to grow even faster

Benefits of PLM for Enroly’s redesign case

Enroly is a growth-stage student engagement app. The year 2020 has brought some tectonic shifts to the education sector — and an ocean filled with opportunities for edtech startups. Enroly set themselves ambitious goals: to increase its market share in the UK and expand to Australia and New Zealand. 

To gain new opportunities, Enroly needed Eleken designers to work on its outdated UI and design some new killer features. One of the killer features was a reporting tool with no parallel among student engagement apps. The tool had the potential to become Enroly’s competitive advantage that is so essential for startups in the stage of growth.

  • We started with feature ideation in a team of designers, developers, and product owners. 
  • With a list of components ready, we brainstormed how each feature is going to work. 
  • The next step was restructuring features into pages.
  • And a cherry on top — wireframing and visual design of reporting tool’s dashboards.
Benefits of PLM for Enroly’s redesign case

One of the Enroly’s reporting tool dashboards

Five months since Enroly started its redesign project, they have raised £1.5m in funding to empower its international expansion. Enroly also reports it currently onboards a new university every three weeks. That’s a dynamic that takes the team closer to achieving its ambitious goals.

Refresh to inject new life into a mature product 

The stage of maturity is the point where the growth tempo starts to slow down. Your market gets saturated, most of the target audience already uses your product or your competitors’ products. 

Refresh to inject new life into a mature product 

Refresh to inject new life into a mature product 

In a saturated market, customer acquisition becomes harder to achieve. The focus moves toward winning customers from competitors and preventing competitors from poaching your own clients. 

In terms of design, the key idea here is to deal with emerging user experience issues and new user requests. Improving product allows to hold the current market share and prolong the maturity stage. This is the essence of the project we did for Ricochet360.

PLM implementation challenges after several years on the market for Ricochet360 

Ricochet360 is a cloud phone system. Like most B2B CRMs, sales, or marketing platforms with rich functionality and a high degree of customization, Ricochet360 has grown into a heavyweight app. 

It took about a month for our client’s team to help their customers set up the application. Many potential clients abandoned Ricochet in favor of less problematic alternatives. We were asked to redesign the application to make it simpler and more accessible for clients to grasp.

The redesign project was going to take two months, another couple of months developers would need to implement changes. We indicated UX issues that made platform usage painful for Ricochet360 clients and offered to make some minor improvements first, which would take only a couple of hours to put in place. 

  • For instance, we added tooltips to the potentially confusing areas,
  • Introduced standard data formats,
  • And indicated required fields with asterisks, so users don’t need to guess which fields they can skip. 

Even such small UX fixes instantly impacted the business performance of a mature app. Not to mention a full-fledged redesign that followed several months later.

Small improvements made for Ricochet360

The decline stage doesn’t mean someone has to die

Sooner or later, all businesses, even the most successful, hit the growth ceiling at some point and start to decline. It happens due to technological advances, new trends, or changing consumer behavior.

That’s what happened to TextMagic, a B2B messaging platform for sending SMS texts. SMS usage declines, replaced by messaging apps like Whatsapp and Viber. The SMS texting market is shrinking, respectively. So TextMagic wanted to innovate and jump into the new product life cycle.

The decline stage doesn’t mean someone has to die

Product transformation for TextMagic

The development of brand new products for new audiences is a promising strategy for companies operating in a declining market. TextMagic came up with an idea to create new email marketing, customer support, and sales features. This is when they turned to Eleken.

  • We designed a live chat tool for TextMagic’s new customer support platform,
  • The entire functionality for setting up and configuring email campaigns,
  • And updated the SMS campaign configuration design to be consistent with emails.

As a result, the SMS texting app turned into an all-in-one digital marketing platform — universal, but at the same time simple from the user perspective. For TextMagic, that opens up new prospects for growth.

PLM: Product lifecycle management wrap-up

For any business interested in continuous growth and profits, a product management responsibility is to predict changes that are coming in the following few years. Those predictions won’t be very accurate, but they will allow responding to product lifecycle changes in a product lifecycle proactively rather than reactively.

As we’ve seen today, UI/UX is often a starting point of those strategic changes responsible for the product’s wellbeing and profits. Design can probably help your product fuel growth or expand its uses and user right now. But we won’t know that unless you get in touch.

SaaS business
min read

Types of SaaS Software: Categories and Examples

With more and more software companies slowly but inevitably shifting to the SaaS model during the past decade, more types of SaaS products appear. All SaaS businesses can be grouped based on their similarities and functions. Currently, there are not so many categories, but the range of these solutions already demonstrates that SaaS technologies can be applied and become successful in any industry.

Before creating a SaaS project, it is important to learn more about the types of SaaS software and how they work. In such a way, you will find out the nuances and challenges of each category, as well as their market particularities and even a little bit about end-users’ needs.

In Eleken, we work with various SaaS products, beginning from CRM and ending up with web hosting projects. Each SaaS solution requires a special approach to its development and expansion. Just like for any profitable product, you should first outline your niche and industry to move forward with your idea or plan. That is why there exists the typology of SaaS products. 

SaaS basics and advantages

As a cloud-based software service, SaaS products have plenty of advantages for users compared to conventional software. We have enlisted their major benefits below:

  • Available per subscription per user
  • No need to download or update the software on your laptop or computer
  • Can be reached from any device in any part of the world through the Internet
  • Lowers costs for subscription in comparison to the price of traditional software
  • Reduced time to launch the software and start using it

All of these characteristics can be found in all types of SaaS software but have slight variations depending on the preferences of targeted clients and the functionality of the very product. Furthermore, in each of the following groups, SaaS solutions slowly force out traditional software.

Let’s check the main categories of SaaS solutions and see how they differ from each other. 

The types of SaaS solutions

There are many types of SaaS software. The central aspect of division into groups is the sphere or industry that the SaaS product improves, such as online banking or communication. 

Probably, the most essential thing about the division of SaaS applications is the fact that in the future, new groups of SaaS products will appear. It seems that cloud-based software service can be applied in almost any sphere of human activity. As more and more people are looking for ways to work from home after the Covid-19 pandemic, the popularity of SaaS applications will be rising as you can use them anywhere in the world. If you want proofs with revenue data, see our SaaS market overview.

So, while we are awaiting the new upcoming types of software as a service, the current ones go as following: 

Customer Relationship Management (CRM) software

For every business, customer data is valuable information, which is used to promote the product and increase sales. CRM software is a tool for effective management. It stores all customer data and helps improve customer relationships.

Some CRM systems help their users forecast sales, but the majority simply automate repetitive sales tasks such as emails. Modern SaaS CRMs bring to the table loads of functions. Freshworks, a CRM owned by Girish Mathrubootham, offers more than 10 other products that can be integrated into each other depending on your business needs.

Want to learn more about CRM SaaS? Read the case study describing our work with TextMagic, for whom we did UI/UX design.


Enterprise Resource Planning (ERP) software

These SaaS are used by large companies and enterprises to manage a wide range of business processes. Among them accounting, risk management, compliance, and budgeting. Such a SaaS allows combining and tracking all these processes in one place due to the big number of its services.

As an example, NetSuite, a popular ERP SaaS with more than 22 000 customers, includes e-commerce and retail solutions for your business. What is more, it even has a function of PSA (Professional Services Automation) for planning and executing projects. 


Accounting software

Accounting software simplifies managing your financial operations and costs by automating them. This comes in handy when you are doing lots of financial operations per day. 

All SaaS in this category differ greatly in features, so you should choose the ones that will fit your needs and expectations when it comes to handling your finance. Currently, the most used ones are Xero and QuickBooks, which have lots of effective integrations.

In Xero, for instance, you can create invoices and bills, and even see reports on your spendings. On the dashboard, you can prioritize your tasks, which makes it easier to track everything going on with your finances. Finally, you can even see your account balance and transactions in Xero due to its integrations with banks and online financial services as Stripe or PayPal.

Accounting software

Project management software

PM SaaS solutions enhance cooperation and progress tracking in teams. They are much faster and easier to use compared to shared spreadsheets or documents as synchronization happens in real-time. 

Confluence by Atlassian is one of PM SaaS with the largest number of additional tools and functions. With only $10/user/month (1–100 users) with its Premium plan, you can make use of such features as task tracking, real-time notifications, adjustable page permissions, and even blog posting. 

PM software

CMS and e-commerce platforms

E-commerce SaaS solutions are a great option for new businesses, as they allow you to start selling your products immediately, saving money on website development and UX/UI design services (if you are planning to make a website).

Shopify, the most famous e-commerce platform, has lots of cool features to help entrepreneurs sell goods and products online. First of all, it has many different themes to make your online shop unique. Secondly, it has various integrations such as POS and PayPal to simplify payment processing. 

You can also create financial reports and even make blogs, which is a great solution for any business. What’s more, purchasing things online should be an easy and fun process for your clients. In Shopify, you can add your discounts, coupons, and gift cards as small gestures to attract customers and, at the same time, to reward them for choosing your service. 


CMS is the Content Management System, which allows publishing and editing content, such as articles and blog posts. The most known platform of this type is WordPress, which was started as a tool for blogging but eventually evolved into a CMS and website-building tool. In WordPress, which is free, you can use templates for your website and work not only with the text itself but also with pictures, audio, and video files. 


Communication platforms

These are widely used SaaS products. Their main benefit of communication platforms is instant messaging and file sharing from any part of the world. These apps are often used by businesses for communication between their employees. For instance, Slack is a favorite communication tool of more than 12 million active daily users in both large and small companies. 


Very often such communication platforms also have mobile applications available, that let users reach the network of their friends/colleagues and get all the necessary information at any time. 

HR/HRM solutions

These SaaS solutions are developed to manage human resources. Such products have features such as recruiting, interview scheduling, performance tracking and analysis, and employee reviews. They come in handy for organizations that are constantly growing and hiring new people, as they allow storing all information on candidates in one place. 

Some of such SaaS applications also allow managing employee productivity and attendance. 

Lattice is a widely known SaaS application with more than 2000 organizations using it daily. With this product, managers can make use of templates for employee reviews or create new ones. Employees, in their turn, are requested to submit feedback right in the software for effective communication and cooperation within the company.

In Lattice, you can also set up your goals as discussed with the manager, and, later on, share the results with other workers or even on a special Slack channel (if integrated). Undoubtedly, such a clear and understandable approach makes it much easier to track achievements from the sides of both management and employees.

Finally, you can measure people analytics on dashboards and, for instance, filter data by skills, age, sex, and many other metrics. 


Payment gateways and billing solutions

Payment gateways enable businesses to accept payments in a fast and easy way handling hundreds of transactions each day. 

Paypal is a safe and secure service to store all sensitive customer data such as numbers of bank cards. For any business, this is a convenient way to receive payments by sharing protected customer information between banks and merchants and eliminate the risks of data leakage. 

One more advantage of a payment gateway is that processing transactions online is much faster than doing it manually. Furthermore, with an extended customer base of Paypal as one of the most popular payment methods, you have more chances to reach out to new clients. 


One more advantage of such software is payment reporting, which allows you to mark or flag any kind of suspicious activity or payments. A fun feature in some of the payment gateways is publishing reward coupons, which is a small thing to both entertain and attract users. 

Different types of SaaS for different goals

SaaS solutions resolve numerous issues in different spheres and make the lives of millions of people much easier. Each type of SaaS software has its special approach to fix the particular problem of the users, whether it is receiving a card payment, sending a file to your manager, or creating a board with tasks for your team. 

If you want to find out more about SaaS business or are simply curious about different SaaS products, you can find more details in our next blog-post What makes a good SaaS product.

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