1. Ideal choice for small and medium businesses (SMBs)
One recent study estimated that 34% of SMBs are expected to switch CMS software or be first time adopters. These new clients are willing to spend an average of $500 per month on CMS software, which places the value of this market in U.S./Canada at over $14 bn. This presents a tremendous opportunity for CMS providers to grab a share of this market, which has been historically ignored for the sake of large enterprises.
2. Economies of scale
In many cases sales representative might not be necessary for SaaS model and when needed, the sales team can be scaled according to your business growth. A SaaS model avoids the need to build multiple versions for client software. Also, your sales cycle is more dynamic and spread throughout the calendar year as opposed to being restricted to the end of quarter.
3. Higher company valuation
Once you have a predicted customer values, know how to acquire new ones and have the churn (drop-off) rate under control then your revenue stream is more certain. As a result of this ‘certainty premium’, SaaS public companies generally trade at higher price / multiples than traditional software companies.
4. SaaS is everywhere
SaaS is now prevalent in every product category from CRM, e-mail, web design, blogging and a host of others. Virtually, all products can now be sold as a service. The SaaS market is huge and is currently estimated to be worth $21 bn and is growing at 21% annually.
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