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If you run a business or department, you’re no stranger to rent, possess, borrow or buy, loan or own decisions. These conundrums stretch over into our personal lives where subscription-based services or SaaS systems are now trumping ownership.
For companies, the number of technology services offering short-term contracts for CRMs, chatbots automations and much more, is ever increasing. Helping your business to lay its foundations without large CAPEX investment.
The direction of travel is clear. But how do you know which subscription is the best value for money?
What are SAAS systems?
Simply put, SAAS are when you opt to subscribe to a product or service, without owning the asset outright. Instead, you’re leasing the service for a set period, typically for a month or a year.
In some cases, they follow a pay-per-use model.
Benefits of SaaS
There are many benefits, including the standardisation of working practices over time, a short lead time to achieve the desired value, and new product releases and developments at no extra charge.
In addition, with the integration of other SaaS products, you can scale your business as you grow with an ever changing and updating ecosystem.
SaaS subscriptions
In the SaaS space, there are typically three payment models; yearly contracts, monthly subscriptions, and pay as you go.
1. Yearly subscriptions and long contracts
Often, customers are locked into long-term fixed contracts, sometimes spanning up to and beyond 60 months.
Purchasing a long-term commitment means just that, you’re committed. When combined with training, implementation support, and continuity for staff, you can embed long-term software into your business for short and long-term benefits. Staff buy into it; they get used to it and it becomes routine.
However, there are drawbacks. You can’t be certain that the technology you buy now is going to the best option in a few years. Plus, in yearly contracts, there’s no guarantee or incentive to keep developing the best software.
Long-term contracts are often more suitable when you need complex technologies that underpin your business or have a lot of functionality, such as enterprise resource planning software (ERP) and server infrastructure subscriptions.
2. Pay as you go
The main benefit of pay as you go SaaS systems is that your company doesn’t waste money and there is little risk financially. A great example is Avail, the online employment agency that matches HGV drivers and operators for a small fee of £7.50 per day.
Pay as you go is useful for in-demand, standardised services. However, when tasks are required daily, when they are specialised, or complex you may want to opt for a more permanent service so that you can reap long term benefits.
3. Monthly subscriptions
While there are pros and cons at both ends of the subscription scale, a monthly subscription for your SaaS system is a solid middle ground.
The main benefit is that you can achieve the desired outcome without a large CAPEX investment, instead only a small OPEX budget is required. You can test the waters with a small-scale pilot, as a low commitment trial. If things work out, you can then make a longer-term investment.
It removes the risk of underdelivering associated with longer contracts, whilst giving the subscription enough time to be impactful.
Monthly subscriptions are best for when you have a reoccurring problem that pulls time and effort away from higher-value tasks, such as expense management processes (accountabl), calendar automations (Calendly), or task automation (Zapier).
Try accountabl for 30-days free.
Next steps
Subscribing to products and services is often the most cost-effective and practical way to get the technology your company needs.
To select the right SaaS contract, you’ll need a clear understanding of processes, what kinds of tools will help, and how often your company will need them. From there you can look at the benefits of SaaS options and make a case for the right solution.
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