Blog Entry

Sep 6
2012 

Flower Power or Growing Pains? Growing Your SaaS Business Model

When technical entrepreneurs build their companies, they don’t really know how to make money from their invention, and they invest more time on building their product without thinking of optimizing revenues. In the last couple of years, I’ve been engaged with some startup companies that have a great and existing product but no clear business model of how to actually monetize their software.

Cloud applications and services are not a trend anymore, and most of the new startup companies build their product in the cloud in order to minimize time to market and expand distribution. But, without a real business model, even the most helpful product on the market can have problems when it comes to software monetization.


With SaaS licensing solutions, like Sentinel Cloud from SafeNet, startup companies can distribute their applications at the beginning with unlocked licenses and monitor their users as they go. Sentinel Cloud offers companies the ability to track their users and monitor the use of their applications. Once the company finds a use trend over time, they can decide how to license specific features, monetize it, and even offer additional functionality for free in order to build their community.

Great examples of businesses that follow this SaaS approach include Facebook, Dropbox, and some of the Google Apps. In the beginning, Facebook was only a community portal and service that didn’t really earn a lot of money. As applications progressed and their community grew, Facebook paid more attention to how to monetize their application and other applications that use Facebook as a platform have since followed the pattern.

When engaging with new startup companies and raising the idea of licensing, most of the time you will get an answer like: “we first want to launch our product”, or “leave your business card and we will get back to you once it is relevant”. Companies don’t need to worry now how to sell their products and make money, but when the time is right, a strong SaaS licensing solution will enable them to make these decisions later without the need to re-engineer their application to support that. In the case of Sentinel Cloud, everything is implemented for you, and you can simply decide how you want to get paid for it.

You probably remember the old TV series called Growing Pains that aired in the 80’s and 90’s. Its theme song was called, “As Long as We’ve Got Each Other.” This is how cloud ISV’s should look at choosing a SaaS licensing solution – as a service that helps them with their growing pains.