---
title: "SaaS — Software as a Service"
section: "Choosing a Business Model"
sectionId: "business-models"
date: "2026-05"
---

## What Is SaaS?

SaaS is when a business charges a **monthly or yearly price per seat** for business software. It allows startups to grow revenue on a recurring basis while keeping fixed costs relatively consistent.

## Why Investors Love It

SaaS creates **recurring revenue**. You start every new payment cycle with almost 100% of the revenue from the last cycle — unlike one-off sales, where you start from zero each period. This predictability makes revenue forecasting reliable and businesses far more investable.

## Bottom-Up vs. Top-Down Selling

If you sell **bottom-up** — into an organisation starting from individual employees rather than from the VP level — your product can spread through a company like wildfire.

Classic examples: **Slack** and **Notion**. Individual contributors start using the product, love it, and champion it upward until the whole company is on it.

Bottom-up SaaS also creates a **cross-pollination effect**: employees who become addicted to your product move to other companies and bring your product with them, seeding new accounts organically.

## Land and Expand

SaaS businesses have the ability to **land and expand** — start with a small footprint in one team or department, prove value, and grow the account over time as more seats or features are added. This compounds growth within existing customers on top of new customer acquisition.