5 Pros and Cons of SAAS Pricing

Cash Friendly

SAAS costs are considered as operating expenses, whereas a software license is considered an asset, with years of planned depreciation. If cash is tight SAAS is really the way to go. Typically it’s much harder to get a large capex approved than it is to take on an annual opex commitment.

Support and Upgrades are Included

SAAS pay as you go pricing typically includes support and upgrades. Some traditional software providers include upgrades but support is typically about 20% of the initial software cost

Over Time, SAAS Can Look More Expensive But…

When you look over an extended period, SAAS can appear more expensive. This can be a dangerous calculation though because it’s hard to compare apples to apples. You can include hardware costs in a total cost of ownership calculation but its harder to correctly reflect implementation costs because SAAS solutions are typically deployed at much lower cost. I am aware of traditional ERP implementation costs in excess of 15x the license costs!

With SAAS You Will Not End Up on Windows 2003 Server!

I know of a company who were faced with a PCI compliance issue because they had several hundred windows 203 servers in 2015! PCI standards require that all of your servers are patched up to date and that none of your servers are out of support.

One of the great benefits of SAAS is that you stay in support and you typically won’t end up running unsupported hardware or software.

SAAS Promotes Ongoing Commitment from the Software Vendor

Once you hand over a seven-figure check for a big software purchase, the software vendor must move onto the next deal. I’m not saying that they don’t care for customer satisfaction but their real motivation is to sell their next big deal. The SAAS steady, regular revenue model encourages the vendor to make an ongoing commitment to the customer.