Glossary
What is SaaS (Software as a Service)?
Software that customers use over the internet by subscription, with the provider running and updating it, instead of installing it themselves.
In plain words
With software as a service you do not buy and install a program. You sign in to one that the provider runs, usually paying a monthly or yearly subscription. Email services, accounting tools and project trackers are everyday examples.
What building a SaaS product involves
- Accounts, sign-in and permissions for many customers who must never see each other's data
- Subscription plans, payments, invoices and tax
- Reliable hosting, backups and monitoring, because customers depend on it every day
- Regular updates delivered to everyone without downtime
- Security and privacy built in from the start
- Ways to connect to customers' other tools (see API)
The hard part is not the first version
A working first version can be built quickly. The difficult and costly parts come later: keeping it secure, fast and available as customers grow, supporting them, and keeping the product improving. Budget for running it, not only building it.
Common mistakes
- Not separating each customer's data properly
- No plan for backups and recovery
- Building every feature before testing that anyone will pay
- Underestimating support and maintenance cost
Questions to ask a company that offers this
- How will each customer's data be kept separate and secure?
- What does it cost to run each month at our expected size?
- How are backups taken, and have you tested restoring them?
- Who owns the code and the accounts at the end of the project?
- How will updates be released without interrupting customers?
A good company will answer these plainly and in writing. Vague or evasive answers are worth noting.
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Explanation last read through on 13 October 2026. It is general guidance in plain language, not advice for your particular project. Tell us if something is wrong or unclear.