SaaS explained: examples, pros and cons, and building your own SaaS product

SaaS is a service model that lets you use software over the internet on a subscription instead of buying and installing it. This guide explains how the model works and how it differs from other cloud models. It also outlines the steps to build a product of your own.

What is SaaS?

SaaS is short for “Software as a Service”. In this model, you do not install the software on your own computer. Instead, you connect over the internet to a product that the provider runs in the cloud.

Payment changes too. Rather than buying a licence once, you pay a monthly or yearly subscription. Email services, online accounting tools and CRM products are everyday SaaS examples.

SaaS vs PaaS vs IaaS

Cloud services fall into three models, depending on how much the provider takes care of. The US National Institute of Standards and Technology defines them in NIST SP 800-145.

Put simply, IaaS gives you an empty plot and PaaS gives you a finished building. SaaS, on the other hand, is a furnished flat that someone else maintains. Therefore, it is the easiest model for organisations without a technical team.

How does multi-tenant architecture work?

A SaaS product usually runs on a multi-tenant architecture. In other words, one application and one infrastructure serve many customers at the same time. Meanwhile, each customer’s data stays isolated from the others.

This setup lowers costs because customers share server and maintenance expenses. Also, when the provider ships an update, everyone moves to the new version at once. However, a failure in isolation is a serious security risk. For this reason, architecture is the most critical decision in the product.

Pros and cons

• Quick start: There is nothing to install; you open an account and start working.
• Predictable cost: You pay a regular subscription instead of a large licence fee.
• Always up to date: New features and security patches arrive automatically.
• Access from anywhere: You can work from any device with an internet connection.

On the other hand, there are limits. Because the product serves everyone, it may not fit your workflow exactly. Your data also sits on the provider’s servers, so export options matter when you cancel. Finally, per-user pricing can push costs up quickly as a team grows.

Off-the-shelf SaaS or custom software?

If your need is common in your sector, an existing SaaS product is often the fastest route. For example, there is no point building your own email or standard accounting tool. In contrast, when your process differs from your competitors, bending a ready-made product gets harder.

In that case, custom software makes more sense. What is more, you can build custom software on a SaaS architecture too. That way, you keep the option of offering the same product to other organisations on a subscription later.

Building your own SaaS product in 6 steps

1. Validate the problem: First, talk to target customers and confirm they are willing to pay.
2. Narrow the first version: Next, define the smallest product that solves one problem end to end.
3. Choose the architecture: Decide on tenant isolation, backups and scaling from the start.
4. Add subscription billing: Set up plans, the free trial, payments and invoicing.
5. Design signup and onboarding: Users should see the value in their very first session.
6. Measure and iterate: Finally, track activation, churn and revenue metrics.

The most common mistake is to grow the product before it meets the market. So release your SaaS idea early as a small version. Then shape the roadmap with real usage data.

Which metrics should you track?

• MRR: Monthly recurring revenue.
• Churn rate: The share of customers who cancel their subscription.
• Activation: The percentage of trial users who complete the core task.
• Customer acquisition cost: What you spend to win one new subscriber.

Data security and privacy

With a SaaS product, customer data sits on the provider’s servers rather than yours. Therefore, ask which country hosts the data. In addition, put backup frequency, access rights and data export options in the contract.

Any product that processes personal data falls under privacy laws such as the GDPR or Türkiye’s KVKK. In particular, transfers to other countries come with extra conditions. So ask the provider for a data processing agreement before you choose.

Coratlas and SaaS

At Coratlas, we build and run our own SaaS products. Coratlas STK for associations and Coratlas Klinik for health tourism clinics both work on this model. Neither of them charges per user.

We also bring this experience to client projects. We develop multi-tenant, subscription-ready platforms from analysis to launch. For details, see our custom software development page.

Frequently asked questions