SaaS Articles

  • Mike

    I am an early stage SaaS start up trying to finalize my financial model for investors. The business is focused on service companies in the construction industry. I have been trying to find some data on conversion rates when using a freemium model and was hoping that someone out there might be able to give me some direction. Specifically I am looking for info to explain how many users covert from a free version of a program to a paid version. Does anyone know a reputable source for this kind of information and where I could find it?

  • http://www.forentrepreneurs.com David Skok

    Hi Mike, unfortunately the conversion rates for freemium businesses vary greatly from one company to another, depending on how compelling the value proposition is for the upgrade to paying. The only thing I can tell you is that in a number of successful businesses, the conversion rate has been around 3%. However, it is my guess that a lot of the businesses that try to get the freemium model working don’t get to that number, as their value proposition is not strong enough.

  • Mime

    What does SaaS stand for .

  • http://www.forentrepreneurs.com David Skok

    Software as a Service. i.e. when you are able to access software using your web browser, because it is running in the cloud. The benefits versus conventional software:
    - No need to ask IT to purchase servers, and run and manage them
    - No large upfront license fee

    - Easy to test the software before purchasing