Ask HN: Various SaaS business models

[parkern]

I know a lot of people here run software solutions, so I thought we could have a list or talk about various business models being utilized for subscription based websites. I will start off with the following:

1) 37 signals approach - which is a very limited hidden free plan and then numerous other paid options.

2) Squarespace approach - 15 day free trial, with no credit card required. If you don't upgrade then your account is canceled

3) Carbonmade approach - funnel everyone into the site via a free plan and then once registered try to get them to upgrade

4) And then another pretty common one is - credit card down on sign up with a 15 day free trial, which rolls into a paid plan if you don't cancel.

[cperciva]

Not all SaaS includes free plans. I'd include the following two options as well:

5) Amazon approach - your usage gets added up over the course of each month, and your credit card gets charged at the end of the month.

6) Tarsnap approach - you start by making a payment to put money into your account, and this money gets used up as you use the service. You can add more money whenever you want. If the money in your account runs out, you lose access to the service.

Obviously, I like the Tarsnap approach. :-)

[dasht]

I don't know anyone who does it this way but an idea I like would be metered, like Amazon, but with a twist: a safety net and "grace amount" for users:

Customer signs up, gives a CC or other payment assurance, says "I am willing to pay up to $N/month for this."

Ideally, the customers actual metered usage comes out at $(N-K) and you bill that lesser amount.

Suppose on day 15, though, the customer has used up $N. Instead of suspending them, you float them for three days and alert them. If they ignore the alert, suspend them after 3 days or a max of $X overage. The customer can also respond to the alert by saying "please suspend for the month" in which case you eat the overage (< $X). Or the customer can raise their limit: "Ok, I'm willing to pay $(N+J)."

In other words, a kind of "meter with circuit breaker and graceful failure mode". As a customer, it makes me paranoid that I might, through unforseen causes, rack up way more in some metered charge than I thought just because I didn't check the meter myself for a few days. The above would fix that.

To avoid gaming, you might want to have rollover of overage charges towards the end of the billing period.

-t