The Never-Ending Subscription
Remember the old days? You’d buy a piece of software in a box, pay a hefty one-off fee, and then own it forever, or at least until it became hopelessly obsolete a year later. It was a lumpy, unpredictable business model. Today, that model is all but dead. Companies like Salesforce showed the world a far more elegant, and frankly, lucrative, way of doing things. They don’t sell you a product, they rent it to you.
This is the magic of Software as a Service, or SaaS. Instead of a big upfront cost, businesses pay a monthly fee. For the customer, it’s manageable. For the software company, it’s a dream come true. It creates predictable, recurring revenue streams that investors, quite rightly, find incredibly attractive. Once a company builds its entire sales operation around a platform like Salesforce, or its creative department around Adobe’s Creative Cloud, do you think they’re likely to switch? Not without a colossal amount of pain and expense. These customers are ‘sticky’, which is a polite way of saying they’re locked in.
