SaaS Glossary
Last Updated: March 30, 2025
Welcome to our comprehensive SaaS Glossary—a collection of key terms, acronyms, and concepts in the Software as a Service industry. Whether you're new to SaaS or an industry veteran, use this resource to quickly understand important terminology and stay updated with the latest industry language.
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5 Nines (99.999% Uptime)
A high availability service level agreement that assures a system or service will be operational 99.999% of the time, which translates to about 5.26 minutes of downtime per year.
A
Agile Development
An approach to software development that emphasizes flexibility, collaboration, and customer feedback. It involves delivering work in small, incremental phases rather than all at once at the end of a project.
AI (Artificial Intelligence)
Technology that enables computers to perform tasks that typically require human intelligence, such as learning, problem-solving, and understanding natural language. In SaaS, AI is often used to enhance features like customer service, data analysis, and personalization.
API (Application Programming Interface)
A set of protocols, routines, and tools for building software applications that specifies how software components should interact. APIs allow different software systems to communicate with each other.
ARR (Annual Recurring Revenue)
A metric that shows the money that comes in every year for the life of a subscription (or contract). It's a crucial SaaS metric that provides a year-long perspective on revenue.
Authentication
The process of verifying the identity of a user, device, or system. Common authentication methods in SaaS include passwords, multi-factor authentication, and single sign-on (SSO).
Authorization
After authentication, authorization determines what resources a user has access to and what actions they can perform within a system.
B
B2B SaaS (Business-to-Business Software as a Service)
SaaS products that are sold to other businesses rather than to individual consumers. Examples include CRM systems, project management tools, and enterprise resource planning (ERP) software.
B2C SaaS (Business-to-Consumer Software as a Service)
SaaS products that are marketed and sold directly to individual consumers. Examples include streaming services, personal finance apps, and productivity tools.
Bootstrapping
Building and growing a SaaS company using personal finances or operating revenues without external funding from investors.
Burn Rate
The rate at which a company spends its cash reserves before generating positive cash flow. It's an important metric for SaaS startups to monitor their financial runway.
C
CAC (Customer Acquisition Cost)
The total cost of acquiring a new customer, including marketing and sales expenses. For SaaS businesses, it's important that the CAC is lower than the LTV (Lifetime Value) of a customer.
Churn Rate
The percentage of customers who cancel their subscription or don't renew within a given time period. Reducing churn is crucial for SaaS companies to maintain stable revenue growth.
Cloud Computing
The delivery of computing services over the internet ('the cloud'), including servers, storage, databases, networking, software, and analytics. SaaS is one model of cloud computing.
CLV or LTV (Customer Lifetime Value)
The total revenue a business can expect from a single customer account throughout their relationship. In SaaS, it's calculated based on subscription revenue and average customer lifespan.
CRM (Customer Relationship Management)
Software that helps businesses manage relationships and interactions with customers and potential customers. Popular SaaS CRMs include Salesforce, HubSpot, and Zoho CRM.
D
Dashboard
A user interface that organizes and presents information in a way that is easy to read and interpret. SaaS dashboards often display key metrics, analytics, and actionable data.
Data Migration
The process of transferring data from one system to another. In SaaS, this often happens when customers switch from legacy systems to cloud-based solutions.
DevOps
A set of practices that combines software development (Dev) and IT operations (Ops) to shorten the development lifecycle and provide continuous delivery of high-quality software.
E
ERP (Enterprise Resource Planning)
Business process management software that allows an organization to use integrated applications to manage the business and automate many back-office functions related to technology, services, and human resources.
F
Feature Flagging
A technique that allows developers to enable or disable features remotely without deploying new code. It's commonly used in SaaS for A/B testing, gradual rollouts, and subscription tier management.
Freemium
A business model where a product or service is provided free of charge, but money is charged for premium features, functionality, or virtual goods. Many SaaS companies use this to acquire users.
G
GDPR (General Data Protection Regulation)
A European Union regulation for data protection and privacy that affects how SaaS companies collect, process, and store user data.
Growth Hacking
A process of rapid experimentation across marketing channels and product development to identify the most effective ways to grow a business. It's particularly popular in the SaaS industry.
H
HIPAA (Health Insurance Portability and Accountability Act)
U.S. legislation that provides data privacy and security provisions for safeguarding medical information. SaaS products in healthcare must be HIPAA compliant.
I
IaaS (Infrastructure as a Service)
A form of cloud computing that provides virtualized computing resources over the internet. IaaS is the foundation layer for SaaS and PaaS.
Integration
The process of connecting different computing systems and software applications to work together. SaaS products often offer integrations with other tools to enhance functionality.
K
KPI (Key Performance Indicator)
A measurable value that demonstrates how effectively a company is achieving key business objectives. Important KPIs for SaaS include MRR, churn rate, CAC, and LTV.
L
Landing Page
A standalone web page created specifically for marketing or advertising campaigns. In SaaS, landing pages are often designed to convert visitors into leads or trial users.
M
Machine Learning
A subset of artificial intelligence that provides systems the ability to automatically learn and improve from experience without being explicitly programmed. Many SaaS products incorporate machine learning capabilities.
MRR (Monthly Recurring Revenue)
The predictable revenue that a SaaS company expects to receive every month. It's calculated by multiplying the number of customers by the average revenue per user (ARPU).
Multitenancy
An architecture where a single instance of software serves multiple customers (tenants). Each tenant's data is isolated and remains invisible to other tenants. It's a core feature of SaaS applications.
N
NPS (Net Promoter Score)
A metric used to measure customer experience and predict business growth. It's based on asking customers how likely they are to recommend the product or service to others.
O
Onboarding
The process of familiarizing new customers with a SaaS product and helping them achieve initial success. Good onboarding is critical for reducing churn and increasing customer satisfaction.
P
PaaS (Platform as a Service)
A category of cloud computing that provides a platform allowing customers to develop, run, and manage applications without dealing with the complexity of building and maintaining the infrastructure.
Product-Led Growth
A growth strategy where product usage drives customer acquisition, retention, and expansion. The product itself is the primary driver of user acquisition and monetization.
Q
QoS (Quality of Service)
The description or measurement of the overall performance of a service, particularly the performance seen by the users of the SaaS application.
R
RESTful API
An architectural style for designing networked applications that uses HTTP requests to access and manipulate data. Many SaaS applications offer RESTful APIs for integration with other systems.
S
SaaS (Software as a Service)
A software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted and managed by the provider. Users access it via a web browser.
Scalability
The capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged to accommodate that growth. It's a critical aspect of SaaS architecture.
Self-Service
A feature that allows customers to find information, purchase, set up, and use a SaaS product without assistance from the company's representatives.
SEO (Search Engine Optimization)
The practice of increasing the quantity and quality of traffic to a website through organic search engine results. It's an important marketing channel for many SaaS companies.
Single Sign-On (SSO)
An authentication scheme that allows a user to log in with a single ID and password to gain access to multiple related systems. It's a common feature in enterprise SaaS solutions.
SOC 2 (Service Organization Control 2)
A compliance standard for service organizations, developed by the American Institute of CPAs (AICPA), that specifies how organizations should manage customer data. Many enterprise SaaS customers require SOC 2 compliance.
Sticky Features
Product features that create habits and keep users coming back regularly. They're important for reducing churn in SaaS products.
Subscription Model
A business model where customers pay a recurring fee at regular intervals (monthly, annually) to access a product or service. It's the standard revenue model for SaaS companies.
T
Tenant
In the context of SaaS and multitenancy, a tenant is a customer or group of users who share common access with specific privileges to the software instance.
Third-Party Integration
The connection of a SaaS application with another software service or platform to extend functionality and share data between the systems.
U
UI (User Interface)
The space where interactions between humans and machines occur. The goal of effective UI is to make the user's experience easy, efficient, and enjoyable.
Upselling
A sales technique where a seller encourages the customer to purchase more expensive items, upgrades, or add-ons to generate more revenue. In SaaS, this often means moving customers to higher-tier subscription plans.
UX (User Experience)
The overall experience a user has when using a product, especially in terms of how easy or pleasing it is to use. Good UX is essential for SaaS product success.
V
Vertical SaaS
SaaS solutions designed to meet the needs of a specific industry (e.g., healthcare, real estate, finance). These solutions typically have deeper industry-specific features compared to horizontal SaaS products.
W
Webhook
A way for an app to provide other applications with real-time information. A webhook delivers data to other applications as it happens, meaning you get data immediately.
White Labeling
The practice of removing a product's brand and logo and replacing it with the branding of the reseller. Some SaaS providers offer white-label solutions for businesses that want to rebrand the software as their own.
Z
Zero-Touch Provisioning
The ability to set up and configure devices automatically without manual intervention. In SaaS, this refers to the automatic setup of customer accounts and services.
Missing a term?
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