The Internet has spawned a whole new way to deliver software to companies that need it to run their business operations. It used to be that you had to buy a software program and pay to maintain and keep it up over time. That required an expenditure for the software program then an expense in hiring someone to manage the software. It might have even meant paying to send someone to a school or course to learn how to use the software. At any rate, the cost of owning the software was expensive and many times companies never saw a return on their investment.

Software as a service takes a lot of the risk out of those expenses. Because you don’t own the actual software you don’t have a large expense up front, nor do you have to pay someone (including their travel expenses and cost of training) to learn how to use it then an ongoing salary to manage the software.

Your expenses are tied up in the use of the software and how you use it. Software as a service is most often delivered over the Internet and your costs are the price for what you actually use. Here are three pricing models that you may run across in software-as-a-service business models.

  1. Per user fees. Some software-as-a-service providers charge you according to the number of users who will log on to the software and use it, not necessarily simultaneously.
  2. Time logged in. More rare than the per-user fee, you might pay for software as a service in seconds, minutes or time increments. For instance, you may pay for 15 minute time slots even if you only end up using 8 minutes on a particular session.
  3. Units used. Some software may be bought as a unit. For example, if you use a particular program to deliver business forms to your company as you need them then you could pay for each form you download.

Pricing models vary for software as a service. You may run across other pricing models as well, but these three pricing models are likely to be the ones you’ll see most often.

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