B2B SaaS stands for “business to business software as a service.“
Acronyms are confusing, and the term “B2B SaaS” is doubly so because it’s made up of a pair of them. In this guide, we’ll clarify the B2B SaaS meaning, explain how it differs from other models, and show what the B2B SaaS industry looks like. By the end, you should have a clear understanding of the term.
Ready to get to the bottom of B2B SaaS? Let’s dive in.
What Is B2B SaaS? (Meaning Explained)
B2B SaaS is software delivered over the cloud to businesses on a subscription basis. These solutions are accessed online, include ongoing updates and support, and help companies solve business challenges. Unlike traditional software, B2B SaaS does not require on-premise installation.
What is B2B?
B2B, as noted above, stands for “business to business.”
B2B businesses sell products and services directly to other businesses, usually targeting decision makers. Disruptive puts it simply: B2B means selling to organizations, not individual consumers.
A few examples of B2B businesses:
- A commercial cleaning company that sells cleaning services to other businesses, not to individual homeowners.
- Cintas, a company that sells corporate apparel (uniforms, etc.) to service businesses.
- IBM, which sells technology products and services primarily to enterprise businesses.
- Our company, New North, which sells marketing services to businesses, not to individual consumers.
B2B offerings are usually more complex and sold at higher price points, since businesses have larger budgets. Purchases often involve buying groups, with multiple stakeholders and a single decision-maker.
This is contrasted against B2C (business to consumer) businesses, which sell products and services directly to end consumers, take Nike, Coke, or Airbnb as examples, typically at lower price points.
What is SaaS?
SaaS refers to “software as a service.” It’s best understood when contrasted against on-premise software deployments. In the past, companies might pay a one-time licensing fee to have software deployed to their on-premise systems, this wasn’t SaaS, it was just software.
There are two key distinctions that make SaaS unique from the old model:
- SaaS is provided via the cloud. The provider manages the infrastructure, so companies only need an internet connection to access the software.
- SaaS involves regular service. The subscription model typically includes ongoing support and automatic updates.
These are the biggest points of distinction. For more nuance, this video is helpful:
How Is B2B SaaS Different From B2C SaaS? Understanding the B2B SaaS Meaning
B2B SaaS and B2C SaaS both use the cloud, but they serve different customers. B2B SaaS is built for organizations, while B2C SaaS is for individual consumers. Here’s how they compare:
- Sales Process: B2B SaaS often involves longer sales cycles, multiple decision-makers, and higher price points. B2C SaaS typically relies on low-touch, self-service purchases.
- Marketing Focus: B2B marketing focuses on solving business challenges and demonstrating ROI, while B2C marketing often appeals to personal needs and entertainment.
- Product Complexity: B2B products are generally more complex, with features for collaboration, security, and integration that individual users don’t require.
What are common B2B SaaS categories?
To fully grasp the B2B SaaS meaning, it helps to think of the industry as being composed of three main tiers. Those are:
Almost-B2C B2B SaaS
Some B2B SaaS companies operate almost like B2C brands. Their products are sold at low price points and marketed to individuals, not buying groups. Sales are often self-serve, with marketing leading directly to a free trial.
Examples include:
Enterprise B2B SaaS
Enterprise B2B SaaS companies focus on high-price-point sales and target buying groups. These companies often require custom setup and have dedicated sales teams, with marketing focused on building connections.
Examples of this tier include:
Hybrid B2B SaaS
Hybrid B2B SaaS companies fall between almost-B2C and enterprise solutions. They are often less established and build customizable software, aiming to let clients tailor the platform to their needs.
Examples of this tier include:
The bottom line is that B2B SaaS is a broad term, but categorizing companies into these three tiers will help you to make more sense of the market. In fact, the SaaS market is expected to continue growing as organizations worldwide adopt SaaS solutions for various business needs.
Want help with B2B SaaS marketing?
Hopefully, this article has given you a clear understanding of the B2B SaaS meaning and what the industry actually looks like.
Don’t be intimidated by the acronyms. In a world that prefers predictable costs and cloud access, the B2B SaaS model simply makes sense.
And if you’re working on growing your B2B SaaS business with marketing, let’s talk.
At New North, we understand B2B SaaS, and we’ve helped firms build user bases, drive sales, and grow with the right marketing.
If you’re ready to turn these insights into action, schedule a free consult today to talk through what’s slowing growth, and how we can help.
Frequently Asked Questions About B2B SaaS Meaning
What is an example of a B2B SaaS product?
Salesforce is a leading B2B SaaS product. It helps businesses manage customer relationships and sales through a cloud-based subscription platform.
What are some well-known B2B SaaS companies?
Other well-known B2B SaaS companies include Slack, HubSpot, and Oracle. Each offers cloud-based solutions for business communication, marketing, and enterprise operations.
Is every subscription software product considered B2B SaaS?
No, only products sold to businesses are B2B SaaS. If the software is for individual consumers, it’s considered B2C SaaS.
How is B2B SaaS different from traditional software licensing?
B2B SaaS is delivered over the cloud and paid for by subscription, while traditional software is a one-time purchase installed on-premise. SaaS usually includes ongoing updates and support.
