Besides SaaS (software as a service), there are many other business models, especially in software and online businesses. The key distinction is between how you deliver your product and how you make money.
1. Software and technology business models
| Model | Full name | How it works | Example |
|---|---|---|---|
| SaaS | Software as a Service | Customers pay to use software online, usually by subscription | Shopify, Slack |
| PaaS | Platform as a Service | Infrastructure for developers to build and deploy applications | Heroku, Vercel |
| IaaS | Infrastructure as a Service | Rents computing power, servers and storage | AWS, Azure |
| DaaS | Data as a Service | Sells access to datasets or data insights | Crunchbase |
| APIaaS | API as a Service | Businesses pay to integrate specific functionality through APIs | Twilio, Stripe |
| AIaaS | AI as a Service | AI capabilities through APIs or cloud platforms | OpenAI API |
| MaaS | Marketplace as a Service | Technology to run marketplaces | Marketplacer |
| BaaS | Backend as a Service | Prebuilt backend infrastructure for applications | Firebase, Supabase |
| FaaS | Function as a Service | Runs individual functions without managing servers | AWS Lambda |
| On-premise | Self-hosted software | Customers install and run software on their own infrastructure | Traditional enterprise software |
2. Other digital business models
Especially interesting if you’re thinking about starting a business.
| Model | How you make money | Example |
|---|---|---|
| Subscription | Recurring monthly or annual payments | Netflix |
| Freemium | Free basic product, paid premium features | Spotify |
| Marketplace | Commission on transactions between buyers and sellers | Airbnb |
| E-commerce | Selling physical or digital products | Online stores |
| Dropshipping | Selling products fulfilled by suppliers | Shopify-based stores |
| Affiliate | Commission for referring customers | Affiliate websites |
| Advertising | Monetizing attention, views or clicks | YouTube |
| Usage-based | Charging by consumption | API platforms |
| Licensing | Charging for rights to use intellectual property or software | Enterprise software |
| Productized service | A standardized service at a fixed price | Design subscription agencies |
| Open-core | Open-source software with paid premium features | GitLab |
| Pay-per-result | Charging for achieved outcomes | Performance marketing |
3. Which models scale?
- SaaS: recurring revenue. Build the software once and sell subscriptions to many customers. Attractive for predictable revenue.
- Marketplace: network effects. Connect buyers and sellers and earn a commission on each transaction.
- API and AIaaS: usage-based revenue. Provide a capability that other businesses build into their products.
- Productized service: easiest to start. Standardize a service, automate delivery, and eventually turn it into software.
These models aren’t mutually exclusive. An AI-powered SaaS business can combine subscriptions, usage-based pricing and API access.
AI agents
AI agents are an emerging category. They overlap with SaaS and AIaaS, with one important difference: instead of only providing tools, they can carry out tasks and workflows on their own. The category is often called AaaS (Agents as a Service) or agentic SaaS.
- Traditional SaaS is software that helps people do work. Example: a CRM that helps salespeople manage leads.
- Agentic SaaS or AaaS is software that does work on people’s behalf. Example: an agent that qualifies leads and schedules meetings.
Four ways to build an AI agent business
| Model | What you sell | Revenue model |
|---|---|---|
| Agentic SaaS | Software with built-in agents | Monthly subscription |
| AaaS | Specialized agents that perform tasks | Per task or monthly fee |
| AI agent agency | Custom agents and automations for companies | Setup fee plus retainer |
| Agent marketplace | A platform to discover and use agents | Transaction commission |
Example: four ways to solve the same sales problem
- SaaS: a CRM where salespeople manage leads by hand.
- AIaaS: an API that scores leads.
- Agentic SaaS: a CRM whose agents follow up with leads automatically.
- AaaS: a standalone sales agent that finds prospects, researches and qualifies them, and books meetings through connected tools.
The difference is how much work the customer hands over.
The shift: from software as a service to work as a service
The opportunity is that agents can take over parts of a workflow, not just make existing software more efficient. But reliability, supervision and the cost of running agents are real constraints. See Decide what AI must never do.
Related: Business models · AI and decisions