The Revenue Model of Top 10 SaaS Startups

Updated on October 20 2023
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The SaaS industry is booming. In 2024, the global SaaS market is expected to reach $232 billion, up from $197 billion in 2023. This growth is being driven by many factors including the increasing adoption of cloud computing, the rise of remote work, and the growing demand for digital transformation.

SaaS startups are at the forefront of this growth. They are disrupting traditional industries and changing the way businesses operate. But how do these startups make money?

In this article, we will take a close look at the revenue models of the top 10 US SaaS startups. We will explore how these startups generate revenue, and what their revenue models mean for the future of the SaaS industry.

Whether you are an entrepreneur, investor, or simply curious about the SaaS industry, this article is for you. We will provide you with the insights you need to understand how SaaS startups make money and how they are shaping the future of business.

However, before you delve into the Revenue Model of Top SaaS Startups, check out our article on how to monetize your SaaS Startups to start making money off your SaaS app.

Top US SaaS startups and their Revenue models

Stripe

Revenue Model of SaaS Startups - Stripe Revenue Growth

Stripe is a financial technology company that provides payment management software and APIs that are primarily aimed at e-commerce and online businesses. It allows you to accept various types of payments, including credit cards, debit cards, and popular payment methods around the world. 

Its advanced security features help prevent fraudulent transactions and provide peace of mind for both businesses and customers. Stripe allows you to customize your checkout process to match your brand aesthetic and customer experience.

Here is the primary source of revenue for Stripe:

Transaction fees: Stripe generates its main revenue through transaction fees. Businesses using Stripe’s payment processing platform pay fees based on the location of their customers and the type of cards used for payments. Stripe charges 2.9% plus 30 cents per transaction to accept card payments online and 2.7% plus 5 cents to accept in-person payments. Additional fees are charged by stripe if currency conversion is required for international cards.

Terminal charges: To use the Stripe payment processing on the physical shop, most probably you need terminals. The pricing for different terminal types starts at $59 for a mobile card reader and ranges up to $249 for countertop terminals.

Service Selling: Stripe Atlas is a service for entrepreneurs looking to start a business. Stripe charges a flat fee of $500.00 for core features, including company incorporation, bank account setup, registered agent fees, and tax ID number

Product Selling: Stripe offers Radar, a fraud and risk management system for transaction protection. Apart from Radar, it also has other products like Invoicing, Billing, and more that contribute to the revenue of Stripe.

DropBox

Revenue Model of SaaS Startups - DropBox Revenue Growth

Dropbox is a cloud storage service that allows users to store files online and access them from any device with an internet connection. It helps users to sync files across devices so that they always have the latest version of their files available.

Dropbox is a popular choice for both individuals and businesses. Individuals use Dropbox to store and share personal files, such as photos, videos, and documents. Businesses use Dropbox to store and share work files, such as presentations, reports, and spreadsheets.

Here is the primary source of revenue of DropBox:

Freemium model: Dropbox’s freemium revenue model involves offering a free version of their cloud storage service with basic features and limited storage capacity. This free version allows users to store a certain amount of data in the cloud at no cost. Users who find value in the free version and require more storage or advanced features are more likely to subscribe to the paid plans that contribute to Dropbox’s revenue.

Subscription model: Dropbox offers its main product through subscription. It offers subscription plans that cater to both individual users and businesses of varying sizes. It provides different levels of storage capacity, features, and customization options to meet their needs. Apart from its main product it also had additional products like Docsend and DropBox Sign, which have separate subscription plans. 

On-Demand Customization: It allows companies to customize the services of DropBox based on their specific needs. This helps DropBox to ask for the price based on the customization and generate a huge chunk of revenue.

Gusto

Revenue Model of SaaS Startups - Gusto Revenue Growth

Gusto is a cloud-based platform that specializes in payroll and human resources management that primarily caters to small and medium-sized businesses. This platform offers a range of features designed to streamline and simplify HR-related tasks. 

Some of its key features include full-service payroll processing, employee self-service tools, workers’ compensation administration, direct deposit options, paid-time-off policy management, onboarding tools, health insurance administration, and more. Gusto’s comprehensive suite of services enables businesses to efficiently manage payroll and HR tasks while ensuring compliance with various regulations. 

Here is the primary source of revenue of Gusto:

Subscription Fees: Gusto offers a variety of subscription packages to its customers. These packages are designed to cater to businesses of different sizes and with varying HR and payroll needs. Customers pay a monthly fee based on the package they choose. 

The subscription packages include features like full-service payroll processing, employee self-service tools, workers’ compensation administration, and more. It acts as a major revenue stream for Gusto.

Benefits Packages: In addition to subscription fees, Gusto offers a range of benefits packages for both paid and unpaid that act as additional revenue streams. These packages include services like Workman’s Comp, Health Insurance, Health Reimbursement, 401K Retirement plans, and 529 College Savings plans. 

While customers and employees pay for premiums associated with these benefits, Gusto also receives referral fees or commissions from insurance providers or partners that contribute to its revenue.

Add-ons: There are certain add-ons provided by Gusto that have additional benefits. Users can add these add-ons to their plans to avail the benefits of add-ons. Time-kiosk, which is an add-on that charges $4/month/user on top of a subscription plan.

SquareSpace

Revenue Model of SaaS Startups - SquareSpace Revenue Growth

Squarespace is a popular website building and hosting platform that allows individuals and businesses to create and manage websites and online stores. It provides a user-friendly interface with customizable templates and makes it accessible to people without extensive web design or coding skills. 

Squarespace offers various features for website design, blogging, e-commerce, and more that make it the best tool for building and maintaining an online presence.

Here is the primary source of revenue of Gusto:

Subscription Fees: Squarespace offers different subscription plans to users, which include features such as website hosting, domain registration, and access to their website builder. These subscription fees are a significant source of revenue.

E-commerce Transactions: Squarespace allows users to create online stores and sell products or services. They earn a portion of the transaction fees for each sale made through their e-commerce platform.

Domain Registration: Squarespace offers domain registration services and allows users to purchase and manage domain names for their websites. They charge fees for domain registrations and renewals.

Design and Development Services: Squarespace provides design and development services for users who need more extensive customization or assistance with their websites. These services come at an additional cost.

Also read: How to build your Shopify website?

Freshworks

Revenue Model of SaaS Startups - Freshworks Revenue Growth

Freshworks is a software company that specializes in providing cloud-based customer engagement and business software solutions. They offer a wide range of products designed to help businesses manage and improve various aspects of customer service, support, and engagement. Some of their popular products include Freshdesk for customer support, Freshsales for sales and CRM, Freshchat for live chat and messaging, Freshservice for IT service management, and Freshbooks for accounting and finance. 

Here is the primary source of revenue of Freshworks:

Tiered Pricing: Freshworks often provides tiered pricing with different levels of functionality and support to cater to the needs of businesses of varying sizes and requirements. Higher-tier plans typically come with more features and customization options at a higher cost.

Revenue-sharing model: The Freshworks Incentive Program is a revenue-sharing model designed to encourage the development of robust future-ready applications for their product suite. Freshworks runs incentive programs from time to time. For instance, in the fourth quarter of 2022, the company offered an active incentive program that revised the revenue share model. 

Intercom

Revenue Model of SaaS Startups - Intercom Revenue Growth

Intercom is a customer messaging platform that enables businesses to communicate with their customers through various channels like chat, email, and more. Its features include live chat for real-time interactions, automated chatbots for handling routine queries, email marketing tools for targeted communication, in-app messaging to engage users within an application, customer data management to provide personalized experiences and customer support ticketing. 

Here is the primary source of revenue of Intercom:

Subscription Fees: Intercom offers different subscription plans to businesses based on their needs. These plans typically include access to various features and communication channels, and customers pay recurring fees for their usage.

Add-Ons and Upgrades: Intercom provides additional features and capabilities as add-ons or upgrades to its subscription plans. Customers can purchase these to enhance their messaging and customer engagement capabilities.

Professional Services: Intercom provides professional services such as consulting, training, and implementation assistance to businesses seeking more in-depth support. These services come at an additional cost.

Outreach

Revenue Model of SaaS Startups - Outreach Revenue Growth

Outreach is a sales engagement platform designed to help sales teams streamline their outreach efforts and improve customer engagement. Its features include multi-channel communication tools like email and calls, automation for personalized and timely outreach, analytics to track and measure outreach effectiveness, a sales sequence builder for planning and executing sales strategies, and CRM integration to ensure seamless data synchronization. 

Here is the primary source of revenue of Outreach:

Subscription Fees: The primary source of revenue for Outreach comes from subscription fees charged to businesses and sales teams. They offer different pricing tiers based on the features and usage levels, and customers pay recurring fees for access to the platform.

Enterprise Solutions: Large enterprises often require custom solutions tailored to their specific needs. Outreach offers enterprise-level solutions that involve negotiated contracts and generate substantial revenue.

Add-Ons: Outreach provides various add-ons and integrations with other sales and CRM tools to enhance its capabilities. These additional features often come at an extra cost, generating additional revenue.

Postman

Revenue Model of SaaS Startups - Postman Revenue Growth

Postman is a popular software application used by developers and testers for testing and interacting with Application Programming Interfaces (APIs). It provides a user-friendly interface to send HTTP requests to APIs, view responses, and automate API testing. 

Postman allows users to create, organize, and share collections of API requests and makes it a valuable tool for API development and testing workflows. It’s widely used in the software development industry to streamline the process of working with APIs.

Here is the primary source of revenue of Postman:

Freemium Model: Postman offers a free version of its software to individual users and small teams. This serves as a starting point for users to get familiar with the tool and its basic features. While this version is free, it also acts as a marketing and user acquisition strategy.

Usage-Based Pricing: In addition to fixed subscription plans, Postman also offers usage-based pricing for certain features, such as monitoring and mock servers. Users pay based on the volume of API calls or usage of these features.

Add-Ons: Postman provides additional revenue streams through add-ons, including monitoring, mock servers, custom domains, and Postman Flows. Users can choose to pay for these add-ons as needed, supplementing their core subscription.

Paid Subscription Plans: Postman offers several paid subscription plans, which are a significant source of revenue. These plans are designed to cater to the needs of different user groups, including teams and enterprises. The paid plans typically include more advanced features and greater scalability compared to the free version. Users pay a monthly or annual subscription fee to access these plans.

Webflow

Revenue Model of SaaS Startups - Webflow Revenue Growth

Webflow is a web design and development platform that empowers users to create and publish responsive websites visually without the need for coding. It offers a comprehensive suite of web design and hosting tools and makes it suitable for designers, developers, businesses, and individuals looking to build and manage websites efficiently.

Here is the primary source of revenue of Postman:

Site Plans: Webflow offers various site plans designed to meet different user needs, from free to enterprise-grade solutions. Users select the plan that suits their requirements and pay accordingly. This is the primary source of revenue of Webflow.

Optional Add-Ons: In addition to the core site plans, Webflow offers optional add-ons, such as localization, for an extra monthly fee. These add-ons allow users to enhance their websites with specific features.

Custom Domain: Custom domains are available as part of the paid plans. Users can choose to connect their own domain name, and there might be associated costs for domain registration or renewal through domain registrars.

Enterprise Solutions: For large organizations with complex needs, Webflow offers enterprise-grade solutions. These are customized plans tailored to the unique requirements of each enterprise client. Pricing for enterprise plans is negotiated directly with Webflow’s sales team.

Also read: Analyzing the Website Designs of Top SaaS companies and what worked for them

Figma

Figma Revenue Growth

Figma is a collaborative and cloud-based design and prototyping tool primarily used by user interface (UI) and user experience (UX) designers. It enables design teams to work together on the same design files in real time, regardless of their physical location.

Here is the primary source of revenue of Postman:

Subscription Plans: Figma offers different subscription plans tailored to the needs of individuals, design teams, and organizations. Figma provides a free plan that allows individuals to use the platform with basic features. This serves as an entry point for users to get acquainted with Figma’s capabilities. Figma’s primary source of revenue comes from its paid subscription plans.

Figma Plugins: Figma supports a marketplace of third-party plugins that extend its functionality. While many plugins are free, some may have their own pricing models, such as one-time purchases or subscription fees. Figma earns a share of the revenue generated by these third-party plugins, contributing to its income.

Enterprise Solutions: For large organizations with complex needs, Figma provides customized enterprise solutions. The pricing for these solutions is negotiated directly with Figma’s sales team and includes additional services, support, and features.

Most Popular Revenue Model of SaaS Startups

The most popular revenue model for SaaS startups is the subscription model. In this model, customers pay a recurring fee to access the SaaS product or service. This fee can be paid monthly, quarterly, or annually.

The subscription model has many advantages for SaaS startups. For one, it provides a steady stream of revenue which can help businesses to plan for the future and invest in new growth initiatives. 

Subscription models also tend to have higher customer retention rates than one-time purchase models, as customers are more likely to stick with a service that they are using and benefiting from on a regular basis.

SaaS products and services are typically delivered over the internet which means that they can be accessed by customers from anywhere in the world. This makes the subscription model a convenient and affordable way for businesses to access the SaaS products and services they need.

In addition to the subscription model, there are a number of other revenue models that SaaS startups can use. For example, some SaaS startups generate revenue through freemium models, where they offer a basic version of their product or service for free and charge for premium features or functionality. 

Other SaaS startups generate revenue through advertising or through selling data and insights to their customers.

Conclusion

The SaaS startups reveal a diverse range of approaches that have contributed to their success. These startups have leveraged various revenue strategies including subscription-based models, freemium offerings, pay-as-you-go options, and tiered pricing structures. Each model has been carefully crafted to align with the unique characteristics of their products, target audiences, and growth objectives.

Now it’s your turn to choose the best revenue model for your SaaS startup that suits your product.

About Appscribed

Appscribed is a comprehensive resource for SaaS tools, providing in-depth reviews, insightful comparisons, and feature analysis. It serves as a knowledge hub, offering access to the latest industry blogs and news, thereby empowering businesses to make informed decisions in their digital transformation journey.

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