---
aliases: ["SaaS Business Models"]
Is A: Topic
---
# SaaS Business Models

SaaS business models covers the economics, strategies, and operational patterns of software-as-a-service companies — recurring revenue mechanics, churn dynamics, pricing strategies, customer acquisition, and the metrics that separate healthy SaaS businesses from struggling ones. It is a frequent editorial topic and a core knowledge area for understanding the newsletter's sponsor base.

## Why this matters

Most of Refactoring's sponsors are B2B SaaS companies, and understanding how their businesses work makes the sponsorship relationship more productive and the editorial content more credible. Writing about engineering leadership without understanding the business context in which engineering teams operate would be incomplete — and SaaS is the dominant business model for the companies where Refactoring readers work. The evergreen note [[the-saas-metric-that-matters]] cuts through the vanity metrics to focus on what actually indicates business health, and [[topic-b2b-marketing]] covers the marketing side of how these companies reach customers.

## Key resources

- [[the-saas-metric-that-matters]] — identifying the single metric that best indicates SaaS business health
- [[note-zero-to-one]] — Thiel's frameworks on monopoly and competition, directly applicable to SaaS strategy
- [[note-the-lean-startup]] — the foundational methodology that most SaaS companies claim to follow
- SaaStr (Jason Lemkin) — the most comprehensive resource on SaaS metrics, sales, and scaling
- Christoph Janz's "Five Ways to Build a $100M Business" — the classic framework for understanding SaaS market sizing

## Notes

- Net revenue retention is the single most important metric for a SaaS business — it tells you whether the product gets more valuable to existing customers over time
- Most SaaS companies die not from building the wrong product but from failing to find a scalable, repeatable customer acquisition channel
- Pricing is the most underleveraged growth lever in SaaS — most companies underprice because they are afraid of churn, but the best companies charge more and invest in delivering more value
- The PLG (product-led growth) vs. sales-led debate is largely a false dichotomy — most successful SaaS companies use both, with the mix depending on deal size and buyer persona
- Understanding SaaS economics well enough to discuss them in editorial content makes sponsorship conversations significantly easier, because sponsors see that the newsletter understands their world
