Pay as you Grow: The best way to scale your SaaS business in LatAm
Finding a balance between investment, added value and effective results are one of the great challenges for the success of SaaS. How does the Pay-as-you-Grow model become a key tool to achieve this? Read on!
Expanding SaaS business to Latin America requires a high initial investment to adapt the platform for the local language and usage, besides the marketing investment needed. That’s the true story.
But the profit worth the initial challenges. That’s also undeniable.
This industry is positioned in the region with great growth potential. According to press releases, the SaaS market in LatAm is anticipated to grow at a compound annual growth rate (CAGR) of 24.79% during the forecast period 2018-2022.
But even with all this market potential, one of the biggest complains of SaaS companies in LatAm is still being how to scale their business in the region and not be dependent of a small group of big clients?
Not only these companies looking to expand their operation can save time and money significantly by monitoring and paying for only the computing power they use or, in other words, by using the pay-as-you-grow model, but they also can increase their audience between small and medium businesses by offering the pay-as-you-grow method of subscription in their own products.
So how exactly Pay-as-you-Grow works for SaaS?
This is a sales model that allows customers to purchase capacity incrementally as it is needed. As they use all the capacity in their initial license, they buy an additional license to unlock more disk drives.
Pay-as-you-grow allows users to scale, customize, and provision their computing resources including software, storage, and development platforms. Resource charges are then based on the services used. In the end, it’s about savings to optimize processes and invest in other areas such as marketing and business development.
This pricing model is used by some storage vendors in contrast to payment models that require customers to pay for capacity up front, even if most of it is unused. With some traditional models, businesses linked to the financial or health industry often deal with costly acquisition cycles and large capital expenditures, ending up over-provisioning and paying for capacity long before using it.
Other benefits have to do with the possibility of being prepared to integrate new businesses and products, having the necessary resources, in addition to being able to invest in the sales force and development.
Let’s recap on some benefits of PAYG model:
- The up-front cost of storage is smaller.
- It can reduce capital investment because customers avoid overprovisioning by purchasing capacity before it is used.
- Scaling is often simple with vendors that offer pay-as-you-grow pricing because many allow additional capacity to be deployed without downtime.
Pay-as-you-grow model also helps SaaS startups to scale as gradual as possible
With this system, expanding companies will be able to devote all their time and efforts to the development of much more effective platforms and software, which meet the needs of the market and with a proper architecture focused on the user.
Pay-as-you-grow storage is most often found in storage-area network arrays. Some arrays have expansion capabilities that allow customers to purchase fixed amounts of additional capacity for existing arrays.
An example of this is Violin Memory’s Flash Storage Platform (FSP) and Windows Flash Array (WFA) all-flash arrays. For instance, WFA customers can purchase software licenses for additional storage in 8.8 TB increments. Additionally, Cloud storage uses a similar to pricing model as pay-as-you-grow because customers only pay public providers for the capacity in use.
What’s hot about SaaS in Latin America
Brazil and Mexico have established themselves as leaders in the SaaS market in Latin America, as more and more companies adopt cloud-based technologies, leveraging their advantages for increased productivity and easy implementation at low cost.
Read more about SaaS market in Brazil and Mexico:
– Small and Medium-sized Companies Leverage Demand for SaaS in Brazil
– Mexico: A Land of Opportunities for SaaS Business
This sector is the hottest market in technology right now. Its appeal to entrepreneurial and enterprising businesses alike have made analysts predict its rise at 24.79%, annually.
Entrepreneurs in the region deeply believe that SaaS companies are a key tool for the growth of their businesses. Not only do they help to structure processes at a low cost, but they also offer advanced technologies capable of competing in a global marketplace.
So if you are thinking scale business in Latin America is an impossible thing to do it, think again because it is just the opposite. There are solutions for doing a company being profitable in these countries, it only takes the effort to adapt the product to the local needs.
Other key players in the region
Besides Brazil and Mexico, the countries that stand out when it comes to talking about Software-as-a-service (SaaS) business technology expanding to this region, Colombia appears also in the scenario booming for this market, positioning the country as the #3 Fintech ecosystem in Latin America that has grown 61% in one year. Also, this country is predicted to become one of the three most innovative economies by 2025.
After the tax reform that this country underwent in 2016, a series of benefits were given to promote the transformation of companies, stimulating economic savings through the use of technology services. One of these benefits has to do with the VAT exemption for cloud computing services.
The growth of e-commerce and digital transformation in the region has made companies aware of the importance of being proactive and prepared for the new way of operating globally.
In addition, SaaS solutions are consolidated as vital for the technological boom that the Latin American region is experiencing. The service model offers the possibility of reaching large and small companies with ideas capable of competing in the most important markets.
With large investments announced in the region by giants such as Amazon, companies and local governments increasingly committed to more open policies and alliances to promote training in issues of development and digital transformation, Latin America is consolidating as a prosperous region for SaaS companies around the world to think about expanding their operation. It has never been so easy to expand in this region!