Most people confuse website hosting with enterprise software. This confusion makes it difficult for users to understand how much their software solution will cost even before they buy it. Relying on the number of user licenses to evaluate B2B SaaS companies and their software products is a sure way to have a bad implementation and end up paying unexpected fees.
This analysis removes the marketing "buzzwords" from vendor sites and shows you how end-users purchase products, what their limitations are, and which products are at the top of the market based on actual deployment statistics.
The True Picture of B2B SaaS Companies and Applications
Many users still see generic lists of business applications mixed in with website hosting providers (who, typically, have little or nothing to do with B2B SaaS companies). The definition of B2B software is "software provided over the internet and delivered exclusively to a business customer on a subscription basis." It may be true that some website hosting providers have developed B2B offerings, but the majority have not, which makes their product offerings misleading.
Analysts do not forecast a $492 billion software market because of "simple" applications. They are tracking significant changes in CRM systems, verticalised platforms, and data integration.
Vendors are now competing on security, compliance, and the level of connection they can provide, not just their attractive user interfaces.
Software Types
Software can be broken down into specific categories and cannot be compared to another category. For example, HR tools should not be compared to database monitoring tools.
The major categories of the software market include:
Customer Relationship Management Systems (CRM): These account for almost 30% of the total value of the software market.
Infrastructure and Security (server logs, data rules and uptime): As a focus area for ingress and egress logs.
Collaboration and Work Management: As a replacement for separate email addresses, this type of software provides a single space for teams to collaborate and manage their work.
eCommerce: Manages complex business-to-business transactions and inventory mappings.
Key Examples of B2B SaaS Companies: Size and Market Positioning
1. Salesforce
Salesforce is the leading provider of enterprise customer database platforms that connect sales, marketing, and service. When we look closely at what buyers actually purchase, we see that it is not merely tools, but rather a comprehensive data platform that targets mid-size and enterprise customers.
The price for such products varies significantly based on the types of contracts selected and user types associated with each contract. Therefore, unless users are buying a product that has a limited number of public "seats," these numbers will not be the total cost that buyers will pay.
2. HubSpot
HubSpot is best known for its inbound marketing software and has also created a system for managing content. The HubSpot target market is primarily startups and other mid-sized businesses.
Although HubSpot does offer a free version of its product, the price increases rapidly when the user purchases a professional seat ($50 per seat per month) and/or enterprise functions ($75 per seat per month). While the reported close ratios from buyer testimonials are very strong, these are still vendor-reported figures.
3. Slack
Slack is a work layer that links people to each other and to software applications. With Slack, companies have fundamentally changed the way they communicate, as communications now occur in an open environment versus being emailed to an inbox.
The average Pro plans are priced around $7.25 per user per month. However, if one were to add on the AI capabilities, the monthly cost will continue to increase.
4. Shopify
Shopify is often viewed as a consumer-focused store builder; however, Shopify is really the world's largest B2B commerce engine.
The Plus plan starts around $2,300 a month with a three-year commitment. The Shopify Plus level has the ability to handle complex wholesaling (multiple payment types and catalogs and inventory) all in one integrated system.
5. Workday
Workday provides an HR and finance system that is built on a single data model and is designed for very large and complex organizations.
Workday's target customer is typically a company that needs to comply with strict global regulations, has complex workforces, and meets rigorous audit standards. All pricing to Workday customers is unique to each company.
6. Datadog
Datadog is a server monitoring tool for engineers to monitor the performance and health of servers and to track errors. Datadog has the ability to unify logging from the cloud environment and a secure structure for protecting systems.
The costs for Datadog are based on the number of hosts and the data retention used by each host. Attempting to rate this tool solely based on the number of users will result in a misrepresentation of its actual costs, a common mistake when reviewing B2B SaaS companies. The true price for Datadog depends on the amount of data retained by a company and the number of servers that are monitored.
7. Notion
The free plan (for employees, etc.) is $20 per user per month for business groups to pay for this service.
Before entering sensitive information into the software, buyers should be certain that the service they will utilize meets their organization's security assurance standards, specifically SOC 2 and HIPAA compliance guidelines.
8. ServiceNow
ServiceNow is a large software platform (engine) to assist businesses by helping with IT service workflow processes and workflow processes related to employee actions.
ServiceNow's target markets are large enterprise and government agencies, with the ability to automate millions of hours of repetitive approval processes. Pricing for ServiceNow's services is custom pricing and is determined by the scale of the buyer.
9. Semrush
Semrush is an intelligence platform designed to assist businesses in tracking their search visibility and their content.
Semrush is utilized primarily by advertising agencies and marketing professionals, with basic subscription pricing in the range of $140 per month and advanced business subscription pricing in the range of $500 per month. Therefore, purchasers need to justify the tool based on whether the tool generates direct traffic revenues.
Strategic Growth Lessons
The Danger of Comparing Features
Checking feature lists—like comparing a product automatically translates into a poor decision.
The greatest metric of concern is total cost of ownership. What is the price of entry compared to what the final cost will be? Purchasers must also calculate any overage fees, and any required additional services, including data storage limits.
For example, a low monthly seat cost will not offer good value if the export of data is 2X, 3X, or higher than the standard professional services fees to create or develop the solution.
How Interconnected is Your Software?
The effective functionality of all software is based on its ability to seamlessly integrate with, and create meaningful efficiency and process improvement for, the rest of the organization.
Interconnected software creates the "glues" that hold large modern companies together. The minute that a newly purchased finance tool does not have a direct integration with your CRM, or when manual transfer of data from one tool to another must be done repeatedly and continuously, is the moment you realize the amount of labor that has been expended on the manual creation of custodial records of the data.
Purchasers of software should verify the level of integration their existing systems have with their new software, rather than taking the vendors' word for it via a marketing page claiming to connect.
Implementation and Compliance Risks
The purchase of software by a corporation includes the factor of security.
A data server's location and whether an audit log exists for the transfer of said data across international borders are necessary compliance verification activities.
A third-party vendor using your proprietary data to train their AI models exposes your organization to significant security vulnerabilities when evaluating B2B SaaS companies.
Conclusion: Making the Right Software Choice
Software buyers should cease using only general review lists as the basis for making software purchases. A high revenue-producing company or a well-known company does not represent a software that fulfills the buyer's needs.
The successful buyer of technology is one that has outlined their workflow process in detail prior to searching through vendors' web pages for pricing.
The market leaders provide clear limitations, the capacity for deep integration with other systems, and established security boundaries. Each software purchase should undergo an extensive assessment of how well it connects with your core applications, what you can anticipate your costs will be when you scale to your largest, and what happens to your data after you stop using the product. If the product cannot meet all three criteria, it is not worth the investment.
Software Growth and Execution Q&A
How do usage-based pricing models impact budget forecasting?
Per-user pricing models are predictable; however, usage models penalize growth that is unexpected. Usage-based billing structures based on API calls, log storage, or computing minutes can result in unanticipated spikes in expense. Finance teams should perform budget projections based on maximum usage scenarios, instead of average usage, to mitigate potential bill surprises.
What are the differences in European buyer rules?
In North America, software that is successfully deployed in that market may not be legal to operate in Europe. Therefore, buyers must verify both the location of any data servers and the vendors' right to process data. If the vendor does not have proof of holding your data in-country, companies based in Europe will be subject to enormous legal liability if they utilize that vendor.
What is the biggest hidden cost of rolling out new software?
The cost of migrating data from prior systems, creating custom field mapping, and providing training takes hundreds, if not thousands, of man-hours to complete and represents the greatest potential cash outflow associated with purchasing a software solution. Vendors typically do not provide this information, which leaves buyers awaiting the completion of their implementations for several months.
How can companies find the true value of AI features?
You should never pay for an AI product that only summarizes text or completes other conventional tasks. The best way to evaluate AI solutions is by finding the ratio between the data inputted, the action taken, the amount of human verification required, and the cost of performing each task. If the AI solution does not materially reduce the time required to execute a process or decrease the length of deal cycles, it is a wasted expense.
