Monetization model

A monetization model describes the strategy a company uses to turn its product value into revenue. Common models in SaaS include subscriptions, usage-based billing, freemium, and per-seat pricing, each with different implications for growth and cash flow.

Example: A developer tools company starts with a freemium monetization model to drive adoption, then converts power users to a usage-based paid tier, capturing revenue proportional to the value delivered.