There’s no one way to run a successful SaaS business. The more distribution channels you have, the safer your business is against market downturns. You don’t want to put your revenue at risk by relying on just one tactic.
The good news is that there are more SaaS software distribution channels than you might have guessed.
In this guide, we dive into the top channels. Plus we offer tips on how to create a winning SaaS software distribution strategy. And to help kickstart your competitor research, we offer examples of SaaS distribution in action so you know what to look for.
What’s in this guide:
Understanding how SaaS software is distributed
SaaS software distribution refers to the channels by which software is sold and delivered to paying customers.
What sets SaaS apart is right in the name: software as a service.
It is an ongoing service, where customers continue to receive updates, as opposed to purchasing a license to a specific version of your software, and having to re-purchase when you release the next version.
For the most part, SaaS software is distributed directly to customers without middle men. Think of SaaS like the DTC version of retail. Today, ecommerce companies can build direct relationships with consumers and mail products to them without having to go through wholesalers and retailers. By the same token, SaaS companies can sell and deliver their software to customers directly via the internet.
However, there are other indirect distribution channels available.
What are SaaS distribution channels?
There are a variety of SaaS distribution channels, both direct and indirect.
Direct distribution channels:
Self-Serve Ecommerce Subscriptions
Product Led Growth Upsells and Cross Sells
Inside Sales (Remote)
Outside Sales (Field)
Indirect distribution channels:
App Stores
Lifetime Deal Platforms
White Label Resellers
API Sales
Professional Services Firms
Retailers
Below, we dive into all of these in more detail.
Direct distribution channels for SaaS companies
Direct distribution channels are those where your company is collecting payments from end users directly.
1. Self-Serve Ecommerce Subscriptions
Self-serve is the most common distribution channel for SaaS companies. Customers enter their credit card information into your checkout flow. PayKickstart, Recurly, and Chargebee are all great options for SaaS subscription management.
You can use these platforms to create subscriptions, collect payments, notify customers of renewal dates, take repeat payments, handle cancellation requests, and more.
2. Product Led Growth Upsells and Cross Sells
Product-led growth (PLG) is a form of self-serve, but it’s worth mentioning as a separate channel for selling additional products and higher tier subscriptions. PLG refers to all of the ways your product sells itself, acting as a 24/7 and scalable sales team. There are a variety of PLG methods you can use to upsell customers into higher-tier plans or cross sell related products.
You might have sales funnels, upgrade sequences, product tours, walkthroughs, and prompts built into your product to help you drive more revenue from the customers you already have.
3. Inside Sales (Remote)
Inside sales teams use remote communication methods like phone, email, video calls, and social media channels to reach out to target prospects, book meetings, and close deals.
With the growth of online work since the start of the Covid-19 pandemic, inside sales has grown even more popular as a SaaS distribution channel.
For most digital-first companies, they only have inside sales teams and they don’t employ outside sales reps.
4. Outside Sales (Field)
Outside sales is common amongst traditional software companies, those that are transitioning into SaaS, and those that serve location-specific industries like manufacturing, banking, and healthcare. Outside sales is also common amongst companies that sell hardware and software combined, such as office management solutions and IoT companies.
Outside sales reps actually venture out into the field, using door-knocking to convert prospects into leads and relying on in-person meetings to turn leads into customers.
5. API Sales
Your API product is another form of direct distribution. You charge your customers a specific amount based on the usage of that product, and you collect payments directly. Your customers then embed your product into their software product and charge their customers for it. Although you’re not working with the end-user directly, you are taking payment from your customers so this is still considered a direct channel.
Indirect distribution channels for SaaS companies
Depending on your industry, you might have the chance to drive a sizable portion of your revenue from indirect channels. With these channels, the reseller collects payments from customers and passes your share of the purchase onto you.
6. App Stores
You can sell your app in the Apple app store, Google Play, Microsoft Office Add-in store, etc. Depending on the store and device it covers, app stores can charge upwards of 10% of your sales. While purchases for food and physical products can bypass the notorious 30% Apple tax, all app and software companies must pay that exorbitant amount. You’ll receive the remainder in payouts.
7. Lifetime Deal Platforms
Want a quick influx of new users to help boost your brand awareness and word-of-mouth sales? You can offer a lifetime deal to your SaaS product in exchange for a small one-time fee (usually between $30 and $150).
AppSumo is the most popular platform for selling lifetime deals, but DealMirror, SaaS Mantra, and PitchGround are all great options too.
8. White Label Resellers
You can also create strategic partnerships with companies that will sell your software for you. This can be great for entering new geographical markets in countries where customers prefer to purchase from a local business and tend to avoid foreign vendors.
In these cases, you’ll completely white label the delivery of the software, so that the platform has the logo and branding of the company that the customer is paying directly. You’ll then receive your share of the revenue based on your partnership agreement.
9. Professional Services
Professional services firms will resell your software as part of their offering to their clients. For example, an accounting firm might resell a bookkeeping software while an IT firm might resell cybersecurity software.
Some professional services firms might want to white label your product so that it looks like their own. Others will be fine selling access to your software without white labeling.
10. Retailers
Retail partnerships are a common indirect distribution channel for B2C software companies. Think of BestBuy and Amazon selling a recurring subscription to Microsoft Office. This channel is hardly used in the B2B SaaS world, however.
How to choose the right distribution channels for your SaaS
Ready to choose the right distribution channels? You’ll want to consider all of these factors when determining your growth strategy:
Target audience
Your target audience should be the biggest determining factor for your SaaS software distribution strategy. If you’re selling to small business owners, you can use direct channels like self-serve sales and PLG. But if you’re selling to large organizations, you’ll need inside and outside sales reps.
If you’re looking to break into a hard-to-crack traditional industry or geographical region, it can help to forge partnerships with boots-on-the ground white label resellers and professional services firms.
Market landscape
Do some competitor research to uncover the distribution channels other SaaS companies in your industry are using.
Because they’re available to the general public, it can be easy to spy on your competitors’ approach to self-serve sales and PLG methods. It’s a bit harder to research their direct sales strategies, but you can use tools like BuiltWith to find out what sales software they’re using and talk with your customers and prospects to learn what promises the sales team is making.
And it’s even harder to research a company’s indirect methods. While you might be able to find out about their lifetime deals, it can be challenging to know their approach to strategic partnerships with resellers and professional services firms.
Review their podcast interviews, case studies, social media posts, and other available content on the web to learn everything you can. Depending on the maturity of this competitor, you might decide to copy their approach or use different distribution channels to capture the market share they’re leaving behind.
Software licensing cost
How much you charge for your software will also determine your distribution channels. The less you charge, the more scalable you want the process to be. The more you charge, the more you’ll rely on 1:1 sales and relationships.
As a rule of thumb, the distribution channels will match these annual customer values.
>$1,000 per customer per year:
Self-Serve Ecommerce Subscriptions
Product Led Growth Upsells and Cross Sells
App Stores
Lifetime Deal Platforms
$2,000 - $50,000 per customer per year:
Self-Serve Ecommerce Subscriptions
Product Led Growth Upsells and Cross Sells
Inside Sales (Remote)
Outside Sales (Field)
API Sales
White Label Resellers
Professional Services Firms
$50,000 - $5 million+ per customer per year:
Inside Sales (Remote)
Outside Sales (Field)
API Sales
White Label Resellers
Professional Services Firms
Company headcount
How large do you want your company to be? As a SaaS entrepreneur, do you dream of creating a billion dollar business with a thousand-person headcount? Or do you want to keep your company small, earn a million a year in profit, and live the simple life (no dealing with investors)?
The answer to this question will have a huge impact on the distribution channels you choose. You might decide to go after smaller customers via self-serve purchases and create relationships with resellers so you don’t have to staff and manage an entire sales department.
Real SaaS distribution examples
Check out these examples of SaaS software being sold and distributed.
Self-serve checkout
The most common format for distribution is the self-serve checkout experience. This example from GoToWebinar shows the checkout experience for their pro plan.
It’s optimized with licenses and add-on selections, and clear savings calculations.
Lifetime deal
Sumolings, as AppSumo customers are lovingly called can get access to this lifetime deal from NeuronWriter. The SaaS product offers semantic recommendations to boost SEO rankings with related, secondary keyphrases. Users can optimize content for search engines by researching keywords, analyzing SERPs, and extracting high-ranking content.
Offering a lifetime deal can be risky. The influx of users can help you grow your platform through word-of-mouth, but it can also create customer service and scalability issues, so if you go this route, make sure your entire company is prepared.
PLG upsell
In this example from project management software Clickup, we see a pop-up box encouraging the customer to upgrade in order to get unlimited access to a specific feature.
For many SaaS companies, the effectiveness of their PLG upsells and cross sells has a major impact on total revenue.
Software reseller
This case study shows an example of a successful reseller relationships. Eventbilletten is a Danish events management company. Rather than attempt to build a SaaS ticketing solution to use for events, they chose to resell Oxynade’s software to their clients.
“We needed a partner that could take care of the software development and we could simply provide feedback, so that we could get the features we needed immediately instead of 6 months from now. When we realized that Oxynade had an engine for seat maps that already included all of the things we wanted, it was easy to choose them rather than to keep trying to build everything ourselves.” - Jannick Helskov Visling, CEO and Director of Eventbilletten
Frequently asked questions about SaaS software distribution
Get answers to FAQs about SaaS distribution.
What are the top distribution channels for SaaS?
The top distribution channels for SaaS companies are self-serve ecommerce subscriptions, product led growth upsells and cross sells, inside sales (remote), outside sales (field), app stores, lifetime deal platforms, white label resellers, API sales, professional services firms, and retailers.
Do SaaS applications run locally on our computers?
SaaS stands for software as a service. This refers to the way that the service is continuously improved, updated, and shipped to customers. For this reason, SaaS applications typically run in the cloud, not locally or on-premise. However, part of the service agreement can be to continuously deploy software updates to on-premise computers.
How does a SaaS company operate?
The SaaS business model is designed to be highly scalable and have a high revenue per employee. SaaS companies operate by selling subscriptions to their software (primarily through self-serve ecommerce checkouts and direct sales). Customers then access the software via the cloud, making it easy for companies to deploy updates continuously so customers always have access to the newest version of the software. Smaller companies tend to ship updates every 14 days, while large software companies might deploy multiple updates to the cloud per day.
Is SaaS always on cloud?
SaaS software is usually sold and delivered via the cloud. However, it is possible to run a SaaS business that offers on-premise software to more traditional customers. In this case, the maintenance and deployment of on-premise solutions would be part of the service agreement.
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