Subscriptions & Platforms: key terms, formulas and examples

Software firms sell subscriptions (SaaS) for recurring revenue. Network effects, APIs and the cloud help them scale; churn and acquisition cost decide their health.

Key terms

SaaS

Software rented by subscription instead of bought once.

Recurring revenue

Income that repeats predictably, like subscriptions.

Network effect

A product grows more valuable as more people use it.

Scalability

Ability to grow sales a lot without costs growing as fast.

Cloud computing

Renting computing power and storage over the internet instead of owning servers.

Freemium

Offering a free basic version and charging for premium features.

API

Rules that let software programs talk to each other.

Open source

Software whose code anyone can view and modify.

Data analytics

Examining data to find patterns and guide decisions.

Artificial intelligence

Computers doing tasks that normally need human thought.

Big data

Datasets so large they need special tools to handle.

Blockchain

A shared digital record that is hard to alter.

Machine learning

Software that improves from data.

Internet of Things

Everyday devices connected to the internet.

Formulas