This post is an adaptation of the first chapter of The Guide to SaaS Metrics. Free to all and completely ungated, it’s our newest resource for anyone looking to master their understanding of metrics that SaaS businesses operate on.
In fact, you're referring to a subscription business model. That means that your theory also applies to on-premise product with a subscription business model.-
An on-premise product sold on a subscription business model will have difficulty convincing investors that it is a true subscription model, thereby reducing the valuation multiple that might be expected. I know this by hard-won personal experience. All other things being equal, a pure cloud / web app SaaS business model will achieve higher multiples than an on-premise product.
In fact, you're referring to a subscription business model. That means that your theory also applies to on-premise product with a subscription business model.-
Yes, this is true!
Yes, but....
An on-premise product sold on a subscription business model will have difficulty convincing investors that it is a true subscription model, thereby reducing the valuation multiple that might be expected. I know this by hard-won personal experience. All other things being equal, a pure cloud / web app SaaS business model will achieve higher multiples than an on-premise product.