Key characteristics

SaaS characteristics include:
Network-based access to, and management of, commercially available software
Activities managed from central locations rather than at each customer's site, enabling customers to access applications remotely via the Web
Application delivery typically closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, including architecture, pricing, partnering, and management characteristics
Centralized feature updating, which obviates the need for end-users to download patches and upgrades.
Frequent integration into a larger network of communicating software—either as part of a mashup or a plugin to a platform as a service
(Service oriented architecture is naturally more complex than traditional models of software deployment.)
SaaS providers generally price applications on a per-user basis and/or per business basis, sometimes with a relatively small minimum number of users and often with additional fees for extra bandwidth and storage. SaaS revenue streams to the vendor are therefore lower initially than traditional software license fees, but are also recurring, and therefore viewed as more predictable, much like maintenance fees for licensed software.
Some SaaS applications are free to the user, with revenue being derived from alternate sources such as advertising, or upgrade fees for enhanced functionality (often referred to as "freemium"). Examples of free SaaS applications include large players such as Gmail and Google Docs, as well as smaller providers like Wave Accounting (free accounting) and Freshbooks (freemium time tracking and invoicing).
In addition to characteristics mentioned above, SaaS sometimes provides:
More feature requests from users, since there is frequently no marginal cost for requesting new features[citation needed]
Faster new feature releases, since the entire community of users benefits[citation needed]
Embodiment of recognized best practices, since the user community drives the software publisher to support best practice