What if we told you that instead of crafting a go-to-market strategy for your product that would take hours, if not days or even weeks, all you need to do is fill out only one slide? Sounds like a dream come true, right? Well, such a thing does exist, and it’s called business model canvas.
Being a pragmatic design agency, Eleken loves such a smart and efficient approach. We’ve been using it for a variety of our projects, such as Haven Diagnostics.
In this article, we are going to share our insights and knowledge about how you can design a SaaS business model canvas, as well as show you some real-life examples. So, let’s get into it!
What is a business model canvas exactly?
A business model canvas is a trimmed down version of a traditional business plan that can be developed in a fraction of the time, saving you hours in the process. It’s also much easier to work with as all the building blocks of your business are laid out in a one-pager.
Using this structured framework you can visualize your company’s goals, relationships and actions. Simply put, canvas serves as an image of your company and its work processes in a nutshell, which allows all the parties involved to stay on the same page and avoid miscommunication.
The concept was introduced in 2004 by Alexander Osterwalder, a business theorist, and his colleague, a professor at Lazanne University, Yves Pigneur. It has since been used by such large corporations as Microsoft, Procter & Gamble, Amazon, and many small startups run by just a few people.
The canvas includes nine building blocks addressing the following questions:
- Who are your customers?
- What do you offer to them?
- How will you deliver the value to the customers?
- How are you going to generate revenue and minimize costs?
Now, let’s take a closer look at each block to better understand how you can design your SaaS business model canvas.
SaaS business model canvas breakdown
When you don’t want to spend too much time on designing the business canvas model from scratch, here is the template you can use:
When you have specific needs, however, you can enhance this template to better adjust it to your project. So, let's get into the details of each building block:
Customer segments
This block explains what groups of customers you are going to target with your product. It might be small businesses or large corporations, freelancers or non-profits. Alternatively, you might focus on a specific industry, rather than targeting various verticals. But don’t forget to create a separate SaaS buyer persona for every segment you choose to work with.
Value propositions
What’s your product value proposition going to be? Will it be a better price-to-quality ratio, or unique features that your competitors don't have? Perhaps, you're looking to solve a customer pain that wasn’t addressed before, or offer a different approach to an existing one? In any case, this information should be described in this block.
Channels
Here, you will have to map out the channels you are going to leverage to deliver value to your customers. For example, using content marketing, and search engine optimization (SEO) to ensure a continuous flow of leads to your website. Or maybe, offline sales is your main channel. Last but not least, let’s not forget about the old-but-gold word-of-mouth. But in the end, it’s your final say which channels are the most optimal for your needs.
Customer relationships
How are you planning to support your customers and what extra mile are you willing to go for them? Today, self-service becomes more and more popular, as it saves customers’ time and efforts. However, it's a good idea to have dedicated support agents available for clients who need more personalized assistance. Educational resources, for example, a company blog or email courses can also help your customer base learn something new and build initial trust.
Revenue streams
When talking about SaaS, the most common pricing model is a subscription-based one. While a customer is paying a monthly fee, they can enjoy using your software. There is also a Freemium model, when clients use your tools for free, but have to pay when they need an extended version with more features. When you are interested in learning about other models, consider reading our article about SaaS pricing models.
Key resources
Key resources refers to people working on your product, tools and technologies they use, and the intellectual property behind a product or service. The idea that makes your solution unique is one of the most important key assets. For instance, Trello’s key idea is a simple way to organize and manage projects, while Slack is famous for its team channels and spaces.
Key activities
This block should include information related to the actions you will take to develop your product, promote it to the customer, and further enhance it.
Key partners
Swimming alone is no fun (and also risky). That’s why in this block you should describe all the partners you’re going to team up with to make sure your product is top-notch.
Cost structure
How much will you spend creating the product, marketing it, maintaining customer relationships, and attracting new customers? All this info, including the research & development expenses, should go here.
Okay, seems to be about it. Feel free to use our guide to design your own business model canvas. And if you want to learn how other companies created them, then keep reading, as we’re about to show it.
SaaS Business model canvas examples
Examples sometimes work better than a thousand guidelines. So let’s look at how other companies designed their own canvas to address their needs.
Zoom
Since the outbreak of pandemic in 2020, Zoom has become a common term for video calls. It’s the video conferencing tool of choice in 66% of all countries worldwide. Here’s what Zoom’s business model canvas looks like:
If we look closely, we can quickly spot that Zoom focuses on offering free services to their customers, while also offering paid subscription plans with extra features (the so-called Freemium model). Its key resource is a platform itself. It is also worth noting that Zoom succeeded to turn Skype from one of its main competitors into a key business partner.
Slack
The number of people using Slack on a daily basis is more than 10 million. With the abundance of features for daily work, like file sharing, direct and group messaging, audio and video calls, Slack has become a perfect communication platform for over 600.000 companies worldwide.
As you can see from their business model canvas, Slack has tailored their value propositions for each of their customer segments. The company is continuously improving their product, offering new integrations and features, and they have plenty of video guides and tutorials for customers to learn and make the most of Slack, which, in turn, improves customer relationships.
Now, apart from business model canvas, you might have heard about lean canvas. Let’s talk about them briefly.
Business model canvas vs. lean Canvas
The lean canvas is an altered version of the business model canvas specifically designed to cater to the needs of lean startups — startups relying on experimentation and iterative development based on customer feedback.
Here’s what it looks like:
The problem section reminds the startup founders to focus on the customers’ problems and find ways to fix them. The solution section is the space for defining their minimum viable product (MVP) according to the customers’ problem. The key metrics section implies that startups should focus on a small number of metrics instead of setting too many goals. And, the unfair advantage is a reminder to define what makes your product unique. To know if a lean canvas is the right tool for you, read this article by Ash Maurya, its creator. And, if you settle on the lean model, explore our article on lean product management to learn how to succeed as a lean product company.
Okay, here comes the question: are there any tools to design a SaaS business model canvas (apart from drawing one on the sheet of paper)? Of course there are, so let’s analyze some of them.
Tools to build a SaaS business model canvas
Here are a couple of options to consider when creating your business model canvas:
- Canvanizer. Free and easy-to-use, this tool allows you to share the link with your team and collaborate on your canvas. You can then export it in CSV or image formats. Apart from creating a business model canvas, you can work on a SWOT analysis, build Feedback and Pitch Planner canvases, and more.
2) CNVS. A simple tool allowing you to create canvases by subscribing to their newsletter. Apart from a BMC, there are also Feature and Lean Canvas options. Having completed your canvas, you can share it with your team with or without editing access.
3) Strategyzer. This software not only allows to build canvases, but also includes an estimator module that evaluates revenue streams and determines the financial feasibility of a business idea.
You’ve built a business model canvas. What now?
The initial strategy development is only one of the purposes a business model canvas can serve. Here are some other ways to use it:
- Onboarding new team members, top management in particular;
- Brainstorming new ideas with the team to improve your products;
- Using your canvas to get your business ideas across to product designers and design a product mockup.
Let’s focus a little more on that last bullet.
When you’re working with a design agency, business model canvas comes as a great tool for explaining your design requirements to designers so that they can create the first mockups and then design a demo of your solution. It will also save you time and resources on creating initial product demos and speed up the development process. When you’re curious to learn how to gather design requirements, read our dedicated article.
Bottom line
You can use the business model canvas tool when your company is just at the beginning of its journey, when you are building your app, and when the work is in full swing and you are in the pursuit of new opportunities. All in all, the beauty of this framework lies in its simplicity, and it’s a must-have tool for any business looking to succeed in today's highly competitive and rapidly evolving market.
Happy canvassing and when you need some assistance with designing your future solution, send us a note and we’ll be glad to help!
