SaaS vs PaaS vs IaaS comes down to one question: who manages what? IaaS (Infrastructure as a Service) rents you raw servers, storage and networking, and you run everything on top of them, while PaaS (Platform as a Service) also takes care of the operating system and runtime, so you bring only your code and data. SaaS (Software as a Service) is a finished app that the provider runs for you, and all you do is sign in and use it.
Last updated: October 31, 2026
The more the provider manages, the less you control. That’s the whole trade. Below, we lay out the responsibilities side by side, name well-known examples of each model, and give a clear verdict on when a small business owner or a developer should pick which one, along with the specific conditions that would change our answer.
Who Manages What in SaaS vs PaaS vs IaaS?
The cleanest definitions still come from NIST Special Publication 800-145, the US government’s definition of cloud computing, published in September 2011. It describes 5 essential characteristics, 3 service models and 4 deployment models. Those 3 service models are exactly the ones this post covers.
Read the NIST wording closely and a pattern shows up. Each model hands one more layer to the provider:
- IaaS: you control “operating systems, storage, and deployed applications,” while the provider runs the physical infrastructure underneath.
- PaaS: you control the apps you deploy and possibly some settings for the hosting environment. The provider runs the network, servers, operating systems and storage.
- SaaS: you don’t manage the infrastructure or even “individual application capabilities,” apart from a few user-specific settings.
Here is the full split. On-premises, meaning you buy the hardware, rack it in your own building and run every single layer yourself, is the baseline that everything else gets measured against.
| Layer | On-Premises | IaaS | PaaS | SaaS |
|---|---|---|---|---|
| Applications | You | You | You | Provider |
| Data | You | You | You | You (stored by the provider) |
| Runtime and middleware | You | You | Provider | Provider |
| Operating system | You | You | Provider | Provider |
| Virtualization | You | Provider | Provider | Provider |
| Physical servers and storage | You | Provider | Provider | Provider |
| Networking | You | Provider (you set host firewalls) | Provider | Provider |
One row trips people up: data. Even with SaaS, the provider stores your files and records, yet what goes in, who can see it, and whether you keep a backup is still your call. Don’t forget that part, because “fully managed” never means “fully protected.”
The Mistake Most People Make When Comparing Them
Most comparisons line up features or prices. That’s the wrong test. The three models don’t compete for the same job, and a company can happily run all three side by side: Gmail for email (SaaS), a customer portal hosted on Heroku (PaaS), and a database server on Amazon EC2 (IaaS).
The real decider is how much of the stack you want to own. When you own a layer, you can tune it however you like, but you also have to patch it, watch it and fix it at 2 in the morning when it breaks. In practice, that staffing question settles the choice faster than any feature list ever will.
Well-Known Examples of Each Model
IaaS Examples
- Amazon EC2 (Amazon Web Services)
- Microsoft Azure Virtual Machines
- Google Compute Engine
- DigitalOcean Droplets
Each one hands you a virtual machine. Nothing more, really. From there, you pick the operating system, install whatever your software needs, set up backups and keep every patch current yourself, because nobody at the cloud company will log in and do it for you.
PaaS Examples
- Heroku
- Google App Engine
- AWS Elastic Beanstalk
- Azure App Service
Microsoft’s own explainer on PaaS lists Azure App Service, Azure Functions and Azure SQL Database as PaaS offerings. Its framing matches NIST: the provider handles infrastructure, maintenance and scaling, while you write, test and deploy the code.
SaaS Examples
- Microsoft 365 and Google Workspace for email and documents
- Salesforce and HubSpot for customer relationship management
- Slack and Zoom for team communication
If you’ve ever logged into Gmail, you’ve used SaaS.
You open these tools in a browser or an app, and the vendor quietly handles hosting, upgrades, security patches and uptime behind the scenes. Microsoft’s page states plainly that Microsoft 365 is SaaS, not PaaS. If the model is new to you, our guide on what SaaS is covers it from scratch.
When Should You Pick Each One?
Here is our verdict, with the conditions spelled out.
SaaS is the right default for a small business, because it takes servers, updates and patching off your plate entirely. However, if you need custom software that no existing app handles, PaaS is the better fit, and if that software needs control of the operating system, IaaS is correct.
For a Small Business
Start with SaaS for almost everything: email, accounting, CRM, scheduling and the support desk. Don’t bother with servers.
You don’t need anyone technical on staff, and you pay a subscription instead of buying hardware. Our guide on how to choose SaaS for a small business walks through picking tools, and SaaS pricing models explains how those subscriptions usually get billed.
Move to PaaS only when you’ve hired or contracted a developer to build something custom, like a booking portal that no app on the market fits. Honestly, plenty of small businesses never need IaaS at all. If someone pitches you a virtual server for a job an off-the-shelf app already does well, ask them why.
For a Developer
PaaS is usually the fastest way to ship a web app or an API. You push code.
The platform deals with servers, OS patches, load balancing and scaling, which means the hours you would have spent babysitting a Linux box go into the product your users actually see. That’s a great trade when you’re a solo developer or part of a small team with no one on ops duty.
IaaS earns its extra work when you need something a platform won’t allow, and honestly, the list is shorter than it looks:
- A specific operating system version or kernel setting
- Software that must be installed at the OS level, such as a legacy app or a monitoring agent
- Long-running background processes or unusual network layouts
- Full control over where and how data is stored, often for compliance reasons
SaaS still matters for developers, just not for the product itself. Your code repository, error tracking and team chat are almost always someone else’s SaaS, and frankly that’s time well saved.
When Does the Answer Flip?
A verdict is only useful if you know where it stops being true. Ours has limits. These are the situations where we’d switch:
- If your SaaS tool can’t do a core workflow and no other app can either, build that piece on PaaS.
- If PaaS limits block you, say you need a background daemon or a custom OS package, move that one piece to IaaS and leave the rest alone.
- When you’re running IaaS servers with no one to patch them, shift to PaaS or SaaS. An unpatched server is a liability, not a saving.
- If a lifetime deal tempts you, remember it’s still SaaS, so the vendor keeps control of the software and its future. Our post on SaaS lifetime deals covers the trade-offs.
Where Does Serverless (FaaS) Fit?
Serverless, often called Function as a Service (FaaS), sits right next to PaaS but goes one step further. You write small functions, and the platform runs them only when an event triggers them, such as a file upload or a web request. Microsoft puts the difference simply: PaaS keeps your app running continuously, while serverless runs functions on demand and charges only for the compute time you use.
Well-known examples are AWS Lambda and Azure Functions. Think of them as tiny apps.
In practice, serverless fits bursty, event-driven jobs very well. It fits poorly for long-running work, so don’t use it as a drop-in replacement for a regular web server until you’ve checked the platform’s time limits.
Frequently Asked Questions
What Is the Main Difference Between SaaS, PaaS and IaaS?
The main difference is how much the provider manages for you. IaaS gives you infrastructure, PaaS adds the operating system and runtime, and SaaS delivers a finished app. Each step up means less work.
Is Gmail SaaS, PaaS or IaaS?
Gmail is SaaS. You use it through a browser or a mobile app, and Google runs everything underneath. NIST even uses web-based email as its example of SaaS.
Is AWS IaaS or PaaS?
It is both. AWS sells IaaS like Amazon EC2, PaaS like AWS Elastic Beanstalk, and serverless like AWS Lambda. Azure and Google Cloud work the same way: one provider, several models.
Which Cloud Model Is Cheapest?
There’s no single answer, because you pay in different ways.
SaaS bundles everything into a subscription, while IaaS bills for raw resources and leaves the labor of running them to you. Labor is the hidden cost. When you compare options, count staff time, not just the invoice.