The term SaaS stands for Software as a Service. SaaS is an evolution of an application that runs on the web. You can either pay a subscription fee or access it for free.
Prior to the use of SaaS products, you would have to purchase a product, install it and pay a licensing fee each year or pay a one-time upfront cost. The SaaS model moves everything to a subscription service so that you can pay to continually use that product.