Application service provider

An application service provider is a third party that provides its customers with remote access to software applications.  The vendor maintains the software on its own hardware platforms and provides routine software updates. Users are typically charged a per-person monthly usage fee in exchange for accessing the software. This arrangement allows customers to avoid an up-front charge to buy hardware and software, as well as the cost of in-house information systems staff. This reduces the fixed costs of customers, so that they can turn a profit at a lower sales level. Because of the lower breakeven level, startup companies are more likely to employ application service providers.