What is Multi-Tenancy?
Definition
A software architecture where a single instance serves multiple customers (tenants) while keeping their data isolated.
Understanding Multi-Tenancy
Multi-tenancy is the foundation of modern SaaS subscriptions. Instead of running separate software for each customer, one shared infrastructure serves all subscribers. This enables lower costs, easier updates, and better scalability.
Tenants share computing resources but their data is logically isolated. Most consumer subscriptions (Netflix, Spotify, Slack) use multi-tenant architectures. Enterprise customers sometimes require single-tenant deployments for security or compliance, which is why enterprise plans cost significantly more.
Understanding multi-tenancy helps explain pricing differences between consumer and enterprise tiers.
Related Terms
SaaS
Software as a Service — a software distribution model where applications are hosted in the cloud and accessed via subscription rather than installed locally.
Cloud Computing
The delivery of computing services — including servers, storage, databases, and software — over the internet on a subscription or pay-per-use basis.
Tiered Pricing
A pricing strategy where a service offers multiple plan levels with different feature sets and price points to serve different customer segments.