Compared to single-tenant architecture—in which each tenant gets its own instance of the application, database and supporting hardware infrastructure—multi-tenant architecture offers significant benefits to software providers and tenant customers, including the following:

• Lower costs: Because the software provider can serve multiple tenants from a single application instance and supporting infrastructure (and because tenants share the burden of software maintenance, infrastructure and data center operations), ongoing costs tend to be lower than those of a single-tenant arrangement. SaaS software is typically offered for a predictable monthly or annual subscription price based on number of users, usage level or data volumes managed within the application.
  
  
• Scalability: Tenants can scale on demand—new users get access to the same instance in the software, typically for an incremental subscription rate increase.
  
  
• Customization without coding: SaaS multi-tenant offerings are highly configurable so that each tenant customer can tailor the application to its specific business purposes without expensive, time-consuming and sometimes risky custom development.
  
  
• Continuous, consistent updates and maintenance: The multi-tenant software provider is responsible for updates and patches. New features are added and/or fixes applied without any effort on the customer's part and just once (as opposed to single-tenant architecture, where providers must update every instance of the software).
  
  
• Improved productivity for tenants. Not having to manage infrastructure or software means that tenants are free to focus on more important tasks.

Multi-tenant cloud was often (but now less frequently) used as a synonym for shared hosting or for any architecture in which customers share computing resources in a public or private cloud. Today, it’s understood that most leading cloud service providers deliver most of their offerings—everything other than dedicated hosting service—based on the multi-tenant model, which allows providers to maximize utilization of their data center hardware and infrastructure and, therefore, offer cloud services to customers for the lowest possible costs.

When choosing a database for multi-tenant applications, developers must strike a balance between customers’ need or desire for data isolation and a solution that scales quickly and affordably in response to growth or spikes in application traffic.

To ensure complete isolation, the developer can allocate a separate database instance for each tenant; at the other extreme, to ensure maximum scalability, the developer can have all tenants share the same database instance. But, most developers opt to use a data store such as PostgreSQL, which enables each tenant to have its own schema within the same database instance (sometimes called ‘‘soft isolation’’) and provides the best of both worlds.