The SaaS (software-as-a-service) market is growing rapidly. By 2030, it’s expected to reach $908 billion, with an annual growth rate increasing from 18% to 18.7%.
More and more companies opt for the SaaS model due to its cost-cutting benefits, improved scalability, and enhanced security. So, if you’re curious about how to build a SaaS product, this article is here to help.
We’ll explore the following topics:
Let’s begin with the definition of the SaaS model.
SaaS (short for Software as a Service) is a model where software applications are hosted on the Internet rather than on an organization’s in-house servers. Users typically pay a regular subscription fee to access a SaaS software product through a web browser or a dedicated application.
This approach offers several advantages over traditional on-premise software. The primary benefit is that users can access the application from any device with an internet connection without needing to install anything. They can also start or stop using the product at their convenience simply by canceling their subscription.
From a business standpoint, SaaS development brings significant cost savings by eliminating the requirement to establish IT infrastructure. Moreover, it simplifies software updates, allowing developers to work on improvements without disrupting users. This ensures uninterrupted software usage and no loss of revenue during the update process.
To understand how to build a SaaS product that resonates with your target audience, explore the main types of software-as-a-service on the market.
Now, let’s look at specific actions you should take if you wonder how to build a SaaS product for your business.
Validating an idea for a cloud-based product is crucial to ensure you build something that meets real needs and has a potential market. This way, you avoid investing time and money in something that no one will buy.
Here are the main steps to properly validate your idea:
After completing these steps, you can start shaping your product concept, which will serve as a blueprint for development, marketing, and execution. It should include the following components:
To excel in the SaaS business, it’s essential that you provide users with features that set your solution apart from similar products. Before diving into SaaS application development, conduct a competitive analysis to define the functionality customers want, increasing your chances of becoming an industry leader.
Here’s how you can identify and prioritize features:
To prioritize features effectively, consider customer needs, impact on the core value proposition, and feasibility. We recommend listing all the features you’d like to include in your product and then using the MoSCoW, RICE, or Kano model to identify critical, performance, and delighter features. Focus on delivering the most value early in the SaaS development process.
That said, the essential functionality depends on the type of SaaS app you are developing. However, there are common must-have features, which include:
To start, prioritize delivering the core functionality to create version 1.0 of your product. This allows you to test the feasibility of your business idea and determine how to build a SaaS application most efficiently and cost-effectively.
Now, let’s delve into how to develop a SaaS application that generates a stable income. Selecting the revenue model may be tricky. As you build a SaaS product, you need to strike the right balance between offering value to customers and ensuring you receive fair compensation for your product while maintaining competitiveness.
Here are some of the most popular pricing models to consider:
If you want to know how to create a SaaS application that will help you grow your cloud business, keep in mind two metrics defining the success of your SaaS business. These are customer acquisition cost (CAC) and customer lifetime value (CLV).
To grow your business, you should keep CLV higher than CAC. With proper pricing, CAC will get lower owing to better positioning. On the contrary, lifetime value is increased due to better customer retention.
Choosing the right technologies is fundamental to figuring out how to build a SaaS product that can efficiently handle growth and a growing number of simultaneous users.
At Syndicode, we prioritize the project discovery process. This involves carefully selecting the technologies that enable the SaaS application development team to create a dependable, scalable, and secure solution within the shortest possible time frame.
The following web development technologies are commonly used for SaaS product development:
|LAMP (Linux, Apache, MySQL, PHP/Python/Perl)||Well-established and widely used;|
Cost-effective, with many open-source tools available;
Good for content-heavy applications
|Isn’t as scalable as newer stacks;|
Performance can be a concern for high-demand applications
Scalable and efficient for real-time applications;
Popular for dynamic web apps
|Not ideal for CPU-bound tasks|
|MERN (MongoDB, Express.js, React, Node.js)||Excellent for single-page applications (SPAs);|
High developer productivity
|Not ideal for features like real-time data synchronization|
|Ruby on Rails (RoR)||Rapid development and developer-friendly syntax;|
Good for startups and prototyping;
Improved quality due to focus on convention over configuration (CoC)
|Performance issues with very high loads;|
Not the best choice for computationally intensive tasks
|Serverless (AWS Lambda, Azure Functions, Google Cloud Functions)||Clean and readable code;|
Excellent for complex and data-driven applications;
Robust ecosystem and active community
|Limited to certain use cases;|
Vendor lock-in concerns
Now that you have established a product vision and identified and prioritized features for your product, it’s time to estimate the project scope and start building a roadmap. It will provide you with guidance on how to build your SaaS product, ensuring alignment with your vision and user needs.
As you move forward and learn more about your product and market, revisit your roadmap and adjust it.
Read also: Software development process. Main things
A well-structured business plan will help you make informed business decisions, secure funding, and communicate your vision to stakeholders. It must feature the following points:
When it comes to hiring software development specialists to build a SaaS product, you have three available options:
1. Hiring freelancers
This option will work for you if your main concern is how to build a SaaS product most cost-effectively. However, it comes with some reliability concerns. The quality of services provided by individual freelancers can vary widely. If you hire a specialist whose work doesn’t meet your standards, you may end up spending additional time and money on revisions.
2. In-house development team
This option gives you complete control over the SaaS development process. However, maintaining an in-house software development team can be costly due to expenses like software licensing, hardware, taxes, salaries, and compensation.
3. Outsourcing your SaaS project to a software development company
Outsourcing SaaS software development can help you avoid the operating expenses mentioned earlier. In return, you will get a dedicated team of highly qualified software-as-a-service developers, UX/UI designers, quality assurance engineers, and project managers experienced in delivering reliable cloud-based products. They will ensure that your cloud solution adheres to industry standards and is tailored to your specific business needs.
The SaaS development process is commonly broken down into the following stages:
After your product is live, set up performance monitoring and promptly address bugs and issues. Actively collect user feedback through surveys, customer support interactions, and user analytics—this will guide your future enhancements.
At Syndicode, we have been developing SaaS applications for almost a decade. One notable example of our expertise in software-as-a-service development is Kinderlime, an educational management tool.
Our team successfully addressed high-load issues, created a new API for both the Kinderlime website and mobile app, overhauled the platform’s user interface and experience, and introduced new features.
These enhancements helped Kinderlime to become one of the fastest-growing SaaS and mobile child care management platforms. Eventually, it caught the attention of industry leader Procare Software, leading to its acquisition.
Another SaaS development project we take pride in is SwiftComply, a B2B compliance management software. Our specialists restructured the product for scalability, ensured seamless integration between the client’s offerings, established a secure payment gateway, and incorporated numerous microfeatures to enhance operational efficiency and user experience.
The result? SwiftComply now serves businesses across more than 400 cities in the USA and continues to win the trust of American citizens.
Don’t hesitate to explore our featured cases to learn more about the services we provide and the successful projects we’ve delivered.
SaaS software development manifests a company’s willingness to keep up with technological advances. However, several risks associated with the cloud can slow down the development/migration process for some businesses.
More than 51% of organizations report cloud data protection as more challenging than on-premises. The common causes of data loss are
The widespread data protection measures in SaaS development include data access control, security policies, data backup, and employee training. Syndicode additionally emphasizes data channel protection and thorough quality assurance.
A cloud-based application must communicate seamlessly with other apps to provide an excellent user experience. However, inadequate integration can cause data silos and impact operational effectiveness.
High cost is another issue businesses face when trying to avoid the previously mentioned problem by leveraging custom SaaS application development.
Lack of support from the solution owner will substantially complicate the integration process and maintenance.
Therefore, choosing third-party providers and planning integrations is as important as building the product itself.
One of the common SaaS drawbacks is the partial system’s unavailability during updating or releasing a new version. You can get around it by careful scheduling and notifying your customers about the planned downtime for a specific period.
Alternatively, your SaaS development team can apply the blue-green deployment strategy that ensures system accessibility during updating.
SaaS adoption continues to rise, and many businesses migrate their data to the cloud. Shopify, Dropbox, Slack, and Zoom are some of the largest organizations that benefited from SaaS development services.
The greatest advantages of SaaS as a business model are
Migration to SaaS architecture will require remodeling your processes to reap all the benefits. First, you must shift from selling a product to offering a service. Therefore, powerful and appealing software must be accompanied by service providers — help desk, marketers, sales, etc.
Next, you must reconsider how you deliver your product to the customer. Consider the following to make your migration successful:
You have to rebuild your product to make it suitable for the cloud. Here is how to build a SaaS product from an on-premises one:
The cost of SaaS app development can vary widely depending on several factors, including project scope, the technology stack chosen, and the rates of the specialists involved.
For a precise quote, we recommend consulting with your SaaS development partner. However, if you’d like to make a rough estimate on your own, we have a detailed guide on software development project cost estimation.
Here we’ll list the key steps to consider:
For example, let’s estimate the cost of developing a basic project management and collaboration platform tailored for small to medium-sized businesses. This hypothetical SaaS application includes the following features:
|User authentication and role management||2-4 weeks|
|Project and task management||6-10 weeks|
|File and document sharing||4-6 weeks|
|Team chat and messaging||6-8 weeks|
|Dashboard and reporting||4-6 weeks|
|Mobile app (iOS)||8-12 weeks|
|Integration with Google Workspace for email and calendar synchronization||4-6 weeks|
The technology stack for this SaaS app development includes:
|Frontend||Backend||Infrastructure and deployment|
|ReactJS for the web application||Ruby on Rails for the server||AWS for hosting and cloud services|
|Swift for the mobile app||PostgreSQL for the database||Docker for containerization|
Let’s say the team was hired in Eastern Europe. Its composition and costs:
The cost of AWS services can vary widely based on usage and the specific AWS offerings you choose (e.g., EC2 instances, RDS, S3 storage, etc.). A rough estimate for a small to medium-sized SaaS application might range from $1,000 to $3,000 per month.
Thus, the total estimated development cost for developing a SaaS platform (excluding AWS) ranges between $174,000-$396,000.
Please note that this estimate doesn’t consider other expenses such as legal and compliance, marketing, ongoing operational costs, or post-launch support.
We hope this guide answers your question about how to build a SaaS product most efficiently and cost-effectively. Here’s a summary of key points:
The SaaS model offers numerous advantages compared to traditional software. This includes recurring income, low initial costs, scalability, global reach, automatic updates, and robust security.
The crucial steps to building a robust SaaS product include:
If you’re searching for an experienced SaaS software development team to turn your ideas into a successful product, Syndicode is here to help. Our track record includes building multiple cloud solutions across various industries. It means we know how to build a SaaS solution that meets the most rigorous business requirements.
If you have any questions about SaaS development or custom software engineering, simply fill out our contact form. Our dedicated representatives will promptly provide you with the answers you need.
The software-as-a-service (SaaS) model is gaining popularity for offering several advantages over traditional software. Firstly, SaaS products save costs by eliminating the need for in-house infrastructure and maintenance teams. Additionally, they are accessible from any device with an internet connection, anywhere. They can also scale effortlessly and receive updates automatically, making them a smart choice for businesses and individuals.
SaaS development differs from traditional desktop or on-premise software in that it operates over the internet, eliminating the need for individual downloads and computer installations. This simplifies distribution, maintenance, and updates, as all users receive them automatically without manual installations. This also means that SaaS product users subscribe to it on a recurring basis rather than owning it outright. However, SaaS products may offer limited customization options compared to traditional software, as it can only integrate with other cloud-based products.
First of all, SaaS application development services allow companies to save on hardware and software. Second, organizations no longer need to take care of the updates. They will always have the latest software version offered by the service provider. The third reason is accessibility. With SaaS development, customers can access the applications from anywhere, provided the place has an internet connection. The same goes for devices: users can freely switch gadgets without issues assessing the required app. Another benefit of SaaS platform development is enhanced security. Cloud service providers adopt the latest security practices to safeguard their customers’ sensitive information.
To calculate the cost of SaaS development, consider factors such as project scope, development team size and location, technology stack, features, and ongoing maintenance. Break down the project into phases, estimate hours, and multiply by hourly rates. Include costs for design, development, testing, and project management. Account for SaaS-specific requirements, such as hosting, third-party services, and potential scalability expenses. Don’t forget post-launch support and updates. Keep in mind that different developers and software development companies may have different rates.
To reduce software as a service development cost, start with a lean Version 1.0, focusing on core features that are just enough to let customers understand what your SaaS web app is about. Gather user feedback and incrementally add features based on insights. Alternatively, consider outsourcing your SaaS development project to a reliable software development partner. This option is less expensive than assembling an in-house software development team and more reliable than hiring freelance developers.
To ensure successful SaaS application development, begin with thorough market research and an understanding of your industry, competitors, and target audience. After you determine how to build a SaaS solution to stand out from market rivals, choose the right revenue model. Define the primary and secondary functionality aligned with your software-as-a-service app. Then, choose the right technology stack and partner with a reliable company to create a SaaS application.
The choice of metrics to track should be based on your business objectives as a SaaS product owner. Generally speaking, most SaaS businesses find it crucial to track the monthly recurring revenue (MRR), customer lifetime value (CLV), churn, customer retention, and customer acquisition cost (CAC). MRR helps assess the cash flow sustainability, while the other metrics show how effectively you gain and keep customers.
Starting your SaaS development journey with an MVP will help you minimize risk, validate your product concept, and efficiently allocate resources. Introducing a simplified version of your SaaS product to market will allow you to test an idea with real users before committing a large budget to a risky project. This way, you get the product to the market fast, get user feedback, and learn which features to prioritize or avoid. In other words, an MVP can help you make informed decisions about further development and allocate resources more efficiently.
Choosing the right funding method for SaaS development depends on your business goals and willingness to trade equity, control, or future revenue. The most common options include bootstrapping, crowdfunding, Angel Investors, Venture Capitalists, SaaS accelerators or incubators, loans, and revenue-based financing. Bootstrapping means using personal or co-founders’ resources and offers control but limited initial resources. Crowdfunding implies raising funds from backers who believe in the idea and is best suited for consumer-oriented SaaS products. Angel Investors, VC firms, and accelerators offer capital and mentorship but require equity. Loans provide traditional financing without equity.
To introduce a new feature or improvement to your SaaS product, begin with validating the idea and prioritizing improvements through research and customer feedback. Next, plan releases with your SaaS development team and assign them tasks. Consider beta testing with a group of willing customers to gather feedback, identify issues, and make improvements before the official release. Develop a comprehensive communication plan to inform customers about the upcoming upgrade. Decide on the roll-out strategy: phased, simultaneous, or allowing opt-in for users. Finally, prepare a support team to assist users facing problems during the upgrade and continue gathering feedback after the upgrade is live.
You can tell that a SaaS product is successful by tracking metrics like Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC). A healthy CLV to CAC ratio (typically between 3:1 and 5:1) indicates profitability. Further, monitor user retention rates, churn, and expansion revenue. Analyze customer satisfaction through Net Promoter Score (NPS) and gather feedback. Assess user engagement, feature adoption, and monthly recurring revenue (MRR) growth. Keep an eye on customer support metrics and response times. Ultimately, success is achieving sustainable revenue growth, satisfied customers, and a positive ROI.
The size of a dedicated development team to create software-as-a-service depends on the desired features and their complexity. However, a typical team includes a business analyst to explore your SaaS business idea, a software development team lead to plan and guide the development, a UX/UI designer, back-end and front-end developers, quality assurance engineers, and a project manager. The latter specialist is necessary to facilitate communication between the team and stakeholders and keep you updated about the current state of your SaaS app development project. The choice of metrics to track should be based on your business objectives as a SaaS product owner. Generally speaking, most SaaS businesses find it crucial to track the monthly recurring revenue (MRR), customer lifetime value (CLV), churn, customer retention, and customer acquisition cost (CAC). MRR helps assess the cash flow sustainability, while the other metrics show how effectively you gain and keep customers.