Staying on top of the evolving technology trends is a tough undertaking for any business entrepreneur. However, even if you aren’t an old hand with cutting-edge techs, you’ve probably heard of the cloud revolution that’s been upon us throughout the past couple of years.
Cloud storage solutions paved the way for SaaS application development, the topic of our discussion in this piece. It brings a host of digital changes for businesses of all kinds since it doesn’t require installation, adjustments, or maintenance.
The above mentions are just a few peculiarities of SaaS applications. Let’s review all the details to consider when creating such a software solution and explore other important aspects in terms of cost and developer effort.
What Is SaaS?
SaaS, a.k.a. software-as-a-service, is a cloud-based model of delivering digital solutions to users for a monthly/yearly subscription fee. It is available via a browser and doesn’t have to be installed and configured on a local device.
These solutions are centrally hosted in the cloud storage on the vendor’s servers. Since a SaaS application is stored on a service provider’s end, they take proper care of its operations, security, and performance. Besides, the vendor is responsible for continuous service enhancement after the solution goes live.
There’s been exponential growth in the SaaS market even before the pandemic. But the global outbreak has triggered interest from a wide variety of users and businesses alike. For instance, Gartner found that the SaaS market grew from $31.5 billion in 2015 to $145 billion in 2021. But the largest annual spike occurred between 2021 and 2022 and is expected to climb to $171.9 billion by the end of this year.
As for the regional SaaS app insights, we can observe that the United States is the technology’s major market. The country is home to circa 16,000 SaaS companies, which is substantially more than in any other survey participant on the list.
SaaS products are becoming increasingly prevalent in modern business, especially when it comes to organizing distributed working environments. And these findings are expected to encourage many business entrepreneurs to develop a SaaS application that will win over the hearts of target audiences.
A successful application can serve the needs of different business spheres and bring immense benefits to each of them. Web-based software powered by cloud technology can fall into a slew of categories. Let’s overview them below and cover the most inspiring examples of SaaS companies.
Types of SaaS Applications
There's a multitude of software-as-a-service tech that's already available and that you may consider building. Let's overview the most common SaaS application types.
A vertical SaaS solution is the type of software that caters to a specific niche or a defined line of business. Rather than embracing a broad range of user needs and demands, vertical solutions are designed to keep a specific request in mind. It is also sometimes referred to as micro-SaaS.
Each SaaS software developer in that category needs to rely on the particular industry expertise to address target user pain points. As a reward, they typically enjoy less tight competition than in other segments and much lower marketing spend.
Some notable mentions of vertical SaaS products include:
- Clearcare - a web-based platform for the home care industry;
- Madwire® - marketing services for SMBs and franchises;
- HotSchedules - an employee scheduling app;
- Seller Snap - an Amazon repricing software.
CRM, or Customer relationship management software, is a cloud-based solution, which lets you manage customers, automates sales pipelines, and optimizes internal processes. It brings utmost visibility and transparency into sales, marketing, and customer service segments.
Instead of downloading and installing a licensed software platform, a SaaS CRM solution gives instant access to all relevant information. There is no need to invest in its support and maintenance since it is a vendor’s area of responsibility.
Some notable mentions of CRM SaaS software include:
- Salesforce - a pioneering CRM platform known for its robust AI-driven capabilities. The company is currently worth $161.4 billion;
- Microsoft Dynamics 365 - a comprehensive suite of web-based services for different domains;
- HubSpot - an end-to-end CRM platform with 135,000+ business customers.
E-commerce and Retail Solutions
With online sales peaking in popularity, the industry provided a timely response to buyers and sellers. SaaS e-commerce solutions enable businesses to set up their online stores, add payment gateways, and provide an easy checkout. They can even be of great help in marketplace development.
Such cloud-based solutions usually come with rich functionality in exchange for a subscription fee. The merchant can log into their account in any browser and start selling and promoting their products online. Besides, SaaS eCom solutions can support global expansion and deliver personalized promotions at scale.
Some notable mentions of eCom and Retail SaaS solutions include:
- Shopify - a platform that serves millions of small and Enterprise-level businesses in 175 countries;
- BigCommerce - a comprehensive drag-and-drop solution;
- Wix - an easy-to-use website builder.
One of the most must-have tools for geographically dispersed and hybrid teams are the ones that ensure seamless coordination and collaboration anytime, anywhere. They enable employees to remain productive and stay on the same page with the rest of the workforce.
Today’s cloud-based technology has enabled companies to set up efficient workflows despite being apart with the help of SaaS collaboration platforms. They also serve to improve communication patterns, boost team cohesion, and promote the internal culture and company values.
Some notable mentions of collaboration SaaS platforms include:
- Trello - an interactive project management and collaboration tool;
- Slack - a cloud-based team collaboration platform, which serves approximately 170.000 paying customers;
- Onebar - a knowledge management platform that helps your team collect internal information and access it anywhere;
- Zoom - video conferencing service that is hosted in the cloud.
The above are just a few big names in the entire SaaS ecosystem of tools. Industry leaders surely disclosed the technology’s potential in digitally transforming their business. With SaaS app development, it is possible to reap the advantages that would otherwise not be possible with other approaches. Let’s explore them.
Advantages of SaaS Application Development
What makes SaaS app development a beneficial move? Here are several main points worth taking note of.
- Cost Efficiency
When you're developing SaaS application, there is no need to face large upfront costs associated with traditional hardware and software development. Instead, businesses can leverage flexible payment options including pay-as-you-go services.
- Scalability and Accessibility
Did you know that 70% of CIOs opt for SaaS development because of its extensive scalability? SaaS applications can easily adjust to changing business needs and provide more storage space, users, and new software licenses. The subscription-based model allows for a quick services upgrade. Such a low entry barrier for non-tech-savvy customers makes it extremely accessible and scalable with a few button clicks.
SaaS vendors strive hard to remain on the same page with the latest security trends and innovations. They invest heavily in making their offerings highly protected against modern threats and malicious attacks. Proactive protection of cloud-based assets is one of the key calling cards of SaaS service providers.
- A Wide Range of Providers
The SaaS service market has become a crowded place in the last couple of years. Currently, diverse vendors offer different solutions at flexible price tiers. Business owners can even switch between vendors when they aren’t satisfied with their current service level.
- High Compatibility
Working within a cloud delivery model, SaaS apps are highly compatible with all operating systems, including Linux and Windows as well as Android and iOS. As for third-party systems, each SaaS vendor has a pool of integration options with payment gateways, maps, CRMs, or EHR systems.
- No Hardware and Maintenance
There is no need to deal with heavyweight monolithic software, which is always thirsty for remedial and preventive maintenance efforts. On the other hand, SaaS eliminates the need to take proper care of hardware elements, cover errors, and pay for licenses.
By now you should’ve figured out which aspects of your business will profit from SaaS software. However, the proper knowledge of how to build a SaaS product is equally important. As a custom software development company with immense expertise in cloud technologies, we follow established workflows and proven practices of delivering SaaS applications. Let’s review the main 9 steps in the SaaS development process.
How to Build a SaaS Application
Step 1. Define Your Value
Build the SaaS product with end-user needs in mind. This means ensuring that it solves real-life problems, brings tangible value, and has straightforward functions. Remember that there will be plenty of paying customers if the SaaS solution addresses their demands.
Step 2. Conduct Market Research and Consider Your Competitors
You can’t just engage a SaaS development company and assign tasks once you’ve found the true value of your product. First, it is necessary to have a clear roadmap of future activities based on the current market situation. This is what the project discovery phase is for.
Why not develop a better version of an existing SaaS solution and add unique features to it? As you conduct your market research, you will define the closest competitors and notice the good, the bad, and the ugly of their undertakings. For instance, if you manage to find the gaps in their service offering, just fill them in your upcoming project. This will allow you to get proof of concept (POC).
Step 3. Define the Primary Functionality
Identify the core features that will differentiate your SaaS product from other types of cloud-based services. A basic setup of features should also be contrasted to those of direct app competitors, especially if you're initiating an MVP development process first.
Hence, mind product feature prioritization. Plus, it is a good idea to add the following instruments in your application:
- functional, which include the most essential elements of a SaaS app;
- analytical, which are capable of collecting and analyzing product performance metrics and vast amounts of data;
- management, which serve to define user types and add role-based access restrictions.
Step 4. Choose the Tech Stack
There is no way to guide users on how to create a SaaS application without mentioning the required tech stack to reach that milestone. This embraces the entire ecosystem of modern tools and technologies, chosen with project needs in mind.
Here’s what it may include:
1. Front-end tools. With them, it is possible to create client-facing interaction elements for a future solution. To create intuitive buttons, dropdown menus, or graphic elements, we use the following toolchains:
- HTML, CSS;
2. Back-end tools. SaaS platform development relies on modern server-side tools like Python, Node.js, or Ruby on Rails to ensure that all requests back and forth are handled in the right way. Another brick is a secure and efficient data storage that is responsible for storing critical back-end information (PostgreSQL, NoSQL, Redis, etc.).
3. Servers and cloud infrastructure. To make the shortlisted features work, it is necessary to deploy them in safe and transparent cloud-based environments. The options can stretch from Amazon Web Services (AWS) to Azure, and Google Cloud as well as private cloud storage solutions.
Step 5. Pay Attention to UI/UX Design
How to create software that will make users stick to your brand? The answer partially lies in the ability to create attractive web pages with clear and consistent layouts. First, it is necessary to translate the core requirements into wireframes and interactive prototypes that outline a connection between windows. Once approved, they will be converted into the initial UI design.
The next step is to supplement the design elements with appropriate visual style and check their performance. When the solution goes through these steps, it can be handed over to the software development team.
Step 6. Choose the Most Suitable Pricing Strategy
The revenue model you opt for is one of the crucial things to consider. After all, it affects the way others perceive your offering and make a final buying decision. Therefore, it is important to create service tiers based on the customers' needs and expectations.
Offering various pricing packages makes a developed solution more attractive to a larger pool of prospective end-users. Additionally, it is possible to provide some basic functionality for free and add tiered pricing for advanced features. This is considered a very effective strategy for achieving product-led growth. As such, using the freemium model is has become one of the latest business trends for SaaS products.
Step 7. Find a Reliable SaaS Development Company
Lack of technical expertise in your company is not a reason to give up on the idea to develop a SaaS application. There are a couple of ways to acquire top engineering talent to develop the product for you.
Here’s a quick overview of the main options:
- Hire an in-house team
It is one of the best ways to ensure quality work with round-the-clock visibility into the project. On the flip side, if we compare in-house development vs outsourcing, the first approach may lead to substantial upfront expenses on sourcing, hiring, and managing the local workforce. This may lay a heavy burden on the company and negatively affect the project’s timeframes. Where do you find a skilled professional in your local area? Search developer profiles on LinkedIn or Indeed.com to shortlist the best candidates.
- Hire freelancers
When you need specialized skills at the fraction of the cost, you may browse Upwork, Fiverr, or other popular freelance web developer sites. However, the risks of rework, unsatisfactory results or lack of commitment should be on your radar all the time. Just compare hiring freelancers vs outsourcing.
- Hire an outsourced team
This option is the right fit when you need to access external expertise from trusted outsourcing destinations. There are numerous IT outsourcing models to select from, including hiring a dedicated team of developers. You may benefit from the best quality-price ratio in situations where project requirements change. As a rule, experienced outsourcing companies like Upsilon follow the best practices of SaaS product development to ensure the developed application meets all tech and business requirements.
Step 8. Build a SaaS App and Test It
The best way to understand how SaaS software development works is to envision it as a 5-step process:
- Planning. This step encourages every project stakeholder to negotiate short- and long-term objectives, choose from cloud architectures, and find potential investors and partners.
- Evaluation. After all decisions regarding the project plan have been finalized, it is necessary to make accurate project estimations of a prospective SaaS platform from multiple points of view. Consider its limitations, security features, and other critical points and contrast them to pre-formulated requirements.
- Subscribing. Dive into the specifics of each cloud service provider to find the most relevant one for the project. It is a good idea to collect documentation, assess compliance and disaster recovery, and conduct other iterations related to your project’s specifics.
- Development and testing. Now it is time to set up the development environment, develop, and deploy features on production servers. With each iteration, new functionality, updates, and enhancements should undergo a careful QA testing process to be valuable for end-users.
- Operations. After the system’s deployment, it is necessary to monitor and fine-tune its performance, fix bugs, and manage compliance. The team collects the initial feedback during MVP validation as well to plan for future improvements and adjustments.
Step 9. Take Care of the After-launch Maintenance and Support
The lifecycle of SaaS application development proceeds to equally important matters after MVP launch. The development team needs to provide ongoing updates and security patches to improve UX and meet changing security and compliance requirements.
Tech Difficulties When Developing SaaS Applications
It is hard to deny that a SaaS development lifecycle can stumble upon a host of challenges. Such projects are usually tailor-made, which means they need to rely on unique architectures and respond to particular requirements. On the other hand, SaaS products should also correspond to certain tech standards and provide a way to overcome core difficulties. What are they?
- Tech Stack. Many companies have to resort to tech consultancy to identify the core technologies for the project. It is necessary to assemble the right toolchains for a specific case.
- Confidentiality. As most SaaS apps contain tons of sensitive information, proper measures need to be taken to ensure its protection. Data encryption, two-factor authentication, and other techniques need to be implemented in your SaaS product by default.
- Robustness. No one likes to deal with downtime even for a good reason. The app should be always capable of avoiding failures by taking care of backups and implementing zero downtime deployment practices.
- Credibility. Businesses need to give users a lot of signs that their SaaS app is trustworthy and credible. Gaining users’ trust and dealing with reputational risks are equally crucial things to consider for industry newcomers.
- Subscription plans. An improper monetization strategy may become a source of struggle for entrepreneurs. To succeed with payment options, you need to explore the financial capabilities of end-users and offer the most optimal pricing policy.
- Integration issues. Applying APIs for integration with third-party software and web portals is a complex undertaking for a newly built solution. It is best to create a product structure that will match seamlessly with external services from the very beginning.
Cost of SaaS Application Development
Now that you are aware of the major difficulties to consider when building a SaaS product, it is time to turn to another crucial aspect. You can’t have a full picture of the future development process without a solid knowledge of its costs. Let’s answer the question: how much does it cost to build a SaaS platform?
For project estimation, we use a PERT (Program Evaluation and Review Technique) method. It includes three points of estimate: Pessimistic, Realistic (it can be also called the most likely case estimate), Optimistic. An average expected estimate is calculated by taking a weighted average of these three points of estimates using the formula:
(optimistic + pessimistic + (4 x realistic))/6 = expected estimate
For our SaaS product estimations, we defined the essential subscription functionality to create a SaaS application, the standard team structure, and calculated the development time based on a PERT method. You can see the result down below:
The approximate duration is 7.5 months for the development till release, considering one full-stack developer. And approximately 2 months for the development till release, considering four full-stack developers. You can also see a QA engineer and project manager in our estimation. We recommend forming the web development team taking into account these specialists.
A QA engineer guarantees product quality during the whole development lifecycle. A project manager provides the day-to-day management of the project, ensuring that communication between the client and the team is going smoothly. A well-formed team will make the SaaS application development more manageable and effective.
Based on the estimate and our experience in SaaS development, we can say that the price of a SaaS application will start with $50,000. Here we talk about the subscription functionality, which is the core of the SaaS product. The cost of a complete, fully-featured SaaS will be around $150,000-200,000 and more.
Keep in mind that all estimations provided here are rough. Cost and timing may vary, depending on the following factors:
- The complexity of features. The more complicated the feature is, the more time the development team needs to implement it.
- Hiring option. You can choose from outsourcing companies, freelancers, and in-house teams.
- Number of specialists and their hourly rates. The hourly rate depends on the hiring option, location, and qualification of the specialist. Developers from the USA will have higher rates than the same developers from Eastern or Central Europe.
If you want to get an accurate estimation of your future project, contact us, and our business development specialists will gladly provide a consultation.
With more SaaS companies entering the game, it is getting harder to navigate the options available to implement your idea. However, with our guide, you will be able to streamline the decision-making process and get started with the project faster. Furthermore, don't hesitate to reach out for more insights into SaaS development. We can help you develop a SaaS application at an early-stage of your startup and scale it while you're growing your business.