How Much Does it Cost to Build a SaaS Platform

Today, cloud computing is more than just a buzzword or a passing fad, but a prosperous market estimated to reach US$679 billion in 2024. And as a primary tier of cloud computing, Software-as-a-Service looks better than ever, with an expected 2024 market size of US$232 billion. 

As a business model, SaaS applications are gaining traction due to their customization abilities and ubiquity. Everyone uses services like Gmail or various CRM systems, and the pandemic just proved their indispensability. The market is expected to grow at a CAGR of 16.47%, reaching almost US$483 billion by 2028 or even US$819.23 by 2030.

Considering that, what is SaaS development cost? How much can a startup owner expect to invest? In this article, we answer these questions and share ProCoders’ experience in this area.

The Latest SaaS Development Trends

SaaS products help businesses bring accessibility and agility to the table and gain one more competitive advantage over the others. They are fairly simple to use, and there are no installation hassles or security issues.

But what will drive this market forward in 2024? 

Artificial Intelligence.
Everything connected with the autonomy of self-learning is a trend nowadays. Integrating AI into SaaS provides an endless list of possibilities, starting with top-notch personalization and gaining data intelligence that is crucial for modern businesses.

Google, Amazon, GitHub, and Zoom all incorporate AI into their SaaS products in one way or another. Besides, by August of 2023, over 80% of Fortune 500 companies adopted ChatGPT, which is the first term that comes to mind when talking about AI.

Machine Learning.
ML is learning by using mathematical statistics, probability theory, and numerical methods to find solutions to many similar problems. For example, Netflix actively uses ML for its recommendation service.

Mobile-First Approach.
The mobile-first approach, already prominent in the IT industry, will remain at the forefront. Cloud-based SaaS products are no exception.

With more than half the world’s traffic generated by mobile devices and search engines like Google starting to support mobile-friendly websites back in 2020, businesses began to pay more attention to the mobile versions of their SaaS solutions.

Focus on Statistics.
SaaS is well-known for its analytics and data centralization. According to Mordor Intelligence, the Business Intelligence (BI) market is expected to reach US$33.34 billion in 2024 and expand to US$61.86 billion by 2029, at a CAGR of 13.16%.

This growth is driven by the increasing demand for data analytics, cloud solutions, and BI integration with ERP and CRM systems. Industries leading this adoption include BFSI, healthcare, IT, and retail, which leverage BI tools to enhance operational efficiency and decision-making.

3 Factors Affecting SaaS Development Costs

With this much hype surrounding it, the question of the day is how much does it cost to build a SaaS product and what affects the final number. We at ProCoders found that all of the factors can be split up into three major categories:

1. The Product

The ultimate cornerstone of the business—the product—is the major factor when trying to estimate the budget. The size, the type, the design, the complexity, any new features that differentiate your product from the rest—everything has its reflection in the price. 

The costs associated with the product are typically more unpleasant since they can’t be reduced without compromises, which is obviously not ideal.

Here are some ProCoders insights on the topic:

• Complicated projects with elaborate designs will either take a long time to reach the market or be expensive. You should never get rid of the product’s core features; however, thorough research is necessary to define that core and erase the redundant functionality from the list. We can help you with this through our Discovery Phase.
• The scope of your SaaS will also influence the price. If your product is designed for one thing (much like Hootsuite), then the scope of your product is relatively small. There are also platforms, like HubSpot, that have tons of different features. They are bulkier, more complex, and therefore take longer to build.
• The scalability of your product is another important factor. Most SaaS products are scalable, meaning they let businesses access new features and tools as they grow.

2. The Team

Your development team is also a key factor affecting SaaS development costs. It can be a team of two or thirty experts, depending on the scale of your SaaS.

It’s obvious that you’ll have to pay extra for every developer you hire. There are several factors that affect the hourly rate of the developer:

• Their skill level (junior, middle, or senior)
• Skill set (technologies they are fluent in)
• Location (living costs range from country to country)

In fact, the location and the cost of living in a particular country can affect the cost to hire an app developer by 2-3 times.

We at ProCoders hire only middle and senior developers and provide staff augmentation and dedicated teams with HR savings for partners reaching 99%.

Trying to save costs here is tricky, as far too low rates may mean a lack of experience and other pitfalls. It is better to contact developers with a track record, industry experience, and practical skills. 

Offshoring is a very suitable approach in this case, as you staff your team with professionals without having to pay for vacation and other bonuses. That is, of course, if you choose the right provider.

3. Development Duration

Finally, SaaS app development cost depends on the time it takes to develop and deploy the project.

If the developers’ work leaves much to be desired and the code is poorly written, additional time (and therefore costs) will likely be required for Quality Assurance and bug fixes.

Let’s not forget to add the post-release expenses. SaaS products are not one-time events; they need to be maintained and improved constantly. Everything from hosting services to updates and cloud storage needs to be included when calculating the cost.

The Stages and Cost of Building a SaaS Product

1. Validation and Planning

First of all, you need to streamline the vision of the product and validate its concept. 

• What is your solution?
• Who is the target audience? 
• What pain points does your SaaS system solve? 
• Who are your competitors? 

At this point, the more research you do, the more chances you have to build a SaaS product that achieves success.

The planning stage involves the decision-making on the scope of your project, possible security protocols, as well as a pricing model.

The average time you should spend on this stage is around 100 hours. It may seem like a lot, but in our experience, well-planned projects develop much smoother and encounter fewer obstacles. That’s why we’ve created our Discovery Workshop and Discovery Phase.

A Discovery Phase can provide much-needed context for your idea and help determine the value of your product on the market. With this knowledge, you can safely proceed to the development of the MVP.

If you need help with this stage, contact ProCoders. We’ll estimate the costs, help you plan the project, develop a roadmap, and even create a prototype if necessary.

2. Minimum Viable Product (MVP) Development (Optional)

The best way to test your idea is to give it a try. Developing a full-blown SaaS product is difficult, but you can develop a Minimum Viable Product (MVP), which is a stripped-down version of it. This may help you see whether it will find a niche on the market and gather viable feedback from customers.

At this stage, you’ll need actual specialists and developers to create a successful MVP; although it is far from an ideal final result, an MVP should still be enticing for your target audience and investors, plus have at least some of the core features.

You’ll need approximately 150+ hours to create a SaaS MVP; however, the final number depends on its scope and the composition of your tech team. 

An average team includes:

• a UI/UX designer
• a frontend developer
• a backend developer
• a QA engineer

It is optional, but strongly recommended to have a designated Project Manager assigned to the team.

The cost to develop a SaaS program in its minimum viable stage is the amount of time multiplied by the hourly rate of the specialists. Supposing you’ll have at least two specialists with average hourly rates of $53/hour, this stage will cost $15,900.

3. The Development Process

Once you have a roadmap, a team, and even an MVP with user feedback, it’s time to finally create the product.

In our experience, special attention needs to be paid to the product’s UI/UX design, among other things, because SaaS solutions should be one-box and customized simultaneously, which is quite difficult to achieve in practice. 

The release of the MVP will also come in handy here because it allows for collecting feedback from customers and helps to understand which functions were used most often and which ones were used less often and, therefore, can be removed.

SaaS products typically have quite elaborate architectures because they use cloud storage, multiple libraries, and tools. That’s why most companies resort to third-party hosting providers and use many API integrations.

Note that before deployment, the project needs to meet the technical specifications, security guidelines, regulations, and service-level agreements. 

Development is the longest and most difficult stage, as it requires really advanced skills from developers. It can take anywhere from three months to a year.

The cost to develop SaaS software product would include the rates of one designer, at least two developers, a QA specialist, and a Project Manager (let’s say they all are paid $53/hour) multiplied by three months’ worth of work, leaving us with a rough estimate of $120,000.

You may not need the designer and the QA specialist for all 3 months, though, but the development would still cost around $100K.

4. Testing, Deployment, and Maintenance

The main difference between your regular product and a SaaS system is maintenance: cloud-based apps require constant support and updates since the software itself functions as a service. This means that the app should run smoothly and without any breakdowns.

In order to do that, coders conduct thorough checks and testing at every iteration of the code: performance, compatibility, integrations, security, etc. Split-run testing for any SaaS product is mandatory, so there’s a lot to do before actual deployment.

Also, post-launch, you may need a round of bug fixes to make sure the users are satisfied.

The cost of this stage is complex to calculate since the maintenance is continuous and unique for every project; however, it can easily be done by a team of a couple of developers and a QA specialist.

In the US, the median rate for a QA specialist is around $29/hour+ (in some regions, up to $43), and the salary of a cloud specialist or a software development engineer is $62,78/hour. 

The number of maintenance hours a month is also unique, so a rough estimate for a month of SaaS maintenance by this team could range from $8,000 to $27,000 or more.

We know that not every business is willing to (or can, in case its a startup) pay over $200,000 for a product. So, we’re going to share ProCoders insights into saving money without compromising quality.

Ways to Reduce SaaS Development Costs

The good news is that you can save some money and still create an amazing SaaS solution.

Optimizing the Team

There are two main team-related approaches you can choose from:

• Hiring a full in-house team
• Use any form of outsourcing 

While it is great to have your own team of specialists, few companies can brag about having a full-stack team prepared to build a cloud-based solution. And even if they do, that means thousands of dollars on vacation, sick leaves, bonuses, taxes, office space and equipment, and more.

If you need to outsource, you might consider offshoring as an alternative. Hiring developers from countries with lower hourly rates may spare you a significant portion of your budget.

SaaS Development Costs Depending on the Location

Here’s why offshoring is a good idea. According to Clutch, in the United States, cloud developers’ hourly rates tend to start at $100 per hour, with some companies charging up to $150 per hour. So, our calculation with a $60 hourly rate can double in the US.

In Germany, the situation is slightly better: the rates hit the $100 ceiling, so you can find a slightly cheaper developer there. But even so, the rates are incredibly high due to the lack of available seasoned coders.

The cost of building a SaaS marketplace in Central Europe will be significantly lower. The average rate of a cloud developer is around $50-70. And that’s from companies with a 4.9 or 5.0 rating, meaning that the quality of the code is outstanding, especially matched with a reasonable price.

Choosing Usage-Charged Clouds

Another strategy to cut costs is to use usage-charged cloud infrastructures like Google Cloud or AWS. That way, you won’t need to spend a fortune on maintaining the servers.

Thorough Planning

Whether you are working with your own team or looking to outsource, a well-thought-out project plan is key to success and cost reduction. Knowing the scope of the project, functional requirements, and main objectives, as well as having an approximate design vision, can save a huge amount of money and time.

Top-tier QA

Recruit a good QA specialist from the get-go. Bugs and irritating errors that occur without a specialist are great examples of SaaS product development costs that could’ve been avoided. In our experience, integrating QA specialists in the development process from the beginning is a major factor in success.

Estimating the Cost to Build a SaaS Platform

The cost to build a SaaS product mainly consists of the salaries of developers who work on the project and payment for hosting at the deployment stage. 

Although the hosting costs can be calculated in advance (they vary from $2,000 to $10,000), it’s very difficult to estimate a specific figure for the entire project.

On a quest for cost-saving, don’t underestimate the Discovery Phase. The more you know about your product, the market, and what pain points you help solve – the more prosperous your business will be. 

That’s why we recommend opting for third-party help if you’re not sure you can conduct the Phase yourself. Many outsourcing companies now offer their services in this area, and the price can vary from $1000 to $5000 depending on the depth and scale of the research. If you skip this stage, your product may not be in demand, and you will lose a lot of time and resources.

So, how much does it cost to build a SaaS platform?

Based on our previous calculations, the cost to build SaaS product can start from $67,000. The most time-consuming and costly stages are the development process and deployment.

How ProCoders Help Businesses Save Money on SaaS Product Development

Our company has been in the outsourcing business for almost 10 years, and no matter how much we talk about our values, such as transparency and open communication, our partners always mention the cost-saving we help them achieve.

But how?

We staff teams with qualified tech experts at $40+ per hour, which is 30% lower than the market’s averages.

These people are middle and senior developers, designers, testers, and skilled project managers. ProCoders engineers are fluent in 50+ platforms and technologies. Every future employee undergoes four stages of interviews and practical tests.

Yet, we’re able to keep rates competitive for our partners while maintaining a team of 120+ specialists.

ProCoders SaaS Experience

Of course, we’ve dealt with cloud computing, including creating SaaS products. For instance, helping our clients at Frontegg to bring their idea of the SaaS system to life. 

They wanted to create an out-of-the-box business solution for startups but had no available developers to carry it out. This is where we came to help by offering a small but extremely talented and qualified team of developers in a record two-week time. We selected programmers in a way that they would ideally fit according to their tech stack and complimented the resources that Frontegg already had.

Thanks to our developers, the time to market was reduced by 25%, human resources costs were cut by 38%, and overall efficiency increased by 30%.

We can help you carry out your business vision. If you have an idea but lack the technical capabilities to implement it, just write to us, and we will be happy to help. Whether you need one developer or a full-stack team, don’t hesitate to ask!

Conclusion

SaaS projects are on the rise and are now more relevant than ever. They are universal, flexible, and increase business efficiency—the advantages can be listed endlessly. For startups, the SaaS model is especially attractive.

First of all, you don’t need to spend money on supporting software with physical media. A good internet connection is enough for a cloud service.

The vast majority of SaaS programs are cross-platform, meaning they can simultaneously work with a PC, smartphone, or tablet. The software development itself is highly customizable, and therefore there is an opportunity to experiment with the format, features, and cost of the project.

Lastly, users can easily and quickly upgrade to the latest version, which significantly reduces the time and resources needed for manual support.

Yet, creating a SaaS project may encounter a number of obstacles, one of which is definitely not a very budget-friendly price. It depends both on the complexity of the project itself and on the team performing it.However, one of the effective ways to reduce SaaS development cost is offshoring – hiring developers from countries with lower rates, which can significantly reduce costs. We hope that our article helped you navigate and roughly calculate the cost of SaaS software development, and if you have any more questions or want to hire web developers, please contact us at ProCoders!