How to Build a SaaS Product to Set up Your Software Business

Chances are, you are already using SaaS products even without acknowledging it. Over 70% of business software use in 2023 was attributed to Software as a Service. The usage of such solutions by companies may rise to 85% by 2025. 

Zoom, Google Docs, Slack, and Trello – were able to change the way businesses operate.  

Now, the key question is how can you hop on this hype train and make a SaaS product fast and cost-effective? How can you make it stand out? Is it even a good idea to create SaaS software and what are the benefits? 

As a company that specializes in augmenting teams with SaaS web developers for hire, we at ProCoders are happy to share our experience and knowledge and offer our services in case you need a seasoned pro in building Software as a Service. 

Want to know how to build a SaaS platform and dominate the market? Keep reading!

SaaS Product Market Overview

No longer than five or ten years ago, SaaS apps were not so popular and flew under the radar. Today they are gaining traction and quickly absorbing the market. Here are some insights:

• Increased Software Spending: 75% of rapid growth companies plan to increase their software spending in 2024. This indicates a strong and expanding market for SaaS products.
• Software Purchase Regret: Despite high confidence in their software choices, the high rate of purchase regret (68%) among fast-growing businesses points to a mismatch between customer expectations and the actual performance or utility of the software.
• Impact on Competitiveness: The fact that 41% of rapidly growing businesses feel that a poor software purchase made them less competitive underscores the critical role that effective software plays in maintaining and enhancing business competitiveness. 

Today entrepreneurs are set on investing in SaaS technology. As stated by BetterCloud, by 2025 every organization will be a SaaS-powered workplace. 

According to Statista,  the SaaS market will reach $232.3 billion in 2024.

To put it into perspective: SaaS accounts for $1 out of every $5 spent on software and the numbers are growing. It’s no surprise many business owners want catch up with the long-lasting trend.

The USA currently retains the leading position in the SaaS app development market, but the region’s growth rate is slowly decelerating. If we are to evaluate the markets in terms of their prospects in the long term, paying attention to the growth rate, then the Asia-Pacific region looks more profitable in the long term perspective. But obviously, the IT infrastructure in APAC is less developed, so Western countries remain the safest choice. Here is a rough evaluation of the SaaS-related revenue in each region.

SaaS Market Trends

• Artificial Intelligence and Machine Learning Integration: AI is increasingly used for automating tasks such as lead generation and sales automation, with 80% of businesses forecasted to adopt AI in one way or another by 2025
• Platform as a Service (PaaS): PaaS is gaining traction for streamlining the development process, allowing businesses to build, test, and deploy applications more efficiently. The global PaaS market is projected to reach $179 billion in 2024.
• Cybersecurity and Data Protection: As cyber threats advance, the focus on cybersecurity within SaaS applications intensifies, with significant investments expected to protect sensitive information.
• Voice Search Optimization: With the rise of virtual assistants and smart devices, voice search is becoming essential, necessitating SaaS applications to optimize for voice-enabled interactions.
• Smart Chatbots: Evolving from simple support tools to intelligent conversational agents, smart chatbots in SaaS platforms are set to enhance user interaction and automate tasks. The chatbot market is anticipated to reach $1.25 billion in 2025.
• Rise of Low-Code and No-Code Platforms: These platforms enable business users to develop applications with minimal coding skills, democratizing software development beyond traditional developers.

The Most Successful Examples of SaaS

There are currently around 30,000 SaaS companies in the world, indicating that competition is fierce. Market dominance, however, is retained by large enterprises: 

• AWS
• Microsoft
• Google

Together they own approximately 60% of the cloud application market.

The most inspiring examples of cloud-based companies would be Salesforce, Slack, and Shopify – all three provide access to completely different types of services and are leaders in their industries. 

Salesforce is offering CRM solutions and marketing automation, Slack is a well-known tool for internal communication, and Shopify is a SaaS provider for e-commerce businesses. Just to compare their total funding amount we’re looking at $1.22B (Slack), $65.4M (Salesforce), and $122.3M (Shopify). 

The numbers are truly astronomical.

Advantages of Software as a Service

So what makes SaaS model such a useful tool when it comes to business operations? The advantages of SaaS can be split to address both parties, the end users and the companies. 

Benefits for the end users are very straightforward: 

• Convenience: Accessible from anywhere, allowing users to operate from any device with internet connectivity.
• Always Up-to-Date: Automatic updates ensure the latest features and security without user intervention.
• Cost-Effectiveness: Typically requires no upfront costs, with affordable subscription plans available.
• Ease of Use and Experimentation: Many SaaS products offer free trials, allowing users to test features before committing financially.

A recent survey conducted by BetterCloud showed that the main reasons IT experts buy SaaS apps are cost-effectiveness, security, and ease of use. Cloud solutions help save valuable time by eliminating the need to install and run an application on-premise, and they also save resources and money by offering different pricing plans.

The benefits of this type of software for the businesses include:

• Recurring Income: SaaS models ensure a steady revenue stream through subscription fees, offering businesses financial stability and predictable income.
• Low Initial Costs: SaaS eliminates the need for substantial upfront infrastructure investments, allowing businesses and customers to access advanced technology with minimal initial costs.
• Scalability on Demand: SaaS platforms can seamlessly adjust to varying demand levels, providing scalability as business needs grow, without requiring significant additional investment.
• Global Customer Reach: The cloud-based nature of SaaS enables businesses to easily reach a global audience, overcoming geographical and physical limitations.
• Reliability and Accessibility: SaaS provides reliable access to applications via the Internet, ensuring that services are available anytime and anywhere, which enhances user satisfaction and trust.

But what benefits are there for developers who want to make SaaS software? Why should one stick to the cloud computing model and invest in SaaS product development process instead of regular non-cloud products?

Why Should You Develop a SaaS Product?

SaaS isn’t just a buzzword; it’s a new reality. Digital transformation has already transformed all industries and areas of business, but it seems like the pandemic only accelerated the process. Cloud workloads are so popular, in fact, that on average, a company uses 110 SaaS apps, with big companies being more proactive in using the cloud.

Moreover, with 85% of companies projected to adopt a cloud-first policy by 2025, it’s a great opportunity to go for SaaS platform development and establish yourself before it gets oversaturated. Especially if you can offer a unique business idea for a particular industry and solve its specific pain points. 

Why should you build SaaS products? To effectively tap the economy of scale and take your business to the next level. However, you need an expert development team to deliver results, and we can help you with that.

How Does a SaaS Project Make Money?

Financial matters are the most pressing matter that bothers those wanting to create a SaaS product. How exactly do SaaS products make money? Traditional on-premises software is frequently sold upfront, unlike SaaS providers, which typically charge a subscription fee. 

If you are to build SaaS software, there are several revenue models you might want to consider: 

1. Monthly/yearly subscription

Today’s most popular SaaS model is a recurring monthly or yearly fee to access the product, such as Adobe (monthly subscription) or Microsoft (yearly). This method is also called “flat pricing” since the usage has no defined limits. It is easy to track, sell, plan, and predict. 

2. Usage-based pricing

You are charged based on how much you use – simple as that. Amazon Web Services, for example, charges you for the number of transactions and the gigabytes of data used. Progressive payments stimulate long-term clients to upgrade their subscription plans, and remission of fees during quiet months supports your image. 

3. Freemium

In the freemium model, users get a limited number of free functions and must pay for additional features. “Over,” a popular image editing app, uses this model by offering basic features for free and charging for “pro” elements. This approach is great for viral distribution and market entry.

When creating a SaaS product, balance the free and paid features carefully. Ensure your revenue covers maintenance and customer service costs. Offer multiple pricing plans to meet the needs of both small and large companies. Choosing the right strategy is crucial as it impacts the scale of your business.

Possible Challenges of SaaS Product Development

Practice shows that migration to the cloud is often a separate and complex project. What challenges might you face when building software as a service?

The Complexity of Multi-Tenancy Architecture in SaaS

Multi-tenant SaaS architecture is a crucial factor in application development, bringing economic advantages to SaaS providers and customization possibilities for users. However, it introduces significant complexities in balancing resource sharing with ensuring data privacy, security, and customization. Addressing these complexities is one of the main challenges in SaaS development.

Types of Multi-Tenancy in SaaS Solutions

Multi-tenancy in SaaS varies widely and is typically categorized into isolated, shared, and hybrid models depending on the specific requirements of the SaaS product, such as user base size, data security needs, and customization demands.

• Isolated Tenancy: In this model, each tenant uses a separate instance of the SaaS application, akin to owning an entire house. While it ensures maximum privacy and security, it also increases costs due to duplicated resources and higher management overhead.
• Shared Tenancy: The most integrated form of multi-tenancy, shared tenancy involves all tenants using the same application and database. This setup is similar to an apartment building where all facilities are communal. It’s cost-effective but concerns data security due to the shared environment.
• Hybrid Models: These models merge the benefits of isolated and shared tenancy. Tenants may use the same application software while having separate databases, balancing cost efficiency and data isolation.

Managing Scalability and Performance in SaaS

SaaS application development transforms how businesses utilize software, requiring just an internet connection unlike traditional systems that need extensive device maintenance. SaaS companies prioritize scalability and performance throughout the development process, from concept to choosing a strong SaaS framework. The real strength of these apps comes from their continual enhancement based on user feedback and analytics.

Implementing zero downtime SaaS deployment strategies is crucial for maintaining a competitive edge. Although SaaS development faces hurdles like data inconsistency and integration issues, a systematic approach can effectively address these challenges related to scalability and performance.

Given that these applications often manage sensitive data, ensuring data security is critical. Moving from traditional ERP systems to SaaS models not only enhances business efficiency and sustainability but also solidifies a business’s position in the competitive SaaS marketplace. But we’ll talk about it in a separate section.

Ensuring Data Security and Privacy

According to the Security Awareness report, 85% of survey respondents believed that their cybersecurity awareness training work had a positive impact on the organization.

The latest Ponemon Institute report showcases that data breach in 2024 costs about $4.5 million on average. Although it’s not specific to cloud-based SaaS solutions, these workplaces are 2.9x more likely to experience external access as a challenge.

SaaS solutions are transforming company operations, but developing these applications involves significant challenges, particularly in ensuring data security and privacy. The convenience of these applications also introduces risks to data security, posing a challenge for SaaS companies to provide robust protection without sacrificing user experience. 

Moreover, maintaining privacy is crucial as these solutions allow data access from anywhere, necessitating a careful balance between accessibility and security in the development process.

Maintaining Regulatory Compliance in SaaS

Regulatory compliance presents a significant challenge in SaaS development. These applications must meet diverse legal requirements that vary by country, industry, and specific customer needs, primarily concerning data security, privacy, and financial transactions. 

Non-compliance can lead to severe penalties and damage to reputation. Development teams must stay informed about the changing regulatory landscape and effectively incorporate these requirements into their SaaS solutions.

Addressing Integration Challenges in SaaS

As more businesses adopt SaaS solutions for a competitive edge, integration issues, especially with third-party services, become prominent. Managing multiple SaaS applications can lead to data inconsistencies and integration challenges. 

Integrating cloud-based SaaS products with traditional systems like ERP requires a knowledgeable development team to ensure smooth deployment and minimize disruptions. A strong SaaS framework is essential for seamless integration, but factors like data security, internet reliability, and device maintenance complicate the process. Despite these challenges, a strategic approach can help successfully navigate the complexities of SaaS development.

Regular Updates in SaaS

Regular updates pose a significant challenge in the SaaS development process. Developers need to routinely roll out new features, address bugs, and enhance security. SaaS solutions, being cloud-based, facilitate more frequent and smoother updates compared to traditional software. Nonetheless, development teams must carefully plan and execute these updates to ensure they occur without disrupting user activities or causing downtime.

Building a Team for SaaS Web and App Development

Creating a capable development team is essential for successful SaaS projects, but assembling this team in-house can be fraught with challenges.

In-House Hiring Challenges

• High Costs: Salaries, benefits, recruitment, and infrastructure significantly increase expenses.
• Talent Scarcity: In competitive tech markets, finding and retaining top talent is difficult and costly.
• Time Consumption: The hiring process can be long and distract from core operations.
• Rigidity: Scaling an in-house team to project needs isn’t always feasible or economical.

However, there’s a way out that can help you save up to 99% on HR costs and still get a talented team with experience in your industry. This is outsourcing.

Outsourcing is the business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house by the company’s own employees and staff. It’s often adopted to reduce costs, access specialized expertise, increase flexibility, and improve focus on core business activities.

Advantages of Outsourcing

Outsourcing offers a compelling alternative with several benefits:

• Cost Efficiency: Reduces overhead by eliminating continuous employment costs.
• Global Talent Access: Taps into a worldwide pool of skilled developers.
• Scalability: Easily adjusts team size based on project demands.
• Speed to Market: Initiates projects quickly without the delays of team building.

All of these benefits will be available to you through a proper software vendor evaluation and choosing an IT partner that’s qualified to develop your idea into a flexible, scalable product!

Partnering with ProCoders

So, how to hire SaaS developers? 

For businesses aiming to streamline their SaaS development, partnering with ProCoders provides access to experienced developers who are proficient in the latest SaaS technologies. 

ProCoders offers the flexibility and scalability necessary to adapt to project changes swiftly, ensuring that your SaaS solution is developed efficiently and effectively, keeping you ahead in a competitive market. With ProCoders, you gain a strategic advantage through expert outsourcing, reducing costs while achieving superior development outcomes.

Steps How To Build a SaaS Product from Scratch

Step 1: Assessing Viability and Establishing SaaS Foundations

Initiate your SaaS product development by rigorously determining if there is a real market need for your solution. Challenge your assumption by asking, “Is there a genuine demand for my product?” Go beyond feedback from friends and family and seek validation from the intended end-users to ensure your product addresses their needs.

Engage potential customers by creating surveys to clarify:

• The demographics and behaviors of your target market
• The specific issues your product is designed to resolve
• Distinctive attributes that set your product apart from existing solutions

Next is outlining essential product specifications. Lay down a robust foundation for your SaaS offering, focusing on critical areas, including security, privacy, customization capabilities, and scalability. From the start, incorporate comprehensive security measures and ensure compliance with relevant data protection regulations to safeguard user information.

Also, design your product to be flexible, allowing for customizations to fit diverse user needs, and scalable to handle increasing demand without compromising performance.

Step 2: Budget Estimation for SaaS Building

Proper budget planning provides a realistic overview of resource allocation throughout the development process.

The budget should include design, programming, business analysis, SaaS customer support, maintenance, and marketing. The development timeframe can vary based on these factors; typically, developing a SaaS application can take about ten months in an established SaaS app development company, while a Minimum Viable Product (MVP) might require around six months.

Carefully plan your budget and consider potential financial obstacles that could arise, such as the need for additional funding during development, which could lead to delays.

Step 3: Establishing a Monetization Strategy

Choosing the right monetization strategy is critical for the success of your SaaS product. Acquiring customers can be challenging if the pricing model doesn’t align with your target user’s preferences and needs.

Common SaaS pricing models include 

• Freemium
• Feature-Based Pricing
• Flat Rate
• Per User Pricing
• Usage-Based Pricing

Effective pricing strategies:

• Free Trial: Allows users to try the product before buying.
• Premium Pricing: Used by brands that offer exclusive services or features.
• Promotional Pricing: Temporarily reduces prices to attract attention as the product gains market credibility.
• Market Penetration Pricing: Sets initial low prices to attract many users quickly.

Selecting the appropriate pricing model and strategy should consider your target market, product features, strategic goals, and market conditions. Alongside pricing, implementing effective SEO, marketing strategies, paid acquisitions, and social media tactics are essential to ensure market penetration and revenue growth.

Step 4: Selecting the Technology Stack

How to create a SaaS product? Pick the right stack!

Choosing the right technology stack is crucial for developing your SaaS product. It not only needs to support the initial launch but also ensure long-term scalability and maintenance. We’ve already covered this topic, but let’s repeat what components are needed:

• Front-end Development: Vue.js, Angular, or React. These tools will help create a responsive and interactive user interface.
• Back-end Development: Django or Node.js, which will manage your SaaS product’s server-side logic and operations.
• Databases: For greater flexibility with data structures, choose from traditional SQL databases like PostgreSQL, MySQL, or a NoSQL database.
• Hosting Provider: Choose a dependable cloud hosting service to deploy and manage your SaaS application effectively online, ensuring optimal uptime and performance.

Step 5: Developing the Minimum Viable Product (MVP)

The next crucial phase is building the MVP, a streamlined version of your SaaS product equipped with only the essential features. This approach allows you to test the product’s viability and gather user feedback early in the development cycle.

Here are some key strategies for MVP development from ProCoders specialists:

• Feature Prioritization: Identify and focus on core features that address the primary needs of your target audience, ensuring rapid deployment and early market entry.
• Feedback Integration: Use the MVP to collect and analyze user feedback, which is invaluable for refining the product and aligning further development with user expectations.
• Define User Persona and Journey: Clearly outline who your users are, what actions they need to take, and how your product resolves their issues. This understanding will guide the selection of features to include in your MVP.

Implementing these steps effectively prepares your SaaS product for a successful launch and scalable future, allowing you to adjust based on real-world usage and feedback.

Step 6: Test and Iterate

And how to create software as a service that succeeds? Test it!

Once your Minimum Viable Product (MVP) is developed, the next crucial phase involves testing it with early adopters. This testing phase helps assess two critical aspects:

• Product Viability: Confirming if the product concept is practical and fulfills a market need.
• User Satisfaction: Ensuring the product meets the expectations and needs of its users.

During this stage, actively engaging with users to solicit feedback is essential. The more honest thoughts you gather, the more insights you’ll gain, which can be used to refine and enhance your SaaS product.

Step 7: Develop the Final Product

Reaching this stage means you are ready to develop your complete SaaS product. By this point, you should have:

• A validated product idea
• A selected pricing model and strategy
• An established technology stack
• Valuable customer insights from MVP testing

Now, it’s time to act on this foundation and create the final version of your SaaS product, incorporating all the feedback and learnings from the MVP phase.

ProCoders can help you with your product’s MVP and final version. You can hire a dedicated team that will handle the development, testing, and even post-launch support and maintenance. We only hire middle and senior engineers, so you can be sure that experienced professionals will manage the project. At ProCoders, we pride ourselves on our Discovery Phase, which helps clearly define your needs and tailor a development plan that aligns perfectly with your goals. 

With over 10 years of experience in the industry, our teams are adept at assembling quickly and efficiently, ensuring that your project not only meets but exceeds expectations. Trust us to bring your vision to life with precision and expertise.

Step 8: Ongoing Maintenance and Development

Continuous improvement is crucial in the competitive SaaS landscape. Here are the key activities involved in this phase:

• Explore Growth Opportunities: Constantly look for ways to expand and enhance the product.
• Engage New Customers: Focus on customer acquisition and expanding your market reach.
• Leverage Feedback: Use customer feedback to guide development, focusing on enhancing user satisfaction.
• Fix Bug and Update: Regularly update the product to fix bugs and refine features to ensure optimal performance and security.

By systematically following these steps, you can ensure your SaaS product meets market demands and continues to grow and improve over time.

How Long Does It Take to Build a SaaS Product?

Understandably, you want to develop a SaaS product quickly enough to get to the market and gain traction, but calculating the time it takes to build a successful SaaS product without knowing precise requirements and workforce capabilities is impossible. It can take from 4 months to a year, and it’s better to discuss terms with professionals, who can evaluate your specific project. 

Here is a very rough estimate of time expenditures to create an MVP of a Saas product like Slack:

Type of Work	Development Time
IOS	800-900 hours
Android	800-900 hours
Back end	560 hours
SaaS UI/UX Design (for one platform)	120-250 hours
Total hours	2610 hours

There’s a way to reduce this number with the approach we at ProCoders have used to save our partners thousands of dollars. It’s called cross-platform development.

It significantly cuts costs and speeds up the development process, especially when paired with compatible frameworks. For example, using Angular for web development and Ionic for mobile apps, or React with React Native, creates a synergistic effect. 

Our Experience in Building SaaS

At ProCoders, we pride ourselves on our SaaS projects. Over the last 10 years, we have helped more than 20 companies establish their own products and accumulated extensive experience in that realm. 

Our recent clients include companies of all industries and sizes, and our talented developers have been able to adapt to each of them and help create a unique product. 

Frontegg

For example, in two weeks we managed to assemble a whole team for an Israeli startup Frontegg that specializes in plug-and-play development. With the help of our specialists, the company managed to outstrip competitors in the market and occupy a profitable niche.

Our main advantage is that we work with projects at any stage and are ready to quickly respond to any of your requests. Developers at ProCoders are constantly improving their skills and are ready to provide technical advice so that your product is the most relevant and high-tech on the market.

Vsimple

At ProCoders, we partnered with AxisPoint (now Vsimple) to enhance their office appliances rental business by developing a comprehensive CRM system. This system streamlined customer interactions and integrated with billing and order management, evolving into VSimple, a robust Workflow-as-a-Service platform that boosts team collaboration and automates processes.

Facing a talent shortage in Kentucky, we assembled a dedicated team of developers and a QA engineer, managed by AxisPoint’s CTO. This approach accelerated development and aligned the solution with the client’s needs.

VSimple has transformed into a significant product line and a subscription-based service, integrating with Microsoft Dynamics and securing $2.5 million in investments.

Looking for a skilled development team to create a high-quality SaaS app? Aspire to be the best in your industry? Give us a call!

Conclusion: How to Build SaaS Product?

Starting the journey of how to make a SaaS product offers both immense potential and challenges. With its increasing demand for cloud-based solutions, the rapidly evolving SaaS market provides a fertile ground for innovation and business growth. 

By understanding user needs, adhering to market trends, and leveraging the right technology, businesses can develop SaaS products that not only meet but exceed expectations.