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

Chances are, you are already using SaaS products even without acknowledging them. For the last couple of years, this relatively new technology became the talk of the town and it is predicted that 86% of companies will run using solely SaaS apps after 2022. 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 are happy to share our extensive experience and knowledge, as well as offer our services in case you need a seasoned pro in building SaaS. If you want to know how to build a SaaS application and dominate the market – keep reading!

SaaS Product Market Overview

The main reason for developing a SaaS product is primarily the promising market. 

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. According to Gartner, custom software will be the fastest-growing market in 2023, with significant growth of 5.3% in IT spending, and the major driver of this growth is precisely the adoption of SaaS software. 

The shift in 2020 was caused by the pandemic and the transfer of a large number of employees to remote work. But SaaS products will continue to evolve and develop after employees return to the offices. Business executives have sensed the benefits of cloud-based SaaS applications and are not planning on ditching them.

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

A market analysis report from The Business Research Company optimistically proposed that the SaaS market will reach $253.62 billion by the end of 2023 (CAGR 7.7%) and an astonishing $328.03 billion in 2027 (CAGR 6.6%). Which is not unrealistic, judging by the market growth, demonstrated earlier.

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 to try their luck in this industry. Building SaaS products in 2023 is a strategic move that is most definitely going to pay off soon.

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.

The Most Successful Examples of SaaS

There are currently over 30,000 SaaS companies in the world, indicating that competition is fierce. Market dominance, however, is retained by large enterprises: AWS, Microsoft, and 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 $1.4B (Slack), $65.4M (Salesforce), and $122.3M (Shopify). 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 developer. 

Benefits for the end users are very straightforward: SaaS products are very flexible in the sense that it is easy to try new software and then drop it if it doesn’t fit; they improve the speed of IT service delivery; enable business continuity; lower TCO (total cost of ownership) and save capital expenditures; reduce overall resource waste. Furthermore, SaaS apps are very accessible and easy to use: all you need is an Internet and a web browser.

A recent survey conducted by BetterCloud showed that the main reasons IT experts buy SaaS apps are cost-effectiveness, security, and ease of use. Not only do cloud solutions help save valuable time by eliminating the need to install and run an application on-premise, but they are also saving resources and money by offering different pricing plans.

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 instead of regular non-cloud products? 

1. Longer-lasting revenue with minimal effort

Yes, it takes time to build a SaaS app that caters to the needs of the market and has a unique value proposition. But once it’s done, all you have to do is provide top-notch customer support and update the software regularly. Without a question, adding new features or creating add-ons is easier than building software from scratch, making it one of the best business models.  

2. Significant enlargement of the client base

It was already mentioned before that SaaS solutions are highly flexible due to their temporary nature: it’s not a once-in-a-lifetime commitment and companies can give up software within the subscription model if the software doesn’t fit them. A piece of good news for developers is the fact that more companies will try their SaaS products because of the favorable subscription fees and stay for the long run since client exposure is greater by several-fold. 

3. Reliability and accessibility

Those who want to develop software as a service can make the most out of remote access. Starting from the very first step – the SaaS product development – and ending with the deployment process, self-service provisioning, and customer support. Since the product itself is available at all times and its only limitation is an Internet connection, you can assemble an international A-Team to build a SaaS platform and work on it.

Why Should You Develop a SaaS Product?

SaaS isn’t just a buzzword, it’s a new reality. Digital transformation already took by storm all industries and areas of business, but it seems like the pandemic only sped up 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, 80% of businesses will be cloud-centric in less than two years. Now it’s a great opportunity to go for SaaS development and establish yourself before it will get 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. For that, however, you need an expert development team to deliver results and that is something we can help you with.

How Does SaaS Project Make Money?

The most pressing matter bothering those who want to create a SaaS product is financial. How exactly do SaaS products make money? Traditional on premises software is frequently sold upfront, in contrast with 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

Probably the most popular SaaS model today is a recurring monthly or yearly fee to access the product, for example, Adobe (monthly subscription) or Microsoft (yearly). This method is also called “flat pricing” since there are no defined limits to the usage. It is easy to track and sell, easy to 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

To put it simply, you get a limited number of free functions and must pay for the rest. “Over”, a popular image editing app, successfully employs this model. They combine free features with “pro” elements so that their clients can choose whether to pay for the subscription or stick with the limited version. Freemium is excellent for viral distribution and provides an easy entry into the market.

So, if you want to create a SaaS product, you have many options for addressing the revenue issue. Always be cautious and strive for a golden medium between giving too much and giving too little for your price. After all, cloud computing requires a significant amount of maintenance power, so your revenue should always cover the costs of providing your service to the customer. A good tip is to give your customers several pricing plans to satisfy their business needs: that way you can cater to both small and big companies. 

When you create software as a service you must choose the best strategy because it will affect the scale of your business.

Possible Challenges of SaaS Product Development

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

Establishing zero-downtime deployment strategy

Making your app available when updating it to a new version isn’t as easy as it may seem, meanwhile availability – is of the highest priority in SaaS application development. Zero-downtime is a strategy when your SaaS website is never down. There are two ways to do this: after-hours deployment (updating after hours to minimize the impact on users) or green-blue deployment (switching between two different production environments). If you are unfamiliar with these methods you might want to consider hiring a software development company to help you out.

Ensuring security

Main security issues include data leakage, data privacy, accidental exposure, and data sovereignty. And this is the main concern that stops businesses from going 100% SaaS. According to the Security Awareness report, 85% of survey respondents believed that their cybersecurity awareness training work had a positive impact on the organization.

A global average total cost of a data breach is $4.35 million, according to the study by IBM. And although it’s not specific to cloud-based saas applications, SaaS workplaces are 2.9x more likely to experience external access as a challenge. That’s why when you are developing a SaaS product you need to pay extra attention to ensuring security.

Building a Reliable Team for SaaS Web and App Development

Every SaaS business model relies on a strong management team. Your development team must devote their entire time and effort to the project. It’s fantastic if your team is knowledgeable and dedicated. After all, it is the responsibility of a good management team to hire good employees for the company.

That’s why if you want to create SaaS software and lack experienced employees you can hire remote specialists, that will be a great asset to your already existing team. 

At ProCoders we specialize in staff augmentation, which means that we help you select a perfect developer for your project. We have dozens of the best Eastern European programmers at our disposal and are ready to help you build the superior SaaS product out there.

Tech Stack to Make SaaS Software

One of the vital parts in SaaS web development is a technology stack. In truth nearly any language for custom software development is appropriate for software as a service.

When choosing a programming language to build your SaaS product on, consider your existing experience and language availability (a large number of quality libraries, frameworks, and supporting community). 

The most generic answer would be Java both on the client side (Angular, React, Vue.js), server side (Node.js), as well as mobile (React Native). 

Some say that Ruby on Rails is the perfect framework for the back-end development when you are developing a SaaS product since it allows for quick coding, it’s rather flexible and highly scalable. 

To create SaaS software you would also need a reliable cloud database to act as a data center. There are two primary relational databases: MySQL and PostgreSQL, so make sure your developer knows either one of them.

A good team includes a UI/UX designer who is responsible for improving user experience, since SaaS products should cater to a wide range of clients.

However, depending on your business application and the features you want it to have, some programming languages and technical stacks may be better suited to your needs. In our experience, we’ve seen SaaS apps built on almost every single programming language. 

Developers at ProCoders already have a proven track record with developing websites and apps in multiple industries (IoT, SaaS, Marketing, etc.), and with the help of 50+ programming languages, frameworks, and other tools. You can check out our expertise and read clients’ reviews in our case study. 

To help Frontegg develop their SaaS solution, for example, we used React.js, Node.js, AWS, and MySQL. This combination worked wonders and with our help, their platform was able to develop in a more efficient way. To learn more about Frontegg and our experience with them, keep reading!

Steps How To Build a SaaS Product from Scratch

Step 1. Do Your Homework

The first steps to building a SaaS product are usually the most crucial and directly related to market research. The well-conducted market research gives an insight into what your target audience will be, who are your competitors, what pricing strategy will be beneficial, and define your niche. While conducting your research try to pinpoint even minute details and see how your business idea can work with your potential customers. 

When it’s time to build software as a service, this data would determine the business model, design, and, most importantly, the functionality of your product.

Step 2. Decide On SaaS Requirements and Figure Out a Business Plan

After you’ve done an in-depth analysis of the market, it’s time to put the results of this research on paper. When writing a business plan try asking yourself a few questions: 

• What pain points your product is addressing? 
• What is your unique selling point? How do you plan to stand out? (for example, use ChatGPT for customer service)
• What is your target audience? 
• Do you have any budget restrictions? 
• What is your chosen pricing model? What is your profitability ratio?

When you’re building software as a service, three major pillars for your SaaS requirements list must be considered: integration options, customization, and security. Make a list of features you’d like to have (and compare them to those of your direct competitors) and those that would be a nice addition. For example, features like multi factor authentication, user activity monitoring and identity management will minimize the risks of security breach, so you might consider including them in your product development plan.

Now, at this stage, you don’t have to be an experienced developer and know all the technical details to the tips of your fingers. Those whom you choose as contractors will subsequently tell you how it would be better to integrate this or that function during  product development. At ProCoders, for example, we offer extensive technical counseling to make sure our clients will get the best result according to their wishes.

Step 3. Build Your MVP

MVP stands for “Minimum Viable Product”. MVP is not a fully functioning product, but rather a mockup with basic features to assess whether clients are going to use your software.

Building an MVP  is a great way to collect vital information about your potential customers and analyze the core features of your SaaS product. In the end, you are left with the data that is going to be used to streamline your SaaS application development, so don’t underestimate it. 

• What features were the most popular? What needs to be modified or even removed?
• Have your assumptions about the target audience been confirmed?
• Will there be a demand for your product? 
• Clarify your forecasts for the business plan: do you need to change the price tier? How long will it take for your project to pay off with this rate of return? 

Now that you have tangible, albeit crude, data, you can be more specific with your developers in what you want your app to look like instead of going in blindfolded.

Step 4. Choose the Right Team

Now that you have a clear vision of what your SaaS product will look like and what you want it to do, it’s time to build your A-Team. You can stick to your in-house team, hire a dedicated developer to strengthen your team or outsource the project entirely. 

Your choice depends largely on the technical capabilities of your team and your budget, but as a whole, if your in-house team lacks the expertise, or you want to save some time while concentrating on your core functions, resorting to a third party’s help may be the best option. If you want to learn more about staff augmentation you can check out this article on our blog.

Step 5. Signed, sealed, delivered!

Finish line! Well, almost. Now that you’ve analyzed the market, gathered feedback, and assembled a great team of dedicated developers, it’s time to make a move and start building software as a service. We recommend creating a roadmap and trying to follow the deadlines indicated in it, so as not to stretch the project for a long time.

What do you need to pay attention to after building SaaS applications? There are a few quantitative characteristics that can tell if your SaaS product is successful. 

• Revenue (monthly or annual, depending on your pricing model and hardware maintenance costs)
• Customer churn (the proportion of customers who stopped using your company’s product or service during a specific time period)
• Customer acquisition cost (the cost of attracting a customer to purchase a product/service)
• Customer lifetime value (the total value of a customer to a business over the course of their relationship)
• Marketing strategy.

And remember, that you need to think about the updates! For your project to develop smoothly in the long term perspective and manage regular updates, you need a team of quality developers with new and fresh ideas. And we can make it happen.

A Way to Build Successful SaaS Product from Efficient Software Solution

Now, if you have outstanding standalone custom software, you might consider converting it to SaaS. The main objective here is to validate that your software is accessible to a wide variety of customers, so if yours is too specific it might not be a good idea. 

If you want to go through with this idea, here are the key steps: 

• Choose the migration approach. 
• Choose a cloud provider that will support your product. 
• It may be necessary to modify the system of protection and access control. After all, migrating to the cloud requires more protection.
• Don’t forget to backup all data in case things go south. It’s better to test everything before migration and make sure data storage is secure.
• Migrate to cloud.

That way you can share your custom software with the world and move to a cloud-based realm. Again, not every app and software can be transformed into SaaS, so if you want to develop and clarify this business idea, you can talk to our experts.

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	852 hours
Android	852 hours
Back end	768 hours
UI/UX Design (for one platform)	80 hours
Total hours	2632 hours

In today’s world, time is money, and the one who manages to quickly and efficiently offer their service to the market wins. That is why outstaffing is an excellent option to reduce the time to market, as it allows you to distribute parts of the development process to one or several additionally hired specialists at once. So if the estimated development time in the table above seems intimidating – outstaffing is for you.

How Much Does It Cost to Develop Software as a Service?

As in the case of time estimation, it is difficult to predict the development cost without having a clear plan in hand. Assume you decide to hire a third-party developer to build a SaaS product. The total cost is primarily determined by the number of times you must return to reconsider or redesign your functionality.

The location of your team can also have a significant impact on the final cost. Programmers in South Asia or South America, for example, may charge ten times what those in the United States or Canada do per hour.

So if we take only one type of development from the previous paragraph – 852 hours – and multiply by the cost of the cheapest American developer, we get as a result $34,080. Meanwhile, you’ll be able to hire a higher-level programmer in Eastern Europe and pay him the same amount of money, but get a better result. 

Speaking of location, developers from Eastern Europe – especially from Ukraine – are the best value for money that can be. Due to the high quality of IT education and high density of IT developers in the market, it is extremely easy to find a high-level developer in Ukraine.

How Much Does It Cost to Create an MVP?

In general, the development of MVP is cheaper, since it includes the integration of only the basic functions. According to our approximate calculations, the development of an MVP for a SaaS project can cost anywhere between $15,000 to $50,000, depending on the complexity of the work and on the origin country of the developer.

Our Experience in Building a SaaS Software

At ProCoders we pride ourselves on our SaaS projects. In the course of the last 10 years, we helped more than 20 companies to establish their own SaaS product and were able to accumulate 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. 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.

Are you looking for a skilled development team to create a high-quality SaaS app? Do you aspire to be the best in your industry? Give us a call!

Conclusion

Without a doubt, the SaaS model has created a wide range of business opportunities. SaaS products are a good choice for multiple users because they do not require installation, configuration, updates, and have no compatibility issues. It is also predicted that the market for software as a service would be the fastest growing software market in the next five years. 

These facts pique the interest of entrepreneurs who want to create SaaS software and provide value to a larger audience.

Hopefully, our guide helped establish the relevance of building SaaS products and you have a clear picture of what you need to do to succeed in developing one. And we can help you with that – contact us and extend your team with ProCoders’ excellent developers. Maybe your product will be the next breakthrough in the SaaS industry!