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What is the Cost of Building a SaaS App?

  • By Gaurav G.
  • November 30, 2022
  • 250 Views

The arrival of SaaS applications in the tech business has revolutionised the software market over the past decade. Creating software as a service products is the best way to start a business right now, essentially because there is no initial cost associated with these products and they are easily scalable.

SaaS, or “software as a service,” is a model of cloud computing in which pre-packaged applications are provided to users via a mobile app or web browser, thereby leading to an increased demand for professional SaaS development services.

With the advent of the internet, there has been a rise in the need for software-as-a service options because such programmes can multiply a company’s productivity and increase the value of its software investment. Users of SaaS applications don’t have to worry about setting up the necessary software because the programme is readily accessible to them.

Cloud computing is a rapidly growing industry in today’s high-tech climate, accounting for a predicted $495 billion by the end of 2022. The use of cloud-based applications is now commonplace, be it for multinational conglomerates or emerging businesses.

So, why are businesses around the world interested in creating a SaaS MVP, and how much does it cost to create one?

The answer to this question is that there is no definite answer. The cost might be anything from $1,000 to $10,000,000 or even more. The answer is conditional on the scope of your SaaS project and the features you plan to implement. You will need to consider the features you would like to implement and the size of your target audience when making this decision.

If you are someone who is interested in getting in on the action of creating SaaS products but isn’t sure how to go about it, you ought to learn whether or not your SaaS spending plan is adequate. Here are the three things to consider: pricing a Software as a Service offering, how much a SaaS service typically costs, and some real-world instances of SaaS pricing.

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Trends and Developments in the SaaS Industry

There are many advantages to the software as a service model over the more traditional delivery method, but that does not mean it is any easier to implement. Here is why companies all over the world are turning to SaaS for a competitive advantage despite the difficulty of implementation:

  • An average of 110 SaaS applications are used by businesses around the world, according to Statista.
  • According to Statista, the global cloud application market will be worth $133.6 billion in 2021 and an astounding $168.6 billion by 2025.
  • Report Linker predicts a 16.3% CAGR (compound annual growth rate) for the global cloud computing market from 2021–2026.
  • According to the Deloitte study, 70 percent of CIOs are interested in cloud-based SaaS because of its scalability and agility. More than a third (38%) of companies are moving their disaster recovery operations to the cloud. Three-sevenths of businesses are making the switch to the cloud because of the flexibility it offers.
  • From the SaaS cost structure, the SWZD report finds that operating systems account for 12%, security software for 10%, and productivity software for 10% of a company’s total SaaS expenditures.

The True Expense of Developing a Software as a Service Product

The budget for creating the minimum viable SaaS product can range from some fixed amount to some other fixed amount. Yet, the ultimate cost of creating a SaaS product depends on a wide range of factors, including the complicated nature of an app, types of programmers, stages of development, location on a map, and form of recommendation.

How Complicated Is an App

A number of factors, including the number and variety of features, the nature of the user’s role and relationships, the inclusion of certain features, and the difficulties encountered by developers, can all contribute to the complexity of an app.Features like access control, multiple payment integration models, customization, data security, and the like should be taken into account when developing SaaS applications. The SaaS application development process and timeline may be affected.

These SaaS offerings feature a plethora of complex integrations and functionalities, with the primary application being similar only in that it has the most fundamental features and integrations. It is possible, though uncommon, for single-use SaaS products to have a plethora of sophisticated features.

Spell check and editing are two areas where Grammarly has been particularly helpful, thanks to the application’s use of artificial intelligence (AI) and big data analytics. But it must be remembered that the longer it takes to complete the development process and the more complex the process is, the more it will cost. While small and medium application development costs $100 and $500 per month, respectively, the cost of developing a complex application ranges from $10 to $1000 per month.

Stages of Development

Development is one of the few essential phases that calls for sustained effort and financial commitment. The costs associated with creating a SaaS product can be roughly estimated by looking at the various stages. Planning, development of the front end, development of the most valuable player, system administration and development, created user interfaces and experiences, and finally publication and upkeep comprise the process of creating a software as a service product.

Planning

Streamlining the product’s vision and validating the concept are necessary first steps before diving into the development processes or even assembling a team. The exact requirements of your product must be effectively communicated. The amount of investigation performed by you at this stage is directly proportional to the guidance you will receive in applying the right strategy. Planning is a more pragmatic form of validation, wherein you determine the extent of your project, potential security protocols, and a pricing model. There are a few ways to make money off a software as a service (SaaS) product: a monthly or annual subscription, pricing based on the number of users, or even a freemium model. The planning and validation step may span from a day to eight weeks, costing somewhere around $100 to $1000.

Thus, when working with a BA analyst to carry out planning and validation, you will obtain the following outcomes:

  • Detailed Instructions for a Specific Process
  • A Complete Strategy for Future Growth
  • Methodology for Creating a Minimum Viable Product
  • Wireframes 

Development of the Most Valuable Player

It may be challenging and expensive to create a fully functional SaaS product, but it is possible to create a fully functional minimum viable product. The minimum viable product will allow you to gauge the interest and enthusiasm of potential buyers. Although a minimum viable product (MVP) is not the final product, it plays a crucial role in interacting with and analysing your target audience, so having experts on your side is essential for developing a successful MVP product.

The most important aspect of a minimum viable product is its ability to meet the needs of thousands of people simultaneously and to be tailored to each individual’s specific preferences. At this point in the process, most teams have a UI/UX designer, front-end and back-end developers, and a QA engineer. In addition, the project manager, who has prior experience working with similar talent and managing similar projects, should be involved. The duration of MVP development ranges from a week to four months and can cost anything from $500 to $100,000.

Designers Specialising in User Interface and Experience

The user interface and user experience of your app are the first points of contact between your project and its end users. It’s a crucial part of making a successful SaaS product. UX (User Experience) is a crucial part of software development because its goal is to provide users with a perfect experience. In other words, your SaaS solution’s user interface and experience simple to use and tailored to the specifics of your intended market. The more streamlined the interface is, the more pleasant the experience will be for the user. UI/UX development can be completed in a week, or it may take two months, with a cost ranging between $100 and $100,000.

Front-End Web Design and Development

Once the mapping of all the features and capabilities is complete, choosing the right technology stack that will make development easier becomes simpler. The costs associated with building a SaaS’s front end can be hard to estimate due to the wide variety of factors that can affect them. When making the right choices, keep in mind all of the factors that contribute to the success of your SaaS applications.

When on a tight budget, hiring a full-time in-house developer may seem like a far-fetched option. However, an offshore development centre may turn out to be a more economical choice than bringing in freelancers from abroad. But do bear in mind that there should not be a compromise with quality.

Back-End Programming

SaaS applications with complex back ends tend to have higher costs because they require more features. This choice should only be made in very unusual circumstances. Another option is to make it accessible through an application programming interface. It would be helpful to keep in mind that you must finish the backend development in any case. Data structure and security need to be developed. Push notifications, file management, and other such tasks are typical of the back end of a website’s development.

Features ImplementedEstimated TimeAverage Hourly RateAverage Cost
File management1 Week – 10 Weeks$20-$200$100-$10000
Database Integration1 Week$20-$200$100-$5000
Push Notification2 Days$20-$200$50-$500
API Integration1 Week – 5 Months$20-$200$100-$50000

Testing

The time and energy expended by the Test Manager and/or Test Engineers in order to guarantee that your product has been thoroughly tested is factored into the test estimation. Work breakdown is used to estimate the cost of product testing by identifying the various stages, activities, and tasks involved in the process. These are the steps that need to be taken:

  • Coordinating and managing test runs
  • Planning and Analysis of a Number of Potential Outcomes
  • Setting up and running a battery of tests
  • Analyzing criteria 
  • Validate the closing and final signature.

Maintenance and Implementation

The nature of SaaS is such that it will be operational for an extended period of time and will inevitably handle private information. This means that you are not yet done with your task. Constant updates, bug fixes, and functionality upgrades to your application are necessary to make your SaaS product secure and meet the specific needs of your customers.

Breaking into the market without a capable quality assurance team, a capable project manager, and a capable development team seems impossible to achieve. You could also benefit from investing in professional marketing campaigns and strategies. In addition, it is important to manage subscriptions, licenses, and other legal details as needed for each individual product. The process can take anywhere from a day to a week, with the average cost being somewhere between $100 and $1000.

Form of Recommendation

Identifying the appropriate classification for your application is essential. The price of the program’s various options will vary according to the features you require. Some SaaS products require extensive development, while others have basic features that can be added quickly by developers. Accordingly, the following is a breakdown of the costs associated with various SaaS solutions:

Types of SaaS SolutionsApprox. MVP PriceExample
Accounting$1000 – $20000QuickBooks
Email Marketing$100-$1000MailChimp
ERP$5000 $50000NetSuite
Project Management$1000-$10000Confluence
CMS & E-Commerce$1000-$50000HubSpot
HRM Solutions$10000-$100000Oracle Fusion Cloud HCM 
Communication Platform$100-$10000Microsoft Teams
Payment Gateways$1000-$100000
Braintree

Forms of Programmers

The cost incurred by you during the creation of a software-as-a service (SaaS) platform is heavily influenced by the developers you hire. For SaaS startups, hiring locally in the United Kingdom can be costly owing to its large and established tech industry. However, in South Asian countries like India, you can find affordable prices without sacrificing quality. Furthermore, SaaS companies typically do not have the financial resources to hire employees from within the company. Freelancers with expertise in design, development, operations, etc. can be a cost-effective substitute for full-time employees. The cost of developing a software as a service application can vary according to the following factors:

Location on the Map

The SaaS operating costs as a whole are in large part determined by the location of the project’s development. However, there are substantial differences in the procedure between different regions and continents. The price in one country may differ from the price in another; in this case, the US differs from the UK and Canada.Here is an insight into the costs incurred across different regions:

Geographical LocationAverage Costs
USA$80
UK$90
Europe$60
India$40
Vietnam$40
Australia$70

Publication and Upkeep 

Software as a service (SaaS) systems are cloud-based and therefore necessitate regular upkeep and updates, which is the main difference between them and a traditional product. This also implies that there can be no bugs or other malfunctions in the software.

Each new version of the code undergoes extensive scrutiny from programmers who look for issues with performance, scalability, integration, security, etc. Since all SaaS products need to undergo split-run testing, a lot of preparation work needs to be done before they can be released to the public.

After your application is live, you’ll need to factor in the cost of routine maintenance, bug fixes, and anything else that may come up. When estimating the overall price of developing your project, be sure to factor in any fees associated with its release and ongoing upkeep. This involves constant effort and can cost you about $20 to $200 per hour.

Developmental Factors Influencing Software as a Service

You will undoubtedly face a number of difficulties while developing a software-as-a-service application.It is important to consider the benefits and drawbacks of software as a service when developing an application for this model.

Some of the variables that go into the price tag for creating software as a service include:

  • Strategic Thinking 
  • Infrastructure for Applications
  • Functionality of the Application
  • Programming Interface (API) Integration
  • Selecting a Format
  • Unexpected Costs 
  • Coverage of the App

Regulatory Scope

This is the first thing to nail down if you have no idea how much it costs to create a software-as-a service (SaaS) platform. You need clear objectives before you can begin designing any kind of platform or tool. Beyond the fundamentals, these numerous SaaS models diverge in their functionalities, intended audiences, and other details.

It has an effect on the cost and time required to develop SaaS offerings. To make the most informed decision, it is important to recognise the gap between a tool and its performance. It is important to keep in mind that most SaaS tools aren’t built to be flexible enough to be used for a wide range of purposes. The scope of the SaaS product is narrower because it is intended to handle many critical tasks. Buffer is a popular social media service that was created to handle multiple social media profiles.

However, the SaaS platform employs a higher-quality toolkit and provides access to more functionalities. It also aims to expand its reach and accomplish new goals. Therefore, having a clearly defined scope for SaaS applications is essential.

Functionality of the Application

What determines the necessity of certain features in your SaaS app are your goals. If the application is simple and focused, then getting started with just the essentials should be sufficient, but more complex platforms may necessitate the addition of new functionality. When starting a project, it’s best to concentrate on the most important features and build an MVP. After receiving feedback from customers, you can move on to developing the final, polished version of your product; however, the cost of doing so will vary across the two phases, depending on the number and complexity of their individual characteristics. A few features that are essential for any SaaS app are:

  • Security that can’t be breached
  • Managing permissions based on user roles
  • Administrative tasks pertaining to billing and accounts
  • Statistical Methods 

Integration of APIs

Application programming interfaces, abbreviated as APIs, facilitate collaboration between software programs. Information is sent to a server on the Internet and then returned when requested. In contrast, the data processing power is available in your backend system.

Therefore, the two choices are to either integrate APIs or develop bespoke backend code. Any SaaS needs a few backend operations to allow users to interact with the data. Most software as a service (SaaS) providers, for instance, prefer to use application programming interfaces (APIs) to link their payment service to widely used options like PayPal and Braintree.

The decision to use an API can lead to cost savings, despite the possibility of ongoing maintenance costs. It also allows for the elimination of a number of app-building processes. Your company’s success can be greatly enhanced by implementing APIs.

Selecting a Distribution Method

For SaaS development, the same platform options exist as with any other kind of web development. While a B2B company’s customers are likely to use desktops or laptops, prompting the company to develop a web application to cater to them, businesses that sell directly to consumers (B2C) are more likely to develop mobile apps because they know their customers will use mobile devices to purchase their goods. The price of a SaaS app may shift if the UI and UX are updated, despite no changes in the product’s core functionality.

Strategic Thinking

The actions that must be taken for the SaaS app to function properly are referred to as “business logic.” Details like the app’s intended use and the outcomes you anticipate will conform to your expectations. At the end of the day, it’s the basis for determining the product’s capabilities and features.

The components of business logic are:

  • Full stack development (both front-end and back-end)
  • Diverse external integrations
  • Capacity of use
  • Issues inherent to SaaS solutions
  • Total Team Members

Infrastructure for Applications

The architecture of software-as-a service (SaaS) applications refers to the way in which components are laid out and communicate with one another to best meet operational and technical goals. The cost of a building is determined by its key architectural features: scalability, multi-tenancy, and the quantity of API integration.

Unexpected Costs

It is important to be aware of any potential additional fees when estimating Saas costs. This sort of expense is not something you have to deal with right away as a startup owner. However, they are essential to the long-term success of your application and its ability to maintain its place in the market.

  • Conformity with the Law
  • Updates 
  • Providing Assistance to Clients
  • Costs associated with servers
  • Marketing 
  • Maintenance 

Strategies for Making Money with Software as a Service Applications

Businesses should ask themselves some key questions before developing a strategy for monetising SaaS applications to ensure that their approach and tools are fit for purpose now and in the future.In this article, we’ll take a quick look at the various ways that SaaS products make money:

The Price of Freemium Software as a Service

The most common type of subscription service provides a free introductory version of the programme and then charges for additional features and components. Services like Spotify, Trello, WordPress, and MailChimp use this tactic.

Prices for SaaS that are User-Based

This is the enterprise SaaS pricing model that Canva uses. In this setup, your team’s cost will increase proportionally as its size increases.

The Price of a SaaS Plan Based on Its Functionality

This enterprise SaaS pricing model is used when the customer is paying for a predefined feature set. As a function, PandaDoc makes use of it. There could be Standard, Premium, and Enterprise tiers in this structure.

Cloud Services that are User-Based

The success of a SaaS business relies on a pricing model that takes into account both the value that customers derive from the service and their willingness to pay for it. Consider the maximum allowed API requests and the amount of data that can be stored on Amazon Web Services as two examples.

Predetermined Rates

Finally, there’s the flat-rate structure. Here, the customer pays a fixed fee (either monthly or annually) in exchange for unlimited use of the product during that period.

Conducting market research and customer satisfaction surveys will help you select the optimal model. That way, you can get an idea of how the market is doing generally.

How can one Reduce the Cost of Building a SaaS Product?

While it is true that creating a software as a service product can be expensive, there are ways to cut costs without sacrificing quality. Looking at strategies that can help you reduce the cost of developing SaaS products is important, but you shouldn’t do so at the expense of the application’s core features. Here are a few ways to reduce SaaS app development costs:

Optimising Group Performance

Software development can be done in-house or outsourced. It would be ideal to have your entire team working on the project, but only the most prosperous companies can afford to do so. The tight budget or the looming due date may be to blame. Even though it’s great, the in-house team is only to be used in dire emergencies. One solution to this problem is to use an outsourcing service. Hiring engineers from countries with lower hourly wages can save a sizable chunk of money.

Employing a Cost-Per-Use Pricing Structure

One more way to save money is to make use of cloud resources, such as those provided by Google Cloud or Amazon Web Services, based on how much you actually use them. This means that it will be discretionary whether or not to pay for minor server maintenance. Whether you’re working with an internal team or trying to outsource, the key to success and cost savings is a well-thought-out project strategy. You can save both time and money by having a rough design idea and a firm grasp on the project’s parameters, functional requirements, and primary objectives.

The Process of Recruiting a Quality Assurance

As a parting word of advice, be sure to employ skilled QA engineers. Bugs and inconveniences in SaaS applications can add up to unnecessary expenses in terms of design and development time and money if a specialist is not involved from the beginning. It is a known fact that integrating quality assurance specialists early on in the process yields the best results.

Conclusion

What it costs to create a SaaS application may not be an easy question to answer. This is because the cost of a software-as-a service (SaaS) solution can vary widely based on factors such as the number of desired features, the technology stack being used, the platform being used, and others. As an attempt to solve your dilemma to some extent, I hope this blog enables you to arrive at an estimate of the costs of developing a SaaS application comprising all the features you desire.

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Gaurav G.

Gaurav heads global operations at Sterling Technolabs as its CEO and leverages his leadership skills to make Sterling Technolabs the most sought-after Web and App Development Company. His mindset and creative vision have been a reason for building great partnerships in the tech-powered world. Outside of work, Fauxy & Oscar- two amazing pups have his attention.
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