Last updated on August 22nd, 2024
Are you a startup founder, product manager, or serial entrepreneur interested in developing your own SaaS platform? If so, you’re in the right place! In this article, we’ll cover:
- What SaaS development is and how it works
- The major benefits SaaS brings
- Steps for building SaaS software
- The team and technology needed
- Common SaaS challenges
- Estimated development costs
- Finding a reliable development partner
Understanding Software-as-a-Service (SaaS)
The SaaS market is experiencing impressive annual growth of 18%, positioning it as the fastest-growing sector for startups offering cloud-based solutions to both businesses and consumers.
- Azure reported a cloud services revenue growth rate of over 20% in 2023.
- Amazon Web Services has over 1 million users, including both freemium and paid accounts.
- Salesforce enjoyed a year-over-year revenue increase of 23.15% in 2023.
What Does the SaaS Model Mean?
Software-as-a-Service (SaaS) is a model that provides users with access to web applications via the Internet. Essentially, the software is hosted on cloud servers, allowing users to connect and use it directly through their web browser. The hosting provider is responsible for all updates and maintenance, which means that users do not need to install the application on their devices. This eliminates the need for extensive local infrastructure and ensures that users always have access to the latest versions of the software.
Also Read: SaaS Application Development: An Ultimate Guide
What is SaaS Software Development?
SaaS development involves creating applications that are hosted in the cloud, providing users with easy access via the Internet. This process encompasses several stages, including documentation, design, development, testing, and deployment on cloud servers. To grasp the financial aspects of this undertaking, it’s important to understand the fundamental structure of costs associated with developing a SaaS platform. These costs typically include expenses related to infrastructure, development tools, and ongoing maintenance, as well as considerations for scaling and customer support.
How SaaS Differs from Web Application Development
While all SaaS products are indeed classified as web applications, the reverse is not necessarily true. Not every web application operates under the Software-as-a-Service (SaaS) model. SaaS applications are specifically designed to provide users with subscription-based access to software over the internet, complete with cloud hosting and management.
| Feature | SaaS Products | Traditional Web Applications |
| Hosting | Cloud-based | May be self-hosted or cloud-based |
| Access Model | Subscription-based | One-time purchase or free |
| Maintenance | Provider-managed | User or developer-managed |
| Updates | Automatic | Manual |
| Scalability | High scalability via the cloud | Limited by local infrastructure |
| Cost Structure | Ongoing subscription fees | One-time fee or installation costs |
Benefits of SaaS Application Development
The SaaS model provides numerous advantages for both startups and users alike. A key factor in the benefits experienced by end-users is the developmental approach employed during the creation of the product. Without an effective product development workflow, these benefits may remain merely potential. Below are some of the advantages associated with SaaS product development.
1. Easy Deployment
The main advantage of SaaS compared to traditional software is the significant reduction in both costs and time needed to deliver a solution to the target market. This model benefits not only SaaS subscribers but also providers, as the latter can fix, update, and deploy offerings centrally in the cloud.
This central management lowers software maintenance costs and facilitates the provision of additional services, such as cloud analytics. On the client side, users benefit from the convenience of not needing to install new software versions. For instance, a SaaS provider can effortlessly leverage services through platforms like Google Cloud Platform (GCP), ensuring that their SaaS products maintain the same level of security as Google services. This capability allows founders to build and scale their websites without worrying about data breaches.
2. Scalability
An ideal SaaS solution is hosted in scalable cloud environments, facilitating easy integration with third-party services. By utilizing APIs, features enabled by third parties can be seamlessly incorporated into the SaaS application, enhancing the platform’s capabilities.
From the user perspective, scaling is hassle-free, as there’s no need for additional software purchases or server investments. Businesses can subscribe only to the services they require, and if their needs evolve, they can effortlessly upgrade to a more appropriate subscription with just a few clicks.
3. No Special Hardware Needed
While SaaS providers must invest in advanced software or a robust third-party hosting service, users enjoy the flexibility of accessing these platforms from virtually any internet-enabled device. Take Microsoft Word, for instance; it requires a Windows 10 system with a minimum 1 GHz processor to function.
In contrast, a SaaS platform such as Google Docs allows users to create and edit long-form texts without imposing specific hardware requirements, making it accessible on a wide range of devices and enhancing user convenience.
4. Secure Database Design
Standard security protocols implemented by SaaS database providers, such as SSL and TLS encryption, safeguard user communications and protect sensitive data, allowing providers to allocate fewer resources towards data security. However, certain industries, like healthcare, demand heightened security measures.
For instance, US-based startups focusing on medical website or healthcare app development must ensure compliance with HIPAA regulations. Similarly, European startups need to adhere to GDPR requirements. The SaaS model facilitates the straightforward and rapid integration of additional security protocols, particularly through third-party integrations, ensuring that businesses can meet specific regulatory demands efficiently.
5 Steps of SaaS Development
Let’s take a look at the checklist of the 7 stages of the software-as-a-service application development life cycle:
Idea Generation and Validation
UX/UI Design
Coding and Testing
Launch and Maintenance
Product Scaling
1. Idea Generation and Validation
At the heart of your creation process lie product ideation and validation. Ideation encompasses the creative journey of generating and articulating ideas to the development team. Conversely, validation involves assessing the feasibility of these concepts prior to commencing core development. While the startup initially conducts a preliminary round of idea validation, it is the development partner who undertakes the more technical evaluations to ensure the ideas can be effectively realised.
Idea generation and validation for SaaS follow this checklist:
- Create a SaaS Idea
- Conduct an Extensive Market Survey
- Define Requisite Technical Parameters
- Create a Prototype for Your Application
- Revise the Prototype’s Compliance with Regulatory Laws
2. UX/UI Design
The UX/UI design of a SaaS product encompasses two key stages: user experience design and user interface design. User experience design focuses on optimizing the overall feel of the application, ensuring that the user journey is intuitive and seamless. This involves understanding user needs, creating user personas, and mapping out user flows. On the other hand, user interface design is concerned with the visual aspects of the application, including layout, colour schemes, typography, and interactive elements. Together, these stages aim to create a cohesive product that not only meets functional requirements but also enhances user satisfaction and engagement.
- UX (User Experience): Focuses on creating a blueprint for the platform, ensuring that the overall user journey is logical and user-friendly.
- UI (User Interface): Involves the look and feel of the future platform, encompassing visual elements such as layout, colour schemes, and typography to create an appealing user interface.
It’s crucial to understand that every icon, button, or form included in the design represents an additional feature of the platform. For instance, creating a visual representation of a button is significantly quicker and more cost-effective than actually developing its functionality. Each button may conceal complex logical connections to various entities, calculations, and integrations. Therefore, caution should be exercised during the design phase for the Minimum Viable Product (MVP) to adhere to budget constraints. Furthermore, the design serves as a valuable tool for estimating development costs with a degree of accuracy, while also helping to break down the development process into manageable milestones.
3. Coding and Testing
The core of building SaaS applications lies in transforming a design concept into a functional platform. This involves translating visual designs and user interactions into actual code, ensuring that the application not only looks great but also operates seamlessly. The process includes writing the necessary programming code, integrating various technologies, and establishing backend support to create an environment where users can engage with the platform effectively. Ultimately, it is about breathing life into the design, making user experiences tangible and interactive.
- The designer provides the UX/UI design files.
- The backend engineer writes the code necessary for the features to function.
- The frontend developer deploys the design to the server and connects the frontend to the backend.
- The QA tester develops and runs tests to identify and report bugs, managing the fixes.
- The project manager oversees the entire process from start to finish, coordinating all aspects of the project.
- It’s impossible to fully describe the development process because different companies have varying standards and approaches.
- Some companies utilise a fixed-price approach, which includes a defined scope of work and a specific team structure.
4. Launch and Maintenance
In this phase, the SaaS platform is deployed using platforms such as GitHub, AWS CodeCommit, or similar tools. The pivotal role in this process is undertaken by the DevOps engineer, a specialist responsible for overseeing the launch of the software. Following the deployment, attention shifts to maintenance, which is often overlooked by tech entrepreneurs. A common misstep is failing to allocate a budget for ongoing maintenance, which should be determined during the initial planning phases. A well-structured maintenance budget is typically around 25% of the total development budget. For instance, if developing your Software-as-a-Service solution requires $100,000, your annual maintenance budget should be no less than $25,000. Properly planning for maintenance ensures the longevity and reliability of your SaaS product, safeguarding its functionality and user satisfaction post-launch.
5. Product Scaling
It’s crucial to highlight that many founders often overlook the importance of attracting potential users during the idea validation phase. However, we believe you are one of those founders who understands this necessity. With this in mind, let’s assume that by the time your platform launches, you will have already secured your initial customers. At this stage, your focus should be on consistently gathering customer feedback. There are numerous methods to achieve this, including conducting interviews, distributing surveys, and soliciting feedback via email. Collecting this feedback is essential to ensure that you continuously improve your product and meet your users’ needs effectively.
Read More: Top 25 Software As A Service (SaaS) Examples You Need To Know
Building a SaaS Team and Technology Stack
There are various strategies for sourcing and hiring dedicated software developers needed for building a custom SaaS solution. However, we recommend adopting the most well-rounded approach, which combines both in-house talent and outsourced expertise. This hybrid model allows you to maintain control over key components while leveraging external skills for specialized tasks, ensuring a more efficient and effective development process.
To successfully execute your SaaS project, consider including the following key roles within your team:
- Project Manager
- Business Analyst
- UX/UI Designer
- Backend Developer
- Frontend or Mobile Developer
- QA Tester
The same applies to your technology stack; backend and frontend technologies can differ based on your specific business needs or technical requirements, as well as the preferences of your development team. Choosing the right technologies is critical, as it influences not only the development process but also the scalability and performance of your SaaS application.
Backend and Frontend Technologies
Here’s a comparison of common backend and frontend technologies that can be used in a SaaS application:
| Backend Technologies | Frontend Technologies |
| Node.js | React |
| Python (Django/Flask) | Angular |
| Ruby on Rails | Vue.js |
| Java (Spring) | Svelte |
| .NET | Ember.js |
| PHP (Laravel) | Bootstrap |
| Go | jQuery |
| Elixir (Phoenix) | Tailwind CSS |
Common SaaS Development Challenges
Let’s take a closer look at some of the most common pitfalls that your development team may face during the SaaS development process:
1. Integrating Third-Party Services
A typical SaaS application incorporates various features, some of which are developed in-house while others are sourced from third-party providers and integrated via APIs. Among the most critical third-party features in many SaaS platforms is the payment system, which enables users to handle subscription payments and manage monetization activities. However, integration can pose significant challenges due to the complex technical requirements involved.
Common payment solutions used in SaaS platforms include Stripe, PayPal, QuickPay, Braintree, and Skrill. Each of these options comes with detailed API documentation to facilitate the implementation process. To effectively navigate these challenges, it is essential to engage an experienced development team, particularly one with knowledgeable QA specialists capable of conducting both manual and automated testing to ensure the seamless operation of third-party integrations. It is important to note that the type of third-party integration required will be influenced by the core functionality of your Software-as-a-Service platform.
2. Building a Secure Database
SaaS applications handle vast amounts of sensitive information accessible from nearly any device with a web browser, which increases their vulnerability to hacking. To mitigate these risks, many SaaS database service providers standardize the use of SSL and TLS protocols to encrypt communications between users and servers, as well as between users themselves. However, this level of security alone is often insufficient to protect the sensitive data managed by SaaS solutions.
In response to these concerns, various countries are implementing laws that govern development processes and platform management, such as HIPAA compliance for healthcare software in the United States. Consequently, startups must partner with SaaS development companies that are well-versed in the details of HIPAA and GDPR regulations. It is imperative that the development team adheres to these protocols from the outset to ensure robust security measures are in place throughout the software lifecycle.
3. Ensuring No-Downtime Deployment
Regular updates to the platform are of utmost importance; however, a common challenge arises during maintenance periods when the platform may become temporarily inaccessible. Unlike traditional systems that typically inform users of scheduled downtimes, Software-as-a-Service platforms must remain continuously available. To address this, maintenance teams often employ a no-downtime deployment strategy.
One effective method is the blue-green deployment approach, where users are gradually transitioned in phases from the older version of the platform—referred to as the blue environment—to an identical new release known as the green environment. This method ensures that both environments remain operational, allowing the blue environment to serve as a reliable fallback should any issues occur during the transition or as a template for future updates.
4. Managing User Subscriptions
Software-as-a-Service (SaaS) platforms come equipped with numerous features, and managing subscriptions is one of the more intricate aspects:
- Subscribing
- Trailing
- Upgrading
- Canceling
- Unsubscribing
These checkpoints revolve around the management of subscriber lists. There are two primary methods for establishing these lists: the first involves developing your own subscription system from the ground up, while the second option utilizes external APIs.
5. Comparison of Subscription Management Approaches
| Feature/Aspect | External API | Develop from Scratch |
| Development Time | Typically quicker due to pre-built solutions | Longer, as it requires a tailored solution |
| Cost | Can involve subscription fees or usage costs | Initial costs may be higher for development, but ongoing costs can be lower |
| Maintenance | Reliant on the API provider for updates and uptime | Full control over maintenance and updates |
| Flexibility | Limited flexibility depending on the API | High flexibility to customize features |
| Complexity | Lower complexity; easier for quick integration | Higher complexity as it requires a deep understanding of infrastructure |
| Scalability | Often highly scalable, depending on the provider | Scalability must be built into the solution |
| User Data Security | Security measures depend on the API provider | Complete control over security protocols |
| Support | Support typically provided by the API vendor | Support must be self-managed or outsourced |
How Much Does It Cost to Develop a SaaS Application?
The development costs for a Minimum Viable Product (MVP) of a SaaS application typically range from $60,000 to $200,000. In this article, we will briefly address this topic, but you can follow the link for a deeper dive into SaaS development costs. The final price can vary significantly based on several factors, primarily influenced by the developers’ location, the application’s complexity, and the team’s composition involved in the development process. Here, we’ve highlighted only the key pricing elements. If you’re keen to learn more, check out our comprehensive guide on the costs associated with developing SaaS applications.
Costs By Team Structure
An important factor that can significantly influence the development cost of SaaS software is the type of team you choose to work with. As a startup, you have several team structures to consider, and navigating these options can be quite overwhelming, especially after conducting market research. To assist you, we will first provide an estimated cost implication for each type of team and then briefly explore the nuances of each approach. Understanding how different team structures align with your project goals can help you make a more informed decision.
| Team Structure | Estimated Cost Range | Description |
| In-House Team | $100,000 – $300,000 | Hiring a dedicated team allows for better control and communication, but comes with higher overhead costs. |
| Outsourced Team | $60,000 – $200,000 | Engaging an offshore team can be cost-effective; however, it may present challenges in time zone differences and oversight. |
| Freelance Developers | $40,000 – $150,000 | Utilising freelancers can lower costs and provide flexibility, but may lead to inconsistencies in quality and project continuity. |
| Hybrid Approach | $80,000 – $250,000 | A combination of in-house and outsourced resources, balancing cost and control over the development process. |
Type 1. In-house development team
This approach is quite simple: you post a job offering to attract potential developers, evaluate their skills through a rigorous testing process, and ultimately make your selection. This option provides complete control over your workflow, allowing for regular communication through daily briefings. With your in-house team readily available, you can quickly address any issues or implement immediate fixes as they arise.
In-House Development Team: Pros and Cons
| Pros | Cons |
| Complete control over the development process | Higher overhead costs due to salaries and benefits |
| Enhanced communication and collaboration | Longer hiring process to find the right talent |
| Immediate availability for addressing issues | Requires ongoing training and skill development |
| Stronger alignment with company culture | Potential for limited perspective or expertise compared to external teams |
Type 2. Local development agency
By a local development agency, we refer to a Software as a Service (SaaS) development team situated in the UK, US, and other high-income nations. These agencies often bring a wealth of experience and knowledge, as they are familiar with the local market trends and regulations. Partnering with a local agency can provide more seamless communication and project management due to shared time zones and cultural understandings. However, this option may come with higher costs compared to offshore alternatives, reflecting the quality and expertise typically associated with teams in these regions.
Local Development Agency: Pros and Cons
| Pros | Cons |
| Expertise in local market trends and regulations | Higher costs compared to offshore teams |
| Improved communication due to shared language and culture | Potentially longer project timelines due to agency processes |
| Faster response times thanks to proximity | Limited flexibility in pricing and packages |
| Stronger project management with dedicated teams | May require greater oversight for alignment with company vision |
| Access to a wider network of local talent | Risk of dependency on the agency for ongoing support |
Type 3. Freelance developers
Freelance developers are independent, full-stack professionals with extensive experience in single-handedly constructing Software-as-a-Service (SaaS) platforms using a variety of tech stacks. They can be easily found on social media and freelance websites such as Upwork and Fiverr, providing flexibility in hiring based on project needs and budgets.
Freelance Developers: Pros and Cons
| Pros | Cons |
| Flexibility in hiring based on project needs | Variability in quality and expertise |
| Cost-effective compared to agencies | Less stability and ongoing support |
| Ability to scale teams as needed | Potential communication challenges |
| Direct communication with developers | Limited access to a diverse skill set |
| Speedier onboarding and project kickoff | Ownership of code and documentation may vary |
| Specialization in niche areas | Risk of project delays due to freelancer availability |
Type 4. Outsource development agency
Outsource development agencies are companies that specialize in providing software development services to clients, often from other countries. These agencies have teams of developers with a wide range of expertise and can offer competitive pricing due to lower labor costs in their respective countries.
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How to Find a Reliable SaaS Development Partner?
Crafting a successful SaaS solution largely hinges on selecting the right development team. Even with the most lucrative concept imaginable in today’s tech landscape, partnering with the wrong team can derail your vision and undermine its potential.
1. Relevant Expertise
It’s essential to evaluate a development team’s previous projects and their grasp of the complexities inherent to Software-as-a-Service before making a selection. Developing an effective SaaS solution requires more than just software engineering skills; the team must also have a deep understanding of the market. Opt for a team that has not only shown proficiency in your business model but also possesses the technical expertise necessary for SaaS.
2. Portfolio of Work
Every proposal you receive will likely come from development teams touting their abilities as the best in the business. However, by thoroughly reviewing their portfolio, you can gain valuable insights into what the team can deliver. For SaaS solutions, it’s crucial to focus on their past cloud computing projects. Look for specific examples that demonstrate their experience with scalable architectures, multi-tenancy features, and security best practices. This examination will help you assess whether the team has the relevant skills and depth of knowledge necessary to successfully bring your SaaS vision to life.
3. Live Successful SaaS
In addition to evaluating the portfolio, it’s important to consider the success rate of the Software-as-a-Service solutions previously built by the development team. A proven track record in launching successful SaaS products indicates their competence in navigating the challenges inherent in this model. If the team lacks direct SaaS experience, take a closer look at other projects they have completed to gauge their overall ability to deliver high-quality solutions. This assessment can provide insights into their problem-solving skills, project management effectiveness, and adaptability, all of which are crucial for transforming your SaaS vision into a reality.
Ready to Build Your SaaS with iTechnolabs?
iTechnolabs a top Saas development company has a dedicated team of experts who specialize in creating high-performing and scalable SaaS solutions. Our portfolio includes successful projects for clients across various industries, showcasing our expertise in designing and implementing cloud-based architectures with multi-tenancy capabilities. We also have a proven track record of delivering successful SaaS products, attesting to our ability to handle the complexities of this business model.
But don’t just take our word for it – let our work speak for itself. Explore our portfolio and see firsthand how we can turn your SaaS vision into a thriving reality. Contact us today to get started on your SaaS journey with iTechnolabs. So, why wait? Partner with us and take your SaaS dream to the next level! In addition to building the actual software, iTechnolabs also offers ongoing support and maintenance services to ensure that your SaaS stays up-to-date and competitive in the ever-evolving technology landscape. Our team of experts is always available to troubleshoot any issues and provide updates or upgrades as needed.
Moreover, by partnering with iTechnolabs for your SaaS development needs, you can also benefit from our extensive research and expertise in various industries. We understand the unique challenges that each industry faces, and we tailor our solutions accordingly to ensure maximum efficiency and success.
Important: A Comprehensive Guide to SaaS Products
Conclusion:
In conclusion, with our expertise, experience and commitment to excellence, iTechnolabs is the ideal partner for building your SaaS business. We prioritize understanding your unique needs and deliver tailor-made solutions that not only meet but exceed your expectations. Contact us today and let us help you turn your SaaS vision into a thriving reality.
