How Much Does It Cost to Build SaaS Application? (In-Depth Guide)
Cloud-based software is now the mainstream. From giant corporations to shops or small businesses, cloud-based applications/software is the globally accepted deployment practice today.
Software as a service, also known as SaaS is a cloud-based software that offers available ready-made handy software to the customers through a mobile app or web browser.
With SaaS, the users don’t have to agonize with any software configuration. They can simply use the software. There are many SaaS apps (Box, Amazon Web Services, Salesforce, and Concur) that are optimized and updated by several developers.
So, it’s important to match the requirements of a large audience to make them successful.
SaaS Business App Development Cost
- Why Create SaaS in 2020?
- Analysing the SaaS Trends and Statistics
- Challenges of SaaS Application Development
- SaaS App Development Cost Structure
- Defining the Scope of Your SaaS Application
- Choosing SaaS Development Platform
- Cost to Develop SaaS Application: Time-Specific Analysis
- Cost to Develop SaaS Application: Analysing Various Factors
- System Specific SaaS App Development Cost
- Things to Consider Through the SaaS App Development
- The Total Cost to Build SaaS Product
- Freelancer or Agency: SaaS Application Development
- SaaS App Development Cost: As Per Geographical Region
- Some Real-World SaaS Pricing Examples
1. Why Create SaaS in 2020?
SaaS development companies have a lot to offer in the future. A SaaS product offers-
- A ready-to-use solution without the hassle of thinking about settings and algorithms
- No huge spend on purchasing an overpriced solution, but only subscription-based packages for the SaaS product development offered by the several solution providers
- The dexterity of cloud storage allows organizations to transfer data more safely.
- Customers don’t have admittance to the source code, which indicates that it is impossible to steal and share the SaaS product development strategy illegally.
2. Analysing the SaaS Trends and Statistics
SaaS is the brand-new golden rule for businesses, from conventional accounting firms to cutting-edge AI start-ups, small shops to huge multinational enterprises and tech titans.
The value and need for SaaS products have evolved and grown tremendously over the years, and we can clearly see the trend continue in 2020 and for years to come.
Let’s explore some stats and trends of SaaS:
- The SaaS market is expected to grow $220 Billion at a CAGR of 13.1 in 2022.
- The worldwide public cloud revenue has grown 17.3% in the last 1 year. This gives a massive boost to the SaaS application markert.
- Overall, SaaS companies brought in $72.2 billion last year which is expected to rise by above 16.4% this year.
- SaaS practice is extensive and expands as companies do. The average firm with above 250 employees employs over 100 SaaS applications. Firms with less than or equal to 50 employees use about 25-50 SaaS applications.
These figures symbolize that the SaaS continues to increase. Growth is constant as businesses grow and is likely to rise for all companies.
3. Challenges of SaaS Application Development
SaaS Development comes with a lot of advantages as well as challenges and pitfalls that users may experience. This includes major three challenges which are;
(a) Poor Execution
Usually, upon the collapse of any software development or business, people blame just the idea,
But in reality, it is not always the bad idea that causes the failure but sometimes a good idea fails if the execution is poor.
Poor execution is the greatest challenge to address before calculating the Cost to Develop SaaS Application.
(b) Small Target Audience
In Spite of the upward and consistent development graph, it is very unsafe to choose a course that is way too different and unique.
As a solution provider, it is essential that one has to refresh, update, and optimize the solutions frequently. In the case of a smaller group of audience, your business would fall into losses.
(c) Lack of Trust
Trust is the most significant determinant in the development of business or app development. The absence of trust implies less customers.
The problem is largely intense with the SaaS model as it protects a large volume of user data, which makes it extra vulnerable.
4. SaaS App Development Cost Structure: Cost Factors To Consider Before Development
Here are some ongoing expenses to develop and manage a SaaS;
(a) Phone Line
For a team with fewer members, you can reasonably get off with just one phone line, but you’ll end up requiring few networks, mostly two – one for the office, and other for assistance.
Your employees should be able to communicate, and your company necessitates to be competent in handling customer queries.
A compact team of trained executives is essential to manage the customers’ perspective. Also, you will require a network inside the office where the SaaS product is being worked.
This is for the website and/or app. Either of the applications is going to claim a hosting service to back its functionalities.
So, you need to take this into consideration for calculating the Cost to Develop SaaS Application.
For almost everything. Starting from the facilities to the workers, from everyone to everything that can be insured.
Especially for the first-class merchandises, insurance cover is an absolute essential to shield yourself from inevitable obstructions.
Therefore, you need to take this into account while calculating the Cost to Build SaaS Application.
This means examining and picking a complete suite of specialized software, that includes but is not limited to: tracking, meeting, billing, project management, and CRM (Customer Relationship Management) software.
(e) Continuing Development
It’s a highly competitive world today. If you just release a SaaS into the marketplace, you might perform well for initial few weeks or even some months, but without consistent backing and updating, your service will quickly fall back on what customers demand.
Even if your service is provisioned to a niche market, it is only an affair of time before someone else takes your idea, improves your service offerings and steals the show. Continued improvement and development help to ensure or upgrade your status in the market.
Out of everything that is required for managing a SaaS business, skilled staff are the most significant. They establish and execute new innovations; Also, they guarantee that any difficulties that occur are managed with agility, urgency and refinement.
They are the face of your company in front of everyone, every customer who needs support. Of course, the more you care for and pay the staff, the more agreeable and more penetrating your hiring pool becomes.
5. Defining the Scope of Your SaaS Application – Tool or Platform
Another essential deciding element to analyse before jumping into the development process is the scope of your SaaS. Will it be a platform or a tool?
Defining the type of system you’re developing is one of the deciding factors to ascertain your SaaS App Development Cost. Tools are restricted in their scope, and aim to perform merely one or two things remarkably well. Some examples of tools are Buffer & Hootsuite.
Platforms reach a little beyond and are “fully-featured”, normally comprising diverse tools within their expanse that interacts and permits for total functionality. Example of such a platform is Facebook.
Before you decide on the platform type. The most vital factor to acknowledge is that the platform you will select must be based on the technical requirements. However, if this is your first time in developing a SaaS, we highly suggest you keep the scope as confined as possible.
It’s natural to undervalue the time it may demand to develop your system and to further recognise additional SaaS expenses later. So, it is suggested to keep it simple.
The cost of building a tool is much less than a fully-featured platform which can put you in financial risks. With a developed tool you can add new specialities to the system after you earn some gains on your MVP (minimum viable product).
It is best to determine immediately, before going into the development phase, keeping the end-goal in mind to chalk a more accurate development plan. Once all of these have been analysed and decided, then the actual work begins.
6. Choosing SaaS Development Platform: PC or Mobile
There are two main prospects for SaaS development platforms – PC and Mobile. Accessibility of your software on both the platforms is most favourable – but it does cost much.
Most B2B SaaS companies find desktop useful for their services. As employees work majorly and primarily on desktops, so integrating it is the most productive approach.
Therefore, we suggest, start-ups SaaS endeavour should always design on using the PC platform for a productive and fruitful start.
At the initial stage of your business, it is always better to avoid drinking from the cup of building a mobile SaaS system.
Mobile app development is a totally different monster. Screens are tinier, and usually, the orientation is flipped from the PC screens.
This implies a completely distinctive UX but wanting to still feel like it is a similar kind of service. Usually, it is much easier to downscale your service’s UX for mobile than it is to scale up the PC.
The expense of SaaS App Development Cost can radius from anywhere from half to double the cost of the original web app. If your project formerly cost $50k, you require to bear extra $25-100k for developing the mobile app, based on your service.
That could cause your SaaS cost structure to mount instantly beyond your original estimate. It may benefit you to concentrate on making the service run on a single platform to start earning revenue before attaching another which may have confined benefits for your customers.
This is a decision that you require to take based on the service you are providing and the demands of your customers.
7. Cost to Develop SaaS Application: Time-Specific Analysis
There is no doubting that time is money. There will even be costs for the amount of time spent on developing the SaaS product. Here are a few things to consider in this aspect:
This process involves a series of activities that demand about 10-50 hours. This includes determining the proper clients, finding potential competitors, managing customers, etc.
The planned projects that are designed well always prove to be better in functionality. Therefore, investing time on planning to guarantee quality and accuracy is best. This would demand 30-200 hours, depending on the scope of your product.
(c) UX Design
Operating on the aesthetics to make a stellar design to captivate the buyers of the SaaS product is important. This takes around 25-200 hours.
(d) Project Management
Managing the diverse phases of the development is as vital as the development of it. This takes around 20 percent of the time.
Each of these activities needs to be accounted for when calculating the costs of building the SaaS product.
8. Cost to Develop SaaS Application: Analysing Various Factors
The cost of building a SaaS application is higher than any other application or website. It is a primary concern of any company that wishes to get an app developed for its business operations.
There are various aspects that you as an application owner needs to decide to plan your SaaS app effectively.
You can manage the expenses related to the development of your SaaS application by considering 5 important price-related factors before the development of your application.
As per your business requirements, you can choose among onshore, offshore and nearshore outsourcing. These three are different kinds of outsourcing that are available and each one has its own advantages.
You can choose one of them depending upon your requirements and the skills that you need in your app developers. The trainers contain a particular skill set depending on the location that they are trained at.
By deciding the ownership expenses, you can decide the application budget. The total ownership expenses are calculated on the basis of updates, licensing, training/technical support and subscription cost.
You should be sure enough that you would be able to manage the Total Cost of Ownership(TCO) after the first year as well. It playes a major role in the Cost to Develop SaaS Application.
You have to consider the opportunity cost as you might not be able to spend that stack on the core competencies of your business.
This is likely to be the case for every business organization that plans to put its money in advance for the software solutions.
The time duration for the development of your SaaS application might stretch from 6 months to a complete year and thus you must be able to have a realistic idea related to the expenses that you would need to manage monthly as well as for the longer term.
Make a complete list distinguishing the must-have app features and the Wishlist features. The cost of an application containing complex features is more than other simple applications.
You can choose to mitigate the development cost by reducing some of the complexities provided that your chosen reductions do not cut the overall value of the app.
Your application should be user-friendly at the end of the day. You can go for more robust software solutions if you wish to make an empowering application.
If you are going to launch your application on cross platforms then that would be more expensive than the one that is launched on one single platform.
However, it has been evident that the cross-platform applications are subject to better success. You can attain Asp.net development services from a reputed company that is known to provide quality SaaS app development for years.
(d) API Integration
Most of the SaaS applications contain backend functionality. You can decide whether you want these features to be developed using the API integration or from the very beginning.
It is quite obvious that the cost of API integration is lesser than the cost of building the backend features from scratch.
With API integration you can rapidly scale your business and it also reduces the time of development by cutting many steps in between.
It is not a smart choice to reinvent the already existing SaaS app architecture. You do not make the best use of your budget while making such choices over API integration.
(e) Overhead Cost
There are a variety of overhead costs related to SaaS app development. Let’s understand it in detail: –
No One-time Cost
Do not consider the app development cost as one time thing because it does not end once your app gets developed and gets ready for deployment.
For example, deciding upon the medium of attracting the target users towards your application. You have to calculate the marketing and advertising costs.
This is quite fundamental as a step. And it can be ongoing as well.
There are federal, local and state laws that one needs to comply with and we need to pay the expenses related to compliance when the application is in its developmental process.
With an increasing subscriber base, the bookkeeping cost grows as the volume of monthly transactions increases. You would also require assistance with the tax-related advice, financial statement preparations as well as auditing.
9. System Specific SaaS App Development Cost
Here are a few more system specific SaaS costs:
(a) Coding and Development
This step is self-explanatory and this is where the majority of the particular creation takes place.
It is what most SaaS creators deem as the bread and butter of the project and it is so in some ways, since this is what makes your system truly do what it’s meant to do.
This is likely going to be the most high-priced task when it’s all said and done; especially because this step will likely have smaller echoes between each of the subsequent steps.
(b) Building in Other Systems
More coding, essentially, but adding in additional functionality also means ensuring that your system plays nicely with others.
The simplest thing here is enabling auto-emails from your server to users or users’ clients upon completion of various tasks.
You could further unite your software with different systems. What works best for your SaaS will depend upon what you’ve designed it for.
(c) Building Tests
You will desire to test the system and you might be considering alternatives to do that manually.
If you test manually, you’ll be paying someone (or a team) for every working hour spent and this won’t be a one-time cost.
It is recommended that you spend the time upfront to build in automated tests since it will save you money in the long run.
If the testing process for various elements is automated, then errors are easier to find and less time is wasted. These tests will still be useful after release and can end in a higher-quality product.
(d) Alpha and Beta Testing
It is ill-advised to release your product without extensive testing. Alpha and Beta tests allow you to urge valuable feedback from people that may become customers.
If you sat down with any potential customers in the Validation step, they may be willing to help you test out the service.
During these tests, aim to gather as much feedback as possible – and ignore the negative feedback at your own peril.
(e) Release and Marketing
Lastly, you’ve got to believe your SaaS release to the general public – and you would like to plug your release.
Marketing is going to be essential for drawing in users, and an idea for marketing should be discussed alongside everything else within the drawing board.
You also need to make sure that other elements, like Customer Relationship personnel and drip emails, are on point.
User testing and analytics need to be running non-stop in the first few weeks or months in the market. In other words, expect to be at your busiest when your product is released; this is not the time to kick up your feet.
10. Things to Consider Through the SaaS App Development
There are several other things to consider when your SaaS development work is on like…
(a) User Management
This is how your users log in and log out, to start with. But remember, the users also should be able to edit their profiles, change their passwords, add or remove members and modify teams and much more.
This is one of those spaces which gives you a comfortable opportunity to influence your users. Expect to add 25-100 extra hours to your UX Design step precisely for this factor of the SaaS.
(b) Pricing Flexibility
Then, there’s the pricing. Neutralizing your cost to build a SaaS, and ensuring the software is effective and profitable, is going to be dependent on how much you beget coming in.
Keep a clear aspect in mind to guarantee profitability and elasticity in pricing. If you know about the SaaS Pricing Models, it will be helpful to you all in the long run, without a doubt.!
Surely, the primary three-tier system may work for a year or more, but as you continue to attach and customise features and welcome feedback from your customers, you may determine that supplementing the fourth tier and accommodating prices might be the best call.
But it would unquestionably be a bad idea to double the prices overnight for existing loyal customers. Putting up a paywall at the start is a great idea!
No matter what your opening prices are, if you’re not seizing orders from the start you’ll be missing out on money, profit and loyal customers.
11. The Total Cost to Build SaaS Product
The Cost to Develop SaaS Application typically closes up to somewhere in the range between $15-100k, with the bulk bending more toward the centre.
For the SaaS Platforms, the range is larger, settling anywhere between $50-250k. This is because platforms have more enhanced and extra features, ergo, more extended time and money in both planning, execution and development.
The final question is, How Much Does It Cost to Develop SaaS App? The end cost is principally dependent on the number of times you need to backtrack to reconsider, redesign your functionality, design, or how the system will rightly fit your users.
P.S – One of the most expensive blunders we see more often, unfortunately, is a client who has already wasted half of their budget (sometimes even more) only to abandon the original build due to faulty or poor planning and a decreased development team.
12. Freelancer or Agency: SaaS Application Development
Once you know your platforms, you need to ensure that you have the right expertise for completing the job.
The next element to acknowledge and analyse is whether to hire freelancers as developers or through any agency.
As far as costs are concerned, freelancers are less expensive. Agencies cost higher because they include costs for employees who handle their developers, project management, quality check, office location, and much more.
However, agencies offer the agreement and assurance for your project’s success which is very crucial.
There are also cases of an abandoned project with no one to finish it. For instance, a developer leaves the project in the middle, it becomes the agency’s duty to substitute them; but if a freelancer leaves, it’s entirely your problem.
If your freelancer resigns or absconds uninformed, it is your responsibility to find and describe the up-to-date development to point to a new freelancer to take it forward.
Also, there many high-grade developers who are picky in choosing projects. They don’t normally pick a project that has been abandoned by a developer because most often that anticipates tidying up someone else’s slushy code.
Hence, agency is always the first recommendation. However, if you had hired a freelancer who ditched at the last moment and now you are stuck with an incomplete SaaS system, it is always better to immediately switch to an agency.
Additionally, when you hire an agency, they have a team of aces, with expert designers, skilled developers and project managers which means you don’t have to worry about screening and choosing good developers and set up the processes yourself.
So, if you want to know, How to Calculate the Cost to Build a SaaS System, then you need to analyze this factor.
13. SaaS App Development Cost: As Per Geographical Region
Even though an agency is highly recommended, there are several underlying factors to consider as well for hiring, both for agency and freelancers.
- Agency – location of agency, outsourcing – offshore, or onshore
- Freelancer – Cost, location, experience
Talking of this, for freelancers, it is always important to decide where you hire them from as their price varies from region to region. To clarify, below is a rough rundown of the Cost to Build SaaS Application as per the geographical region:
- India: $15-35/hr
- Southeast Asia: $15-35/hr
- Eastern Europe: $20-85/hr
- Western Europe: $35-110/hr
- South America: $30-65/hr
- US/Canada: $40-250/hr
14. Some Real-World SaaS Pricing Examples
By now you have got a fair idea of the cost factors involved that need to be considered and how to put it all collectively to effective development.
Now let’s see and understand some real-world SaaS pricing cases to demonstrate what projects actually cost:
- The least-spend on SaaS project with a successful MVP was $15k.
- An upper-level and advanced form-development and surveying system for a niche business that took almost three years including three phases of 2-3 months each with a lot of testing involved, reached a cost of $85k.
- A directory service with an advanced searching feature and an advanced admin area was relatively cheap, just nearly 30k. The project included manually mining data and gathering them on a centralized database to be bundled and traded.
The service employed magnified data-entry specialities to guarantee great levels of productivity from the employees assigned with the task of data mining.
The project took a sound deal of design and planning and the development operated for merely a few months, in just a single phase.
- A healthcare practice management service that would interface with tools in hospitals, and attach to their billing and insurance systems.
While it was not a pure SaaS because of the absence of logging into the service – no user accounts as well – it took some years and around $500k to develop.
The cumulative expense of developing a SaaS system entirely depends on the decisions you make, whether with your team or individually.
By making sound and correct decisions you can observe where your capital is best spent and if at all the cutting-corners will bother you and cost you more in the end.
However, spending funds in the appropriate areas will eventually enhance the overall system, arrangement and its profitability once the SaaS is out in the market.
So, to conclude, the Cost to Build SaaS Application is up to you after considering all the given factors in this article.
To end, this article solely reflects on the factors that need consideration to determine the cost to build a SaaS. It is essential to realise that cost is not the single factor to weigh when delivering a concept to fulfilment.
With the right assortment of information, you become able to assess where to spend the money to get maximum and fruitful return safely.
It is also important to identify the cutting corners. Most of the phenomenal SaaS Application Development projects are made out of a burning desire, sheer passion and are delivered to make a striking influence on the way business operates.
If you have any amazing and out-of-the-box ideas, go for it and be sure to consider the factors discussed in this article.
And, that’s a wrap.
There can not be a fixed price for developing a SaaS application. It varies from one region to another and also depending on the requirements. However, the average cost in the US is around $30k-$50k.
Generally, it takes around 2-10 months for building a SaaS MVP. But, for larger products, it could take more than that as well.
SaaS is an acronym for Software as a Service. It is a software model where any 3rd party provider hosts the application and makes it available to all the customers through the internet facility.
There are a variety of factors that you need to take into account while calculating the SaaS application development cost. They are as follows:
Cost To Consider Before Development
Type Of Platform
Scope Of The Application
Software as a Service is a popular alternative for SaaS applications. Many people also refer to it as ASP Services or software on demand.
The simple answer to this question would be YES. Amazon is a SaaS product that provides reliable as well as secure services to all customers.
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