Software as a service (SaaS) is a breakthrough solution that has gained significant popularity over the last few years. A Harvey Nash survey has shown that 73% of businesses consider this cloud-based technology quite important, and 38% of the respondents link their success exclusively with this innovation.
The large numbers are not surprising. SaaS opens the door to possibilities for product owners who can quickly deploy the service and clients who can easily develop and scale with niche-specific technologies. If a software-as-a-service solution is beneficial, how much does it take to create one? Multiple pitfalls hide behind a SaaS development cost, so we want to discuss this topic to show you the accurate picture of investment in this network-based product.
Let’s take the example of building a house. When you contact a home building company, they will tell you an average price, as the nuances of materials choice, design complexity, and unpredictable issues influence the final bill. The same approach applies to SaaS development costs. They depend on many factors, which we will discuss below.
SaaS products can operate on different scales and offer various features and integration capabilities. Thus, it follows naturally that the more advanced solutions the product provides, the larger the development investment it requires. This is the approximate budget for building a SaaS platform based on its complexity:
- Micro SaaS. This narrow niche-oriented product focuses on one specific problem and is not customizable. It takes $5,000-$15,000 to develop.
- Basic SaaS. This limited-functionality platform that can serve startups and be slightly customized requires an investment of $15,000-$50,000.
- Average SaaS. A rich-functional software product with basic integrations and the ability to scale costs $50,000-$100,000.
- Complex SaaS. This advanced product, suited for large enterprises and ideal for any scalability level, costs from $100,000.
Software-as-a-service products are built based on different software types caused by the functionality requirements. For instance, if you are developing a banking application, you focus on securing safe data transfer and storage. This factor influences the type of software and, thus, its development cost.
Here are the average costs needed to develop different types of SaaS products:
- CRM. Customer relationship management platforms that help to manage customer interactions can take $40,000-$60,000.
- ERP. Enterprise resource planning programs allow businesses to manage their basic processes and require an investment of $100,000-$120,000.
- Accounting. Apps for performing financial operations take around $80,000 to build.
- Project management. Products that help manage and streamline project processes can cost between $50,000 and $80,000.
- Email marketing. Solutions for executing email campaigns need approximately $70,000 of investment.
- MarTech. Marketing technology software that supports all marketing processes requires a $100,000-$120,000 budget.
- Visual website builder. Website creators who help create websites without coding cost $100,000-$150,000 to develop.
The talent pool for creating SaaS products must be trained in a complex cloud-based field. Also, developers’ salaries vary depending on numerous factors.
The first one is a location. If you choose a senior developer from the USA, remember that they earn $150,000 a year. The same-level specialists from Eastern Europe expect to get $70,000 a year.
The second factor is the experience level. Junior developers will charge less than middle or senior ones. Still, the concept of SaaS development requires an experienced professional, so you won’t be able to save costs on this part.
The third aspect is the team type and size. You can choose between hiring an in-house development team, collaborating with freelance specialists, or getting a workforce through an outsourcing agency. In-house teams are the most expensive, while freelancers are the most affordable.
Product design requires a lot of resources. Suppose you build a user-centered SaaS platform with easy navigation and advanced design solutions. In that case, you must invest additional resources into user research and detailed wireframing, which can cost around $40,000.
Essential design solutions don’t significantly influence the software development cost. A simpler UI/UX can add up to $15,000 to the final bill.
Agile and Waterfall development methodologies offer different project management approaches and influence SaaS cost for its creation. Agile methodology allows teams to perform various processes simultaneously. You don’t need to wait for one stage to complete before proceeding to the other. Thus, the project can be done more quickly and customized to meet client needs. However, additional funding is necessary as the requirements change throughout the way.
Planning is everything in the waterfall method. Every stage begins only when the previous one finishes. This approach can help you predict expenses more precisely but doesn’t allow customization and iterative development.
The developers themselves can recommend a development method, considering your vision of the final product.
SaaS price increases if you choose a more expensive technology stack, proprietary technologies. To develop a product according to this approach, you will need to buy licenses and subscriptions to services like Salesforce. In return, you will receive professional support and constant technology updates.
Open-source technologies offer a more affordable way to develop a SaaS product. They are free to use and don’t require investing in licensing. Open-source tech stack still has a community but requires custom development.
Knowing what influences SaaS development cost helps you plan a budget to successfully complete the deployment stage. To better understand the flow of investment, let’s examine how much it takes to create a SaaS product at every development stage.
The initial step in any digital product creation, including SaaS, is to discover who will use it. User research helps to circle out the target audience, define ideal customers, and find their goals, motivations, and pain points. This process involves various methods like surveys, interviews, and focus groups and aims to transform user data into insights. It takes $3,000-$5,000.
Analysts conduct market research to be competitive in the market. Their findings shape the product course and define the project’s solutions to be on the same level as competitors in this niche. This procedure costs $2,000.
When the external research is done, teams gather to plan the strategy: product goals, features, milestones, and deadlines. This step has to be taken seriously, as precise planning sets a clear development path. Usually, the budget for product creation strategy starts from $4,000.
This stage transforms row data into a visual product presentation. The process is divided into several steps: building the user interface, ensuring the best user experience, and testing and validating the ideas.
The UI design part focuses on the visual side of the SaaS app. Using prototypes, they develop buttons, features, appearance, and other visual elements. Those steps require funding starting from $10,000.
When creating the SaaS app visual elements, they need to be linked together through user experience techniques. The final goal of this step is to receive high-fidelity wireframes that present the final product image. UX designers’ service prices are around $15,000.
Validation of the UI/UX design wireframes is performed through testing.
This project stage is the most expensive as it covers back-end and front-end development.
Back-end development creates the core of building a SaaS product. The results of this stage are databases, APIs, integrations, and platform logic.
Front-end development teams create everything visible to end users. They transform design ideas into real design solutions in the application and are responsible for user interactions.
This SaaS product development stage is time-consuming and resource-consuming, but it is the skeleton of the whole creation process.
When dividing developing a SaaS platform into stages, the costs for every stage are the following:
- Planning & strategy: $11,000-$16,000
- MVP creation: $31,000
- UI/UX design & prototyping: $11,000 — $43,000
- Front-end: $17,000 — $41,000
- Back-end: $47,000
As the SaaS market is very competitive, you have to work on its advertisement to ensure product success. This is another considerable expense that, depending on the scale of your project, can significantly increase the cost of developing a SaaS platform. The following expenses are added to the development price and can not be neglected.
Building a cloud-based application is a multi-stage process that can be controlled only within one spreadsheet or on paper. To assign the scope of work, set deadlines, track progress, and manage all the processes, teams need specific tools like Asana, Jira, Trello, ClickUp, and monday.com.
Even though many project management tools offer free versions, they are not enough to work on complex projects like SaaS development. The average cost for subscriptions to such services varies and can be up to several thousand dollars per year.
A high-quality product has advanced features and creates a space where users can easily manage it. This can’t be done without copywriting. All the elements and actions in the app need clear verbal support to ensure seamless usage. Also, users need to be guided through tutorials, including videos, as the SaaS target audience is businesses that dive deep into the processes.
Copywriting and video production are also required for promotional purposes. You have to hire professionals to write blog posts, generate SEO content, compose newsletters, and craft user-engaging videos. The cost for these services depends on your marketing deliverables, but on average, it can take $10,000 out of your pocket for all the stages of copywriting and video creation.
SaaS costs don’t end at the stage of product deployment. You must acquire users to receive a return on investment, as they don’t flow organically initially. Thus, you need to invest in promoting your product. This includes SEO optimization to appear at the top of search rankings, PPC advertising to post ads across different channels, and content marketing to show users your value proposition.
Another way to attract customers is through user acquisition techniques like email marketing, referral marketing, and influencer marketing. Marketing requires huge funding, starting at $30,000 for the overall campaign expenses.
For the marketing part, you have to be ready to include this investment on an ongoing basis until you build a sustainable organic user acquisition.
The average cost for developing a SaaS product ranges from $50,000 to $300,000 for the overall development cycle, including additional marketing and content creation expenses.
However, the cost for this project can not be defined precisely for your case as many factors we mentioned, such as project complexity, software type, development team, design complexity, development approach, and technology stack, influence the final bill.
Also, there are no limitations when it comes to budget. If you want to grow big, your number might exceed hundreds of thousands of dollars.
Controlling the budget expenses in the development process of any SaaS project is crucial for ensuring the project’s success without exceeding the set financial expectations. Implementing specific strategic methods and approaches can drastically reduce possible financial losses, increase product creation efficiency, and maximize the value of investments. In this section, we would like to present some valuable tips to help control financial expenses and maintain the proper pace of SaaS development.
The first major enemy of any SaaS project is improper prioritization of the development functionality. The project can often start sensing financial shortages due to excessive spending on subordinate features. Such an approach can lead to an immediate shortage of resources to create the major application features. Therefore, it’s crucial to identify the primary users’ needs at the beginning of the process and direct the budget to cover those specific needs. Only when those are secured can the team create a progressive plan for integrating secondary features.
Creating your SaaS solution’s minimum viable product version is another major approach to strategically managing the available financial resources. The MVP version is a great way to introduce your product to the market, collect feedback from the potential customer base, analyze the gathered data, and even receive a chance to improve the necessary details before the product’s final release. Many beginning companies may underestimate this stage of the SaaS development process, preferring to release the raw version of the product by skipping the MVP. Ultimately, this may lead to severe financial losses and potential shifts in project deadlines.
Many SaaS-developing companies may neglect the usage of open-source technologies, which can unlock a great possibility of significantly reducing budget expenses at each stage of development. Such platforms usually offer developers free access to the internal code for modification and usage. By integrating those open-sourced developments, the team can save a lot of time creating similar technologies for the specific project, and the company may not allocate a separate funding source for this matter. Moreover, this approach is excellent for the company’s financial state and helps your product be relevant using the latest technological solutions.
This advice is essential for companies with little development experience, especially in complex SaaS solutions. Startups with a small budget may find it more attractive to rely on their strengths, even if there is an obvious shortage of the necessary specialists. However, in most cases, it can only lead to the project’s breakdown and substantial financial losses. To prevent that from happening, the team has to carefully consider the possibility of acquiring outsourced specialists according to the current budget availability.
SaaS product development is a complex project, and cost is a considerable factor. Before you start looking for a development team, defining the approximate budget needed to achieve a successful product deployment and continue its maintenance is crucial.
The cost of building a SaaS application depends on various individual factors for every project. Whether you want to develop a micro SaaS, hire an in-house development team, make an advanced UI/UX design, or choose an Agile development technology, all these factors contribute to the final price. However, knowing the expenses, you can approach cost planning strategically and take complete control over the process without having “financial surprises” appear on your way.
To clarify the development expenses, you can contact our Uitop agency. We offer a free consultation to estimate your project and give you references on the expenses for creating SaaS products.
Compared to a regular digital product, software as a service requires a larger budget because of the complexity of infrastructure, compliance, security, hosting, maintenance, and development. However, the popularity of this niche-oriented service is rising, so you can expect to receive a fair return on your investment.
Generally, the overall price for building a SaaS product cannot be calculated precisely. This is because the final cost will depend on many factors, including the project complexity, software type, design choice, development team choice, etc. But if you decide on these aspects, you can strategically plan your expenses.
We don’t recommend planning to save on SaaS creation, as the final goal is to receive a high-quality product. But instead of saving, you can make different choices. For instance, you can develop a micro SaaS with basic yet high-quality functionality. You can also choose a development team among freelancers rather than hiring an in-house team.
Product creation involves many other aspects. These include project management tool subscriptions, content creation, and marketing expenses. Marketing is the most expensive part, but it pays off as you get more clients who, in return, can recommend your product to even more businesses.
Yes. Every stage has an average cost variation, and you can plan your expenses according to the steps in your development process. However, you need to consider the development approach, as, for example, it is impossible to go from one stage to another within Agile technology.
You can plan your budget considering the factors influencing the final bill described above. But if you want detailed price planning, we recommend contacting a professional agency like Uitop to discuss your specific project and identify what aspects will be vital for your case.
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