Building a successful SaaS product requires a clear understanding of the investment in cost and time. However, estimating these factors accurately can be daunting, given the many variables involved.
Several elements impact the overall cost of building a SaaS product, from the complexity of the product and desired features to the development approach and integration requirements.
In this blog post, we will delve into the crucial aspects of cost and time involved in building a SaaS product, equipping businesses with valuable insights to make informed decisions and streamline their development journey.
Software as a Service (SaaS) Global Market Overview
Let’s look at some statistics to see if SaaS pricing is justified. According to Research and Market, the software as a service market is expected to reach $328.03 billion with a CAGR of 6.6% by 2027.
But which companies make the most investments in these solutions?
According to the 2022 SaaS Industry Market Report, the banking sector is leading the way, with 86% of organizations expected to expand their investments in process automation. The manufacturing sector is at 85%, while the transportation and healthcare sectors are at 80%.
How Long Does it Take to Build a SaaS Product?
The development time for a SaaS product depends on various factors. Let’s discuss some of them below:
Complexity of The Project
One of the key elements is how complicated the product is. A more complicated product will require more time to build than one with fewer features. The development time is also influenced by the resources available.
The development process will go faster if the team can access seasoned programmers and other resources. The project’s schedule is also crucial. The team might have to work more quickly to reach the deadline if it is close.
Designing The Product
To do this, a plan for the product’s features and functionality must be created. The user interface and user experience should also be part of the design. This process can take a few days to several weeks, depending on the complexity of the product. The team can begin the development phase after the design is finished.
Developing The Product
The development stage is the most time taking building the product. The product must be coded to ensure all features and functions operate as intended. Depending on the intricacy of the product, this process can take a few weeks to many months. The team should test the product during this phase to ensure it functions properly.
Testing and Launching The Product
After creating the product must be tested to ensure it functions properly after creating it. Depending on how complicated the product is, this process could take a few days to a few weeks. The product can be launched after passing the tests. Depending on the platform on which the product is being launched, this process often takes several days to a few weeks.
Maintenance and Updates
After the product is released, it must be continually updated. It involves both the addition of fresh features and functionality and the correction of any flaws or other problems.
Depending on the complexity of the product, his process can take a few days to a few weeks. It is crucial to keep it updated to ensure the product operates properly and offers the optimum user experience.
Also Read:8 Ways SaaS Product Development Services Can Help Your Business to Grow
Factors Influencing The Cost of SaaS Development
The following factors affect the final cost, as they do in any development project. Let’s discuss each of these factors in more detail.
Project Scope
The scope of a SaaS project is decided upon during the planning stage, and it is determined based on the type of platform you want to construct, your target market, and the business objectives of your SaaS product.
SaaS systems like CRMs often have a larger scope than SaaS tools. While SaaS tools are designed to address one or two problems, SaaS platforms include several tools, greatly expanding their potential applications.
If you’re working on your first SaaS project, build one tool as an MVP for subsequent expansion because you can always scale a tool to a platform.
Tech Stack and Functionality
Some technologies are easier to work with than others, and your chosen technology also affects your project’s cost.
However, rather than the technology itself, functionality has a considerably greater impact on the price. Complex features need to be properly tested at every stage of development because they take longer to build and have a larger risk of errors.
You should prioritize features and create the most crucial ones to reduce costs. Your product type, target market, and the primary issue your program should address will all influence the features you choose to include. The following characteristics are typical of most SaaS products:
- Access and permissions are dependent on roles to protect sensitive data
- Analytics and a dashboard to help companies monitor their performance
- Omnichannel sign-in enables users to access their profiles across all devices using a single set of credentials
- Tracking user behavior to spot any fraudulent activities and safeguard data
Team Structure
The composition of your team and how you work with developers also affect the overall cost of your project. Employing employees internally often costs businesses more money because they must pay for taxes, workspaces, tools, sick days, vacations, etc.
Additionally, finding an expert and paying them competitive compensation requires time to prevent them from leaving the organization after a few months.
Because of this, many SaaS enterprises favor working with independent contractors or software development firms. Managing freelance developers with other team members, including business analysts, designers, and quality assurance professionals, might be challenging.
On the other hand, a SaaS app development business offers you a team that is immediately available, and you only pay for the hours they spend creating your SaaS platform. In this situation, the cost of building a SaaS product is optimized, and you can further reduce costs by hiring experts from nations like Ukraine with lower living expenses.
Developer’s Hourly Rate
The hourly rates of developers have a significant impact on project costs. Depending on your development team’s hourly charges, the same functionality and quality can be created for $40,000 or $100,000. Usually, the hourly rate is influenced by the nation and the developer’s expertise.
However, location is the main consideration. For instance, the average hourly pricing for web development in Ukraine is $35, whereas, in the US, the same service can go as high as $150.
As a result, the average beginning cost for a SaaS product development will vary depending on where in the world you are.
API Integration
Nearly every software includes APIs, and most companies use them to speed up development and enhance the user experience. You’ll require both internal and external APIs for a SaaS product.
While external APIs enable you to interface your product with third-party services, internal APIs are the glue between your software’s component parts. You must be prepared to make financial investments in creating APIs and using third-party services.
Overhead Costs
Overhead costs significantly affect the overall cost of developing a product, including SaaS. These costs encompass various indirect expenses necessary to run a business but are not directly tied to the development process.
In building a SaaS product, overhead costs include office rent, utilities, administrative salaries, legal fees, marketing, and general operations. These costs are necessary to support the development team and create an environment conducive to productive work. While they may not be directly attributed to the coding or programming aspects, they are essential for the organization’s overall functioning.
Overhead costs can vary depending on the development team’s size, the office’s location, and the project’s specific requirements. Considering and allocating these costs appropriately is important to ensure a smooth development process. Managing and controlling overhead expenses efficiently can contribute to overall cost optimization, allocating resources more effectively toward the actual development and enhancement of the SaaS product.
How Much Does it Cost To Build a SaaS Product?
The entire cost to develop a SaaS product will vary depending on your team’s location and your project’s complexity. Here is a description of the entire SaaS development process and a cost estimate for each step.
Validation and Planning
During the discovery phase, a business analyst gathers your requirements and turns them into a technical specification. At this step, your vendor does market and competitor research and compiles a list of features needed to meet your company’s objectives.
You’ll pay a business analyst for their time when they are conducting planning and discovery tasks, and as a consequence, you’ll receive:
- A technical specification
- Wireframes
- A detailed development plan
- A plan for an MVP
The planning phase typically lasts 40 to 260 hours, depending on the project’s complexity.
UI/UX Design
Your SaaS solution’s user interface (UI) and user experience (UX) should be simple to use and consider the specifics of your target industry. By this, you should keep the UX pipeline practical for your client’s business processes and employ phrases and symbols in the UI that are widely used in the sector.
The length of time needed for UI and UX design varies on the size and complexity of the product and is typically three weeks. With enterprises in Eastern Europe, UI/UX design typically costs $15 to $40 per hour.
Frontend Development
Selecting the tech stack is essential after determining the functionality your product requires. Your development team should support you and provide various options for your requirements.
The length of time required for front-end development varies on the size of the project, and hourly costs range from $25 to $60.
Additionally, remember that project management and quality assurance are necessary for each stage of the development process, and you will also need to pay for these professionals’ time.
Backend Development
Depending on your plan, building the server side of your software can take a variety of times. The development time will be greatly shortened if you use a backend as a service (BaaS) offering rather than building your backend from scratch.
While BaaS relieves you of constructing your infrastructure, it also forces you to rely on the service provider’s infrastructure, whereas a custom backend allows you more freedom. There will be little you can do if a problem arises on the service provider’s end.
However, BaaS is ideal for an MVP. You can always switch to your bespoke backend later. Depending on your provider, building the server side of your SaaS business could take up to 800 hours and cost $25 to $60 per hour.
Maintenance
Post-release maintenance can cost up to 50% of your initial development budget per year, which includes updating system components, doing routine security checks, running tests, fixing bugs, and other tasks.
Since adding new features constitutes development and calls for alterations to your SaaS service’s front and back end, it will not be covered by the maintenance plan.
Final Words
Building a SaaS product involves a combination of time and cost factors. The development timeline can vary depending on the complexity of the product and the resources available.
Developing a fully functional SaaS product, on average, may take several months to a year. As for costs, it’s essential to consider factors such as development team salaries, infrastructure expenses, and ongoing maintenance costs.
While there is no fixed price for building a SaaS product, planning and allocating resources wisely ensures a successful and efficient development process. Investing in quality and scalability will pay off in the long run, as it helps create a robust and competitive SaaS solution.
Moreover, you can connect with experts for SaaS product development services to develop a safe, scalable, and dependable cloud solution.
