How Much Does It Cost to Build a SaaS Product

Factors impacting SaaS development cost

For people wondering how to build a SaaS website or application, understanding the development costs is one of the most critical steps. There is no way to give a definitive answer to the question of how much does it cost to build a SaaS product. Minimum viable products built with low-code and no-code platforms could cost around $10,000, but your SaaS MVP will suffer from a lack of customization options, proper project documentation, and testing and quality assurance. Custom SaaS MVP development may start at $100,000, and full-fledged SaaS platforms can cost several thousand dollars. To better understand how much your SaaS product will cost, it is crucial to know about the key factors that form a final pricing.

• Project complexity. The cost of building SaaS products heavily depends on project complexity and scope. Do you want to create a SaaS platform with a broad scope and different tools or a single tool designed for solving a particular problem? Is your product vertical or horizontal SaaS? Does your Software-as-a-Service app include advanced features or third-party integrations? All of these aspects of SaaS app development are instrumental in estimating development expenses.
• Technology stack. Technologies used during software development can reduce or increase the costs of your product. Modern frameworks and libraries can speed up development, while emerging technologies sometimes require additional employee training. The choice of a cloud provider is also crucial, as each cloud service offers different pricing models. The type of databases used by the development team, app architecture, design tools, and other tech stack components can also increase costs or help you reduce your budget.
• Development team composition and location. Software developers’ salaries are one of the most significant expenses during SaaS application development. Hiring freelancers is the cheapest option, but considered risky. Assembling an in-house team of full-time tech experts is the option with most control over project and reliability, but comes with additional expenses such as benefits, hardware, and sometimes office space. If you decide to outsource app development to a dedicated team or an experienced SaaS development company, the cost of labor will vary significantly depending on the hiring destination.
• Security and compliance. One of the most important aspects of Software-as-a-Service development is how to create a SaaS app that is secure and complies with various regulations. Implementing robust security measures and hiring compliance experts may increase initial development costs, but with cloud-based SaaS applications handling sensitive user data, investments in cybersecurity will help you save money by avoiding regulatory fines, lawsuits, and loss of customers’ trust.
• Development timeline. If you wonder how to develop a SaaS application as quickly as possible, compressing the development timeline may seem the most logical option. However, it is only possible with hiring additional developers, investing in automation tools, or paying your time for overtime. A longer development cycle will also impact your budget by increasing labor costs.

SaaS development is a complex process with its own specifics and intricacies that differs from website, native, or web application development. Now, when we determine which factors impact development costs, let’s talk about the steps to accurately estimate the budget of the SaaS development process.

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How to estimate the cost of SaaS

If you want to enter the SaaS market, learning how to estimate the cost of the product is crucial. It allows you to allocate your budget wisely and avoid unnecessary and unexpected spending. Here are some key steps that will enable you to determine how much it will cost to build a SaaS application.

• Define the scope. The first step in estimating the cost of developing a SaaS platform is clearly defining the scope and complexity of the project. Outline the core features, functionalities, and goals you want to achieve. To avoid inflating the costs, determine who your target audience is, what problem your platform or tool needs to solve, and separate essential features from non-essential. Document project requirements so your team can better understand your vision and avoid adding unnecessary features.
• Break down the project into tasks. To create a SaaS application that will align with your vision without going over budget, break down the project into smaller tasks as they are more manageable. Create a list of all activities needed to build a SaaS app. Each task should be specific and measurable so you can easily estimate them.
• Estimate time for each task. When your SaaS platform development project is broken into smaller tasks, you can determine the time frame for each one based on complexity and effort. You can consult with a SaaS application development company if you hire one or ask an experienced member of your in-house team with SaaS development expertise to set realistic timelines. This step is crucial for calculating labor costs and setting deadlines for your development team.
• Determine team composition and rates. Building SaaS applications usually requires front-end developers, back-end developers, UI/UX designers, QA specialists, and project managers. The number of IT professionals you need depends on the specifics of the project. Once you decide on team composition, research hourly rates for each role based on the level of expertise you are looking for and the hiring destination. You can calculate labor costs by multiplying the estimated hours for each task by the hourly rates of the team members.

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• Calculate development costs. At this stage, you can calculate the overall costs of developing a SaaS application. Sum up the labor costs based on hourly rates and task estimates and the budget for software licenses, third-party integrations, and other development tools. Include a buffer for potential overhead costs.
• Decide on infrastructure and tools. Infrastructure is essential for Software-as-a-Service products. Decide what cloud computing services provider you want to partner up with, what security measures you will implement at launch, and what monitoring and analytics tools you will use. Compare different options and consult with your tech partner to select the most cost-effective yet efficient solution.
• Pay attention to maintenance and support. Many people wonder how to build SaaS applications, yet forget about post-launch costs. Your SaaS startup costs should include regular updates and bug fixes, tech support for users, and ongoing maintenance. To estimate costs of post-launch support, research similar projects and consult with your tech team. Usually, ongoing maintenance and support requires from 10% to 20% of SaaS app development budget.
• Remember about the contingency budget and miscellaneous costs. It is extremely important to remember about potential SaaS application development challenges. To ensure smooth execution, allocate a contingency budget that will ensure that the project can continue without significant disruptions, even if unexpected issues arise. Also, remember about miscellaneous costs, such as legal and compliance fees, marketing expenses, training and onboarding, and administrative costs.

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Estimating the cost of Software-as-a-Service projects is not an easy task that requires attention to detail and meticulous planning. However, without a realistic and comprehensive budget, developing SaaS applications that will become successful and help you return the investment is impossible. Now, let’s talk about how to build a SaaS app without inflating the budget.

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Tips for minimizing the costs of developing SaaS

When many aspiring entrepreneurs find out how much does it cost to build a SaaS platform, some of them can be put off by the relatively high price. Here are some tips on how to make your development process more cost-effective and fully benefit from the SaaS model.

• MVP approach. SaaS startups with limited budgets can still enter the market and compete with established players by leveraging the MVP approach. A minimum viable product developed with only essential features can help you validate the core idea, gather valuable user feedback for future development, and even receive additional funds for building a SaaS product with a complete set of features and a more refined UI.
• Agile methodologies. Iterative development and constant collaboration can help you to significantly reduce costs by breaking the projects into smaller, more manageable parts, allowing changes based on user feedback, and ensuring that the app development team stays focused and productive.
• Open-source technologies. Software licensing costs can become a real problem when you decide to develop a SaaS application. Open-source technologies are typically free to use, transparency of source code enables you to build SaaS products with a higher level of security, and a robust community around open-source tools and technologies can assist you in ongoing maintenance and support. The budget saved on licensing fees can be allocated to a contingency budget and miscellaneous costs.
• Right tech stack. Selecting scalable technologies will prevent costly overhauls in the future. Choosing a widely-used technology will present you with a broader pool of tech talent so you can hire a SaaS development company or individual developer without going over budget. Also, it utilizes managed services offered by cloud providers to reduce maintenance and operational costs.
• Strategic outsourcing. If you don’t want to fully outsource your product to SaaS application development services providers offshore, consider delegating specific tasks to reduce development costs. You can not only benefit from a wider talent pool and save money on labor costs but also quickly scale your team up and down based on project requirements without hiring full-time team members.

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Conclusion

So, how much does SaaS cost? Even tech experts who have been developing SaaS applications for many years can’t give a definite answer. It can vary based on numerous factors, such as development timeline, number of features, type of SaaS you want to build, team composition and location, tech stack used, and many more. With our guide, you will be able to accurately estimate the cost of your project based on its unique specifics and learn how to create SaaS applications on a budget without unnecessary spending.