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How Much Does It Cost to Build a SaaS Product in 2022: Detailed Guide

How much will it cost to build a SaaS app? If you decided to follow the latest trends and invest in SaaS development, this question is relevant more than ever.

This blog post is written to help you clear up this matter. Here, we will cover in detail the main factors that define the final cost of building a SaaS product. They include the project scope and timeline, API integration, and the required functionality.

Also, you will learn how the total cost of a completed software-as-a-service product changes depending on the chosen SaaS development service provider.

What should you know about SaaS applications in 2022?

Before we discuss how to calculate the cost to build a SaaS app, let’s take a look at the latest software-as-a-service trends. When you know what your potential customers want, you can figure out how to meet their needs with your product much faster.

The rise of SaaS tools for remote collaboration

An outbreak of coronavirus at the beginning of 2020 forced companies to switch to remote work. As a result, online collaboration tools have become highly sought-after.

The most popular ones include:

  • Video conference - Skype, Zoom, Google Hangouts;
  • Online chats - Slack, Chanty;
  • Time-tracking tools - Harvest, Everhour;
  • Cloud storage and file-sharing apps - Dropbox, Google Drive;
  • Collaboration and project management platforms -Trello, Jira, Asana.

Vertical SaaS

A vertical SaaS platform is designed to satisfy business needs within a particular industry. In this regard, they are different from horizontal SaaS apps that are aimed at serving as many domains as possible.

The biggest players in the vertical SaaS market are:

  • Guidewire (property insurance);
  • Veeva (pharmaceutical management);
  • Infor (manufacturing), etc.

Below you can see the description of Veeva cloud solution for life sciences:

Cloud solution Veeva for life sciences | Codica

Switching from SaaS to PaaS

Today we witness the high-level competition in the SaaS market. In light of this, organizations think of new ways of retaining customers. For example, they scale their products further and move from SaaS to PaaS model. As a result, SaaS applications get a scalable, fast, and agile alternative.

Box and Salesforce are the SaaS market leaders that have successfully adopted this trend. The migration from SaaS to PaaS allowed them to drive up the demand for their products.

You may also like: SaaS vs PaaS vs IaaS: Choosing the best Cloud Computing Model

Mobile-first approach

The number of mobile users is constantly growing. Statista predicts that it can reach 7.49 billion in 2025.

Forecast number of mobile users worldwide from 2020 to 2025

This impressive figure makes companies willing to stay ahead of the game adapt their SaaS products to mobile devices. Dropbox, Skype, Jira, Trello - all these SaaS tools are developed as desktop and mobile platforms.

The growing popularity of microSaaS

MicroSaaS is known as a small tool (add-on, extension) designed to enhance the functionality of an existing application. What makes MicroSaaS apps so popular? It enables businesses to gain a competitive advantage and find an unoccupied niche in the saturated market.

Micro-SaaS apps require fewer resources to launch. At the same time, with such apps you get revenue like in the case of full-featured SaaS products, but with less effort. Also, you can run micro-SaaS apps remotely and grow your business without attachment to location.

The most famous companies that adopted the microSaaS approach are:

  • Grammarly (editing tool);
  • Social Sprout (social media software).

Main challenges of SaaS app development

SaaS app development is a complicated process. There are certain pitfalls you may face along the way. These challenges can increase SaaS development costs considerably if you do not know how to address them.

To make things easier for you, we will show how you can avoid the most common mistakes related to SaaS development. Follow these tips, and you will be able to keep the cost to build a saas application down.

Poor execution

If a SaaS project fails, business owners often tend to blame the idea. However, in fact, the idea itself may be brilliant, but its execution is far from perfect. Poor execution can be a reason why the cost to build a SaaS app can skyrocket.

To make sure that you execute your business idea properly, we recommend applying SWOT analysis. In other words, you need to identify strengths, weaknesses, opportunities, and threats of your SaaS project.

This way, you can clarify the objectives of your business venture and define your SaaS app cost. Also, you will find out what factors facilitate or impede reaching them.

Lack of trust

Trust or lack of it can determine the fate of your SaaS product. If your customers do not trust your app, they will not use it. It is particularly true for many SaaS apps where large volumes of sensitive data are at stake. Hence, SaaS application security should become your top priority.

To protect user data, your SaaS product should offer two-factor authentication and role-based access.

In addition, it would be a sound idea to introduce a strict data deletion policy. Specify how customers’ data should be stored and deleted.

Finally, the SaaS app development company you will partner with should provide customers with field-level encryption. It should enable you to choose the fields that should be encrypted, for example, credit card numbers or social security numbers.

Small audience

Earlier, we have mentioned the focus on a specific industry or particular issue as a popular SaaS trend. However, it would be a big mistake to choose a niche that is too small. Thus, you are risking not getting enough customers.

In the future, the limited audience can play dirty on you. The thing is that you will need to update and optimize your SaaS app constantly to stay relevant. And since this is not cheap, in case of a small audience, you will inevitably sustain additional SaaS implementation costs.

What is included in the cost of building a SaaS product?

To understand how the cost to build a SaaS app is calculated, let’s discuss a few key stages and aspects of the SaaS development process.

The scope of your SaaS project

To start with, decide what kind of a SaaS product you are going to build. Will you create a SaaS platform or a tool? The thing is that these kinds of software-as-a-service systems have a different scope. Consequently, the cost to build a SaaS application will be different as well.

In general, a SaaS tool has a restricted scope. They are designed to fix one or two issues and are expected to perform only a few functions greatly.

A classic example of a SaaS tool is Buffer, which is an instrument built to manage social networking accounts.

Saas platforms, in their turn, often comprise several tools. Owing to this structure, their functionality is expanded greatly, influencing the cost of SaaS. Thus, users get access to the features that were unavailable in similar SaaS instruments.

One of the top SaaS platforms that comes to our mind is Facebook.

If you are new to cloud business, and you build your first SaaS product, you would better keep it simple. Start with a tool and then scale it by adding new features. In this case, you will not have to worry that the cost to build a SaaS app will be too expensive.

The implemented functionality

SaaS development costs depend on the complexity of your project. The more features your product will have, the higher price you will have to pay. For this reason, choose the required functions wisely as it influences SaaS product development costs.

Draw a clear line between must-have functionality and desirable but not essential features. Thus, you will make sure you will not overpay for unnecessary options at SaaS application development.

So what features should your SaaS application have? Basically, the key functionality hinges on the particular issue it is designed to solve.

At the same time, the following features are common for all types of SaaS products:

  • Role-based access. It enables admins to set different permissions within a team. For example, they can restrict the level of access to sensitive information for some members.

For example, TalktoTheManager, a customer feedback solution, provides each team member with different access levels depending on their role:

Role-based system of permissions for SaaS app | Codica

  • Analytical dashboard. When companies have access to analytics, they can see which business metrics should be improved. Thus, they will be able to provide better customer services.
  • User management. It includes the possibility for users to log in and log out, edit profiles, and change passwords. You might also consider choosing a single sign-on. With this option, customers no longer need to log into every application they use. Instead, they apply single credentials for accessing multiple services. It is advisable to use two-factor authentication for your user management system.
  • Customer relationship management (CRM). It helps organize communication with customers and prospects. CRM enables tracking sales and interactions, managing documents and quotes, etc. Salesforce is a prominent example of a CRM. Thanks to the tools and display of customer behavior, the service facilitates marketing for businesses.
  • Account management. The feature allows collecting data on successful and failed payments. Also, it displays changes in subscriptions and deleted accounts.
  • Infrastructure. The number of SaaS application users vary as time goes by. So, your solution should be able to scale up and down depending on the loads.
  • Audit trail. With this feature, businesses can track the activities of the account users. In such a way, organizations can prevent suspicious activity.
  • Customer analytics. The feature enables you to analyze customer’s behavior. Thanks for analyzing the dynamics, you can optimize users’ experience in your SaaS solution.
  • Enhanced security features. They protect sensitive information against the most common security vulnerabilities. It is especially useful in a complex SaaS system storing sensitive data of many users.

If your SaaS app solves a narrow problem, you will need only the basic functionality. Expanding your solution means more effort. Hence, it brings additional SaaS software development costs.

At Codica, we select the solution functionality considering our customers’ business needs. Thus, they receive reliable products within a shorter time.

This is how we approached creating the healthcare referral management software. We helped the customer to outline the necessary functionality at the start. So, the customer received the final solution earlier with all the required features.

Choosing a development team: a freelancer vs partnership with a technical company

When it comes to hiring the right specialists for your SaaS product, if you don’t have an in house development team, there are two available options. You can turn to the team of freelancers or partner with a SaaS app development company.

Each of these variants has peculiarities that can influence the cost to build a SaaS app. The brief outline of each option below will help you make the right choice.

Hiring freelancers will cost you less than a partnership with software companies. The price gap is explained by the fact that self-employed professionals usually set lower rates. It could reduce the SaaS software development costs.

However, since the quality of the service is not a top priority for freelancers, you are risking getting a low-grade product.

At the same time, the specialized app development agencies cherish their business reputation. It means that you should not worry about the quality of their services at SaaS application development.

Partnership with a software agency will raise the cost of SaaS. However, it is worth the effort and cost. First of all, such companies offer full-cycle development services. These are as follows:

  • Conducting a product discovery. You can do it on your own. In this case, it will cost you zero. But if you choose a professional company, count on the hourly pricing of $80 in the US and $50 in Eastern Europe. This stage involves checking the feasibility of your idea and market research. Analyzing your idea’s market fit will help you develop a product that your customers need and love. After discovery sessions, you’ll get answers to the following questions:

  • Who is your target audience?

  • What is their demand?

  • What are their needs?

  • How does your product appeal to their needs?

  • Who are your competitors?

  • UX/UI design and prototyping. At this step, a designer creates layouts for your solution. It’s vital to consider the discovery answers to choose the right flow and palette for the SaaS app. Design should include intuitive UX and attractive UI. It should clearly show your users the key purpose of your solution.

  • Minimum viable product development. Creating a solution as a minimum viable product includes the core value for your customers. It allows testing your SaaS system with early users and discovering if the system is profitable. Since your SaaS product includes only the key features, you’ll need less time and cost to build it. Also, it should be scalable as your audience and business grow. So, you need to include the possibility for further development.

  • SaaS product development. It includes the use of proven technologies. A company with reliable expertise chooses such tools to deliver robust and secure SaaS solutions. The aspects typically included in SaaS product development are as follows:

    • Front-end. It is what a user sees in your product and interacts with it. The development of this part typically involves using Javascript. Its frameworks are also widely used for this purpose. They include React, Angular, or Vue.js. At Codica, we prefer working with React and Vue.js. React is the leader among the top used frameworks. Vue.js helps create lightweight and easy-to-support solutions.
    • Back-end. It is a part of a SaaS app that is invisible to a user but ensures the app’s good work and responsiveness. The prominent frameworks are Ruby on Rails, Node.js, and Django. Codica opts for Ruby on Rails as a fast, cost-effective, and reliable framework.
    • Database. It helps handle your solution’s data. We suggest using PostgreSQL, MySQL, or NoSQL.
    • Hosting. For handling SaaS requirements, you need to host your solution with a trustworthy provider. We advise Amazon (AWS), Google, Microsoft, or Heroku. At Codica, we typically work with AWS owing to its flexibility and safety.
  • Quality assurance. Testing helps refine the code and avoid errors ensuring proper work of your solution. Quality assurance allows testing the critical aspects during SaaS application development. They include performance, user experience, compatibility, and security.

  • Maintenance and support. After the deployment of your SaaS app, the developer will support you as your product changes. It involves updating without downtime to streamline the user experience. Shortly after launch, you’ll need to make improvements frequently and check them based on customers’ feedback. So, there should be a developer team to support you.

At Codica, we believe that all these stages are vital for building a successful product. Our team develops SaaS applications with backup and recovery strategies in mind. This ensures the required level of usability and security.

When it comes to exact rates, everything depends on the location and experience of a development team. For clarity, below you can see the average hourly rates of software developers in different geographic regions. The stats are provided by Accelerance and cover the US and Canada, Central and Eastern Europe.

Average web developer hourly rates
North AmericaCentral and Eastern Europe
$41-$175 per hour$21-$118 per hour

Our team provides the needed services to deliver your product with regard to your requirements and business needs. For example, we implemented blockchain technology in an insurance platform. Such an approach secures the users’ personal and e-wallets data.

Related reading: How to Choose a Reliable SaaS Application Development Company

API integration

Like any other app, your SaaS product will have backend functionality. The question is how it will be implemented. You can either build it from scratch or via API integration.

In terms of the SaaS app development cost, the second option is cheaper, while developing a SaaS application from scratch can turn out quite expensive.

If you use API, you can scale your business fast. Besides, it allows SaaS companies to skip many development steps they would have to follow if they develop the backend of their app from scratch. In today’s highly competitive market, you need to think of better use of your budget than reinventing the architecture of existing SaaS solutions. It will reduce the SaaS app cost for you.

SaaS development platform: desktop vs mobile

There are two main types of SaaS development platforms: desktop and mobile. Mobile platforms are suitable to give users enhanced accessibility and speed. For example, Mention and Buffer offer exceptional user experiences within their mobile versions.

On the other hand, for most B2B solutions, a PC platform is preferable as employees work with full-size screens. For example, Dropbox and Slack allow easy handling of files in their desktop versions for businesses.

Building your product for both is favorable, but you need to add it to your SaaS cost structure. In the beginning, it is advisable to create a SaaS system for one platform, which you will expand in the future.

As exemplified by Deskera, both versions have pros and cons. The mobile SaaS version is helpful if you want to quickly look through a short piece of information or drop a message. Meanwhile, you’ll prefer a desktop version to look at spreadsheets. That is why Deskera offers cloud-based business software for mobile devices and desktops.

Deskera CRM

Overhead costs

It would be a great mistake to think that all your expenses will be over after the launch of your SaaS application. There are different overhead costs for a SaaS release you need to consider. First off, you need to figure out how to attract users to your application. That means significant spendings on promotional strategies and marketing, which raises the cost of SaaS.

Besides, do not forget about legal costs. They include compliance with federal and local legislation. It is particularly important if you build a SaaS application for such industries as healthcare or finance.

Speaking about the total cost of ownership, we should mention the following expenses:

  • Licensing;
  • Subscription;
  • Updates;
  • Technical support/training.

All these also add up to the cost of building a SaaS product.

How much does it cost to build a SaaS product MVP?

SaaS apps differ by goals, scope, and functionality. As the cost of building a SaaS depends on many parameters and variations, estimating a unified relevant price is a challenging task. SaaS software development costs vary widely. The price for an MVP for a SaaS app starts from $50,000. The fully-fledged SaaS product cost can reach $700,000 and beyond.

However, before you invest your time and money, it’s important to know what budget you might need for a SaaS MVP, at least approximately.

So, we’ve prepared a table with estimates of the cost for a Minimum Viable Product of typical SaaS solutions.

SaaS MVP product development costs
MVP for a SaaS appMinimum time to build, hoursApproximate cost, $
Cloud storage app (Dropbox)1,000 hours$50,000
CRM or Customer relationship management system (Salesforce)1,200 hours$60,000
Messaging application (Slack)1,200 hours$60,000
Online design tool (Figma)1,500 hours$75,000
Project management tool (Trello)1,000 hours$50,000

Please note that the above costs are mentioned for reference only. Only your development partner will be able to provide you with the final estimate.

How can Codica help you build a SaaS app?

It is expected that the SaaS market will grow globally and reach over 229 million euros by 2025. The United States will see the largest increase compared to other countries.

Global SaaS market share in 2020 and 2025 by Statista

So, if you want to be at pace with the market trends, you need a reliable technical partner. SaaS product development is one of the focal areas for our company. Since 2015, Codica team has been engaged in building fast-loading, scalable, and secure cloud solutions.

Our in-house expertise allowed us to create successful SaaS products for a number of domains including finance, travel, automotive, and insurance. Our experience allows us to reduce the total cost to build a SaaS app, and help you save time and budget.

Do you need a custom software-as-a-service solution? Our professional team will build a SaaS product for you from scratch. It will take into account all your specific business requirements and needs.

Are you worried about how a new solution will work with other programs and tools used within your organization? Our team will make sure that the application delivered is easily integrated with different third-party services.

Digital Village case study

We are happy to share our experience with you and tell you about one of our successful projects. It was a smart collaboration platform that we built for an Australia-based alliance called Digital Village.

The client has reached to us with a request of building a professional network in the field of IT product development. The idea was to build a professional medium where entrepreneurs could find high-skilled developers and web designers for building excellent software products.

SaaS application example – online collaboration platform | Codica

The main challenges related to the project included creating a simple and intuitive user interface, offering extended search functionality, and lean project management.

As a result, the client got a user-friendly and intuitive cloud solution with efficient and transparent project management and convenient admin part.

Do you want to build a highly scalable SaaS solution?
Talk to Codica SaaS experts and learn how to quickly bring your idea to reality.
Learn more about SaaS development

Conclusion

So how much will it cost to build a SaaS app? As you can see, there is no unified answer to this question. Every SaaS project is unique, and so is the cost.

We have covered the main aspects of SaaS development that influence the total price of building a SaaS product. We hope that now you will be able to calculate the SaaS development costs much easier.

If you are looking for a reliable SaaS app development company that will help you create a secure, scalable, and reliable cloud solution, contact us. We will be happy to take on your project and help your business grow.

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