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How to Build a SaaS Product: Step-by-Step Guide

With the growing and constant popularity of SaaS products, more businesses eagerly use such technologies and actively implement them in their working environment for a myriad of reasons. Understanding SaaS benefits and the ways to develop it is impossible without a proper understanding of the technology itself. Essentially, SaaS is a technology available through browsers and on any device with an Internet connection, but as with any other technology, there are many nuances.

It usually starts with in-depth research, followed by UI/UX design, MVP development to quickly test the idea, QA processes, deployment, and post-release monitoring. However, all those steps tend to grow big while including numerous aspects.

Thus, this article will cover what is SaaS and how to develop a SaaS product from the idea seed to a successful product. So, you are about to find out what SaaS technology is, how to build a SaaS application, and why it is important for running and developing businesses.

SaaS product definition

SaaS, or software as a solution, stands for a cloud computing model. It is provided over the internet on a subscription basis, allowing users to use it on the web without installing it. It means that a customer can access the software needed and all its functionality on any device with a web browser and an Internet connection.

Modern SaaS technology is realized in a huge variety of products, many of which we use daily. Google Docs is perhaps the best-known example. It is a web-based software office suite within Google Drive service.

Among other most prominent examples of SaaS providers are the following market leaders:

  • Salesforce;
  • Oracle;
  • Amazon;
  • Google;
  • IBM;
  • Slack;
  • Microsoft;
  • HubSpot;
  • Shopify;
  • Figma.
SaaS apps examples

Although all these products are SaaS, they are built differently. Thus, to understand the SaaS development world better, let’s shift focus to the types of SaaS products.

Types of SaaS products

To begin with, there are two main types of SaaS, with vertical and horizontal focus. Thus, each of them is the backbone of any SaaS product. In this regard, vertical SaaS is characterized as more specialized software used in narrow niches. Horizontal, on the other hand, covers a wider area, delivering content or products to a wider audience. Here’s a detailed comparison.

CharacteristicVertical SaaSHorizontal SaaS
ScopeNarrow, focused on a specific industry or nicheBroad, applicable across various industries and business functions
FlexibilityMore specialized, less flexible outside the targeted industryMore flexible and adaptable across different business environments
ApplicabilityIdeal for businesses within a specific industry seeking tailored solutionsSuitable for businesses with general needs across various sectors
Industry focusIndustry-specific, addressing unique challenges and requirementsGeneralized, providing solutions for common business processes
CustomizationDeeper level of customization for the targeted industryOffers flexibility but may not provide as deep customization within a specific industry
ExamplesHealthcare SaaS, financial services SaaS, legal SaaSCRM software, ERP software, accounting software
FunctionalitySpecialized features for industry-specific processesGeneralized features applicable to a wide range of business functions
ScalabilityMay be limited in scalability outside the targeted industryScalable across businesses of different sizes and industries

As you can see from the outline of horizontal and vertical SaaS, they are quite different. Hence, products built with a focus on one of the two have different purposes, functionality, and applicability.

Both horizontal and vertical SaaS approaches are involved in many different products. For this reason, let’s take a look at several practical implementations of them.

Vertical SaaS applications

The vertical approach in SaaS implies tailoring the product for specific industries or niches, addressing their unique needs and requirements.

Healthcare softwareTailored solutions for managing healthcare-related processes, such as patient records and medical billing.Zocdoc, Cerner, Helsi
Financial services softwareSpecialized tools for financial institutions, including banking, investment, and accounting software.Stripe, Salesforce
Legal softwareSolutions designed for law firms and legal professionals to manage cases, documents, and legal processes.Everlaw, Onit, Clio, and others
Retail softwareAddresses the unique needs of retail businesses, covering inventory management, point of sale, and customer engagement.24TTL, Wholesale, Toolio, and many others
Manufacturing softwareStreamlines processes in manufacturing, including production planning, supply chain management, and quality control.Autodesk, Synopsis, and others
Education softwareSupports educational institutions with tools for e-learning, student management, and administration.Coursera, Duolingo, Skillsoft

Horizontal SaaS applications

Software-as-a-solution apps with a horizontal focus are designed for broad use across various industries and business functions. Here are several examples:

CRM softwareManages interactions with customers, streamlines sales processes, and improves customer service.Salesforce, HubSpot, Zoho CRM
ERP softwareIntegrates core business processes like finance, human resources, inventory management, and procurement into a unified system.SAP, Oracle NetSuite, Microsoft Dynamics 365
Accounting softwareAutomates financial processes, including invoicing, budgeting, and expense tracking.QuickBooks Online, Xero, FreshBooks
HR softwareAssists in managing HR functions such as recruitment, employee onboarding, performance management, and payroll.Workday, BambooHR, ADP
Project management softwareHelps teams plan, collaborate, and track project progress.Asana, Trello, Jira
Email marketing softwareFacilitates the creation and management of email marketing campaigns.Mailchimp, Constant Contact, SendinBlue
Content management systems (CMS)Assists in creating, managing, and publishing digital content.WordPress, Wix, Squarespace
Ecommerce platformsEnable businesses to set up and manage online stores.Shopify, BigCommerce, Magento
Communication toolsFacilitate collaboration and communication among team members.Slack, Microsoft Teams, Zoom

The SaaS market continues to evolve, with new applications catering to emerging needs and industries. The categories mentioned above provide a foundational understanding of the diverse landscape of SaaS applications available today.

How to build a SaaS product from scratch

At Codica, after more than 8 years, we cultivated a stable mechanism of delivering exceptional-quality products. Thus, according to the flow we cultivated, we divide all development services into sizeable milestones. Each milestone represents a certain step on the development curve, with a certain focus and task.

Step 1: Research and discovery

Each extensive development process begins with thorough research and product discovery. It is a service Codica provides that encompasses all essential milestones of the development. It greatly relies on thorough cooperation with the founder.

Throughout the discovery, we collaborate with the founder, evaluate their ideas, and involve them into all the processes. For instance, we conduct thorough research on the SaaS idea, choose a tech stack, and determine the product's requirements. Here are the most crucial parts of product discovery.

Market analysis

First, we refine your idea and research it to determine whether it is viable enough to build a SaaS product based on it. Our team analyzes the market segment you want to break into. To understand the situation in the market you are planning to enter, we analyze the future product based on key questions:

  • Who is the target customer?
  • What are their main pain points?
  • Who are the potential competitors?
  • What essential/unique features do they have?
  • What business models do they adopt?

The market analysis will help you explore business opportunities and find ones preferable for you. Choosing appropriate strategies for SaaS product development services and understanding how to build a cloud solution is crucial.

Let’s take Slack as an example. It’s a successful SaaS-based communication platform that generated over $533 million in revenue as of 2023 and has millions of active users.

Slack cloud-based company as an example

Stewart Butterfield, a founder of Slack, believes that when developing a go-to-market strategy, it is essential to create a cloud product that differs from competitors. This product also should play a significant role in your target audience's lives.

Stewart Butterfield highlighted three things the company has improved: search, sync, and ease of file sharing. With three points, Slack has become a leader among similar companies.

Thus, you have every chance of success by focusing on what is valuable to your audience. A product discovery process is a crucial step if you’re developing a product with us.

Business plan

Another important part of product discovery is a business plan, which is a roadmap for your software-as-a-service product. Let’s describe the crucial points you should mention in your plan to know exactly how to build a SaaS product.

  1. How can you distinguish your product from the others?

    Your company’s identity, product name, the value you want to share with your customers. Try to describe it in one brief sentence and make it catchy.

  2. What are the main pain points of your potential customers, and how will your project solve them?

    Determine the problems you want to solve with your product.

  3. How can you reach your target audience?

    Choose a marketing strategy for your promotion. Content marketing, social media, advertising, partnerships, etc. – there are plenty of options here.

  4. How will you make money with your SaaS product?

    Define your monetization strategy. Consider different subscription plans, advanced support, and some sorts of upgrades. You can use freemium, flat-rate, usage-based, tiered, or per-feature pricing.

  5. Where do you want to get financial coverage, and how do you want to spend it?

    Estimate your primary expenses, dividing them into different areas. Also, identify the funding sources for your enterprise. You can opt for your own budget, investments, or crowdfunding.

  6. What are the goals to be achieved to realize your vision?

    And finally, create a list of fundamental goals for the first few months of your custom enterprise software solution.

Read also: 10 Biggest Problems for SaaS Companies and How to Solve Them

The plan will most likely be subject to change. But it is a prerequisite for making up your mind about how to build a SaaS product successfully. Once the business plan is established, it can also be enhanced further. For instance, in collaboration with the founder, we can choose crucial metrics to track and set standards for them.

In the context of SaaS, several key metrics are commonly used to evaluate the performance and health of a SaaS business. Here's a brief overview of each:

Metrics to consider in SaaS development

Lifetime value (LTV)

LTV represents the total revenue a business expects to earn from a customer throughout its entire relationship. It helps businesses understand the long-term value of acquiring a customer.

Gross margin

Gross margin measures the profitability of a SaaS business by subtracting the cost of goods sold (COGS) from the total revenue. It provides insights into the efficiency of delivering the product or service.

Customer acquisition cost (CAC)

CAC is the cost associated with acquiring a new customer. It includes all expenses related to marketing, sales, and any other activities aimed at gaining new customers.

Monthly recurring revenue (MRR)

MRR represents the predictable and recurring revenue generated from subscription-based services on a monthly basis. It is a fundamental metric for subscription businesses.

Churn rate

Churn, also known as customer attrition or customer churn rate, measures the percentage of customers who stop using a service within a given time period.

Technical stack

The technology stack is a list of the programming languages, frameworks, and tools used in software development. Nowadays, technologies provide a huge variety of options to choose from.

That is why the question of how to build SaaS application and determine a solution stack is not an easy one. Yet another issue depends on the particular demands of your business. Thus, everything is individual. Let’s take a look at the technologies we prefer at Codica.


To deliver superior performance and have an extensive array of tools at your disposal, you will need modern JavaScript frameworks – React, Angular, or Vue.js. At Codica, we prefer React and Vue.js as both are market leaders. Also, you should consider Vue.js if thinking of lightweight and easy-to-maintain apps.


It is in charge of the server side in the process of creating a SaaS product. Being invisible to the users, it builds the core functionality of your SaaS product and formulates its responsiveness. In this regard, you need to use a reliable framework, such as Ruby on Rails or Node.js.

The Codica team is passionate about the Ruby programming language. We opt for Ruby on Rails to build a cloud solution as a fast, cost-effective, scalable, and secure framework.


Databases keep the necessary information for your applications. We suggest PostgreSQL, MySQL, or MongoDB. Our selection to build a cloud web solution is PostgreSQL, the most advanced open-source database.

SaaS hosting provider

To handle SaaS requirements, any reliable cloud provider will do. The leaders are Amazon (AWS), Google, Microsoft, and Heroku. We usually work with Amazon Web Services due to its reliability, flexibility, and security.

Do you want to build a highly scalable SaaS solution?
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Do you want to build a highly scalable SaaS solution?

Step 2: UI/UX design

Right after completing an extensive product discovery, UI/UX design services comes into play. With all the information on the future SaaS product needed, designers put lots of effort into making your product visually appealing and engaging to users.


It is the initial step in our development process, allowing us to focus on the project's architecture without the distraction of color and font. The prototypes, depicted in a subtle gray-blue palette, serve as a canvas to meticulously plan the logic of future user roles, creating a seamless user journey. Here’s a quick example of the prototype our team designed.

Examples of prototypes by Codica team

Once these prototypes are transformed into clickable versions, we present them to the client for comprehensive evaluation.


Moving on to the visualization phase, we collect references to guide the design process. We finalize the project's style, including fonts and color schemes. This critical phase involves presenting multiple design options for client approval, ensuring a shared vision for the project.


Lastly, in the design phase, we utilize the approved visual elements to create a comprehensive guideline. This document outlines numerous details, such as element sizes and colors, fonts, imagery, and other essential design elements.

One such example of a great user-oriented design is CakerHQ, a SaaS platform for bakery business. Working on this platform, not only did we deliver a performant product, but also made it look neat and easy to use. As a result, CakerHQ brings just the right vibe to people who fuel parties with their cakes and to customers who seek delicious masterpieces for their celebrations. Here’s an overview of the platform highlighting how it works and looks.

Later on, this guideline becomes invaluable for developers as they get a clear understanding of the overall aesthetic of the solution. Subsequently, we proceed to design all pages, ensuring consistency across both mobile app and desktop versions. Throughout each stage, ongoing discussions with the client ensure alignment with their vision and expectations.

Step 3: SaaS product MVP development

What do you need to launch a successful SaaS application and validate the value proposition? We have no doubt about it – creating an MVP is an advisable stage of your software-as-a-service product development.

Building SaaS products requires lots of time and investments. To save them, MVP is an excellent choice. An MVP is not a fully-fledged product, but it has enough features to attract early users and validate an idea. MVP is ready to enter the market and can further be scaled and amended. Moreover, it is an excellent business decision for a SaaS product as it allows to test the idea before creating a full product.

Although it is not an end-product, it solves your customers’ critical problem. An MVP must appeal to your target audience and make people love your product. The primary purposes of launching an MVP prior to developing a fully functional SaaS product are:

  • Collect and analyze feedback. It provides very valuable information on usability and user experience. What did users like and did not? What functionality should be added/modified/removed?
  • Test the waters. It allows you to check whether your application will suit the rapidly growing SaaS market. Also, you will know whether customers are willing to buy your services. Will there be enough demand for your application?
  • Try different concepts. MVP gives the possibility to measure the effectiveness of business hypotheses. Focus on the whole impact of your SaaS application, not only on its features.

Read also: Minimum Lovable Product: Definition and Key Development Steps

At Codica, we recommend creating an MVP in order to quickly collect feedback, check the technical implementation of the idea, and demonstrate it to investors or clients. For example, we developed an MVP for accommodation search for expats. The project idea was to facilitate the relocation process to Australia for people who found employment.

Example of Codica's completed case study

As a result, our client successfully tested the cloud product in practice and presented it to investors. Consequently, this healthy approach proved to be beneficial as our client successfully raised funds for further development and continued to actively scale the platform.

Looking to develop a superior SaaS app?
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Looking to develop a superior SaaS app?

Step 4: Quality assurance and optimization

Developing and delivering a superior product is not an easy task. Thus, quality assurance is the crucial step to make this process easier. The development process is closely intertwined with quality assurance services, where testing plays a pivotal role in ensuring that the product aligns with your business requirements and industry standards. A refined and polished product not only increases user engagement but also enhances customer retention.

Based on our experience, a deep understanding of product requirements facilitates seamless testing. The QA team, equipped with appropriate testing documentation, conducts both manual and automated tests. At Codica, our testing strategy focuses on verifying compliance with product specifications, allowing our quality assurance specialists to conduct a range of tests tailored to the specifics of SaaS applications.

Speaking of the testing processes, there are various tools QA specialists use to ensure the product is stable and performant. For instance, they employ different types of testing to see how each functioning part of the product works.

Types of testing applicable for SaaS
  • Security testing. Validates the secure storage of sensitive data and ensures the resilience of the product against common security attacks.
  • Compatibility testing. Checks the app's compatibility with various browsers, allowing you to choose the most popular ones for your customers.
  • Functional testing. Evaluates the features of the solution and examine possible configurations and customizations within the SaaS app.
  • External API testing. Validates the seamless functioning of SaaS app APIs with software and third-party applications, ensuring the correct operation of the APIs.
  • Backup and recovery testing. Verifies the app's capability to revert to the previous version and recover data in the event of a fault.
  • Performance testing. Assesses how well the app performs under expected stress and loads, ensuring it supports the anticipated number of simultaneous users, manages memory usage, and maintains optimal response times.
  • Usability testing. Examines the convenience of content layout, evaluates deliverables from UX/UI design services, and assesses the user-friendliness of the application.
  • Regression testing. Ensures the continued correctness of the SaaS app after software updates and changes, contributing to the stability and uninterrupted functionality of the SaaS solution.

Clearly, there are more testing types, and such a comprehensive testing approach validates the SaaS application's functionality and performance and fortifies its security. It improves usability and resilience to changes, providing a robust and reliable end product.

Step 5: Deployment

Considering that SaaS apps are stored on the web and work absolutely online, deployment is an important stage of the entire product development process. In other words, deployment is the process of making your SaaS product available to the public. The entire product has to be carefully tested and polished to perfection to not spoil the initial impression for users.

For this to happen, though, DevOps specialists’ work proves to be irreplaceable. Based on our experience, the deployment process works on automation, and DevOps specialists ensure it works as intended. Each version of the app receives a number and after the initial release, automation allows developers to release new smaller updates without the need of shutting down the entire app. This way, we can regularly implement new features, improve performance, and fix any bugs and issues.

Lastly, another important aspect you need to know about is a hosting provider for your SaaS app. Considering that users don’t need to download it, SaaS apps are stored on servers and are accessed through the web. Hence, SaaS provider choice is crucial for making your app accessible and secure.

Find out more: Choosing the Best SaaS Hosting Provider for Your SaaS App

Step 6: Post-release monitoring and maintenance

After we create a SaaS product, the work is far from over. Technologies always evolve while, for example, UI/UX design trends regularly change too. Thus, every SaaS app needs updates every now and then. Accordingly, at Codica, we always offer our clients to support the app even after its release. This way, we can bring changes, add updates, and new content.

Moreover, feedback plays a pivotal role in this regard. After the initial release, we evaluate the metrics the SaaS product generates. Then, we learn from them and update the app accordingly. In layman’s terms, it is called a feedback loop and consists of three main actions, namely, build, measure, and learn. After all, it is a great technique that helps to deliver superior quality solutions.

Build-measure-learn feedback loop explained

Team composition for SaaS development

To develop a superior SaaS product, a professional and coherent team is a must. However, the team composition for SaaS development can vary based on the size of the project, its complexity, and specific requirements. Thus, the exact composition is often defined during the product discovery mentioned previously.

Although SaaS development is individual, the basic team should normally consist of the following specialists:

Team members for SaaS development

Project manager

During the entire development process, project managers guide and manage all activities of the team. For instance, project managers create and maintain project deadlines and ensure the project is delivered on time and within budget. Moreover, they are usually responsible for active communication with clients.

UI/UX designers

These specialists do not only design the pages of the product. They choose color schemes, fonts, and create wireframes, mockups, and prototypes. Besides, emphasis on UX brings much-desired usage comfort and convenience. As a result, a combination of UI and UX brings the SaaS product as close to the product concept as possible.

Frontend and backend developers

In layman’s terms, frontend developers focus on the user interface and user experience. They implement features according to the technical requirements defined during the product discovery and prove them valuable during the MVP stage. They enliven the visual concepts designers have created while enriching the product with features. Thus, frontend developers work with the functionality of the solution, implement APIs, third-party services, and much more.

Backend developers, in turn, focus on the backbone of the solution, namely its connectivity to the servers and databases. They handle server-side logic and database interactions while ensuring the product is performant and stable. Moreover, as SaaS products work on the web almost exclusively, backend developers’ efforts play a pivotal role in maintaining and developing the app.

Looking for a team to create a SaaS app?
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Looking for a team to create a SaaS app?

Quality assurance (QA) engineers

By running different types of tests, these specialists ensure the product works as intended. They test the application for bugs, usability, and performance issues by developing and executing test plans. Additionally, their work is done regularly to ensure stability at all stages of development.

DevOps engineers

Apart from the development itself, the working environment requires maintenance, which DevOps specialists provide. They set up and maintain the development and production environments and automate deployment processes. Additionally, they emphasize the security aspect of the development, implement security best practices to protect user data, and address security risks throughout the process.

The specific roles and their emphasis can vary based on the development methodology (e.g., Agile, Scrum) and the size and nature of the SaaS project. Effective communication and collaboration among team members are crucial for successful SaaS development.

Advantages of the SaaS model

To explain such a sharp rise in the popularity of SaaS-based products, we defined their key benefits. These reference points will bring you closer to understanding how to make a SaaS product. Let’s have a look at them.

Benefits SaaS model brings
  • Quick setup. The vendor’s cloud environment provides the installation and hosting of the software. Thereby, the deployment process speeds up compared to the traditional on-premises model.
  • Cost-effectiveness. The on-premises model offers a license for an upfront cost. However, the SaaS model implies very convenient subscriptions.
  • Effortless updates. Customers do not have to buy and install upgrade packages to get the latest version of a SaaS product.
  • Great flexibility. Software-as-a-service vendors provide many subscription models that are adjustable to any company’s growing needs.
  • Data security. SaaS providers invest heavily in security measures, ensuring data protection and compliance with industry regulations. Demonstrating robust security measures builds trust with users and helps attract businesses with stringent compliance requirements.

Now that all the introductory theory is dealt with, let’s move to the development process.

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

SaaS development pricing

When it comes to creating complex software-as-a-solution products, pricing is one vague point. The variety of functionality and forms modern SaaS apps have is spectacular, and it’s crucial to understand that everything has a price. Thus, the price of developing a SaaS app depends on its complexity and the hourly rates of the professionals involved in its development.

The more ambitious the project, the more expensive it is going to be. Thus, full-fledged products require lots of resources. Hence, the price is higher, varying from $15,000 and more.

Hourly rates based on the location are another important aspect worth mentioning. For instance, in software development, hourly rates for professionals vary from $30 to $70 based on their skill level, location, and other variables.

However, to put you into context more, we can estimate approximate prices for building a SaaS product MVP. In this exemplary table, we use a set rate of $50 per hour. We list common functionality many SaaS apps have, yet the cost varies in each particular case, and your technical partner will give you a precise quote.

FeaturesTime, hoursCost (50$/h)
UX Development56$2,800
UI Development80$4,000
Project setup16$800
DB structure32$1,600
Payment (Stripe or PayPal)64$3,200
Shipment (Shippo)32$1,600
Main functionality
Authorization and security64$3,200
User profiles42$2,100
Search and filters72$3,600
Product page42$2,100
Auction functionality104$5,200
Reviews & Ratings48$2,400
Shopping cart64$3,200
Buyer panel96$4,800
Vendor panel120$6,000
Admin panel104$5,200
Non development activity
Project management48$2,400
Quality assurance64$3,200
Code review48$2,400

Codica's expertise in building SaaS applications

Codica specializes in delivering SaaS development services designed to elevate your business above competitors by offering a distinctive, secure, and scalable solution. Whether you seek to create a new cloud-based application or manage an existing product, our team is eager to share its expertise and passion for cloud solutions, addressing any SaaS-related challenge you may encounter.

Throughout the years of delivering exceptional products, we haven’t simply created SaaS solutions. Instead, we mastered building a wide variety of products tailored to different industries. As of now, we create CRM, ERP, CMS systems, and more, all of which greatly simplify management, streamline working processes, and enhance the user experience.

In addition, we have deep experience delivering SaaS products across multiple industries. Here are several examples.


SaaS ecommerce software from Codica comprises software, backups, hosting, and technical support, significantly boosting eсommerce sales.


Our SaaS apps simplify and enhance the travel experience, providing users with solutions that are simple, fast, intuitive, and pleasant.


Our SaaS healthcare app development incorporates modern technologies, delivering a seamless user experience and engaging a broader audience.


We offer reliable and scalable SaaS application development solutions for automotive manufacturers, enabling them to stay ahead of the curve.


Rental apps developed by Codica help businesses stay on top of their rental operations, enhancing bookings and increasing revenue. One such example is a real estate SaaS solution we recently built.

Real estate SaaS app built by Codica

It comprises user-friendly UI/UX design and a whole lot of features that take user experience to the next level. While on this platform, we packed it with rich functionality such as 3D real estate tours, real-time map integration, and convenient search and filtering options. As a result, we delivered a highly performant platform that works seamlessly on various types of devices. Here’s a deeper dive into how it works.

Codica's expertise in custom SaaS solutions spans various industries, and our agile methodology ensures the effective development of quality SaaS applications. As a trusted SaaS development company, we are committed to providing profitable and efficient SaaS products for businesses of all sizes. If you have a groundbreaking SaaS idea, we are here to bring it to life.


The SaaS model, without a doubt, has produced a great variety of business opportunities. To take the best from it, follow our expert step-by-step guide on how to build SaaS product. And, of course, customize your software-as-a-service product to stand out in the best possible way.

For now, our team sincerely hopes this article sheds more than enough light on all the intricacies of SaaS development. Still, if challenges persist, the Codica team can take care of your SaaS development needs and help to realize your vision. Browse through our portfolio, or just contact us to discuss your idea.

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