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How to Build an MVP for a SaaS Startup: Practical Tips

July 05, 2021
9 min

It’s hard to imagine now that only some decades ago people had to purchase and download software for all possible needs on their PCs. No matter the task, every new tool took some space on the hard drive and every program update was a nightmare. Why? Because it needed extra space and pretty much of your time and effort if something went wrong. Those days are gone thanks to cloud computing and SaaS products.

These software as a service tools have changed the way we work and use software for good. As per recent forecasts, this market is going to reach $623 billion by 2023. So let’s find out what are SaaS perspectives in the near future, why it’s better to start off with a SaaS minimum viable product, and how to create a SaaS MVP.

SaaS products market overview and perspectives

What is a SaaS product?

SaaS platform is a cloud-based application offering its services to end-users via the Internet. Instead of downloading an application, users can access the product from their mobiles or via a web browser on a desktop.

10 types of SaaS products and solutions

Let’s have a closer look at different types of SaaS products and name the main market players in each category.

The overview of the SaaS startups market

COVID-19 had a negative influence on many big and small companies. Still, recent feedback shows that the impact of the pandemic on SaaS businesses was not so deadly. Below are some interesting statistics of the SaaS product market:

  • 34% reported a moderate negative impact of the pandemic on their business;
  • 27% claimed a greater negative impact;
  • 39% reported little to no negative impact.

3 key SaaS statistics: top vendors, churn stats and public cloud (FinanceOnline)

Source: FinancesOnline

Further reading article
Further reading: 10 Best SaaS Startups in 2021 for Your Inspiration

The future of SaaS

The SaaS market is forecasted to reach $623 billion by 2023. Sounds pretty optimistic, isn’t it? Still, there are two sides to the coin. One of them is bright with a faster and more reliable connection, growth in numbers, and industries. 86% of companies say they are planning to cover more than 80% of their software needs by SaaS after 2022. Thus, let’s admit it, the growth of SaaS products won’t slow down.

The other side of the coin: a large variety of tools on the market created a kind of SaaS chaos, paralyzing companies. Indeed, what tool to choose amongst a hundred similar ones? That’s when big market players started to think about collaboration options.

For example, Figma announced new integrations with GitLab to help teams manage projects. Such collaborations don't solve the chaos problem. Still, they show that big brands are aware of this problem and care about their end-users.

Bottom line: more companies enter new markets or even create new ones, thus cloud products will continue to see high demand. As you can see, SaaS indeed has changed the global business landscape.

Do you want to build a secure, scalable and performing SaaS solution?
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Learn about SaaS Development

Minimum Viable Product for SaaS in a Nutshell

SaaS MVP is an early working version of a cloud product. It has the must-have features needed for this solution. Still, an MVP offers enough value to end-users.

A minimum viable product development for SaaS is vital to validate the idea, launch the product fast, and, of course, save costs. Only after creating MVP for SaaS startup, it’s time for further steps: design, development, and upgrades.

How can a SaaS startup benefit from MVP?

Even though the SaaS domain is on the rise now, the stats of successful startups should put us on a guard. Statistics report that over 90% of SaaS startups shut down in the first 5 years regardless of funding. The main reasons why SaaS Startups Fail are: no market need, ran out of investment, and the wrong team.

So, even if you have a one million dollar idea, don’t hurry up with complex product development. Probe the market, initial idea and start with building SaaS minimum viable product.

Check the main business benefits of MVP software development services for SaaS startups.

6 MVP benefits for SaaS startups

SaaS MVP from a technical point of view

Let’s talk about the technical hotspots when developing a minimum viable product for SaaS. Try to make it secure for users, scalable for developers, and performing for both with nothing extra.

The following tips will be useful for MVP for SaaS startup development:

  • Use open-source tools;
  • Consider fast prototyping with, let’s say, Ruby on Rails;
  • Benefit from free databases;
  • Use available solutions, like Ruby gems;
  • Don’t ignore load testing;
Further reading
Further reading: SaaS Product Development Guide: Why Choose Ruby on Rails Framework

SaaS minimum viable product realities

"I had lost 1.5 years of not validating ideas before building them."

Joel Gascoigne, Co-founder and CEO of Buffer

The stories of big and small SaaS fish were not always a success, especially from the very beginning. Some SaaS MVPs started with slight failures or rejections and, thus, lessons learned. For example, a popular tool for social posting, Buffer, made some mistakes and received a rejection from the Y Combinator first.

Even if success does not prevail for SaaS startups still, there are some popular success stories to mention. The Spotify example shows how to build a minimum viable product with a single killer feature and succeed. Way back in 2004 Facebook was not stuffed up with all possible complex features. On the contrary, it had a simple, limited idea - to connect Harvard students. Now it’s an international high-load SaaS platform.

How to create a successful SaaS MVP

Of course there exist best practices when it comes to MVP development. SaaS solutions are no exception but for some points.

Competitive research

Market and field research are still the first in your plan. You should know your competitors and find where you can do better.

Defining customer's needs and pains

Your first adopters are your main focus. No matter how cool your idea sounds, if no one needs such a tool, it's a waste of time.

Features with priority

There is no universal feature set for a SaaS MVP. Full stop. Must-have features for your solution totally depend on your customers’ pains and needs. Below are two popular principles to help you narrow down the choices when you build a minimum viable product:

  • Pareto Principle or 80% to 20% rule. In MVP, the version with 20% of all functionality is done first so you can check your users reaction. Following this, you will be able to define what features your end-users lack and have a clear picture of the coming (or final) version of the product. This rule helps avoid the 80% of the product’s functions not being used.
  • The MoSCoW method is another way of prioritization. You can avoid extra work and concentrate on thoroughly selected functionality for your SaaS MVP. Below is an example of four categories: M - Must have, S - Should have, C - Could have, and W - Won't have.

MoSCoW prioritization method to select functionality for SaaS MVP

Source: Product Plan

Pricing Model Development

Choosing the right monetization strategy for your SaaS minimum viable product is not that easy. That’s why check some helpful numbers as per SaaS market trends:

  • About 30% of all SaaS companies offered extra functionality. (OpenView, 2020)
  • 40% are planning to try new pricing models when their businesses recover from the crisis. (OpenView, 2020)
  • 44% of SaaS companies offer a 30-day free trial. (BlueTree, 2021)
Further reading new article
Further reading: Top 8 SaaS Pricing Models: Ultimate Guide 2021

Prototyping and MVP Development

Now you can check your idea with a working prototype. A prototype is a product ‘draft’, while a minimum viable product is a version ready for the market.

Feedback gathering and analysis

Never neglect the feedback stage. Once you receive your first feedback, greetings, you already achieved some great results! Now you can analyze and plan your next steps.

Factors that influence SaaS MVP Development cost

Every SaaS is unique, especially on the MVP stage, so there is no unified SaaS MVP cost example for all. The price always depends on many factors. Let’s have a look at what influences the final price of the development.

  • Features sets and their complexity

The more complex solution you think of, the more features you want to include, the more expensive it will cost you.

  • The development team and its skills level for cloud service MVP

A team experienced in SaaS development services will deliver a granted high-quality solution within your budget. Applying their expertise, such developers know the challenges you as a SaaS business owner face, how to solve them and deliver a successful cloud product.

Thus, to build your SaaS MVP, we recommend collaboration with a team that specializes in creating SaaS solutions, instead of hiring outstaffing firms that work on all kinds of projects. This way, you will be able to save time and budget.

  • Prices for building SaaS MVP in different locations

A software development team in Eastern Europe will charge less for the same services than a team from the USA.

Average web developer hourly rates
The United StatesWestern EuropeEastern Europe
$81-$100 per hour$61-$80 per hour$40-$56 per hour
  • Tech stack you choose

The technology stack is the basis of your software. It defines the entire development process. That's why it has a separate place in the general cost calculations. SaaS development overcomes a lot of technical challenges: performance, scalability, security, and speed.

First off, cloud products rely on a top secure infrastructure for proper data handling. Second of all, keep in mind the API creation, third-party integration, and availability issues. You should also pay extra attention to choosing the hosting provider for your SaaS product. And finally, find out about the best frameworks for SaaS development.

You can create an MVP for a SaaS startup using any popular framework. Our top three are Ruby on Rails for the back-end, and React.js, or Vue.js for the front-end. Many famous SaaS services, such as Shopify, Slideshare, and Github have chosen Rails for their products. Why is Ruby on Rails so popular?

Rails framework offers developers free open-source libraries, or Ruby gems. With these solutions, your team will develop the application faster and save development costs. Today, there are more than 167,000 gems for different ready-made solutions.

Read more
Read more: SaaS Product Development Guide: Why Choose Ruby on Rails Framework

As you can see, there are several factors that influence the cost of every cloud MVP. You will need to consider all of them to figure out the final cost of your Minimum Viable Product. And that’s where an experienced SaaS development team can help you.

When working with SaaS experts, you will get access to the accumulated expertise from the team that has already delivered multiple cloud products.

In such a way, you will not only get an accurate estimate and expert advice in the beginning, but can be sure that your app will be delivered on time and on budget.

How can Codica help in building a SaaS MVP

Since 2015 Codica team has been delivering SaaS development services worldwide. We help all types of businesses create new or support existing solutions, and deal with possible challenges. Our team makes sure that the delivered solution is unique, secure, scalable, and works well with other programs and tools.

The main industries in focus are travel, insurance, finance, automotive, and accommodation rental. Our team is building software-as-a-service platforms of all types based on end-users needs.

Let us share one of the latest projects we delivered for the Australian market - SaaS MVP for accommodation search for expats. The big idea behind the project was to make the relocation to Australia fast, easy and smooth for people who found a job.

SaaS minimum viable product of accommodation search for expats

The customer’s main challenges were to create a fast-loading SaaS MVP of the accommodation platform to present it to investors. This solution also needed an accurate search of accommodation and strict deadlines.

The Codica team handled all business challenges and came up with a working minimum viable product for SaaS. We provided UI/UX design, Front-end, Back-end, and MVP development services. As a result, we presented a complex solution, personalized pop-ups, and a search wizard with the most relevant offers.

You can find more case studies in our portfolio.

Final thoughts

With the current global shift to remote work, SaaS products proved their benefits for businesses. Even if you did not consider cloud products or cloud MVP before, it’s high time to move in this perspective direction.

The good news - you don’t have to come up with a final product version at once. On the contrary, best business practices have proved it's better to start building SaaS minimum viable products first.

If you are looking for a trusted SaaS development company, with a solid tech background, consider the Codica team. We practice and know how to create a SaaS MVP on time and on budget.

Contact us to help you deliver a secure and scalable solution that both your users and stakeholders will love.

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Irina SaaS Growth Researcher | Codica
SaaS Growth Researcher
Irina has 10+ years of experience within the software development domain. She is keen on everything tech, easily inspires and follows recent IT-related trends.
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