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How Much Does It Cost to Build a SaaS Product?
With the increasing size of organizations and thousands of human resources working collaboratively, it was always challenging to execute the teamwork with the traditional working methods. That’s where the SaaS products walk in the landscape. These are the software solutions that help the employees, team members, and all the stakeholders of the business to use some cloud-based applications simultaneously and work collectively on the project. However, how much does it cost to build a SaaS platform? is always a factor that concerns most business owners. In this blog, we will be talking all about SaaS development costs and factors affecting the same.
According to Statista, the global SaaS market generated around $197 Billion in revenue in 2023. This amount equals two-thirds of the entire public cloud services market revenue. So, there is no doubt in the truth that businesses are shifting rapidly toward SaaS software development to streamline their operations, facilitate teamwork, and perform more collaboratively. SaaS product development in such a scenario can prove to be a significant investment idea where you can secure a good ROI just by providing the right features.
What is Saas product?
SaaS stands for Software as a Service which refers to the way of delivering applications to end users via the Internet. With SaaS, users don’t have to download the applications locally on their computers or devices. SaaS applications are also popular with several other terms like web-based software, hosted software, on-demand software, and many more.
When using SaaS, you are purchasing and paying for a product. Once you have purchased the subscription and downloaded it to your device, the product instantly transforms and takes the shape of the service that you render. The services are equipped with a range of features and capabilities that you leverage for your business.
Along with the constant collaboration and teamwork, there are several benefits that you can leverage with the SaaS implementation at your firm. Following are some of the advantages that will encourage you to impart the capabilities of SaaS into your business-
- First of all, SaaS can easily reach more users in more departments. So, irrespective of the organization’s size, you can bring collaboration and teamwork to your company with a robust SaaS solution.
- It is very easy to onboard SaaS applications which makes them the most adopted software solutions for organizations worldwide.
- SaaS solutions have a very low initial cost that can further be optimized according to particular business needs.
- SaaS requires practically minimal configurations and no installation which makes it significantly handy for even small organizations to rely on software as a service.
- SaaS solutions display real-time data and changes in the project. So, it becomes easier for the users to work simultaneously on a file without having to provide manual updates.
- SaaS app development comes with robust security features that keep all the business and client data confidential and safe.
Check out this blog for a clear comparison and better understanding of SaaS, PaaS, and IaaS.
Why Is It Important to Understand The SaaS Development Costs?
When you are all set for developing SaaS applications, it becomes very important to understand the cost of SaaS development. The reason is that there is not an exact amount that you can stick to for SaaS development. On the other hand, there are a number of factors that influence the SaaS product development cost. So, if you don’t have any idea about the cost of hiring SaaS developers, you might not be able to make informed decisions.
- Informed Budget Allocation- First of all, having a clear understanding of the SaaS application development cost will help in budget planning and allocation. So, you can decide if you have plenty of resources for the project or not.
- Better Risk Mitigation- Risk management becomes easier when you are aware about SaaS development services cost. You can easily identify the potential cost drivers and the areas that might require financial backup.
- Profit Driven Pricing Strategy- With a clear vision of the overall cost of SaaS product development, you can tailor a pricing strategy that can cover the expense, generate profit, and remain competitive.
- Retain Investors- If you know about the cost of SaaS development, it becomes easier for you to attract and convince investors to invest in your SaaS apps and thus develop a bigger solution.
- Feature Prioritization- You can foster a better feature prioritization technique with an understanding of the cost of SaaS product development.
Factors affecting the SaaS Development costs
As interpreted in the earlier section, there are a number of factors that combined contribute to the overall cost of SaaS application development. In case of any alteration in these factors, the overall development cost is influenced significantly. So, instead of sticking to any random numbers, it is a better idea to have an understanding of these factors so that you can customize your requirements and develop a robust SaaS application within your budget.
1. Complexity of the Product
The foremost factor that plays the core role in determining the capitalizing SaaS development costs is the project complexity. If you are planning to develop a SaaS Solution equipped with complex features and large scale implementations, it will make the project more time-consuming and thus lead to higher development costs. Here is a basic estimation of SaaS software development cost-
| Project Complexity | Estimated Cost |
|---|---|
| Micro SaaS Development | $10,000- $25,000 |
| Basic SaaS Application | $25,000- $50,000 |
| Medium SaaS Application | $50,000- $150,000 |
| Complex SaaS Application | $150,000- $500,000 |
2. App type
Next comes the type of app that you want to develop as a SaaS application. For example, there are different types of applications according to the industry and niches which decide the exact cost of SaaS development services. The reason for this dependency on app type is that there are different technology stacks and human resources that are required for the particular type of SaaS app. Let’s have a glimpse of the estimated cost of SaaS development based on application type-
| Project Complexity | Estimated Cost |
|---|---|
| Custom CRM Development | $30,000- $150,000 |
| Ecommerce Website Development | $40,000- $200,000 |
| ERP Software Development | $50,000- $250,000 |
| HRM Software Development | $25,000- $120,000 |
3. Set of Functionalities
The SaaS development costs is directly proportional to the complexity of features and functionalities integrated into the application. For example, if you are looking for advanced features, integration with external services, and customization options in your SaaS product, the cost will automatically go higher.
| Type of SaaS MVP | Estimated Cost |
|---|---|
| Simple SaaS MVP | $25,000 – $50,000 |
| Medium Complexity SaaS App MVP | $50,000 – $150,000 |
| Complex SaaS MVP | $150,000 – $300,000+ |
4. UI/UX Design
While all the SaaS solutions come with an interface, there are different types of personalization and changes that you can choose to make the user interface more intuitive and interactive. However, you must remember that a UI is designed by the designers and there is an associated cost for customizing the user interface.
| Type of SaaS MVP | Estimated Cost |
|---|---|
| Simple SaaS application design | $5,000 – $15,000 |
| Medium complexity design | $15,000 – $40,000 |
| Complex design | $50,000 – $100,000+ |
5.Hiring Model
There are different types of engagement models that you can choose for your SaaS application development. For example, first of all, you can outsource your project to a SaaS development company for a pref-defined budget. Similarly, you can freelance your project to a team providing SaaS development services. The freelancing model is comparatively cost efficient than outsourcing. Similarly, you can hire SaaS developers with an in-house model where they will be working at your workplace under your guidance. This is best for long-term projects but is equally expensive.
6.Location of SaaS Development Team
The location of your SaaS product development team highly influences the cost of the project. For example, hiring a SaaS development company from a European or Western country like the USA, UK, Australia, etc. will cost you more than twice as much as hiring a team from an Asian country like India. So, your choice of location can make a big difference in your SaaS product development cost.
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Step-By-Step Breakdown of The SaaS Development Costs
Having gone through the different factors that affect the cost of SaaS application development, it is also a good idea to have some basic knowledge about the areas that consume the different shares of your entire investment. In this section, we will be having a glance over the overall breakdown of SaaS development costs along with the key phases that consume the investment for multiple purposes-
1. R&D cost of Saas development
Building a SaaS product requires thorough research and development which requires monetary resources to be performed. It includes researching the market, conducting competitor analysis, gathering the user’s expectations, and much more. Here is the cost breakdown in the R&D phase of the SaaS development project-
| Tasks in the R&D Process | Description | Estimated Cost |
|---|---|---|
| Market Research | Assess market needs, competitors, and target audience | $5,000 – $15,000 |
| Requirements Gathering | Documenting and collecting product requirements from stakeholders | $3,000 – $10,000 |
| Prototyping and Wireframing | Crafting initial sketches and prototypes to effectively visualize the product | $5,000 – $20,000 |
| Technical Feasibility Study | Monitoring technology requirements, architecture, and tools | $7,000 – $25,000 |
| Proof of Concept (POC) Development | Developing a basic version to validate key functionality | $10,000 – $30,000 |
| UX/UI Design | Developing a user-friendly and visually appealing UI design | $8,000 – $25,000 |
| Software Development | Developing and coding core functionalities | $40,000 – $120,000 |
| Testing and Quality Assurance | Conducting tests so that software meets the defined quality standards and requirements | $10,000 – $30,000 |
| Deployment Planning | Preparing deployment strategies, cloud strategies, and infrastructure setup | $5,000 – $15,000 |
| Post-Launch Maintenance and Support | Ongoing updates, bug fixes, and support after product launch | $20,000 – $50,000+ |
2. Development cost of SaaS product
Now comes the development phase where all the features and functionalities are integrated into the app with the help of backend and frontend development. The right programmingg language, technology stack, API integration, Saas architecture, and third party integrations are performed in this phase which makes the application functional. Following is the table for a breakdown of Saas development costs, in the development phase-
| Tasks in SaaS Development Process | Description | Estimated Cost |
|---|---|---|
| Frontend Development | Implementing a responsive and user-friendly experience with front end development. | $10,000 – $40,000 |
| Backend Development | Building the server-side logic, including data processing, authentication, and business rules. | $15,000 – $60,000 |
| Database Design and Management | Optimizing queries, structuring the database, and managing data storage solutions. | $8,000 – $30,000 |
| API Development | Creating and managing APIs to enable communication between different services, frontend, and backend. | $5,000 – $25,000 |
| Integration with Third-Party Services | Integrating different third-party services like payment gateways, analytics tools, etc. | $5,000 – $20,000 |
3. Design Costs
Coming to the design cost, if you are looking for an interactive and intuitive user interface that can easily be navigated by users who are not tech enthusiasts, you will have to pay an additional fee for that. Here are the three main tasks that the SaaS development company charges you for:
| The task in the Designing Process | Description | Estimated Cost |
|---|---|---|
| UI/UX Design | Creating user-friendly and intuitive interfaces, wireframes, and prototypes. | $5,000 – $20,000 |
| Graphic Design | Designing visual elements, images, and icons, for the SaaS product. | $3,000 – $10,000 |
| Branding and Marketing Materials | Crafting branding elements such as logos, marketing assets, and color schemes. | $2,000 – $8,000 |
4. Infrastructure Costs
Next comes the infrastructure cost where the components like server cost, network costs, and a lot of other expenses contribute towards the designing process. Here is the table for different types of infrastructure costs along with a brief description-
| Infrastructure Task | Description | Estimated Cost |
|---|---|---|
| Cloud Server Costs | Expenses for cloud hosting services (e.g., AWS, Azure) to run the app | $500 – $5,000/month |
| Database Costs | Database storage and management services costs. | $200 – $3,000/month |
| Network Costs | Costs of data transfer, load balancing, and CDN. | $100 – $2,000/month |
| Security Measures | Investment in encryption, firewalls, and other security protocols | $1,000 – $10,000/year |
5. Team Costs
As we interpreted in the earlier section there is a complete team of SaaS development services providers who play their respective roles in the project. All these members have their particular hourly costs or fixed costs. This expense contributes significantly toward the overall SaaS software development costs. Let’s have a glance over the salaries or per-hour costs of team members with different profiles.
| Professional | Description | Estimated Hourly Cost |
|---|---|---|
| Project Manager | Oversees projects, coordinates teams, and manages timelines. | $50 – $100 |
| Business Analyst | Analyze requirements, business needs, and strategies. | $40 – $90 |
| UI/UX Designer | Crafts user interface and application experience. | $40 – $80 |
| Frontend Developer | Develops the client side of the application. | $50 – $100 |
| Backend Developer | Develops database management and server-side logic. | $60 – $120 |
| DevOps Engineer | Manages infrastructure, deployment, and CI/CD pipelines. | $70 – $130 |
| Quality Assurance (QA) Engineer | Tests and ensures the overall quality and application functionality. | $40 – $90 |
| Support Specialist | Provides customer and technical support post-launch. | $30 – $70 |
6. Marketing and Sales Costs
You need to inform your target audience about your SaaS platform. So, it will require the support of different types of marketing and sales tactics. Each of the marketing and sales strategies comes with an associated cost that increases the overall product development cost. Here is a rough estimate of the cost associated with different tasks of marketing and sales for a SaaS solution-
Here’s a table for the step-by-step breakdown of sales and marketing costs in SaaS development:
| Cost of Sales and Marketing Strategies | Description | Estimated Cost |
|---|---|---|
| Content Marketing | Creating and promoting valuable content to attract leads | $5,000 – $15,000 |
| SEO (Search Engine Optimization) | Website optimization for search engines for better visibility | $3,000 – $10,000 |
| PPC (Pay-Per-Click) Advertising | Running paid campaigns on popular platforms like Facebook and Google | $10,000 – $30,000 |
| Email Marketing | Developing email campaigns for lead nurturing | $2,000 – $8,000 |
| Social Media Marketing | Promoting the SaaS app on social media channels | $5,000 – $20,000 |
| Sales Team Training | Onboarding and training for effective sales practices | $7,000 – $15,000 |
Other Hidden cost of Saas development
Other than the above-defined factors and costs, there are anonymous expenses that can only be identified during the project development. Some of the hidden costs of SaaS development are-
| Hidden Cost | Description | Estimated Cost |
|---|---|---|
| Third-Party Integrations | Costs of integrating third-party APIs or services (e.g., payment gateways, analytics tools). | $5,000 – $20,000 |
| Security and Compliance | Expenses to ensure data security, GDPR compliance, as well as implementing necessary encryption standards. | $10,000 – $30,000 |
| Maintenance and Updates | Continuous costs for bug fixes, feature enhancements, updates, and server maintenance. | $15,000 – $40,000/year |
| Customer Support | Investment in maintaining and setting up customer support teams or systems, including training and tools. | $10,000 – $25,000/year |
| Infrastructure Scaling | Additional costs for databases, scaling servers, and infrastructure to handle growth and increased demand. | $20,000 – $50,000+ |
| Data Migration | Costs of migrating data from existing databases or systems to the new SaaS platform. | $5,000 – $15,000 |
| Downtime and Performance Issues | Potential losses due to performance bottlenecks, unexpected downtimes, and their resolution. | $10,000 – $50,000+ |
| Legal and Licensing Fees | Costs for legal consultations, patents, software licenses, regulatory compliance, and trademarks. | $5,000 – $30,000 |
Tips for Reducing SaaS Development Costs
While it might not be a great decision to compromise the quality of the project to save some dollars, there are some tips and practices that can help you save the cost right away. Here are some of the tips that you can practice in your SaaS product development cost.
- Start with the development of MVP where you can assess the features and navigation to timely provide feedback and avoid unnecessary change fees at later stages.
- Hire SaaS developers from an Asian country like India where you can find skilled professionals at a fraction of the costs.
- Choose google cloud platform or any cloud service that is flexible in pricing and has cost effective plans.
- Use agile project management methodology that ensures quality outcomes and timely delivery.
Choose the automated testing that can save cost and time simultaneously. - Work with a cross-functional team so you can avoid overstaffing.
- Analyze the cost regularly to assess where the money is going as the project chases the completion
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Why Choose The NineHertz to build your Saas product?
The NineHertz has been providing SaaS consulting services and SaaS development services for over 15 years. This long experience in the industry enables us to identify the project challenges at the beginning and thus tailor the mitigation strategies accordingly. At the same time, we are well familiar with the strategies that help us to keep the overall SaaS development costs under the defined budget without compromising the features and functionalities of the software.
NineHertz has experts in different fields under one roof so that you don’t have to worry about imparting different features and capabilities into your software. Our well-experienced project managers ensure the best quality standards even if you are unable to connect to the team daily. So, when partnered with The NineHertz, you need not worry either about quality or cost.
Final Words
So, developing a SaaS solution can be an amazing business idea. However, what is more important is having the knowledge about different factors that will make up your overall SaaS development cost. For example, the complexity and number of third-party integrations can increase your development cost while choosing the right development company from the right location can make the project cost efficient.
If you want to develop a SaaS solution and have concerns about the exact cost, connect with our experts in a free consultation session. Ask all your doubts and make the right decision.
Frequently Asked Questions (FAQs)
Q.1 How Long Does It Take to Build a SaaS Product?
Depending on the SaaS business model, client’s requirements and the features being imparted in their SaaS product, it can take anywhere between 4-6 months to build a SaaS product.
Q.2 What Are the Most Expensive Components of SaaS Development?
Some of the most expensive components of SaaS development are backend development, database design, API creation, complex business logic implementation, data security measures, etc.
Q.3 How Can I Estimate the Total Cost of My SaaS Project?
You can estimate the total cost of a SaaS project by assessing the number of factors like features and functionalities to include in the application, the complexity of the project, the timeline, the location of the development team, etc.
Q.4 Is It Wise to Outsource SaaS Development?
It is a great decision to outsource SaaS development services to the team in India. The hourly cost of skilled developers in India is half as compared to developers in European or Western countries which can save a lot of dollars for you.
Q.5 How Much Does It Cost to Build a SaaS Platform?
The cost of building a SaaS platform depends on what you need. For a basic platform, it can cost between $25,000 and $50,000. If the platform is more complex with extra features, it could cost $200,000 or more. Things that affect the cost include design, development, security, integrations, and maintenance. It’s best to talk to a development team to get an estimate based on your specific requirements.
Q.6 How to Choose the Best SaaS Provider?
There are different strategies that you can use to choose the best SaaS provider-
- Assess the experience of the firm
- Analyze their project portfolio
- Connect with the client testimonials
- Monitor the project quotation closely
- Assess the collaboration and communication models.
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