The software-as-a-service market has become a necessary component for those seeking to realize their innovative ideas. The development of technology has caused an increased interest of developers and entrepreneurs in SaaS. Therefore, SaaS has become very active and attractive among them. As a result, a simple and effective model of using programs and services directly via the Internet is attracting the attention of entrepreneurs from all over the world. In this context, the question of the development cost of a SaaS platform becomes one of the determining factors. The question of the cost of developing this platform is essential for those who wish to make a successful entry into this market. That’s why we’ll take a closer loоk at the various factors that influence the cost to start a SaaS platform and how to plan a budget for this type of product.
Research and Planning
When thinking about how to start a SaaS company, the first and most crucial stage of its development is the planning and research stage. Below, we’ll look at the key factors of this phase and, accordingly, SaaS development costs.
Defining Functional Requirements
Designing high-quality functionality is a key point. This includes,
User needs analysis
Carefully analyze the needs of the target audience. Interactive sessions with users, surveys, and competitor research can be effective methods for obtaining comprehensive information.
Prioritizing features
Not all features may have the same priority among users. Therefore, it is essential to conduct an assessment to determine which features are key to solving the main tasks of the product. This will help focus efforts on the most important ones and save resources.
Creating a technical task
Based on the defined functional requirements, create a technical task that contains a detailed description of each function, its interrelationships, and implementation requirements. This stage defines the technical basis on which the development will be carried out. Also, based on the defined functional requirements and to ensure product development and stability, it is necessary to consider the possible occurrence of technical debt. Technical debt management is an integral part of the development process. Understanding tech debt helps developers and engineering managers improve code quality and system reliability. Understanding how to measure technical debt and implementing strategies to reduce it is a neсessary step in ensuring the long-term sustainability and ease of maintenance of your SaaS platform.
The final step in this process is to estimate the cost of defining functional requirements. Target audience analysis includes costs of approximately 5% of the budget.
Including payment for specialists conducting the analysis and the previously mentioned participation in user interaction, the cost of this stage can be up to 10% of the total development budget.
Competitive advantages. Integration
Another major aspect is to identify competitive advantages and opportunities for integration with other systems. The cost of this can also be 10% of the total SaaS cost budget.
Developing the Concept and Design of the Interface
When you build a SaaS product, such developments are the next stage and they are important not only for aesthetics but also for the user experience.
Interface Mockups
The first step is to develop interface mockups. The following is essential in this context.
The logic of element placement
The size, location, and interaction of elements. This will ensure the logical and efficient use of the product.
Visual design
The design and style reflect the brand and ensure user receptivity.
The cost of this stage can be up to 15% of the total budget.
Definition of User Experience (UX)
Defining user experience is a process that focuses on creating a product that meets the expectations and needs of users. In particular,
User behavior research
Analyzing and collecting data on consumer habits to develop an interface that meets the needs of users.
Interaction optimization
Creating an interface that is easy to understand and allows the user to interact with the product easily.
Interaction testing
Using prototypes and testing them with users to improve the user experience.
The cost of this stage can be about 10% of the budget.
Technical Implementation and Programming
This third stage is a fundamental part of SaaS platform development, where the core of the product and its technical architecture are defined. The main sub-stages of this stage are as follows.
Core Functionality
The development of the core functionality includes the creation of key features and characteristics that define the uniqueness of the product. This includes:
Basic Functions
Implementation of the basic features required by users.
Advanced features
Additional features that will improve the use of the product and meet market requirements.
Server Infrastructure
It is also vital to pay attention to the development of the server infrastructure. This means:
Technology selection
Determining the technical tools, such as databases, programming languages, and others, that meet the needs of the product.
Scaling
Designing a system that can scale to accommodate the growing number of users and volume of data.
Security
Developing security measures to protect data confidentiality and integrity.
The costs for all of the above, in terms of technical implementation and programming, can vary from 40% to 60% of the total budget.
Testing and Improvement
Once the programming is complete, bug and compliance testing must be performed to improve the product. This stage is aimed at ensuring the high quality and efficiency of the product.
Functionality testing
Checking the operation of the main and additional functions of the product defined in the previous stages of development.
Security testing
Checking the system for potential threats and vulnerabilities.
Fault tolerance testing
Determining how the system responds to loads and possible failures to ensure stable operation.
Integration testing
Determining the correct interaction between different components of the system.
All of the above testing stages can take up to 15% of the SaaS startup budget.
Implementation and Support
This last stage of SaaS platform development determines the successful launch of the product on the market and its further operation.
Marketing and Promotion
After development is complete, it is vital to focus on promoting the platform. Promotional activities, content marketing, and other marketing strategies will play a key role in attracting users.
Content marketing
Creation of interesting informative materials (blogs, videos, infographics) to attract attention and establish the platform’s authority in the industry.
Advertising campaigns
Using targeted advertising campaigns on platforms where the target audience is located.
Participation in exhibitions and conferences
Presentations and participation in major events to attract attention from industry professionals and potential users.
Marketing and promotion costs can amount to about 10-15% of the budget.
It’s also important to keep in mind that these costs can be considered part of the SaaS cost of revenue, as they are direct costs assoсiated with acquiring new customers and retaining existing ones.
Support and Updates
After implementation, it is key to provide effective support for users. Also, regularly update the platform to ensure its relevance and security.
Customer support
Providing a quick and efficient response to user questions and problems through various communication channels.
Regular updates
Fixing bugs, introducing innovations, and improving functionality to ensure market competitiveness.
SaaS product development as of 2024 usually ranges from $50k to $300-500k. A more accurate cost will depend on certain key factors that affect the cost of development. Namely,
- The complexity of your product, which is usually related to the time required for development.
- The skill level required for your development team and the size of the team, which is related to complexity
- Location of your development team
Building a SaaS platform is a responsible and costly task. But it’s worth it because creating a successful SaaS platform is a balance between quality, costs, and strategic thinking. There are many options, so it’s important to properly allocate resources to different stages of development. By taking into account all aspects from planning to implementation, an entrepreneur can maximize efficiency and avoid unexpected costs.
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