In today’s tech-savvy world, artificial intelligence (AI) plays a crucial role in revolutionizing businesses across industries, helping them get innovative solutions and driving efficiency. One such AI-based solution that has completely transformed the modern business world is software-as-a-service (SaaS). SaaS applications are run in the cloud and can be accessed through desktops, web interfaces, and mobile applications with an active internet connection.
Today, SaaS products are witnessing rapid growth and massive demand in the market due to their ability to provide scalable and efficient solutions. According to Statista, the global SaaS market is estimated to be worth $197 billion in 2023 and reach $232 billion by 2024.
With the ever-growing popularity of SaaS products, enterprises often ask, “How much does it cost to develop an AI-based SaaS product?”
Designing and developing a SaaS product without having a clear idea of product scope, requirements, and other essential features can increase the time and effort required in product development. It can result in a significant increase in its development costs also.
Therefore, it is vital to define your product objective and understand its tech stack, scalability, software development services, features, and other essential elements. Having a deep understanding of these vital components will help optimize the SaaS product development cost.
This blog will give a comprehensive overview of developing an AI-based SaaS product based on different factors involved in the process.
Understanding AI-Based SaaS Products
For efficient cost optimization, it is imperative to understand what AI-based SaaS products entail. SaaS products leverage emerging AI technologies, such as machine learning, computer vision, natural language processing, and data analytics, which help deliver intelligent and automated solutions to end users.
A successfully developed SaaS product tends to offer multiple benefits to users, like predictive analytics, chatbots, automated data processing, recommendation systems, and personalized user experiences.
With so many use cases and advantages of leveraging SaaS products, its market size is significantly increasing with each passing day. Accordingly, worldwide end-user spending in the SaaS industry is forecasted to grow at a rate of 21.7% from $491 billion in 2022 to $597.3 billion in 2023 – as per the latest report by Gartner.
SaaS Product Development Cost
Providing an exact cost to develop a SaaS product is quite a challenging and intimidating procedure due to the various factors involved in the process. However, to give you a rough idea, a SaaS MVP product costs between $15,000 to $100,000. An average AI-based SaaS product development cost ranges somewhere between $50,000 to $200,000. For more advanced, feature-rich, and complex products, the cost can upsurge $500,000 or more.
Here, it is imperative to keep in mind that development cost is just the initial phase of the long journey. There is an ongoing expense for product maintenance, support, and updates. Hence, the cost of maintenance and upgrades should also be taken into account when budgeting for an AI-based SaaS product.
To get a detailed insight into SaaS product development, let’s delve deeper to understand various factors that contribute to development costs.
Factors Affecting the AI-Based SaaS Product Development Cost
As said above, there are various factors that contribute to SaaS product development. Here is a comprehensive analysis of the crucial factors affecting the development cost.
Product Complexity
We should always keep in mind that the more complex the product is, the higher it will cost. Complexity consists of different features, functionalities, modules, and challenges that an AI development company faces while building the product.
Prime features like data security, customization, payment integration model, etc., significantly contribute to the SaaS software development time, effort, and resources, thus leading to an increase in cost.
Depending on the level of complexity, SaaS products can be categorized into four types: Micro SaaS, Basic SaaS, Average SaaS, and Basic SaaS. Based on these categories, here is an estimated cost breakdown.
| Complexity | Average Cost |
| Micro SaaS | $20,000-$30,000 |
| Basic SaaS | $40,000-$50,000 |
| Average SaaS | $60,000-$80,000 |
| Complex SaaS | $150,000-$200,000 |
Development Stage
SaaS product development is a complex and time-consuming process involving various stages and steps. Ideation, planning, UI/UX designing, programming, MVP development, testing, and deployment are the most important phases contributing to a successful product launch. Each of these stages plays a crucial role in defining the timeline and cost of SaaS product development.
Let’s have a rough estimate of each phase to understand the cost breakdown.
| Development Stage | Average Cost |
| Planning and MVP Development | $40,000-$80,000 |
| UI/UX Design | $5,000-$10,000 |
| Front End Development | $20,000-$50,000 |
| Back End Development | $30,000-$80,000 |
Product Type
SaaS product development cost also varies depending on the application/software category you want to build. Depending on your business domain and industry requirements, your SaaS solution will have different requirements and objectives. Thus, they are designed with dissimilar features and tech stacks, accordingly taking different time and cost in development.
Let’s bifurcate the SaaS product development cost of some popular types of SaaS solutions:
| Types of SaaS Solutions | Average MVP Price (USD) |
| Accounting | $70,000 – $100,000 |
| ERP | $120,000 – $150,000 |
| Email Marketing | $70,000 – $80,000 |
| Project Management | $80,000 – $90,000 |
| HRM Solutions | $30,000 – $80,000 |
| CMS and E-Commerce | $100,000 – $150,000 |
| Communication Platform | $20,000 – $100,000 |
| Payment Gateways | $80,000 – $120,000 |
Geographical Location
The location of your chosen AI software development company also plays a crucial role in deciding the SaaS product development cost. The cost differs across regions and continents. For instance, the developers located in the US typically cost higher than that in Australia, the UK, or Asia.
Let’s have a view at the cost breakdown of the SaaS solution as per the geographical locations of developers:
| Geographical Region | Average Cost |
| US | $170,000 – $180,000 |
| UK | $140,000 – $150,000 |
| Eastern Europe | $50,000 – $60,000 |
| Western Europe | $90,000 – $100,000 |
| Australia | $110,000 – $120,000 |
| Asia | $40,000 – $50,000 |
Developer Type
Lastly, the cost to build a SaaS product heavily depends on the kinds of developers you partner with for your project development. If your company is based in the US, hiring local developers might cost you hire than an offshore development team. Also, your in-house team might lack the essential skill of development, and hiring new staff or training the existing ones can exceed the overall cost and also hamper the other crucial operational processes.
Therefore, the ideal choice is outsourcing an AI development company based in South Asian countries like India. Here you can find proficient developers to get quality work and cost-effective solutions.
Depending on the developers’ type, here is a cost breakdown for SaaS product development:
| Developer Type | Average Cost |
| Freelancers | $50,000 – $80,000 |
| Local Agency | $170,000 – $180,000 |
| In-house | $1200,000 – $1500,000 |
| Outsourcing (Contract) Agency | $80,000 – $100,000 |
Final Thoughts
Getting an estimate of the cost to develop an AI-based SaaS product requires a comprehensive understanding of the various factors involved in the process. And while getting an exact figure of the SaaS product development cost is intimidating, it is good to partner with a trusted AI development company to get an accurate cost idea within your budget. On average, an AI-based SaaS product costs between $50,000 to $200,000, depending on the factors mentioned above.
Why is FinancesOnline free?
Leave a comment!