As the Software as a Service (SaaS) market grows, it’s becoming an increasingly popular choice for businesses and consumers. SaaS products are known for providing more strategic value and flexible solutions, so they’re often chosen over traditional software solutions.
SaaS solutions offer low overhead and high profit potential, making them an excellent choice for new businesses.
Many businesses ask, “How much does building a SaaS App in 2024 and beyond cost?” While SaaS products have the potential for significant growth and success, development costs can be pretty high. Although SaaS companies do not typically need to invest in technology or products like other companies, SaaS development costs can still add up.
According to Statista, the SaaS market revenue is expected to reach $232 billion in 2024, a significant increase from $197 billion in 2023. If you’re considering creating a SaaS app, it’s essential to consider the associated costs.
For more insights and tips on developing a successful SaaS product, check out SaaS Development Secrets to learn best practices for building and optimizing your SaaS app efficiently.
Table of Contents
What is SaaS App Development?
SaaS (Software as a Service) is a cloud-based software program that offers users various online features and services for a monthly fee. This type of app can be accessed via a web browser, eliminating users needing to install software on separate devices or servers.
The service provider is responsible for hosting and managing the SaaS app, eliminating the need for customers to manage infrastructure, upgrades, and maintenance tasks.
One of the main advantages of using a SaaS app is its cost-effectiveness, scalability, and flexibility. This makes it popular for individuals and companies seeking easily accessible software solutions. SaaS app development involves creating a delivery model in which a solution provider hosts an application and makes it accessible to consumers online.
This process includes designing and developing a safe, dependable, scalable application, hosting it on a server, and maintaining accessibility using necessary skills and tools.
Read more: What is the Data Cloud?
SaaS Global Market – The Market Overview
The global SaaS market is experiencing a significant annual growth rate of over 11.7% and is projected to reach a massive $374.48 billion by 2026. Businesses worldwide embrace the SaaS revolution due to its agility, flexibility, and scalability.
North America is leading the way in SaaS adoption, accounting for almost 67% of the market share.
However, the Asia-Pacific region is quickly catching up, fueled by digital transformation initiatives. Moreover, the SaaS model’s cost-efficiency is its main appeal – organizations can reduce IT costs by up to 25% by adopting it.
Factors Influencing the Cost of SaaS Application Development
Depending on the type of business model, the cost of a minimal viable product (MVP) SaaS may range between $50,000 and $150,000. However, the cost of developing a SaaS platform is influenced by several factors, including the application itself, its complexity, and the location of the SaaS app development partner.
1. Project Scope
It is essential to note that the cost of a SaaS application can vary significantly depending on its complexity. Advanced core features, customization options, and industry-specific capabilities tend to be more expensive than basic solutions.
Additionally, the level of integration with other systems and the need for extensive customization options can also increase the cost of a SaaS solution.
Additional costs may be incurred if significant integration work is required to connect the SaaS solution with existing infrastructure or third-party services, or if custom SaaS development, tailored interfaces, or specialized workflows are needed.
2. Features
Several key components must be considered when determining the price of SaaS products. The features provided by a particular SaaS package can significantly impact its length and cost. When starting a project, app developers focus on fundamental features while creating a Minimum Viable Product (MVP).
After receiving consumer approval, they can then move on to develop a complete product. As a result, the cost of SaaS development can vary depending on the features’ quantity, nature, and complexity. Some of the essential features required for any SaaS application when hiring dedicated developers include:
1. User authentication and authorization – to ensure secure access to the application.
2. Payment gateway integration – to facilitate secure online payments.
3. Scalability – to enable the application to handle increasing users and data.
4. Data security and privacy – to protect sensitive user data from unauthorized access.
5. Analytics and reporting – to provide insights into user behavior and application performance.
6. Integration with third-party services – to enhance the application’s functionality.
7. Customer Support – to provide timely assistance to users in case of any issues.
These are just a few features to consider when developing a SaaS application. The cost of SaaS app development depends on the specific project requirements and the complexity of the features.
3. Types of SaaS Products
It is essential to note that the type of software plays a crucial role in determining the cost of developing a SaaS solution. Some SaaS projects can be particularly challenging due to the inclusion of numerous new features and the sensitive nature of the data that needs to be managed.
For instance, accounting software requires cutting-edge data protection methods to safeguard critical financial information from leaking. Similarly, ERP software development for large organizations can also be complex and cost more.
4. Platform Type
It’s true that choosing the right platform for a SaaS product largely depends on the target audience. For B2B companies whose clients primarily use laptops or desktop computers, creating a web application is the best choice.
On the other hand, B2C businesses may opt for mobile applications since their customers tend to access their products or services through smartphones. Even though the core information may remain the same, the user interface and experience can significantly impact the cost of a SaaS product.
5. Create the MVP
Building an MVP (Minimum Viable Product) is an innovative approach to validate the concept of your app before investing in its full development. With an MVP, you can gather user feedback, assess the product’s viability, and make informed decisions about further investment in the project. The focus at this stage is to deliver a rock-solid basic version with all essential features, even if it doesn’t have all the bells and whistles.
The cost of developing an MVP can vary depending on the features you want to include. It can take approximately 300 to 700 hours and cost between $17,500 and $30,000, with an hourly rate of $20 to $60.
However, sometimes an MVP can be as simple as a landing page or explainer video, so you don’t have to spend much money in the early stages.
6. UI/UX design
Design is a crucial factor that can determine a project’s success or failure. Therefore, it is essential to allocate the necessary budget for this purpose. The design process involves extensive research, wireframing, prototyping, iterative testing, and refining based on user feedback.
The complexity of your project will determine the duration of the design process, which can take anywhere from 120 to 250 hours. The cost of UX design ranges from approximately $20 to $40 per hour, which means the total investment for this phase can range from $2,400 to $5,000.
7. Third-Party Integrations
When developing a new project, the development team must decide whether to use third-party API connectors or create a custom backend from scratch to achieve a high level of customization. For commonly used functions such as payment processing, subscription management, and user login, selecting pre-built APIs may be more cost-effective.
However, SaaS developers must follow best practices, including reviewing documentation, selecting reliable APIs, conducting security audits, and addressing scalability concerns. Each of these procedures is a small project in itself and requires significant expertise and time, which can increase overall costs.
8. Testing
A QA team conducts multiple tests on the application to ensure it is free of bugs or usability problems. We report issues to developers as soon as they are discovered so that they can be resolved.
Generally, the testing phase consists of six steps: requirements analysis, testing planning, developing test cases, setting up the environment, executing tests, and reporting results.
9. Post-Release Expense
It’s a common misconception that developing a SaaS product is the end of the road. Contrary to popular belief, this is not the case. Several expenses must be considered post-release, including hosting services, server maintenance, database upkeep, and integration.
It’s also important to remember that you can always bring improvement as you grow. All of these factors, and more, will contribute to the product’s total cost of ownership (TCO).
How Much Does it Cost to Build a SaaS Application?
According to industry research, the average cost of building a SaaS platform ranges from $40,000 to $130,000, potentially higher depending on factors such as the platform’s complexity and scope. In some cases, startup costs can exceed $300,000.
However, it is worth noting that SaaS companies enjoy high gross profit margins, typically between 68% and 75%, or higher. So, as long as your SaaS platform can retain a solid user base, you can expect to make good profits regardless of the SaaS solution you offer.
Conclusion
Hence, the cost of developing a SaaS platform can depend on various factors, including the project’s complexity, the technology stack used, and the development team’s expertise.
However, partnering with a reliable outsourcing partner and skilled, experienced professionals can help ensure the development of a robust SaaS platform while optimizing costs.
While rough estimations may provide some insight, consulting with a professional SaaS development team is vital for precise and tailored cost assessments.
