Looking to get into the world of SaaS application development? If the answer is yes, there’s a lot you need to consider. Here’s our guide on how to develop a SAAS application.
At the turn of the century, if you wanted to buy a piece of software, you’d go out and buy it on a floppy disk or CD, and you’d own it for life. Now with Software as a Service or SaaS for short, you pay for the amount of time you want to use it.
The SaaS market has skyrocketed over the last few years, with it now being worth nearly $172 billion worldwide. That’s double the value that it was just five years ago!
Many of the world’s most prominent businesses, including Adobe, Salesforce, and Intuit, all have SaaS methodology at the core of their product offering. If you’re a startup looking to make your mark, then it could be worth your while to create a high-quality, value-providing SaaS application.
In this article, we’re going to look at what SaaS is, the benefits of developing this type of software, and how you can get started on your SaaS creation journey.
- What is SaaS?
- Why dig into SaaS application development?
- How much does it cost to dig into a SaaS application development?
- Top tips for SaaS application development
- Want to launch the SaaS application development process? Get planning!
What is SaaS?
‘Computing may someday be organized as a public utility just as the telephone system is a public utility’ – John McCarthy
Software as a Service (SaaS) is a piece of software that is delivered online. It’s often referred to as web-based software or on-demand software.
Think about your typical working day. You may start by checking your emails in Outlook or Gmail and updating your leads in HubSpot. Then you might put together a pitch deck in PowerPoint or create an email for your mailing list in Mailchimp. Finally, you catch up with your friends and colleagues in Slack and update your Trello board, ready for tomorrow. All of these pieces of software are SaaS!
Many people liken SaaS to ‘renting’ a piece of software rather than buying it outright. It can be a good choice for people who temporarily need to use a service but don’t want to invest in it long-term.
SaaS technology runs in the cloud, meaning customers need an internet connection to use it. However, with the introduction of the 5G network across the world and 60% of people having access to the internet, more people than ever have the internet needed to run SaaS.
The significant advantage of SaaS for customers is that it’s automatically kept up to date. They get access to all the latest versions as well as any security updates. As it’s cloud-based, they can access it on any device too.
SaaS is great for businesses as it grows and shrinks as their needs do. If a business brings on more staff, it can easily scale up. If a business downsizes, it can save money by reducing the services it requires.
SaaS feels like it’s only been around for a couple of years, but the concept has been around for longer than you might think. It was initially talked about by MIT professor John McCarthy, who provided the quote at the top of this section, in 1961. One of the first businesses to offer SaaS software was CRM provider Salesforce, which launched in 1999 – over 20 years ago!
Why dig into SaaS application development?
If you’re looking to create a business idea, why build a SaaS application? We’ve looked at some of the benefits for customers; now it’s time to look at the advantages for startups considering moving into this sphere.
1. Easy to set up
One of the major advantages of SaaS application development for businesses is that apps are easy to create, and the barrier to entry is low. Dropbox founder Drew Houston famously developed the tech for the software while he was on a four-hour bus ride!
Almost half of SaaS founders worked on their startup part-time while they were either in full-time employment or working on other business ideas.
This means if you’re looking for a quick win, SaaS can be a good niche to get into.
(Of course, if you don’t have the time or skillset to create a SaaS platform, don’t worry! We can help.)
2. Easy to scale
When you have a SaaS product in place, the cost to bring new customers on board is very low. This makes it very easy to scale your SaaS business and grow profits.
Customers can scale quickly as well. As everything is based in the cloud, as their company and/or needs grow, they just need to select a new package.
And as they grow, your startup does too!
3. Recurring revenue
When you’re in business, what could be nicer than waking up and finding that new customers have signed up for your platform?
The thing we love about SaaS is how easy it is to generate passive income. The average monthly retention rate for SaaS companies is between 92% and 97%. This means as long as you have a few sales and marketing going on in the background to bring in new customers, you’re good!
How much does it cost to dig into a SaaS application development?
It depends on several factors, including your skillset and the complexity of the app you’re planning to create.
In our experience, it can cost anything between $15k to $250k to develop a SaaS application, depending on how ambitious the idea is. Things you need to consider include:
- Development. You may choose to hire developers to build your app for you, or if you have the skills, you may create it yourself. This is likely where most of your money will go. If you’d like to have a go at making your own SaaS application, Freecodecamp has a very useful breakdown of what you need to bear in mind when it comes to coding
- Website and domain registration
- Cloud hosting (more on that later)
- Technology (ironically, you may have to sign up to several SaaS services to create your own SaaS!)
- Subscriptions to competitor’s SaaS platforms for research
Planning ahead can be a major benefit, and we’ll go into more detail about how you can do this shortly in this article. That way, if your idea isn’t workable, you can walk away from it without wasting too much time and money.
If you can’t bootstrap your SaaS application yourself, it might be a good idea to get an investment. Not only will you get the money you need to move forward, but you’ll have someone on board with the experience to help you launch.
Top tips for SaaS application development
So you’ve had a think, and you’ve decided that you want to create a SaaS application. That’s great news!
There are a few things you need to think about before you start. Here are our recommendations for those looking to develop a SaaS application.
1. Do your market research
As with all startups, you need to see that your idea is a viable one and that it will solve the problems your target audience is experiencing. Not only this, but it’s essential to identify any potential competitors in your marketplace.
It’s always good to start with a model canvas – we recommend the lean canvas model. You can use this to see:
- Who your target audience will be;
- What problem your target audience has;
- How your SaaS service will help your target audience;
- What your service does differently from the competition;
- What metrics you’ll watch to measure success;
- How you’ll promote your SaaS platform to customers;
- What your SaaS will cost to create, and how you’ll make a profit.
This will give you the insight you need to see if your SaaS application is worth pursuing.
With a SaaS, an MVP doesn’t have to be expensive or time-consuming. When Joel Gascoigne launched the social media scheduling platform Buffer, he created a simple MVP. When people clicked on the pricing button, they had the option to enter their email addresses. This not only showed how many people were interested in the platform, but it gave Buffer a chance to contact prospective customers and ask what they would like to see.
(Want to know more about lean startup methodology? Check out our collection of articles!)
2. Consider your pricing
The unique selling point of the SaaS model is that you pay a subscription for it. The question is, how much will you charge, and what will you offer?
Things you will need to think about include:
- Will you offer a flat rate or a usage-based rate? Most SaaS companies charge a flat price, but some let users pay as they go. One of the most well-known pay-as-you-go models is Amazon Web Services, (AWS) which charges per gigabyte of data. Alternatively, some SaaS companies let companies pay per user, like Slack
- Will you offer tiered pricing? Many SaaS platforms provide three or four different levels of pricing, with varying degrees of functionality. Our top tip is? Use the Centre Stage Effect to entice prospective customers to buy the middle option!
- Will you offer monthly or yearly pricing? Many SaaS platforms offer both, with a discount for customers who commit to twelve months of use
- Will you offer a free trial? A lot of SaaS platforms let customers try the platform out – either providing full functionality for a limited time or a long-term plan with reduced features – also known as freemium. This is in the hope that customers will like the platform so much, that they’ll pay for it in the future. Conversion rates vary from business-to-business, but freemium platforms typically convert between 2% and 4% of their customers.
3. Choose the right cloud services provider
As your SaaS application relies on cloud technology, you need to use a reliable cloud services provider. Think of this provider as the foundation you’ll build your SaaS house.
You need to consider speed, uptime, security, price, and space. If you have a lot of customers, you may potentially need a lot of storage! You’ll also need to consider futureproofing too – what will you do if your cloud service provider goes out of business or becomes too small for your needs?
Some of the most popular hosting solutions include AWS, Google Cloud, and Microsoft Azure. Do your research and ask your network to see which is the right provider for you.
In summary: Want to launch the SaaS application development process? Get planning!
Four out of five businesses plan to use nothing but SaaS software by 2025. This means if you have plans to create the next big SaaS application, now’s the time to get started!
With SaaS, it’s important to do your research. How can your platform help your target audience and alleviate their pain points? Once you know this, you can start work on developing the right application for your customers’ needs.
Alternatively, if you need a little extra support with your SaaS application development, read on…
Need help creating your SaaS application? You are launched can help.
We’ve been working with startups since 2014, helping them create and launch software that people want to use.
Our team of specialists uses lean startup methodology to help you plan, design, and get your SaaS app to market.
Contact us today and see how we can help you develop a SaaS application that will get people to subscribe.