Cost to Build a SaaS Application: What You Need to Know

Quick Summary: The in-depth guide “How much does it cost to build SaaS application?” defines all factors of developing a SaaS application. We will start with analyzing SaaS stats and trends, the cost structure, scope, various challenges to be faced, and multiple factors that affect the cost of developing a SaaS application.

An increased revenue, steady growth, and several untouched opportunities have always grabbed the attention of CTOs, CEOs, and business owners to accelerate some profits and create a footprint of their products in the industry.

Are you growing as fast as you know you can, or are there big opportunities you know you're missing?

• If you decided to triple your revenue within the next three years, could you do it?
• Would you know where to start?
• Would you know exactly how to achieve it?

Well, it isn't magic, or luck, or privilege, or connections, or working harder.

And that’s when SaaS comes into the picture and what the SaaS industry is doing right now.

The journey to doubling, tripling, and even growing 10x begins with a single step: an outline for success. The same outline many of the fastest-growing companies in the world (like Salesforce.com, Twilio, HubSpot, Marketo, Zuora and others) have followed to grow FAST and create billions in record time.

With so many SaaS products in the market, it’s no surprise that the industry is forecasted to have end-user spending of $597.3 billion in 2023, up from $491 billion in 2022. Gartner also stated that it is about to grow by 21.7%.

The number is huge and increasing. Hence, it’s attracting big and large industries to utilize SaaS development services and launch amazing SaaS products in the market. Therefore, there were approximately 17,000 Software as a Service (SaaS) companies in the United States in 2022.

And that’s where our in-depth guide will come into play.

As a startup owner or CTO, you will find all answers to your queries before entering the vast market and competing with the world. Now is the time to explore why many organizations are interested in developing SaaS products and keen to find out the exact answer to SaaS application development costs.

Well, there is no specific answer to the question. However, the actual cost may go up to $100,000 or beyond, starting from $15,000. The SaaS development cost depends on the features you want to integrate, the complexity of your SaaS application, the platform you choose, the development team, your target audience, and many more.

As remote cooperation gains traction, SaaS solutions, known for their flexibility and scalability, outshines the software market. And with the rising adoption of cloud solutions, businesses today are readily investing in cloud-based apps, focusing on better security and accessibility.

Therefore, SaaS app development is the most excellent solution for gaining a competitive edge in the digitized business environment.

Also, with so many SaaS apps in the market, it's no surprise that the industry is forecasted to have end-user spending of USD 829.34 billion by 2031. The number is enormous and increasing!

However, the main question is, how much will it cost to develop SaaS applications?

As a startup owner or CTO, you will find all the answers to your queries before entering the vast market and competing with the world in this blog. Now is the time to explore why many organizations are interested in developing SaaS applications and how much it will cost.

Let's begin!

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“The advance of technology is based on making it fit in so that you don’t really even notice it, so it’s part of everyday life.” - Bill Gates

However, the quote is not about cloud technologies, but it reflects what we see today in the SaaS industry.

Latest Trends and Analytics of SaaS

SaaS has become a game-changer for many businesses. Every business owner, from traditional accounting firms to tech giants, is on the verge of adopting the SaaS model. Hence, the requirement for SaaS products has increased and evolved over the years.

However, running a successful SaaS business is not easy as you think, although you can leverage several SaaS benefits over the traditional delivery model.

The following data and stats show why many organizations use the SaaS model to gain a competitive benefit.

• By 2028, the SaaS market is predicted to reach $2,34,900 million.
• The report from Statista states that organizations worldwide use an average of 110 SaaS applications.
• According to Statista, the worldwide cloud application market had a value of $133.6 billion in 2021 and is expected to reach $168.6 billion by 2025.
• According to Report Linker, the CAGR (Compound Annual Growth Rate) for the worldwide cloud computing industry is 16.3% between 2021 and 2026.
• The Deloitte study found that 70% of CIOs are attracted to cloud-based SaaS because of its Scalability and Agility. 38% of organizations are embracing cloud-based technology to improve disaster recovery. To emphasize flexibility, 37% of businesses are converting to cloud computing.
• The use of SaaS is widespread and growing along with businesses. The average company with more than 250 people use more than 100 SaaS applications. About 25–50 SaaS apps are used by businesses with less than or equal to 50 employees.
• The SWZD report claims that, based on the SaaS cost structure, an organization spends 12% of its SaaS budget on its operating system, 10% on security software, and 10% on productivity.

As a renowned SaaS consulting provider, we can conclude that SaaS will continue to rise in the coming years – by considering the above facts and stats. Hence, businesses implementing the SaaS model are also likely to grow.

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Cost of Developing SaaS Applications: SaaS Cost Breakdown

Again, this section brings us to share a rough idea of SaaS application development costs. As we mentioned earlier, SaaS MVP product development costs may range between USD 15,000 to USD 100,000. However, it may go beyond, depending on several factors, which we are going to discuss in this section.

• App Complexity
• SaaS App Development Stages
• Solution Type
• Developer Type
• Geographic Location

App Complexity

Complexity consists of different functionalities, modules, features, and challenges SaaS developers face for integration.

While building a SaaS application, we should not forget to consider prime features, including data security, payment integration model, customization, and many more. This can consume the SaaS application development time, process, and cost.

SaaS product is meant to provide a seamless user experience by integrating complex features and modules.

If we consider a renowned SaaS product that has been used by a large number of users, Grammarly, it follows the same concept. Grammarly, being a single-purpose SaaS product, consists of complex functionalities.

In addition, Grammarly is integrated with AI modules and Big Data analytics in the backend. Hence, we can conclude that the higher complexity of the SaaS product may lead to a higher cost of building a SaaS product.

Here we are categorizing SaaS applications based on their complexity level:

SaaS App Development Stages

Well, software development stages also play a vital role when you are estimating the cost of developing a SaaS product. Each development phase defines the time and cost, resulting in the final SaaS development costs.

So, let’s go through each phase now and understand the calculation properly.

1. Planning and MVP Development - $30,000 to $60,000
2. UI/UX Design - $3000 to $6000
3. Front End Development - $10,000 to $40,000
4. Back End Development - $18,000 to $60,000

1) Planning and MVP Development

Before getting into the SaaS product development processes or hiring a team, you need to finalize your product ideas. You should have a thorough understanding of what your business objective by would be in implementing this idea. How can it benefit or be competitive?

However, you need to ensure that your idea is validated and could bring many benefits to your business.

You can also do comprehensive research and gather customer feedback. In the end, this phase will help you define the roadmap to SaaS application development.

Another thing you could do is, build an MVP version of your SaaS product. This will help you implement and validate your ideas, and build a SaaS product with basic features.

This may cost you between $30,000 to $60,000.

2) UI/UX Design

First impression is the last impression.

We can’t deny this statement when we need to grab the attention of plenty of users in the market.

UI/UX design is the essential development stage of SaaS product development. This phase defines how your application or product will look and how it will interact with users.

In this phase, UI/UX designers create a wireframe and give a proper layout to your application in order to meet user’s needs.

UI/UX development takes around three to four weeks to accomplish.

The average UI/UX design cost will be around $3000 - $6000.

3) Front End Development

This front-end development phase helps you decide the correct tech stack based on the core features. Now, you must be wondering why we should focus on front-end development.

It takes just 50 milliseconds for users to decide whether to visit and check your application further. And most users are bound to discontinue your app after that point.

The fact-check itself tells the opinion about your application.

The cost of developing a SaaS front-end platform is not easy to predict as several other factors are equally important. Because front-end is not only about creating an amazing design but also about compressing files, applying caching, lazy loading, compressing files, optimizing images, reducing server calls, and more.

To implement front-end development of your SaaS application, you may need experienced and expert frontend developers. The best way to connect with expert front-end developers is to hire offshore development center (ODC) instead of connecting with freelancers.

The prime advantage of choosing an offshore development center is to quality of work with transparency.

Here, we can estimate the average developer rate is between $35-$80 per hour, costing $10,000 to $40,000.

4) Back End Development

Back-end development is the major phase where you are bound to invest more when it comes to the cost. Backend developers need to create every module and functionality from scratch.

However, leveraging the features of APIs can help you save some money for back-end development. You can consider multiple functionalities like push notifications, database management, security, file management, search, export, user query, etc.

It will take around 20 to 25 weeks to build the back-end of your SaaS application. Also, by considering the $30 to $70 average rate of developers, it may cost you between $18,000 to $60,000.

Solution Type

Enterprise SaaS pricing estimation also depends on your application's category or solution. Different SaaS applications have different development requirements; some of them require extensive time and effort to build, while some may be integrated easily with some basic coding.

Let’s consider the breakdown of the costs as per the type of SaaS solutions below:

Developer Type

The cost to develop SaaS software is heavily dependent on the kind of developers you choose. If you are based out of the USA, employing a local employee may be expensive for your SaaS startup.

The ideal choice for hiring a team of SaaS developers is to outsource your requirements to South Asian countries like India, where you can find cost-effective solutions with quality work. You can connect with the right software development outsourcing company like Radixweb and hire software developers as per your demand.

Hence, the cost of building a SaaS product depends on the given factors, like:

Geographic Location

The region you choose or the location you prefer for the development team significantly impacts the entire cost of building a SaaS product. However, the process differs across regions and continents.

For example, the price in the United States may vary from that of Australia, UK or Asia.

Let’s bifurcate the development cost as per various locations:

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Factors That Affect SaaS App Development

It’s not an easy way to develop the SaaS application. You may come across some obstacles during your SaaS app development journey.

So, let’s consider those factors that affect the SaaS app development cost estimation apart from those discussed earlier.

1. Scope of App

2. Application Features

1. Role-based access management
2. Billing & Account management
3. Robust Security
4. Analytical Tools

3. API Integration

4. Platform Selection

5. Business Logic

1. Tech stack for Front-end & Back-end
2. The complexity of SaaS solutions
3. Number of Team Members
4. Various external integrations
5. Application Size

6. Application Architecture

1. Scalability
2. Number of API integrations
3. Multi-tenancy

7. Hidden Charges

1. Legal Compliances
2. Marketing
3. Maintenance
4. Updates
5. Customer Support
6. Server Costs

Effective Strategies for Your SaaS App Monetization

While dealing with the SaaS development company, you should prepare some strategic questions. Also, you need to ensure that their development approach and technologies meet both present and future requirements.

Here, we have found some monetization techniques used by different SaaS products:

• Freemium SaaS Cost
• User-based SaaS Cost
• Feature-based SaaS Cost
• Usage-based SaaS Cost

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Ways to Reduce SaaS Software Development Cost

We know developing a SaaS product cannot be budget-friendly, but as a Startup or large organization, there are some strategies you can implement to reduce the cost of developing SaaS applications.

While looking into ways to reduce the cost of developing SaaS products, it is not worth sacrificing the application's core features. Let's examine the techniques that can help you reduce the SaaS application cost.

• Optimizing Team
• Using Third-party services
• Flexibility with Hosting
• Outsourcing

Minimize SaaS Product Development Costs with RadixwebSo, the question - How much does it cost to build a saas platform, still doesn’t have a specific answer. The cost of ownership for a SaaS product depends on the features you want to implement, the tech stack and the platform you wish to use, and many more. Every SaaS product is different, and so is the cost.However, in this detailed guide, we have covered the major aspects of SaaS development that influence the total price of developing a SaaS product. We hope you have got a rough idea about it as well.If you plan to build a SaaS application, consider Radixweb. Our experts will provide the best SaaS consultancy to help you build scalable, secure, and reliable cloud solutions with minimal expense.Connect with our experts and share your project requirements.