SaaS Product

How Much Does It Cost To Build A SaaS Product In 2023: An Excellent Guide

With the development of modern technology, there is no surprise to witness a significant increase in the adoption of SaaS products in the business process. However, before applying the optimal solution of the SaaS method, one important question worth considering is: “How much does it cost to build a SaaS product?”  

The potential SaaS industry can bring numerous benefits to your business regarding its fast growth and high-profit generation rate. That’s why the first step is essential for your business goal in the long run. Considering the cost estimation before starting your work is highly recommended for the best outcome of the whole working process, laying a strong foundation to help you be on track.

Estimating the exact cost for a SaaS model is difficult since each project requires different resources. The following article will guide you through some important notes on unmissable factors contributing to the development cost. Let’s find out what they are and how you can optimize the price for your maximum profit!

1. What To Know About SaaS?

SaaS stands for Software-as-a-Service, a web-based software developed and managed by a provider to users. This business solution provides a software application that can be accessed online with a one-to-many model, making reaching thousands of potential customers worldwide easier. Users can use the software product once they create an account and log in to the system.

The introduction of SaaS products has changed how businesses work with their products to achieve the most optimal goal. Since it is stored and performed in a cloud option, companies do not need to worry about the problem of investing in hardware and software infrastructures. It is a big plus for startups or small businesses to quickly scale their products in an international market without a big sum of investment in a short time.

You only need to deal with the initial capital to set up a professional team of developers to get the application done. However, the process is complicated, requiring you to engage deeply in the best option to optimize the development cost. There are several factors to consider throughout the process, and you should consider them carefully beforehand to avoid any risk in the development stages.  

2. Important Factors Influencing The Cost

2.1. Project Scope

The project scope is the first factor you should consider in the planning stage. It will directly affect the cost of developing the product since different target platform types and audiences require other financial estimation plans.

Complicated features result in greater effort and money, reducing the app’s development cost. The more time you spend developing the premium-quality of interface design, the more you will pay for the developers. That’s why you must be careful and think smartly to reduce the sunk cost of human resources. 

If this is your first time building a SaaS application, limit the project scope to avoid unnecessary costs. Remember that an MVP version always costs you less than a fully-fledged platform with completed functions. Before investing in a larger project scope to optimize your budget, you should test your idea first.

The project scope is the first factor you should consider in the planning stage. It will directly affect the cost of developing the product since different target platform types and audiences require other financial estimation plans.

Complicated features result in greater effort and money, reducing the app’s development cost. The more time you spend developing the premium-quality of interface design, the more you will pay for the developers. That’s why you must be careful and think smartly to reduce the sunk cost of human resources. 

If this is your first time building a SaaS application, limit the project scope to avoid unnecessary costs. Remember that an MVP version always costs you less than a fully-fledged platform with completed functions. Before investing in a larger project scope to optimize your budget, you should test your idea first.

2.2. Design And Features  

Your choice of technology stack applied to design and maintain the project’s performance is also noteworthy for your budgeting plan. Design plays an important part in the success of a SaaS product; therefore, the tech stack will cost you considerably if you wish to have excellent software.

Some fundamental tech stacks are UI/UX design, front-end development, back-end development, quality control, and testing. Each one is an essential link in a chain, contributing to the final goal of building a successful SaaS platform. The burden of creating useful and eye-catching software to increase the satisfaction level in the user’s journey falls on your option of tech stack and developing team.

The real challenge is to strike a balance between top-level features and an affordable budget. The project quality is based on the application of modern technology, which will be directly proportional to the payment strategy. The best advice is to focus on your goal and carefully select only crucial parts to design first before continuing with other high-tech options. 

2.3. Team Structure And Location

Another remarkable aspect of the financial estimate is team structure and location. Remember that your team selection will influence your budget as specific types require different resources regarding tech stack and human resources.

Selecting an in-house team will not be an optimal option as it results in high development costs, including hidden workspace costs or taxes. Instead, an outsourcing company or freelancers would be a sensible decision to reduce the cost of developing the product. The below table will help you gain insights into the team’s options and their approximate cost.

In addition, the cost breakdown can vary significantly according to the geographical location of the development team. If you want to hire a team from North America and Latin American countries, prepare to pay them a large sum, as the outsourcing cost is the highest compared to other countries. Asia and Africa will be reasonable choices for outsourcing as they provide quality performance at an affordable price. The difference does not rely on the work quality, but it is about the availability of developers in specific regions.

2.4. Maintenance Cost

When building any software application, the working process never ends when you finish designing and running the product. Remember to include the maintenance stage in the development cost, as updates and bug-fixing are irreplaceable parts of the building’s progress.

Changes in design and updates in features are important to carry out regularly to ensure the best experience for users. Based on the frequency of the updating stage, you can predict the maintenance cost as a monthly or yearly cost. It will account for 10% to 30% of the estimated expenses, a considerable amount of the financial report. 

3. How Much Does It Cost To Build A SaaS Product In 2023?

3.1. Planning Stage

This is the first thing you will do to get a clear insight into the project idea. At this stage, it would be best to have experienced analysts to give you the best advice to set a long-term goal for your business. Thorough research is of great importance to other stages in the future, requiring you to spend time and money to produce a satisfying final result.

The estimated time for conducting analysis and research activities is 50 to 250 hours, depending on the project scope and complexity. The payment also varies based on the difference in certain regions worldwide, with the highest fee being $24,000 and the lowest cost being $7,500 for an average of 150 working hours. 

3.2. Development Stage

The development stage is the core part of building a SaaS product. It will decide how the product comes out as a final version and is ready to deliver its best performance. That’s why it is understandable that this step will cost you the largest sum with the participation of more professional people compared to other stages.

The most difficult part is defining the software’s UI/UX design, as it contributes greatly to the project’s success. User-friendly design deserves your consideration if you want to achieve more customers after they come across your product. The required time for UI/UX design completion is about 4 weeks, with the cost falling between $15 and $40 per hour in European countries.

Other key features of building the product are front-end and back-end development. Both are irreplaceable components of the project as they are responsible for visual aspects and structural sections. Therefore, you must tolerate the high fee for the two services, $20 to $60 per hour for each type. However, the time needed to finish the task of back-end development is longer than that of the front-end one.

3.3. Completion Stage

The final stage of any project always requires the utmost care to solve unexpected problems in time before releasing the final version to the market. Surprisingly, post-release maintenance can account for as much as 50% of your initial budget for system updating, security checking, or bug-fixing tasks.

Never underestimate the importance of this stage, as it will affect your overall performance in the long run. Paying attention to even the smallest error to ensure your SaaS product works smoothly is highly recommended for an excellent outcome.

>>> Read more: How to Build a SaaS Salon Booking System: A Complete Guide in 2023

4. How To Cut Down On The Cost Of Developing?

4.1. Outsource The Project Or Hire Freelancers 

The choice of outsourcing or hiring freelancers is more economical compared to the cost of setting up a dedicated team for each project. Doing thorough research to get the most skillful team at a reasonable hiring price is advisable.

Both options give you the convenience of choosing a specific partner for certain projects without the limitation of destination or scale of human resources. You can choose the most suitable collaborator as long as you believe it is the best choice for your company. 

Understanding the outsourcing market is highly recommended to give an ideal payment to your partner according to performance and efficiency. Set a clear goal from the beginning and ensure that the resourcing team or freelancers stick to the plan during their working process.  

4.2. Take Advantage Of Open-source Software

If you are not confident to invest money in the development process with the worry about not making a profit, try to get access to some free sources to build your software product. Such open sources for developing software are designed to support short-of-fund business, allowing you to create a SaaS application with basic features for free or at a very low cost.

This option suits projects at their beginning phase when everything is new and requires no complicated process. If you want to develop your software product to become outstanding in a competitive market, you had better consider the choice of serious investment in your software.

Conclusion

In summary, SaaS products are the future of the business world that is worth your consideration and adoption. With the full potential of becoming a great business idea to solve all the problems of service and cost, SaaS applications will not let you down regarding a special assistant tool for your business.

Your choice to build an in-house team or hire an outsourcing partner depends greatly on your business type and scale. If you are searching for a reliable business companion, don’t hesitate to contact AgileTech. With our experienced team of developers, we will give you a detailed plan and estimation of any of your SaaS ideas that meet all your expectations. For further discussion and free consulting time, please contact us here or fill in the registration form for a 30-minute meeting with our IT experts.

Leave a Comment

Your email address will not be published. Required fields are marked *