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

Description: Want to know how to calculate the cost of SaaS development? ➜ Then this guide on SaaS development costs is for you!

If you decide to enter the Software-as-a-Service market with your own app, SaaS cost is probably one of your main concerns. For people without previous experience with building a SaaS product, calculating the costs of the software development process can be challenging. There is no definite answer, as the costs of Software-as-a-Service solutions are impacted by numerous factors. In this guide, we will discuss the key factors that influence development costs, offer tips for reducing the project's budget, and help you come up with accurate estimation.

What factors impact the cost of SaaS development

Understanding the development costs is one of the most critical steps for people wondering how to build a SaaS website, tool, or platform. You can't find an experienced SaaS development company that can immediately provide accurate project estimation. SaaS development cost can change drastically due to several factors. Here are the main aspects to consider:

• Scope and complexity. The cost of building SaaS products depends heavily on project complexity and scope. If you want to create a micro SaaS solution, you can complete the project with a relatively small development team in several months. However, a cloud-based CRM system or ERP software will feature more functionalities and third-party integrations, require more tech experts, and take more time, which impacts the budget. To come up with accurate estimates, clearly define the scope and complexity of your application, outline the core features that need to be added in the first version of the product, and document project requirements to avoid unnecessary spending.

• Development team. No matter what type of SaaS product you want to build, the software development team's salaries will be one of the most significant expenses. There are several cooperation models, such as hiring freelancers, outsourcing your SaaS application development offshore, finding a dedicated team, assembling an in-house development team, or partnering with a SaaS development company. Each option has pros and cons, and balancing cost-efficiency with reliability and getting the highest level of SaaS development expertise you can get is not easy. If you decide to hire tech experts remotely, their salaries will heavily depend on the hiring destination, so analyze different options to get the best price.

• Project timeframe. If you wonder how to develop a SaaS application as quickly as possible, compressing the development timeline is the option that comes to mind first. But remember that projects with tight deadlines usually require more developers who need to be compensated for working overtime, more resources, and investments in automation tools. Consider launching MVP first and iterating your SaaS platform later instead of developing SaaS applications with numerous features and complex functionalities within a compressed timeframe.

• Third-party integrations. It is almost impossible to imagine developing SaaS products without third-party integrations. Creating each functionality from scratch can take years and cost hundreds of thousands of dollars. Remember about initial costs, such as subscription and licensing fees, ensuring seamless connectivity, and API documentation and support. Ongoing costs influence the SaaS platform development budget, including subscription renewals, continuous monitoring and troubleshooting, and ensuring security and regulatory compliance of integrations.

• Security and compliance. Every person interested in Software-as-a-Service development has the same question in mind: How can a SaaS app with a high level of data security and compliance with various regulations be created? Implementing robust security measures, investing in ongoing testing, training employees to be knowledgeable about multiple threats, and hiring compliance experts will increase initial development costs. However, with cloud-based SaaS applications handling sensitive user data, money spent on cybersecurity will help you save on your budget by avoiding regulatory fines, lawsuits, and loss of customers' trust.

• Multi-language support and localization. In today's landscape, developing SaaS applications for a single region is not feasible. Translating the user interface, documentation, and other materials will require professional translation services. Also, content often needs to be adapted to be culturally relevant for different audiences. The costs can change significantly depending on the number of languages and the volume of content you need to translate.

Understanding these factors, you can calculate your SaaS startup budget by summing up the labor costs based on hourly rates and the budget for software licenses, third-party integrations, and other development tools. However, to really know how to build a SaaS app without going over budget, you need to fully understand any hidden costs you might encounter.

Hidden costs to consider

Building a SaaS platform differs from creating web applications or native app development. This process has many intricacies and details that can be overlooked when planning the SaaS development process. Here are the main hidden costs you must account for while building SaaS applications.

• Infrastructure costs. It is not enough to just determine what tech stack you need and invest in the necessary development tools and technologies. SaaS applications require infrastructure to work properly, including databases, network equipment, and cloud services. Big cloud providers like AWS, Google Cloud, or Microsoft Azure offer scalable and secure solutions, but initial setup still requires significant investments.

• Ongoing maintenance. You need to ask yourself how to create a SaaS application that doesn't lose customers due to bugs and downtime. The answer will most likely be ongoing maintenance and quality assurance. Software-as-a-service products require software updates, server maintenance, proactive troubleshooting, and 24/7 customer support. Some beginners forget about this while estimating the budget.

• Marketing and advertising. Entering a competitive and saturated SaaS market requires a thought-out marketing strategy. There are also ongoing marketing activities, such as SEO optimization, social media outreach, and PPC marketing. You need to calculate customer acquisition cost (CAC) and include it in your project's budget.

• Feature creep. Continuous addition of new features during SaaS software development is also called feature creep. There are many reasons for this, from changing the founder's vision to competitive pressure. To avoid going over budget, consult with your tech team or SaaS application development company on features prioritization and resource allocation. Don't forget that each new functionality comes with additional testing costs.

• Incident management. Even if you implemented robust security measures, planned for scalability, and invested in QA specialists, technical issues or data breaches are always possible. A comprehensive incident response plan can help you quickly deal with problems that may arise, but it requires investments in automated monitoring tools, alert systems, and post-incident analysis protocols.

To be prepared for hidden costs, you must include a buffer in your budget. But where do you find the extra money? Let's talk about some useful tips that can help you reduce the costs of the SaaS solution development process.

How to reduce the cost of building a SaaS product

Many people and organizations that want to benefit from the SaaS model are interested in building a SaaS application that is as cost-efficient as possible without compromising quality. These tips can help you to minimize spending during SaaS app development.

• Agile development. The iterative approach of Agile development methodologies allows you to detect issues early and make necessary adjustments without spending more time and resources later. Also, with a project broken down into small, manageable parts, you can build a SaaS application that better aligns with customer needs and market trends.

• Open-source technologies. Managing software licensing costs are one of the key SaaS application development challenges. Open-source technologies are typically free to use and a robust community around these technologies can provide you with resources, tools, and libraries that can accelerate the development process.

• Cloud services. Choosing the right cloud computing services provider can help you reduce infrastructure costs and increase scalability. Pay-as-you-go pricing models minimize wasted resources, and advanced security features provided by leading cloud providers enable you to spend less on cyber defense.

• Optimization of development processes. By automating repetitive tasks, implementing CI/CD deployment, and adopting cutting-edge practices in code quality and testing, you can streamline many development processes, minimize errors, and even compress the development timeline.

With these strategies and methodologies, you will be able to save costs and develop SaaS applications more efficiently.

How much does it cost to build a SaaS platform?

Of course, before you decide to create a SaaS application, you'll want to know how much it costs to build a SaaS app. To answer it precisely without knowing all the requirements, features, and other details is basically impossible. Minimum viable products created using low-code or no-code platforms can cost you less than $10,000, but it will be challenging to be competitive in this market and generate revenue with a solution like this.

Custom SaaS MVP with third-party integrations and advanced features may start at $100,000 and usually takes more than three months. If you need to develop a SaaS application faster, costs will grow. Enterprise-level SaaS platforms with complex custom workflows, robust security measures, and extensive integrations can cost from $500,000 to $100,000,000. Estimate costs using a list of critical factors we provided and if the budget seems too high, consider building MVP first to attract first users and generate revenue before launching a full-fledged version of your SaaS product.

Conclusion

Even top SaaS application development service providers can't tell you how much it will cost to build a SaaS product before the thorough planning and roadmapping stage or discovery phase. Development costs may be drastically different based on various factors, including development timeframe, number and complexity of features, type of product you want to build, team composition and location, technologies used, and many more. With the information provided in this guide, you will be able to estimate the cost of your project based on key factors and learn how to create SaaS applications even on a tight budget.