Licensed software is giving way to another business model named Software-as-a-Service (SaaS). The process has been going on for a decade or so. Its main driver is the rapidly evolving capabilities of cloud platforms. Online computing is becoming mighty enough to run almost any software in a streaming mode. Access to broadband internet is almost the only desired trait of modern hardware, while subscription is the primary business model of leading service providers.
Why do things go as they go? Can a reverse trend towards computer programs distributed by retail with licensed carriers go back anytime soon? And if the new paradigm is so fatal, how to develop a SaaS application to follow the zeitgeist?
Read, learn, and find your own way to progressive SaaS application development.
Why SaaS Sets a New Standard
SaaS solutions differ from traditional software conceptually. Unlike programming products that run on local computers, SaaS applications reside somewhere in the cloud. It exempts users from owning applications on a licensing basis. Technically speaking, their hardware should have an operating system and a browser to access remote servers via the internet. From a business standpoint, users deal with a service provider to have the right to use in-cloud applications remotely. We call such deals "the subscription."
SaaS programming is popular and successful because both parties benefit from it. The SaaS advantages for users and service providers are worth considering separately.
SaaS Advantages for Users
It may sound controversial, but the fewer software programs you own, the wider range of applications becomes accessible for your computer. Theoretically, the overall limit of SaaS implies having nothing but a browser on your local device. All other programs run as SaaS applications. Why is such an order of things beneficial today?
From year to year, numerous experts of the World Economic Forum in Davos keep repeating that consuming natural resources as usual is no longer affordable for our civilization. The global population consumes too much to leave our descendants with nothing. The so-called sharing economy promises to be a resource-saving approach in this regard. People worldwide have started adopting car-sharing, home-sharing, appliance-sharing, and other whatever-sharing services to reduce consumption.
In such a paradigm, we can easily accept the software-sharing model, which is essentially SaaS software development. Users can save a lot by refusing to pay hundreds of dollars upfront for licensed software when sharing in-cloud applications with others for a much more affordable monthly subscription. SaaS web development meets the “less property, more freedom” trend of the resource-saving sharing economy. Very diverse strata, from classic housekeepers to digital nomads, appreciate such a sort of online socialism that allows them to use the software they need during the period they want to pay for.
Since no one-of-its-kind software product is able to stay long alone in today’s world of total competition, similar applications hinder the choice that users should make between software vendors. The more software products with similar functionality appear on the market, the harder the choice. The SaaS model facilitates the proof of concept when we try apps for free. Moreover, many people find free versions satisfactory enough to meet their expectations. Besides, we can stop paying for a subscription at any moment. Hence, SaaS vendors allow users to travel across the app markets without obligations and redundant expenditures.
Small and middle-sized companies, start-ups, and freelancers are often limited in their budgets. They face troubles with new staff members who can appear barely affordable regarding the operating costs they require. Buying a licensed copy of a particular software product for every newcomer is expensive. Besides, the modern workforce is very dynamic: employees come and go with little resistance.
The SaaS model helps employers save a lot on software when they hire new staff. In addition, international teams working in different locations can establish their working environments with shareable SaaS applications. Many staff compositions and workflows can become easily scalable with SaaS programming to let many promising but modest projects stay afloat when growing and succeeding finally.
As the outsourcing model is becoming increasingly popular in various sectors, the problem of licensed software is getting tougher. Many outsourcers and freelancers from underdeveloped countries have to refuse projects when they teeter on the brink of profitability due to the unaffordable cost of software required to complete the project. Such scenarios stop being fatal with the subscription model inherent in SaaS software development. Also, large transnational corporations having staff worldwide get another chance to optimize their workforce costs with SaaS applications. Affordability of software becomes a norm anywhere when shifting from ownership to rental happens. SaaS vendors do not sell software. Instead, they sell access to software hosted on cloud platforms.
A lack of disk space is a common problem for both individual users and organizations. The insufficient computing power of processors is another problem occurring everywhere. On the one hand, the problems belong to hardware. On the other hand, enormous databases and demanding software can overload even the most powerful device. What if we borrow memory capacity and computing power from some remote data centers that outperform every single computer by order of magnitude?
This is what SaaS platform development offers to mass users. Instead of upgrading their machines to up-to-date performance metrics, users can rely on SaaS providers whose financial and technical possibilities are unattainable by any user, be it an individual customer or a corporation.
Uninterrupted operation is possible when your system has no single point of failure. A hidden bug can cause the same failure to your software as a trivial power outage can do for your desktop. Cloud providers are famous for faultless performance due to their powerful data centers distributed across the world. Besides, every respected SaaS vendor holds a team of support engineers who monitors the app’s performance 24/7 to fix the slightest malfunction.
A chance to put down a service like Google Drive is close to zero compared to any on-premise system. Hence, building a SaaS product is more reliable for faultless performance than using licensed software installed on an individual computer. This is especially critical for corporate customers with multiple staff members whose local conditions and personal hardware can be diverse.
SaaS Advantages for App Vendors
Many software vendors with a solid background in licensed products are still hesitating about building SaaS applications. Probably, they are guided by the famous principle “it works” in their reluctance to leave selling software on a traditional retail basis. However, the evidently positive experience of their SaaS-centric rivals should make them ponder where the future of software development lies. To add some fuel to the fire, we articulate the following well-proven advantages of SaaS application development for software vendors.
Those who regularly release new applications know well that keeping development tool sets and frameworks up-to-date is not so easy. Specialized software programs for developers cost much. In addition, some of them have spatial restrictions in their licenses prohibiting the use of those products in particular locations. Trivial scaling of a production environment, when new members join the team, sometimes becomes a tough challenge due to a limited number of licensed copies currently available. Organizational, financial, and technical issues arise when it is time to update your licensed software.
In contrast, SaaS programming allows developers to forget many (if not all) problems related to updating their tools. It is not about money but rather about time in many cases. Waiting weeks and months for particular updates is no longer necessary: the latest version is always available online when using the SaaS model. Time is money, especially in sectors with fierce competition. The one who can get down to work faster conquers the market.
Your production flexibility becomes unprecedented when the development process runs in the cloud. It is no exaggeration to say that SaaS development sets the new golden standard for software vendors. The unlimited technical resources accessible from anywhere at any moment via easily affordable subscription require only two more things to let any development team succeed: sufficient staff and inspiration.
Forecasting your sales is problematic if they are irregular. The erratic behavior of markets determines such sales. It is like fishing when you hold a rod expecting a fish to catch your bait. The best you can do is throw fish food around as much as possible. Advertisement and marketing campaigns are the fish food you spend your money on continuously. Sometimes it works, but often it doesn’t. Predicting your sales more or less reliably in such a situation is possible when you are a monopolist. Microsoft, with its OS Windows in the 1990s, was such a monopolist. But those days have long gone.
SaaS app development makes sales predictable as few other models do. You rely on your user base that grows month after month or, at least, remains stable. Your subscribers pay you a fixed monthly fee. The subscriber audience can fluctuate in the number of users, of course. But the lion’s share of your customers stays stable in the long run. The SaaS relationships with customers provide the so-desired sustainability for your business. An opportunity for long-term planning appears at your disposal. And what is more valuable for entrepreneurship than predictable income in these days of financial and political uncertainty?
Is it possible to sell the same product to the same buyer many times? In an ordinary seller-buyer model, it isn’t unless you are a fraud. However, a legal opportunity to sell your application to the same user every month is possible with the SaaS subscription model. You need not sell multiple copies of your software. You offer users multiplied access to the same application you hold in the cloud. This is how a product turns into a service.
Suppose the retail price of your software is $1000. The sum covers your production costs and gives you a $200 net profit. If you sell the product once as a licensed copy to a single customer, you should expect nothing more from the customer.
When you offer the same software as SaaS for a $10 monthly subscription, 100 online subscribers (a very modest number of users in terms of modern totally-networked environments) pay you the price in one month. But the same 100 users will pay you the same price again next month. For what? For the same application. Since you have already compensated your production costs with the first-month subscription, the next month’s $1000 appears to be your net profit.
Not the entire $1000, actually, since you spend something to keep your cloud infrastructure running. But in any case, you will need no application development again in all subsequent months. And how about 1000 subscribers paying for your service?
How long can a single software product released as a SaaS solution bring value to your business? It depends on numerous factors, such as the theoretical lifetime of your application, its popularity, the availability of possible alternatives from your rivals, the quality of your customer support, and the like. But we can state categorically that a SaaS solution's profits can exceed its actual development cost by many orders of magnitude.
New market opportunities
Trying to enter a new market can be painful. You always risk failure if your product appears to be far from the customers’ expectations. Besides, different markets have diverse conditions. What is normal for American customers can be intolerable for Arabic ones, and vice versa.
Suppose you create an application that is great as a whole. Still, due to minor issues, it faces trouble with a particular customer category. Fixing the issues is not a big deal, but customers will have to reinstall the app when you release an updated version. People are too busy nowadays to spend time on tambourine dancing with repeated installments. Many customers will likely delete the app and leave for another vendor. Can you lose a promising market in such a case? Yes, you can. Will the situation impact your business reputation? Yes, it will.
Let’s address the same use case from a SaaS development perspective. Your subscribers may not even notice the corrections you are making in the app. An updated version can replace an old one when traffic is the lowest. Everything happens somewhere in virtuality, not on your customers’ computers. It means you can improve your product-as-a-service as often as necessary to satisfy your subscribers completely. Hence, however screwed your first version may appear for one or another market, you always have an opportunity to achieve a positive business result without abandoning the project. SaaS programming provides such an opportunity, while licensing doesn’t.
Applications Worth Building as SaaS
Technically speaking, any application can be built as SaaS. However, practice suggests that only a few app types perfectly correspond to such a business model. This applies primarily to complex multi-user systems from the corporate sector. The systems requiring clock-around operations with significant technical resources are worth developing as online services.
Enterprise resource planning systems usually consist of several modules responsible for various functions such as HR, CRM, accounting, inventory, and the like that can be utilized by different staff members. One of the most common reasons for applying SaaS development to ERP systems is the ease of implementation and maintenance. In addition, SaaS ERP systems can often provide real-time data access and visibility, which can be especially valuable for businesses involved in fast-moving and data-driven industries. The flexibility of SaaS ERP systems also makes them a great choice for businesses with changing or growing needs, as they can easily scale their SaaS system to their specific needs and requirements.
SaaS project management tools offer a number of benefits over traditional on-premise solutions, leading to increased productivity and profitability. The advantages of such systems include but are not limited to the following:
- Lower upfront and maintenance costs compared to on-premise project management solutions;
- Accessibility from any device or location;
- Ability to scale with the business as it grows and its needs change;
- Faster implementation and rollout of new features and updates;
- Ease of management and maintenance through a centralized platform
Jira and Trello are examples of successful project management apps built with SaaS development.
The recent global pandemic has demonstrated that remote working is possible but challenging without online collaboration software. The more diverse the user audience is, the stronger the reasons to have collaboration tools as SaaS. The benefits and flexibility of SaaS collaboration tools make them attractive for businesses of all sizes and needs. They provide more streamlined integration with other business systems and tools, easier implementation and deployment, and real-time collaboration and communication between team members.
In addition, SaaS collaboration tools can offer more advanced and customizable features at lower prices with faster development times than traditional on-premise solutions. The existing leaders, such as Zoom, Slack, and Google Workspace, can hardly cover the growing global trend for remote collaboration. Such a niche promises to have enough space for SaaS platform development for a long while.
SMM systems and analytic tools are integral components of modern business processes. They are developing hand-in-hand with the digitized sectors where marketing activities are critical for success. Scalability and flexibility are the primary traits expected from modern marketing platforms.
Scalability in such a context implies meeting the growing business needs and marketing demands. This is a significant benefit, especially for businesses starting out or needing to ramp up their social media marketing efforts and capabilities. Flexibility implies a broader scope of customization inherent in SaaS app development compared to on-premise systems. In addition, SaaS marketing apps can be easily integrated with other business platforms and online solutions to enhance marketing efforts significantly.
The convenience of online streaming services has become so apparent to a mass audience that many entertainment companies have received a second wind when adopting SaaS. Such business sharks as, for example, Netflix never spend even a penny on anything worthless. Spotify, YouTube, Netflix, and other streaming services have long realized clearly how lucrative the subscription model is. They are developing their platforms with SaaS programming for many reasons. Enormous coverage of the population worldwide, reliable revenues due to the subscription model, and an optimal development costs/profitability ratio are among those reasons.
Remote studying is becoming as popular as remote working. Schools, universities, and other educational institutions can hardly account for further development without online education platforms. Western education was traditionally expensive, preventing many students from learning in famous universities. Besides, combining conventional learning with other activities is always problematic unless you study by correspondence.
E-learning apps are on the rise because they provide a more engaging and interactive learning experience for students, which can help to improve engagement and retention. Unsurprisingly, SaaS education platforms are considered a more affordable, accessible, and personalized way to learn in the modern world. Many e-learning apps use the subscription model making education easily affordable for various strata in locations where universities are simply unavailable. One of the most famous online education platforms, Coursera, offers full course access for only $59/month.
Gaming facilitates socialization when players get together online. Modern people have to spend much time at home working remotely. Gamers know that playing with a computer cannot remain exciting for long. Rather sooner than later, they start looking to communicate with other people through gaming contests. However, a specific gamer community grouped around a particular title can be palliative for those seeking a broader gaming context.
Online gaming platforms can offer gamers a more streamlined and personalized experience, with easier access to games and in-game content. SaaS platform development opens up new opportunities for growth and engagement, allowing game developers and publishers to reach a larger global audience and provide more comprehensive and in-depth gaming experiences.
How to Develop a SaaS App Step by Step
The entire SaaS app development lifecycle consists of several critical steps, among which some optional ones may appear. Many depend on the type of application to be built. However, the following widely-accepted pipeline reflects what SaaS developers usually do to create any type of SaaS application.
Before generating any idea about building a SaaS product, a particular market is worth exploring. Markets and industries differ significantly to prevent applying the same approach to all of them. Online gaming has traits and features that can hardly correspond to online project management and vice versa. The same relates to target audiences. Their needs and aspirations determine how a particular sector evolves. A well-conducted market analysis should be able to answer the following questions:
- Which user audience forms the market?
- What are the primary problems of users?
- How are users solving the problems now?
- Which on-premise software is popular among the users?
- Is any relevant SaaS solution available in the sector?
- What are potential SaaS rivals for your future app?
- How can your SaaS app contribute to the user audience?
When the market analysis delivers a holistic picture of the user audience and current conditions, the idea of a new SaaS application can be finalized. The concept should explain why the app can find a sufficient number of users, who a typical user is, and how users can benefit from the application. Besides, a clear monetization strategy should be designed. It can imply variations of the SaaS-inherent subscription model in the form of different payment plans (free, paid, freemium, etc). In a nutshell, the app’s concept should describe how the app will solve the users’ problems, what revenue the app owners may account for, and how long an approximate lifetime of the app can be.
User interface and user experience are what developers usually mean talking about app design. UI/UX determines how smoothly users interact with software. When considering SaaS programming, designers should keep in mind that everything will happen online. The responsiveness of a user interface comes out on top, therefore.
It is critically important to consider the diversity of hardware that people may use and significantly varying bandwidth in different locations. Also, the screen size of mobile devices requires a special approach to UI/UX design. Various operating systems and browsers can impact the user experience in many scenarios. Only experienced professionals can develop SaaS applications with flawless UI/UX designs.
In contrast to on-premise software, SaaS applications hold their architectures beyond physical servers. Storage, computing, databases, transactions, and whatever else run and reside somewhere in a cloud. The cloud technical capacities are usually distributed across several massive data centers. Cloud service providers do their business by selling access to their online facilities.
Some of them, like Amazon Web Services, have grown into transnational mastodons (in a good sense) whose capabilities always appear excessive for any SaaS project, however demanding it can be regarding storage space or computing power. Besides, cloud providers continuously upgrade their software to make cloud services more secure, innovative, and reliable. Cloud service providers are SaaS vendors themselves to know well what app developers need for building SaaS applications. Monitoring updates of leading cloud services helps stay tuned to the latest trends in SaaS app development.
Development and QA
The agile or iterative approach implies creating a product with basic functionality, also called a minimum viable product, that can be launched quickly to get customer feedback, providing the development team with a proof of concept. SaaS development benefits from the approach as few other development pipelines do. Why so? An MVP is less resource-intensive to create. It can be developed and launched in a few weeks. Even if it fails, the result of such an experimental release can be considered positive since the project’s stakeholders receive valuable insight into what is wrong with their business idea.
If they do otherwise and create a fully functional SaaS solution for all the money, no other chance to fix anything and launch a relevant app is available. When the results of the MVP launch are thoroughly analyzed, developers can get down to building a final version of the SaaS application.
In addition to an MVP, agile development implies continuous integrations between designers, programmers, QA engineers, and operation specialists when product development is divided into cycles that continuously circulate between the teams. Such iterative workflows are also known as DevOps. DevOps engineers combine sysadmin functions with programming and testing skills. Agile and DevOps are especially recommended for SaaS development since the successful user experience with online solutions depends a lot on how clearly the developers understand operations and vice versa.
Maintenance and updates
Maintenance is a continuation of development in many cases when it comes to SaaS solutions. Fixing bugs when the application runs with multiple online users is a special activity that can hardly succeed without experienced backend developers available in a support team. Technical opportunities for updates and maintenance on the go should be pre-designed at the development stage. Fortunately, modern cloud infrastructures allow for doing many things that SaaS app developers may overlook due to their lack of experience.
However, developers should realize from the beginning that the SaaS philosophy implies continuous software evolution. Every SaaS application should be able to evolve according to the users’ demands and changing market conditions. Regular updates must be easy to release, while new functions should face no severe implementation constraints.
Technical support engineers of cloud providers can assist SaaS app developers and stakeholders in dealing with the cloud ecosystem, but they are unlikely to work wonders. It means that the app’s owners and developers must understand that regular and accidental maintenance and updates will become their main jobs after the application is deployed. The opportunities and tools for doing such jobs must be prepared beforehand.
Cost of Building a SaaS Application
Building a SaaS application comes with its own set of costs that must be considered. We will explore the various factors that influence the cost of building a SaaS application, including development, design, infrastructure, maintenance, and more.
The development process of a SaaS app can be broken down into several components. Here are the estimated price ranges for each component:
Planning and Analysis: $5,000 - $20,000
This phase includes market research, competitor analysis, project scoping, and the creation of a project roadmap. The cost depends on the complexity of the project, as well as the expertise of the team conducting the research and planning.
Backend Development: $30,000 - $150,000
Backend development involves creating the core functionality of the SaaS app, such as data processing, storage, and user management. The cost depends on the size and complexity of the app, as well as the hourly rates of the software engineers involved.
Frontend Development: $20,000 - $80,000
Frontend development includes creating the user interface (UI) and implementing the user experience (UX) using various web technologies. The cost varies based on the app's complexity, design requirements, and the expertise of the developers.
Quality Assurance (QA) and Testing: $10,000 - $50,000
QA and testing are essential to ensure that your SaaS app is stable, secure, and performs as expected. The cost depends on the scope of the testing, the tools used, and the expertise of the QA team.
Design plays a critical role in the overall success of a SaaS app. Here are the estimated price ranges for design costs:
User Experience (UX) Design: $5,000 - $25,000
UX design focuses on optimizing the app's usability, accessibility, and overall user satisfaction. The cost varies based on the complexity of the project and the experience of the UX designer.
User Interface (UI) Design: $5,000 - $25,000
UI design involves creating visually appealing and intuitive user interfaces. The cost depends on the design requirements, the number of screens, and the expertise of the UI designer.
SaaS apps rely on cloud-based infrastructure to deliver software over the internet. Here are the estimated price ranges for infrastructure costs:
Hosting and Server Costs: $50 - $2,000 per month
Hosting and server costs can vary greatly depending on the size and complexity of your SaaS app. Options include shared hosting, VPS, dedicated servers, or cloud-based platforms like AWS, Azure, or Google Cloud Platform.
Content Delivery Network (CDN): $50 - $500 per month
CDNs help improve the performance of your SaaS app by caching and distributing content across multiple servers around the world. The cost depends on the amount of data transferred and the number of requests.
Database and Storage Costs: $100 - $1,000 per month
Database and storage costs depend on the amount of data stored, the type of database management system (DBMS) used, and the required storage capacity.
Maintenance and ongoing costs
Ongoing maintenance and support are essential for the success of your SaaS app. Here are the estimated price ranges for these costs:
Application Updates and Bug Fixes: $5,000 - $20,000 per year
Regular updates and bug fixes ensure that your SaaS app remains stable, secure, and up-to-date with the latest features. The cost depends on the complexity of the updates and the expertise of the development team.
Customer Support: $1,000 - $10,000 per month
Providing timely and effective customer support is crucial for user satisfaction and retention. This may involve hiring dedicated support staff, creating knowledge bases, or implementing chatbots. The cost varies based on the size of your support team and the tools used.
Security and Compliance: $2,000 - $15,000 per year
Ensuring that your SaaS app is secure and compliant with industry standards and regulations is an ongoing cost. This includes regular security audits, vulnerability scanning, and investment in cybersecurity measures. The cost depends on the complexity of the app and the level of security required.
Marketing and Sales: $1,000 - $10,000 per month
To grow your SaaS business, you'll need to allocate funds for marketing and sales efforts. This includes content marketing, social media advertising, SEO, and other customer acquisition strategies. The cost depends on the scale of your marketing campaigns and the channels used.
Subscription and Licensing Fees: $100 - $1,000 per month
SaaS apps often utilize third-party services, libraries, or frameworks that may require subscription or licensing fees. The cost depends on the specific services and tools used.
Total cost to develop a SaaS app
The cost of creating a SaaS app can vary greatly depending on various factors, such as development, design, infrastructure, and maintenance. In general, the cost can range from $50,000 to over $300,000 for a medium-sized app, with ongoing costs ranging from $1,000 to $10,000 per month.
Keep in mind that these are approximate figures and actual costs will depend on your specific project requirements and the expertise of your development team. By understanding the factors that influence these costs, you can make informed decisions and create a realistic budget for your SaaS app project.
Nothing hints that the digitization of industries and markets can slow down anytime soon. On the contrary, digital hardware is becoming more affordable for various strata who are increasingly enthusiastic about adopting online services. The software development sector can hardly stay aside from modern trends. Cloud platforms' impressive technical capabilities make developers and software vendors adapt to new technologies and conditions.
SaaS programming impacts the entire landscape of software distribution. The SaaS-inherent subscription model sets another standard in business interactions between users and vendors. Both parties benefit greatly from SaaS: users pay affordable monthly fees instead of high upfront costs, and vendors receive easily predictable revenues that can eventually exceed the SaaS development costs by many orders of magnitude.
The present article provides a good picture of SaaS app development and its advantages. Nonetheless, there is never too much knowledge, as they say. Those who seek to establish a successful SaaS business are always welcome to contact our experts. We can assist you in choosing the right SaaS app design and architecture, developing the app from A to Z, and providing post-deployment maintenance and technical support. A highly individual approach is guaranteed.