The SaaS sector has developed to the point where its applications and advantages don’t need to be explained. Cloud-based SaaS applications are now part of a market that is anticipated to be worth $195.20 billion in 2023. This is due to instant application readiness, high scalability, and quicker proof-of-concept testing.
Custom mobile app development services that offer the greatest software are becoming more and more well-known as a result of the considerable growth in demand for remote collaboration. Consequently, developing a SaaS app is probably a fantastic choice. How to calculate the cost of constructing a Software-as-a-Service (SaaS) platform?
We will draw on Acropolium’s expertise in building highly effective SaaS applications to assist you in finding the solution. We will provide a development cost estimate and a list of the major pricing determinants. Additionally, you can use our operational command, biotechnology, international trade, and accounting scenarios to evaluate how well these solutions work.
Software as a Service (SaaS) Global Market Overview
The SaaS industry is expected to grow at a CAGR of 6.6% from 2022 to 2027, with the market size expected to reach USD 328.03 billion. However, which industries are investing the most in SaaS solutions?
With 86% of organizations planning to engage in process automation, the financial sector is leading the way. Manufacturing, healthcare, and transportation are following closely behind with 85% each. Is SaaS cost-effective?
Costs Affecting the Development of SaaS Apps
It consists of the procedures necessary for the SaaS application to operate as a whole. The goal of the app and the expected result that satisfies the target audience’s demands are also included. Finally, it provides the framework for choosing the product’s features and functionalities.
The business logic is made up of
- The back-end and front-end technology stack
- The intricacy of SaaS solution
- Members of the team
- No. of integrations with external systems
- The application’s size
Based on the selection and the decision to hire mobile app developers in India you make for each of these factors, the SaaS pricing calculator will display a specific figure.
Architecture for applications
The structure and interactions between various entities in the SaaS architecture depend on the business and technological needs. Several key architectural characteristics that have an impact on price estimations are
- Number of integrations with API
- Tenancy in more than one place.
Therefore, SaaS products will cost more the more challenging it is for engineers to develop integration.
A SaaS product’s range
The project’s scope should be one of your first decisions. The functionality and subsequent features will alter depending on whether your SaaS application is a platform or a tool. Therefore, you must first make that decision. The length of time needed to design a tool or platform will also differ, affecting the SaaS deployment expenses. This is why several experts prefer to hire Indian app developers in India.
The platform’s scope is greater than that of the tools, whose ability to control key activities is confined, and where correctly carrying out a function may serve several purposes. A good example of a SaaS tool is Buffer, whereas a good example of a SaaS platform is Google Workforce. As a result, the features, time, effort, and cost vary depending on the extent of your application.
You must specify the components required in order to establish the price of SaaS products. The features that are provided by a particular SaaS package affect its length and price. When starting a project, you concentrate on fundamental features while creating an MVP. Then, after receiving consumer approval, you can develop a complete product. As a result, the cost in both stages varies depending on the features’ quantity, nature, and complexity.
The following features are a requirement for any SaaS application when you decide to hire dedicated developers:
- Management of role-based access and user permissions
- Tools for Analysis
- Account management and billing
Your development team will likely have to choose between building the complete back end from scratch or using third-party API interfaces in order to provide a high level of customization. For common features like payment, subscription, login, etc., you can choose APIs to assist in cutting costs. API methods that enable CRUD operations (Create, Read, Update, Delete) make up an API integration. The main methods for using RESTful APIs to retrieve and manage data are contained in these CRUD processes. Thanks to seamless API connectivity, businesses can use the existing functionality with other applications. Additionally, APIs will enable system automation and data sharing.
The developers must, however, adhere to recommended practices, such as reading documentation, choosing dependable APIs, checking for security flaws, managing scalability concerns, etc. It takes time, talent, expertise, and effort to finish each of these tiny projects correctly. This adds to the overall cost.
You can select a platform for SaaS just like you can for other applications. For instance, a B2B company must create a web application because the majority of its clients utilize desktops or laptops. B2C businesses, on the other hand, are more likely to choose mobile apps since they anticipate that their clients will access their products through smartphones. UI/UX changes impact the pricing of a SaaS product, while the content is largely unchanged.
Many people believe that after a SaaS product has finished developing, all work is completed and there is nothing left to do. There are costs associated with post-release maintenance, hosting, servers, databases, and integrations after the development period. As a result, these factors, and the ones described above, will affect the total cost of ownership (TCO).
The creation of a SaaS app typically takes three to nine months, sometimes even longer.
The timeline is determined by complexity, features to be added, and the steps you need to do before launching your app, just like the pricing. It should also be taken into account to build an MVP or POC to determine the viability of the project.
Any firm must set time constraints. But be sure to evaluate your work impartially. Consult your development agency to clarify any potential time frames.
Calculating the Price of Creating a SaaS Product
What should the cost of software as a service be? A few key steps require both time and money to perform. Let’s now examine each of them separately. The cost of your project will depend on its complexity as well as the location you choose for the development team.
Planning and Validation
The next steps are to determine your product goals, obtain customer feedback, and develop a sound plan once you fully understand your product. Budgeting for SaaS app development is obviously challenging. As a result, in order to bring in money for the organization, it could be necessary to develop a Minimum Viable Proposition (MVP). These programs merely offer the most basic features. To build a basic MVP of your SaaS software with standard functionality, you need to budget between $25,000 and $50,000.
Costs of Creating the SaaS Product’s UX
Since it determines how the interface will appear and what kind of user experience it will recommend to the clients, UI/UX design is a crucial stage in the development of your SaaS product. An important component of development is user experience. It all comes down to fulfilling the user’s requirements and expectations.
Testing is another crucial phase that informs you of how well your product’s user experience fits its target market. To make UX even more user-friendly, test your app at every level of development and incorporate comments you receive after releasing your MVP.
UX design typically costs between $35 and $60 per hour in the US. A non-complex SaaS program typically takes three weeks to design.
Cost of developing a SaaS product’s front-end
Choose the appropriate tech stack first for your SaaS mobile app. Be sure to consider all your app’s essential components when deciding. For the functions that your app might have, some frameworks work better.
It may be challenging to determine the development cost of a front-end application, as there are numerous elements to take into account. An internal team will cost more to work with than an outside one. The most affordable choice will be to hire a freelancer. However, you must first consider the accuracy of the job and the ease of communication. The front-end developer’s services will typically cost between $33 and $53 per hour. The cost to hire Android app developers in India can also vary.
Costs Associated with Building a SaaS Platform’s Back-end
As we’ve already stated, a complicated SaaS app’s backend must be built from the ground up using progressive backend frameworks. It’s only meant to be used in extreme circumstances and costs a lot more. Using APIs to create a back-end is a far more common and budget-friendly option. It cannot be omitted since the back end establishes the necessary data structure and security.
The average cost of back-end development ranges from $30 to $50 per hour or more, depending on the complexity of the services. All stages will probably take longer than 20 weeks to finish. Whether you choose to employ backend developers for your team or outsource them to a trustworthy provider is up to you.
Your adventure is not over if you successfully designed and launched your SaaS app. You must do more to determine the cost of constructing a SaaS application. Every SaaS solution is created with a broad target market in mind. It must be regularly updated with bugs repaired, improvements made, and new features included if it is to stay relevant and satisfy user needs. Keep collaborating with your technical team to ensure that your SaaS app receives specialized support and maintenance.
It is crucial to assemble a strong team and an expert project manager for the advancement of your project. You don’t just need your product to survive. To benefit people and remain competitive in the market, it must develop. It implies that marketing and advertising will also demand money.
Depending on the nature of your product, some of the additional expenditures for SaaS app development will be connected to legal licenses, subscriptions, and more.
What Additional Expenses Are Associated With Creating SaaS Applications?
Are you curious about the price of software as a service? Knowing about hidden costs is crucial, then. As a company entrepreneur, you may not immediately see these overhead expenses, but they are necessary for your application’s existence and long-term ability to compete in the target market.
In cost calculations, maintenance operations are typically overlooked despite the fact that they account for about 25% of your overall costs. The lengthy list includes numerous items, including domain names, SSL certificates, email services, hosting services, and more. These are the tasks necessary to maintain your platform functional. Calculating the precise cost is difficult because it involves many variables, including real-world components like outdated software and hardware, inexperienced engineers, engineering turnover, and software-end features of the external environment and program structure.
Additionally, maintenance may be preventative, corrective, adaptive, or predictive. As a result, it is safe to handle maintenance costs similarly to handling a separate software development budget. However, this takes professionals from the operation and production sides, who are difficult to come by because you need a seasoned campaigner, which drives up costs.
A startup company needs a strong marketing staff because it may help you draw customers and become known to your target market. The marketing expenses frequently exceed the development expenses by a factor of two to three. Some of these include content marketing, SEO, email marketing, product scouting, social media marketing, and public relations. An efficient and targeted marketing strategy is one thing that all profitable SaaS products have in common.
It’s challenging to succeed in today’s world of ever-changing technology without getting your items in front of your target market. Every day, hundreds of new SaaS apps enter the market; therefore, in order to stand out, you must constantly present yourself to the audience and highlight your USPs. Since marketing increases awareness, conversion, reach, higher income, and ROI, it is an investment rather than a hidden expense.
For every SaaS product, adherence to federal and state legislation is crucial. No matter what kind of application you are creating—finance, healthcare, banking, or finance—you must adhere to strict regulations like HIPPA, PCI-DCS, GDPR, etc., for which you must pay a large fee.
Due to the fact that the majority of SaaS solutions employ cloud storage, which is a vulnerable target for attackers, you must regularly upgrade your corporate software to prevent security or user experience issues. Additionally, new features must be added to maintain a high retention rate as the user base expands.
The next stage is to build up a customer support site when you debut your products on the market. You can assist clients in selecting the optimal plan, which they will ultimately pay for, by responding to their questions. However, assembling an entirely new team entails additional expenses.
Practical Strategies to Cut the Cost of SaaS Software Development
Software testing and quality assurance procedures often consume a third of the entire development time. As a result, manually testing your SaaS solution will require significant time and money. If you choose test automation, on the other hand, it cuts down on the amount of repeated work and necessitates less effort, which helps to lower the development cost drastically.
You can use third-party APIs for numerous features and functionalities, like managing subscriptions, processing payments, and logging in. Use third-party services rather than implementing custom code for these capabilities. It will enable you to lower your overall cost significantly.
Adaptability in hosting
Your SaaS platform must have hosting, which consumes a lot of resources. However, you can choose wisely by going with a hosting company that offers flexible and adaptable plans that meet your requirements. It will lessen the waste of services that are not necessary.
Startups are constrained by their scant financial and material resources. Outsourcing can be advantageous for startup owners in these circumstances since it enables them to create their applications at reduced costs in locations with lower developer rates than their home markets.
Given the vast array of SaaS offerings and the numerous variables that influence their pricing, it is difficult to determine the total cost for a single Software-as-a-Service (SaaS) project. Even the initial estimate a vendor gives you after you provide specifics about your company’s needs will be a bit speculative.
You must go through a discovery process and establish a technical specification containing comprehensive details about your project’s features, technologies, and third-party services to more precisely determine the cost of SaaS development.
If you have internal technical expertise, you can create a technical specification on your own or with the assistance of any firm. Once you have your technical specifications, you can contact various software development businesses for quotations. We can assist you with SaaS development at any point in your project, from developing a specification to managing your program.