Demystifying SaaS Development Costs for Your Next Big Project

“This comprehensive guide determines all aspects of creating a SaaS app. We will begin with assessing the factors impacting the cost of SaaS software development, the actual cost of developing a SaaS product, its various monetization strategies, and how SparxIT can be your trusted partner in SaaS app development.” 

Today, many businesses face a growth challenge—they hope to derive up to 50% of their revenue from new ventures and products, but they are not currently on a trajectory that would get them there. One tactic non-tech incumbents should consider is developing a software-as-a-service (SaaS) product. Beyond its profit potential, SaaS has many advantages. 

One reason is that SaaS has less overhead and logistics costs than tangible items due to its asset-light design. Another is that it frees traditional businesses to collaborate with large cloud service providers. Third, software is easy to scale. This is especially true when combined with the elasticity and extensibility of the cloud.

SaaS development offers a vast untapped market for business owners looking to reach a wider target audience. Furthermore, pay-as-you-go pricing, low capital expenditure, quick deployment, and on-demand scalability have also made SaaS product development very appealing.

Given the abundance of SaaS solutions available, it is not surprising that end-user spending in the sector is expected to increase from $491 billion in 2022 to $597.3 billion in 2023. As a result, businesses are concentrating on SaaS app development. However, before developing a SaaS product, they must know the SaaS development costs. 

Essential Factors Impacting the Cost of SaaS Software Development

We all know that the cost of developing a SaaS platform is more than a figure. It’s a critical aspect that every business owner must understand upfront. Let’s see the main factors influencing software-as-a-service pricing in detail.

• Complexity of Business Logic 

The business logic encompasses the app’s general functionality, the rationale behind its development, and the results users expect. This logic is crucial to SaaS platform development. Understanding the business logic helps you make informed decisions about your SaaS product, as it supports the app’s primary business functions. 

The business logic determines the following characteristics: 

• Intricacy of the solution to build a SaaS product.
• Tech stack used in front-end and backend development of the logic.
• Number of external integrations it could support. 
• The number of skilled developers working on the project.
• The peak reload size for apps. 

• Feature Set and Functionality

The number and complexity of features significantly impact the cost of developing SaaS products. For example, adding sophisticated features, customizing the application, or integrating it with other services might add to the overall SaaS application development costs, as you will require more time and resources. 

• UI/UX Design

User experience and user interface design play a pivotal role in determining the application’s usable features, capabilities, and pages. This directly impacts the business logic and developmental activities of SaaS application development. It’s important to be aware that a sophisticated SaaS UX/UI design can significantly increase the cost of SaaS development.

• Technical Architecture and Integrations

A SaaS product’s technological architecture comprises the arrangements and interaction of entities as per business needs. The following characteristics of the technology architecture impact the cost and app development process:

• Various API integrations
• Flexibility and Scalability
• Multi-tenancy 

• Stages of SaaS App Development

The many phases of software development—from ideation to implementation—greatly impact how much it costs to create SaaS apps. Understanding this expense distribution will enable you to opt for design services more suited to your requirements.

• Discovery and MVP Development

Your product concepts must be finalized before starting the SaaS MVP development process or hiring a team. If you put this concept into practice, you should be fully aware of your company’s objective and even understand how it is competitive.

However, you must ensure that your idea is solid and has the potential to benefit your business. You can also seek customer feedback and conduct extensive research. In the end, this stage will help you draft the roadmap for SaaS app development. 

Another option is to develop SaaS MVP. This will help you put your ideas into practice, confirm them, and develop SaaS products with basic functionalities. The SaaS MVP product development costs may range between $30,000 to $60,000. 

• UI/UX Design

The most crucial phase of developing a SaaS app like Canva is UI/UX design. This stage establishes the design and user interface of your application or product. To fulfill the user’s needs, UI/UX designers build a wireframe and adequately structure your application during this phase. The UI/UX development takes three to four weeks to complete. The typical UI/UX design price range is $3000 to $6000.

• Front-End Development

The front-end development stage assists you in selecting the appropriate tech stack based on the essential characteristics. You must ask yourself why front-end development is necessary. Users can determine whether to visit and check your application further in under 50 milliseconds. After that, most users will undoubtedly stop using your application. 

Since many other elements are equally essential, the cost of SaaS software development is difficult to predict. Front-end development involves more than just designing a beautiful layout—it also involves applying caching, compressing files, optimizing graphics, decreasing server requests, and more.

You might need experienced and expert front-end developers to deploy front-end development for your SaaS application. Hiring a reliable product development company is the best way to contact skilled front-end developers. In this case, the typical developer rate is estimated to be between $35 and $80 per hour or $10,000 and $40,000. 

• Back-End Development 

Backend development is the main where you will have to spend more money. Backend developers must start from scratch when developing each module and feature. On the other hand, using APIs’ functionality can help you save some money for backend development. 

Numerous capabilities are available for consideration, including user queries, push notifications, database management, security, file management, search, export, and more. The cost to build a SaaS product back end will take 20 to 25 weeks. Additionally, considering the average developer fee of $30 to $70, the cost might range from $18,000 to $60,000.

• Quality Assurance

SaaS systems have complex architectures, including various frameworks, libraries, and development tools for front-end and back-end development. SaaS product QA verifies that the application works as intended and fulfills users’ objectives. As a leading SaaS software development firm, we conduct various test cases, such as functional, automation, integration, acceptance, security, API testing, etc., to ensure your SaaS product functions properly. 

• Security and Compliance

SaaS programs manage sensitive user data, making them easy targets for hackers. Risks include malware attacks and data breaches, which can cause severe financial and reputational harm. 

Moreover, noncompliance with privacy and security requirements may result in severe fines. Maintaining a safety culture can be resource-intensive, and lacking consumer trust hampers your chances of success.

Robust security measures are a non-negotiable part of product development in the SaaS industry. By adding a layer of protection to the system, features like role-based access control, two-factor authentication, and field-level encryption reduce the likelihood of unauthorized access and data breaches, instilling confidence in your product’s security.

• Support and Maintenance 

Support and maintenance are critical components of a SaaS development cost. A small team of developers, designers, and quality assurance engineers will charge $10,000 to $20,000+ monthly for maintenance and upgrades. 

Operations must follow project specifications, service-level agreements, security guidelines, and the shared cloud infrastructure. Moreover, SaaS app developers must deliver updates utilizing no-downtime deployment to prevent user base fragmentation and make sure of continuous availability.

What is the Cost of Developing a SaaS App?

Creating an MVP for a SaaS startup costs between $60,000 and $150,000. However, several factors determine the precise SaaS product development costs, which have been mentioned below: 

• Cost Based on Project Complexity

SaaS platform complexity refers to the collection of features, user roles, and their interrelationships within your application. They can also be defined as a developer’s difficulty when creating a SaaS.

Even though “complexity” is a relative term, we can better comprehend it by using four categories: micro, basic, average, and complex. As one might anticipate, the complexity of a SaaS platform increases the time required for its development, ultimately affecting the cost to build a SaaS app. 

Following is a table that will assist you in estimating the cost implications depending on complexity.

Complexity	Average Cost
Micro SaaS Development Cost	$13,000 to $25,000
Basic Level SaaS Application	$25,000 to $50,000
Medium SaaS Software Cost	$50,000 to $150,000
Complex SaaS App	$150,000 to $400,000

• Cost Based on SaaS App Type

This type of application is a significant component that impacts the cost of developing a SaaS product. Building SaaS projects may be very challenging, mainly because of the number of new features that need to be included and the sensitive nature of the data that needs to be managed.

For instance, consider accounting software. Modern data protection techniques are necessary to prevent sensitive financial information from leaking. One feature alone raises the cost of the website. 

Type of SaaS App	Average Cost	Example
ERP Software Development Cost	$100,000 to $130,000	Acumatica
Custom CRM Development Cost	$50,000 to $140,000	Salesforce
Accounting Software Development Cost	$75,000 to $100,000	QuickBooks
HR Management Software Development Cost	$50,000 to $125,000	ADP Workforce
Project Management App Development Cost	$60,000 to $80,000	Trello
MarTech Software Development Cost	$90,000 to $110,000	HubSpot
Email Marketing App Development Cost	$60,000 to $75,000	Mailchimp
Visual Website Builder Development Cost	$130,000 to $150,000	Figma

• Cost Based on Team Type

Let’s examine how the type of development team you choose might impact the cost of SaaS development. For illustration, suppose you are developing a SaaS platform of average complexity.

• In House Team

Using this recruiting approach, you would hire app developers to work on your firm’s premises. These developers would regularly report to superiors inside your organization and accept directions from the company’s administrators.

However, adopting this business model comes at a high cost. It can be cumbersome, from infrastructure costs to employees’ salaries and other overhead expenses. 

• Local Development Company

This alternative may be costly for firms in high-income countries like the UK, USA, Canada, etc. The local development team in high-income countries is extravagant, mainly if you consider the hourly rate of developers.

• Freelancers

Freelancers are independent SaaS developers with the multi-skilled tech stack expertise to create a feature-packed SaaS platform. These people obtain contracts from several clients and carry them out as needed; they are not dedicated to working for any particular company.

However, they showcase no loyalty to the task or company they are working with. Moreover, they can immediately change clients if someone pays them better, that too, without prior notice. 

• Outsourced Team

Choosing offshore software development is a popular trend among high-income countries for businesses. The main idea behind this model is to look for an application development agency in a country other than your home country. 

For instance, a US-based company seeking assistance from an Indian software development company to create a SaaS product. This choice offers entrepreneurs reduced costs and top 1% talent as well. 

• Cost Based on Geographical Location

The nation where your team is based significantly influences the cost of developing software-as-a-service. For instance, a standard SaaS business solution that costs $180,000 in the US will only cost $60,000 in India. A table showing the cost of SaaS application development in various nations is seen below–

Region	Hourly Costs
North America (the USA, Canada, etc.)	$35 – $150
Gulf Countries (UAE, Saudi Arabia, etc.)	$30 – $120
Europe (UK, France, Italy, etc.)	$30 – $100
Asia (India, Japan, China, etc.)	$20 – $50
Australia & New Zealand	$35 – $150

Hidden Cost of Developing SaaS Products

The founders are not overly concerned about these expenditures during the first stages of building a product. However, your total ownership cost must include the two significant hidden expenses of SaaS product development.

Let’s go over each in more depth.

• Ongoing Maintenance

It accounts for 25% of the cost of developing SaaS Software. If the development cost is $100,000, the annual maintenance cost of your SaaS product might reach $25,000.

Expenses for maintenance will include the following:

• Hosting
• Domain name
• SSL certificate
• Email services
• Superior technical support

This cost is important to keep your platform running and offer an immediate fix for any issues.

• Marketing and Promotion

Expanding your user base and ensuring business objectives are met are two reasons why business marketing matters. If the development cost is $100,000, you must have a budget of at least $200,000 to $300,000 per year for product promotion. The following financial factors contribute to the high yearly cost of marketing:

• Information Architecture
• Technical on-site and off-site SEO
• Email Marketing
• Product hunt releases
• Social Media Marketing

Effective App Monetization Strategies for a Successful SaaS Platform

Preparing a few fundamental queries for the SaaS development business is advisable. Additionally, you must confirm that their technology and development methodology satisfy current and upcoming needs. Here are some monetization strategies employed by various SaaS products:

• Freemium Model
• User-Based Model
• Feature-Based Model
• Usage-Based Model

How Much Does it Cost to Build a SaaS Application: Final Estimation 

After examining the factors influencing SaaS development costs, it’s time to finalize them. What is the overall price of creating a SaaS product?

Working with an IT outsourcing company, whose typical hourly charge is between $30 to $70, to build an MVP of your SaaS application. A team of three to five professionals usually works on the development process for three to six months. In this case, the projected cost of SaaS development will be $50,000 to $400,000 or more.

Developing a SaaS application can be costly and complex, requiring meticulous planning, funding, and implementation. Nonetheless, employing a methodical technique and collaborating with a reliable SaaS product development company might minimize the risks and costs while accomplishing a successful outcome. 

SaaS Development Costs Estimation at SparxIT

We are a leading software development company with over 16 years of experience providing our clients with high-quality and feature-rich software, including SaaS solutions for any complexity. Our clients include large corporations, startups, and mid-sized businesses from various industries, including Healthcare, BFSI, Manufacturing, Supply chain, eCommerce etc. 

You will get several benefits while working with us, such as: 

Extensive experience in creating various SaaS solutions, including ERP software development, custom CRM development, HR management software development, etc. We are AWS-certified software developers proficient in creating innovation-intensive digital SaaS solutions. Moreover, you can select from different engagement models based on the unique requirements of your business. 

Frequently Asked Questions 

Q:1 How much does SaaS Product Development Cost? 

A: Developing SaaS products usually costs between $50,000 and $400,000. The main factors that will affect the development costs are the complexity of your product, features, UI/UX design, tech stack and integrations, QA, security and compliance, maintenance, etc. 

Q:2 How long does it take to create a SaaS solution?

A: Building a SaaS product can take anywhere from 3 months to 10 months. However, a SaaS MVP shouldn’t take longer than 6 months. 

Q:3 What is the average cost to build a SaaS app?

A: Micro SaaS development costs may vary from $13,000 to $25,000. The approximate price for a basic-level SaaS application may vary from $25,000 to $50,000. The medium SaaS software cost will range from $50,000 to $150,000. The complex SaaS app may cost you around $150,000 to $400,000. 

Q:4 What are the key steps in developing a SaaS MVP?

A: The key steps in developing a SaaS MVP are:

• Identify your target audience
• Access the market
• Define core features
• Build a product roadmap
• Choose a business model
• Create a SaaS MVP
• Test your SaaS product
• Launch your SaaS MVP 
• Gather customer feedback
• Analyze your SaaS MVP data and iterate

Q:5 What should I look for in a SaaS product development company?

A: You must check the company’s case studies, portfolios, and reviews. Building a high-quality SaaS application requires a keen focus on choosing the right technology stack, frameworks, tools, and development trends.

Q:6 Why should I outsource SaaS product development?

A: One of the significant benefits of outsourcing SaaS development is the capability to set up the team and kick off the development quickly. SaaS projects are complex, so businesses need to hire specialists with diverse skill sets to get a project up and running.

Companies should outsource SaaS product development for the following reasons:

• Cost savings
• Quick turnaround times
• Flexibility and Scalability
• Access to professional SaaS developers 
• Technical expertise
• Risk minimization