SaaS Development Guide: How to Build an Incredible Product
Is the SaaS market worth investing in today? And if so, how to build a SaaS product that will truly stand out? Diving into such a project requires careful consideration: after all, building a custom SaaS product is a costly investment, and we get that you need to do your research.
As a SaaS development company, we can assure you that the market is promising. There is a clear positive trend in venture capital investments, especially in European software companies, which signals investor confidence in the SaaS market. Besides, businesses are increasingly turning to SaaS solutions for their efficiency and flexibility, so needed for navigating economic challenges.
At the same time, if you want to enter the market with your own product, you have to get it right. This means focusing more on customer retention, working hard to enhance the customer experience, and nailing down several other key factors. In this article, we share crucial tips so that you have all the information needed to develop a SaaS product that will thrive in today’s market.
Key takeaways
As experts in the SaaS development, we recommend following the lean startup concept for emerging SaaS businesses and starting with an MVP (a minimal viable product).
In the case of SaaS startups, it’s crucial not to skip the discovery phase. It allows you to validate the market before making any significant investments in development and build a product users truly need.
After MVP development, you have to collect and address customer feedback, follow product metrics, reassess performance issues, and implement new features. You will also have to market your product and find a strategy to expand your customer base.
The cost of building a SaaS application can range anywhere between $20,000 and $500,000. For instance, a SaaS MVP with the most essential features might cost around $35,000, while a complex, full-fledged product with advanced features like AI will cost $150,000 or higher.
Step 1: Follow the right development approach
We know you’re eager to jump straight to SaaS app development. However, to establish a solid base for your project, there are a few crucial factors to consider.
The classic software development strategy “Concept → Product Development → Alpha/Beta Test → Launch” rarely works for startups unless they have a limitless pit of resources. Established organizations with known markets can afford this approach, but for emerging businesses, building a SaaS product without prior validation can turn into a disaster. Skipping the discovery phase leads to assumptions about market fit, building unnecessary features, delayed problem detection, and potential financial losses if the launch goes wrong.
So, how to build Software as a Service and not fail? Well, we typically recommend choosing the lean startup concept as the project foundation. The core of this approach is the build-measure-learn loop, which means creating and testing a product that your customers actually want. For that, you must start with building a minimal viable product (MVP) and measuring its performance and feedback. After getting the results, there are two ways to go: improve your Software as a Service development strategy or shift directions.
While in this article we focus on both MVP development and what comes after it, you can go deeper into the topic and check out our article dedicated specifically to SaaS MVP development.
Step 2. Conduct the discovery phase
The discovery phase involves thorough research and analysis to identify real user pain points and opportunities. It is an unskippable step of the journey since it allows you to validate the market before investing in product development. It also helps to focus on what truly matters to customers, not just the features you think your SaaS product should have.
Early negative feedback is an integral part of conducting a discovery phase and building an MVP. However, it shouldn’t discourage you. On the contrary, take it as an opportunity to make a timely pivot based on research findings and customer feedback and adapt your SaaS product development roadmap to meet market demands better.
What the Brights experts say
“From my experience, people building their first startup often have a very basic vision of what they want to build. The discovery phase helps them shape the vision, understand what they want, and determine the implementation strategy. For instance, recently, we conducted a discovery phase for our clients only to conclude that the idea wasn’t unique and viable. The clients won’t proceed with the project, but that’s also okay—at least they didn’t spend lots of money on a product that wasn’t going to work.”
— Nata Shved, Chief Operating Officer at Brights
The discovery phase may sound complicated since it can determine the success of the project, but in reality, it’s one of the quickest stages in the software development process. Besides, you don’t have to do it alone. If Brights were to conduct your discovery phase, we would:
Conduct thorough market research
Define target audience
Establish a product vision
Decide on the development approach, which may involve building either a horizontal or a vertical SaaS application
Choose a pricing strategy
Develop a Minimum Viable Product (MVP) roadmap
On average, the cost of the discovery phase at Brights rarely exceeds $5,000, meaning it makes 6-12% of the MVP development cost, depending on the project’s complexity. During this phase, we will put your idea through a stress test and determine whether it’s worth exploring further. Once the discovery phase is done, you can choose whether to continue working with Brights or brief other vendors.
“Going through the discovery phase gets you a strategic foundation for your project, complete with essential documentation and often even a prototype. This foundation later accelerates collaboration between business analysts and the development team, improving the development process and saving your resources.”
— Nata Shved, Chief Operating Officer at Brights
An additional tip for validating your idea
The answer to the question of how to create Software as a Service lies in finding a problem to solve. After all, the goal of any new product should be to address prospective users' real needs. Here is a simple formula for identifying the right problem.
Step 3. Find a reliable development team for MVP development
First things first, to make a SaaS MVP, you need people to do it. Whether you want to go with an in-house or outsourced team, a SaaS product requires the following set of specialists:
Product manager to define the product vision and roadmap, ensuring they align with your business goals;
Project manager to deal with timelines, resources, and team coordination so that the project stays on track;
UI/UX designer to create the user interface and experience that satisfies your target audience;
Software architects to design the system's structure and make high-level technology decisions;
Backend developers to develop a SaaS application’s server-side logic, databases, and APIs;
Frontend developers to build the user interface using programming languages and frameworks;
DevOps engineers to manage software development, deployment, and maintenance processes;
QA engineers to test the software and ensure its quality and performance.
We recommend kickstarting your project with an outsourced team since it can be an easy way to save money while preserving the quality. For instance, Brights can provide each one of the experts on the list. Moreover, these would be people with experience in SaaS application development since this type of software is one of our company’s main focuses.
Step 4. Choose the tech stack
Typically, as a tech team, we choose the tech stack during the discovery phase when we are planning for project implementation. However, if you want to pick your own set of technologies, there are some things you should know.
Deciding on the technology stack involves determining which programming languages, frameworks, databases, and infrastructure tools you’ll use to build a SaaS website or app. Here are the most popular options for SaaS products:
Front-end: React, Angular, Vue.js, JavaScript, and TypeScript;
Back-end: Node.js, Nest.js, ASP.NET Core, PHP, Laravel, and C#;
Database management: PostgreSQL, Microsoft SQL Server (MSSQL), MongoDB, Snowflake, MySQL, Redis, and Elasticsearch;
You can learn more about the specifics of a technology stack for SaaS applications in our article on the matter.
Step 5. Set up a reliable cloud infrastructure
Cloud services offer automatic scaling, load balancing, and security features, on top of being cost-efficient. Therefore, it makes sense for SaaS startups to use cloud-based solutions since it ensures your product can handle varying user loads. We recommend going with a cloud provider that offers:
A cost-efficient pricing model with options that match your budget;
High availability with multiple data centers across different regions;
Scalable resources like auto-scaling, load-balancing, and serverless computing;
Strong data redundancy and disaster recovery options;
Advanced security measures and compliance certifications relevant to your industry (such as ISO 27001, SOC 2, HIPAA, etc.).
Popular cloud service providers include AWS, GCP, Microsoft Azure, and Heroku, so you can start by comparing these options.
Step 6. Create UI/UX design for the MVP
UI/UX designs can define whether users like the product within the first few seconds. We asked our UI and UX specialists what it takes to design an MVP for a SaaS product that can get it adopted by the target audience.
Designing the product’s UI
“With an MVP, our main task is to check our hypotheses and gather user feedback. We must focus on our audience's most urgent problems, needs, or pain points. As for the design itself, the product has to be simple, intuitive, and functional at this point. For a user interface, it means that the users can quickly and easily understand how to navigate through it without excessive instructions. Also, I recommend keeping it minimalistic so as not to weigh the product down with redundant information and visual elements.”
— Alina Khaliavinska, UI specialist at Brights
Designing the product’s UX
“A good product is a useful one, so UX is one of the most critical development aspects during MVP development and requires a lot of resources. Firstly, I recommend focusing on whom you’re building the product for. Communicate with your users as much as possible, ask them how they satisfy their needs now, and find ways to improve the process. Then you will create a convenient and valuable product, and users will make a habit of using it as early as possible.”
— Maryna Shevchenko, UX specialist at Brights
Step 7. Develop the MVP and test
The development phase can roughly be divided into three parts:
Back-end development
Front-end development
Quality assurance
During back-end development, engineers build server-side logic, create APIs, integrate databases, manage servers, ensure security, and optimize performance. Meanwhile, front-end developers turn designs into responsive, interactive interfaces, ensuring cross-browser compatibility and optimizing user experience.
Lastly, quality assurance engineers test the application’s stability, identify bugs, collaborate with developers on fixes, and perform regression testing to be sure that fixed problems remain resolved.
Step 8. Implement rigorous security measures
The majority of hacks happen due to internal vulnerabilities. The good news is that you can prepare your system and make it resilient in the face of security threats. The not-so-good news is that the bare minimum of security measures gets quite long. For Brights, these include:
Access management to control user access with strong authentication and regular permission reviews;
Virtual machine (VM) management to prevent unauthorized access;
Updating VMs to regularly patch security vulnerabilities and improve performance;
Network control to monitor and manage network traffic using firewalls and intrusion detection systems;
Perimeter network control to secure the network boundary, prevent unauthorized access, and mitigate external threats;
Data protection to safeguard data through encryption, secure backups, and strict access controls;
Incident management to quickly detect, respond to, and recover from security incidents;
Downtime minimization to implement strategies like redundancy and failover mechanisms to minimize downtime.
Step 9. Deploy
The finish line of MVP development is deployment. At this stage, DevOps engineers configure servers and infrastructure to handle user demand with scaling and load balancing. They also monitor performance and collect user feedback for ongoing improvements. The Brights team also recommends continuous delivery for rapid updates and implementing disaster recovery and backup systems to ensure data remains secure and available.
Step 10. Turn a viable product into a lovable one
MVP is the first step in the evolution of your SaaS product. Next comes the transition from a minimum viable product (MVP) to a minimum loveable product (MLP). And here is how you can get there.
Collect customer feedback
The first thing to do after launching an MVP is to gather feedback, your foundation for further product improvements. How do users interact with your app? Which features are helpful? What does the product lack? Are there any issues to fix? By actively seeking answers to these questions, you ensure that your SaaS product will evolve into a version loved by users.
To collect and analyze customer feedback, you can employ methods like:
Surveys to gather quantitative data on user satisfaction and feature usage;
Interviews to gain deeper insights into user experiences and needs through one-on-one conversations;
A/B testing to try out different versions of your SaaS product and see which resonates more with users;
User feedback forms integrated within your app to capture immediate user feedback;
Focus groups of users to discuss and provide feedback on specific aspects of your product.
Follow key SaaS product metrics
An MVP tests if the product idea is viable and worth investing in, which requires setting and measuring performance indicators. There are over a dozen metrics you can follow, from MRR (Monthly Recurring Revenue) and CLV (Customer Lifetime Value) to various product performance indicators. But to start with, we want to focus on three key metrics and the growth levers connected to them.
| Churn | ARPU (Average Revenue Per User) | Number of customers | |
|---|---|---|---|
| Metric | The rate at which customers stop subscribing to your service within a given period. | The average revenue generated per user or customer during a specific period, typically calculated monthly. | The total count of users or customers subscribing to your service. |
| Strategy | To reduce churn, you can improve customer support by offering more personalized service, enhancing product features based on user feedback, and offering incentives. | To increase ARPU, you can upsell higher-tier plans with additional value, introduce new paid features or add-ons, or optimize your pricing strategy based on early user feedback and market research to better align with customer willingness to pay. | To grow the number of customers, you can implement marketing campaigns, improve sales processes, leverage initial user feedback to refine the MVP, etc. |
Brights provides data analytics services if you’re unsure how to collect the right data and what to do with it. We transform information into actionable insights that help you improve business outcomes.
Reassess the obstacles your clients are encountering
Based on the feedback you collected from initial users, you need to reexamine the issues your users are facing to refine your product. We suggest focusing on the following areas in this process:
Performance requirements to ensure your SaaS product is fast and responsive so you don’t lose users to better-performing alternatives;
Scalability requirements to prepare the infrastructure of your SaaS for growth and ensure it can handle the number of users you anticipate to have;
Product reliability to eliminate bugs, crashes, and downtime, providing users with a consistent SaaS product they expect.
Shift from early adopters to mainstream majority
Not all customers behave the same way. Consider the difference between how your parents use their smartphones and those waiting for the newest iPhone. Early adopters are enthusiastic about new products and are more forgiving of imperfections. However, as you present the SaaS product to a broader audience, user expectations rise significantly.
To explain this aspect better, we turned to the book “Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers”, which covers how new products are adopted in stages by different user types, shown as a bell curve. The "chasm" is the gap between risk-taking early adopters and the cautious early majority, who need more convincing.
“The key to getting beyond the enthusiasts and winning over a visionary is to show that the new technology enables some strategic leap forward, something never before possible, which has an intrinsic value and appeal to the non-technologist.”
— Geoffrey A. Moore, Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers
Each user group is unique, and adapting to them is crucial for SaaS growth. To move from early adopters to the mainstream majority, you might need to accept the shift from a technology focus to a human-centric approach, changing your value proposition, marketing, product focus, and communications.
Prioritize and implement new features
“It’s important to highlight that an MVP can be a well-functioning product; it just doesn’t offer anything “extra,” be it design elements or additional features. Therefore, we always recommend going further after the MVP launch, just because the users have gotten really used to flawless digital products.
— Nata Shved, Chief Operating Officer at Brights
Once you have fixed the existing functionality, you can take the next step and implement new features. Use the feedback you gathered earlier to select the most requested features and rank them based on their potential impact, as well as the effort required to implement them.
We suggest prioritizing features that enhance user experience and meet your customers’ most urgent needs. Also, be sure to implement new functionality iteratively, ensuring each update is well-tested before release. This approach will keep your SaaS product competitive and continually improving based on real user needs.
Take care of marketing
Integrating marketing efforts throughout the entire development process, including during MVP, is essential. However, at this point, it’s especially important to use top marketing channels and develop a strategy to reach a broader audience. This will be much harder than attracting early adopters, so you will have to utilize whatever you can: social media, email campaigns, online ads, and encouraging your existing user base to spread the word. In Brights’ experience, overlooking this aspect can severely impact your SaaS product's success.
Challenges in SaaS development
We’ve already shared our approach to making SaaS products secure, but that’s not the only development challenge you might face. Here are three more issues to be aware of.
Scaling for growth
At the beginning of SaaS development, it might seem like product growth is way down the road, which prompts business owners to focus solely on essential functionality. However, you have to think ahead from the start.
"We’ve had clients come to us with MVPs that didn’t have a proper architecture for scaling. As the product grows, it often can’t support more users or new features. We aim to preserve existing work and be mindful of our clients’ resources, but sometimes reworking the architecture is unavoidable. Without it, adding new features could take twice as long. In the long run, it’s cheaper to prepare the product for future scaling right from the beginning."
— Nata Shved, Chief Operating Officer at Brights
Zero-downtime deployment
Zero-downtime deployment in SaaS development means updating the software without any interruptions for users. This involves complex strategies like blue/green deployments, where the team needs to create duplicate environments so that traffic can seamlessly switch between the old and new versions without any hiccups.
Cloud providers do offer tools to facilitate zero-downtime deployment, but they often come with additional costs. So, managing the process requires careful planning and setup, as well as additional resources, and you need to be aware of that.
Managing SaaS subscription lifecycle
One of the challenges you may face down the road is churn due to payment failures, leading to lost revenue and customers. To mitigate this, you must re-engage customers after failures, implement retry mechanisms, and ensure an easy payment update process.
For managing SaaS plans, we often recommend ready-made solutions like Stripe, which offers integrated payments and well-documented APIs, simplifying management and reducing external dependencies. Alternatively, you can build a custom subscription and plan management system within your SaaS so that all operations are consolidated in one place with no recurring costs.
Regardless of the path you choose, you must ensure proper management of the entire subscription lifecycle, from subscribing to upgrading, canceling, and resubscribing.
SaaS development costs
The cost to build a SaaS application can range anywhere from $20,000 to $500,000. There are lots of factors that influence the significance of the investment needed for the project. The most fundamental include:
SaaS product type, complexity, and scope of work;
The composition of the software development team;
The cooperation type (in-house, outsourcing to a company, working with freelancers) and the location of your team.
In terms of selecting the team for the job, the optimal option with a good price-quality ratio is outsourcing SaaS development to a company with hourly rates that match your budget. For instance, with a team in Eastern Europe, the rate varies between $25 and $99 per hour. Compared to other regions, this can provide substantial savings. With a partner like Brights, your SaaS app will cost:
≥ $15,000 for a micro SaaS with limited functionalities;
≥ $35,000 for an MVP SaaS with the most essential features;
≥ $60,000 for a SaaS with comprehensive functionality;
≥ $150,000 for a complex SaaS with advanced functionalities.
You don’t have to invest all this amount of money into your software development project right away. Start with a discovery phase to see whether the idea is worth it. If it is, you can invest more yourself or go to the investors for additional funding. At that point, you will have all the necessary documentation and a roadmap to convince them to invest in your idea or even explore acquisition opportunities.
Learn more about what influences the cost of SaaS applications and how to reduce it in our article.
SaaS development with Brights
SaaS platform development is, without a doubt, a complicated journey. We know this firsthand since we specialize in building such solutions.
“If you’re considering building a SaaS application — think twice. And I don’t mean that building a SaaS product isn’t worth it. I mean, you really have to take your time and think about why you want to do it. What problem do you aim to solve? What is the initial value of your future product? How do you plan to scale in the long run? The tech team will handle the design and development aspects; you don’t have to worry about that. But without the answers to the fundamental strategic questions of “Why” and “How,” you’re going nowhere.”
— Nata Shved, Chief Operating Officer at Brights
If you do decide to build your own SaaS, Brights is here to support you with our expertise. We’ve got a lot of successful projects, with both vertical and horizontal SaaS, under our belt, so you can count on us.
One of the classic SaaS MVPs our team built is Guided, an app for 24/7 access to consultations from experts and licensed professionals through on-demand video calls, be a tutor, a hairdresser, or a plumber.
We worked on this platform in 2020, when the need for this service in the US was especially relevant due to the pandemic. The Brights team was tasked with:
Creating the design of the application;
Developing an app MVP from scratch so the client could submit it for investor review.
Since it was an MVP and the deadline was tight, we fit the functionality for service users and specialists into one app, which helped us simplify the development process and make the app versatile. Though there was much more to the platform, all the extra features were postponed for full-fledged development.
Summing up
The SaaS market is expected to grow at an annual rate of 19.28% between 2024 and 2029 and reach a market volume of $818.80 billion by then. Getting into this market and developing a SaaS product of your own can be extremely promising as long as you do it right.
Naturally, rapidly growing markets also mean high competition. But the Brights team can help you minimize the risk of wasting resources and building a useless product. We start all our new projects with a product ownership approach, taking full responsibility for the tech side of the product. And after building multiple SaaS solutions, chances are, we will know how to deal with the challenges you’re facing.
FAQ.
From Brights’ experience, there are two suggestions that can help you develop a SaaS product within your budget. The first is starting with an MVP so that you can test the core functionalities of your product without the risk of spending a fortune on an idea that’s not viable. The second is outsourcing software development to a budget-friendly vendor. This doesn’t mean you will compromise the quality of your product: there are lots of talented and experienced teams with reasonable hourly rates simply because the labor costs are lower in their regions.
