How much does it cost to develop a SaaS product

The global Software as a Service market is experiencing a transformative surge fueled by the expansive growth of the global cloud services sector. With the global cloud services market reaching a substantial value of $500 billion in 2023 and expected to grow at a compelling Compound Annual Growth Rate (CAGR) of 17.32%, reaching an estimated $1630 billion by 2030, the landscape for SaaS is poised for significant expansion. 

In addition, the SaaS sector experienced a significant surge in popularity, as reflected in the substantial venture capital investments across various industries.

These substantial investments underscore the transformative impact of SaaS solutions across diverse industries, signaling a broader trend toward digitalization and efficiency in the modern business landscape.

Moreover, SaaS market growth is attributed to factors such as the rise in the adoption of public and hybrid cloud-based solutions, integration with other tools, and centralized data-driven analytics. The increased adoption of communication tools like emails, instant messaging, and video calls, along with the growing demand for smart devices, is projected to further drive the SaaS market. The rise of enterprise SaaS such as CRM systems is driven by businesses seeking cost reduction and scalability, as well as the increasing ease of customization and configuration of such solutions.

Amid revenue drops and budget constraints, organizations turned to cloud-based solutions, presenting a unique opportunity for SaaS market growth as businesses prioritized adaptability and ensured business continuity during the crisis.

In conclusion, the global surge in the SaaS development market is propelled by the rapid growth of the cloud services sector and significant financial support for SaaS platforms. As we delve deeper into this discussion, we will analyze the factors influencing SaaS development costs, considering product complexity, team models, and development stages.

Cost estimation of SaaS app development based on product type

We’ve made an approximate estimation of SaaS app development costs based on two critical factors: product complexity and team model. For a more precise and tailored estimation suited to your unique project requirements, we encourage you to contact our expert team at Brights for a free consultation. But for now, let’s start with a rough estimation based on product complexity first.

By the product complexity

SaaS platform complexity refers to the intricacies associated with its functionalities, user roles, and their interrelations within an application. While "complexity" is subjective, categorizing it into micro, basic, average, and complex levels enhances understanding. Higher complexity generally means more advanced features and interdependencies, requiring additional time and resources, which in turn increases the overall project cost.

To provide a clearer perspective, we outline estimated cost implications based on complexity in the table below:

Now, let’s consider how the team composition and model can influence the SaaS development cost.

By the team model

In estimating the cost to build a SaaS application, the team model plays a crucial role, offering three primary options: in-house, freelance, and outsourcing. Each option carries distinct advantages and drawbacks, influencing the overall project cost. Below is a concise overview of each team type:

Furthermore, here is an approximate price comparison table based on team types:

To build a SaaS app, the outsourcing model stands out as a compelling option for an increasing number of companies. Here are some statistics to prove that.

• In a worldwide survey of business leaders by Statista, 59 percent cited cost-cutting as a driver in outsourcing processes.

• In 2022, Deloitte reports that 76% of businesses outsource IT functions.

• Zippia indicates that each year, 300,000 jobs in the U.S. are outsourced.

And now, when you know how the team and project complexity impact the SaaS development price, let’s delve into the development process and the costs each stage entails.

SaaS app development costs are linked to the various stages of the development process, each defining both the time and investment required. To gain a comprehensive understanding, let's delve into the key SaaS app development stages and their associated calculations.

Beyond the core development expenses, several ancillary costs significantly influence SaaS product development. These include but are not limited to:

• Infrastructure costs: Hosting, server maintenance, and cloud service subscriptions contribute to infrastructure expenses, typically ranging from $1,000 to $5,000 monthly, depending on the scale and complexity.

• Licensing fees: Depending on the use of third-party software or libraries, licensing fees may apply, ranging from a few hundred to several thousand dollars, based on the software's complexity and features.

• Security measures: Implementing robust security protocols, encryption technologies, and compliance with data protection standards may involve an additional investment of $5,000 to $10,000 or more, depending on the project's specific security requirements.

• Marketing and launch: Introducing a SaaS product to the market involves marketing efforts, branding, and promotional activities. A marketing budget of $10,000 to $50,000 or more is common, depending on the scale of the launch.

Considering these additional expenses is crucial for businesses to understand the overall investment required for successful and sustainable SaaS product development. However, at Brights we know a few ways to cut SaaS development costs, which we share further in the article.

SaaS applications costs examples

The nature of the software significantly impacts the cost associated with developing a SaaS product. Certain types of SaaS projects pose greater challenges due to the extensive set of features they must encompass and the sensitivity of the data they handle. Let’s consider the prices by the type of SaaS with apps examples:

While these estimates serve as a valuable reference, it's important to note that the actual costs can vary based on factors we mentioned above in this article.

Reducing SaaS development costs without compromising on the quality and functionality of the product is a common objective for businesses. Here are five effective ways to achieve cost savings in SaaS development.

Explore outsourcing opportunities

In the quest to optimize SaaS development costs, exploring outsourcing opportunities stands out as a strategic approach for businesses seeking efficiency without exceeding budget constraints. A comparative analysis across different regions reveals varying hourly rates, providing valuable insights into cost-effective options. Here's a breakdown of the average hourly rates to build SaaS in different parts of the world, according to Clutch:

The United States, Canada, and Australia tend to have the highest hourly rates, followed by Western Europe. Eastern Europe and Asia present more budget-friendly alternatives. Leveraging global outsourcing strategically enables businesses to tap into the expertise of skilled professionals while effectively managing costs, resulting in a substantial reduction in SaaS product development expenses.

Prioritize MVP development

For businesses on a budget, we suggest starting with an MVP to bring essential features to market quickly. This approach allows you to validate your product concept, gather user feedback, and make informed decisions about additional features. By avoiding the development of extensive features initially, you can significantly reduce both time and costs. To help you prioritize your SaaS product features, we use a feature prioritization matrix.

Select the right technology stack 

Choose a technology stack that aligns with your project's requirements and goals. Opting for proven and widely adopted technologies can lead to faster development cycles, reduced debugging efforts, and a more extensive developer community for support. This strategic selection helps in streamlining development and minimizing unexpected costs.

Embrace Agile methodology 

Implementing Agile development practices enhances collaboration, flexibility, and responsiveness to changes throughout the development process. Agile allows for iterative development, reducing the risk of costly rework and ensuring that adjustments can be made efficiently based on evolving project needs and user feedback.

Third-party services

API integrations play a pivotal role in reducing SaaS development costs by offering a streamlined and efficient way to incorporate essential functionalities without building them from scratch.

Examples of widely used APIs include payment gateways like Stripe for secure and efficient online transactions, Twilio for integrating messaging and communication services, and Google Maps API for embedding location-based features. 

Integrating with the Amazon S3 API facilitates scalable and cost-effective cloud storage solutions, while the OAuth API simplifies user authentication processes. Additionally, services like SendGrid API enhance email functionality and integrating with social media APIs, such as Facebook or Twitter, facilitates seamless user interactions.

Choosing the right tech partner for SaaS development is crucial, and Brights is a proven SaaS development agency. We build SaaS solutions across these industries:

• FinTech

• EdTech

• InsurTech

• Healthcare

• LegalTech

• E-commerce

• Entertainment & media

• Supply chain & logistics

• Travel & hospitality

Our tech stack blends latest front-end technologies with reliable backend frameworks, secure databases, and scalable cloud services. This powerful combination ensures the development of high-performance, innovative, and scalable SaaS solutions.

Our unique approach to building SaaS is guided by these three pillars:

• Precision: Our meticulous approach ensures every aspect of SaaS development aligns precisely with clients' business goals, leaving no room for deviation.

• Innovation: At Brights, innovation is a constant pursuit. We strive to push the boundaries of SaaS possibilities, creating solutions that redefine industry standards.

• Collaboration: We foster dynamic partnerships with clients, encouraging open dialogue and co-creation to achieve transformative SaaS experiences.

Our expertise in SaaS development shines through projects like Signal Intent, a groundbreaking platform for creating dynamic online calculators. The primary goal was to create a user-friendly tool enabling anyone to customize calculations and styling effortlessly, integrating calculators into web pages seamlessly. With over 35 templates, our team crafted calculators that update in real time, requiring no developer assistance. Signal Intent is now a unique and administratively managed product that offers a diverse range of tasks, from designing to real-time analytics.