How Much Does It Cost to Develop a SaaS Application?

SaaS has transformed software business models with an innovative idea to allow access to your software or application to the users. Today, many new startups have been established utilizing this business model and generating remarkable revenues. The success story of various SaaS businesses has attracted many entrepreneurs to plan for a SaaS solution. 

Are you one of those founders, co-founders, or entrepreneurs, looking to build a new SaaS app? You must be willing to know how much it costs to build a SaaS app. Knowing the cost can help you find out the budgetary requirements and understand the possible investments. 

This comprehensive guide on SaaS app development cost provides an insight into the cost covering the different aspects affecting it. There are all the factors that are involved in the development cost. It can help you calculate the estimated cost to build your SaaS app.  So, keep reading for important information. 

Factors that Affect the Cost of SaaS Application Development

Whether you want to develop a basic SaaS app or a highly advanced SaaS app, the cost of developing it depends on some common factors. By understanding the various components or factors of costs, you can find out an estimation that coincides with your requirements. 

It is possible that the cost of one set of requirements can be different from another set of requirements because the level of effort can vary. So, you can get more precise estimates by considering every situation. 

Let’s see all the factors on which the cost of your SaaS app depends.  

App Complexity

The complexity of a SaaS application is a critical determinant in the development cost. Different types of SaaS applications use diverse combinations of features. Plus, they use different types of architectures, development methodologies, and tech stacks. As a result, the complexity level varies for every application which would require additional developer hours. Hence, more time in development means, more cost to develop the application. 

Therefore, we can divide the SaaS app development cost into three categories as follows:

App Complexity Level	Reason	Possible Cost
Basic SaaS App	Requires basic functionalities	$30,000 – $50,000
Average SaaS App	Additional features, APIs, and more complex structure	$55,000 – $80,000
Advanced SaaS App	Advanced features, third-party integration, APIs, and highly complex structure	$90,000 – $150,000+

There are several other add-ons that increase the cost of developing a SaaS application like third-party APIs, integration with other systems, and advanced technologies. For example, Grammarly uses advanced technologies like AI (Artificial Intelligence) to analyze text and suggest corrections based on the analysis. 

Many SaaS applications require a simple front-end but the backend is more complex. Grammarly is an example that has a simple interface but the backend functionality is complex with its AI and other features. 

So, a SaaS application’s complexity correlates with its cost. There is a direct relation between complexity and features. It is one of the crucial factors for precise cost estimates. 

Development Process

Another important factor in the cost of building a SaaS product is the development process. The process involves different phases from planning and designing the SaaS product to development and testing. Every step requires a specific budget based on the development time spent on it. The final calculation of SaaS app development cost hinges on the cost in individual stages. 

Let’s check all these stages and the cost estimation for each of them.

Planning

This is the preliminary phase of building your SaaS app and it involves planning, research, and brainstorming sessions. This phase aims to find the objectives that you want to achieve and create a roadmap for your software development process. Understanding your audience and taking their feedback is crucial to envisioning the actual product you will create. 

You need to analyze the pain points of your target audience and find the problems your product will solve. Once you have the ideas and data, you can come up with a solution that satisfies your audience. Starting with an MVP (Minimum Viable Product) is prudent here because you can launch a simple one with only some basic features to validate your app SaaS app ideas. 

The cost for this phase could range between $20,000 – $50,000.

Designing

Designing is another important stage in developing any software application. It maps out the user interface and user experience of your application that determines user interactions. This stage helps app designers find out how users will interact with the application and the user flow that shows navigation and movement throughout your application. 

App designers use various ways to map out user interfaces like wireframes and mockups that help them understand the relationship between different elements and create a rough structure. Designers define app layout and structure in this process. 

This phase can cost around $3500 – $6000 for the designing phase. 

Development

Development is the process when your idea is implemented with technologies. After planning and designing, your SaaS development partner will have a proper idea of what has to be built and how it is to be built. In development, they need to choose the best architecture, technologies, and development process to build an application. 

There are two facets of software – frontend and backend. Developers work on these two sides to build a cohesive solution that works like magic. So, we can divide the development phase into two steps i.e. frontend development and backend development. 

Let’s check each of these steps.

• Frontend Development

Users click a button, choose an option in the selection box, scroll up or down, and more, all of these interactions take place at the front end. Hence, the front end is the user side of an application that includes the user interface and front-end logic. 

So, front-end development includes the implementation of application user interface using technologies like AngularJS, ReactJS, VueJS, HTML/CSS/JavaScript, etc. Here the app designs created by designers are utilized and taken as a reference. The front-end developer will create elements, layout, navigation, and other things as per the UI/UX design. 

Besides implementing technologies it also involves additional steps like minimizing resources, optimization, reducing server calls, and more. These efforts help to boost the loading speed of your app and provide a pleasing user interface. Front-end developers make necessary adjustments to make sure that the UI is responsive, fast, and pleasing. 

Front-end development costs could be anywhere between $10,000 – $30,000

• Backend Development

For every software, the backend is the engine that provides functionality, processes data, and delivers output to the client. It is a more complex process than front-end development. Developers have to create everything from the ground up. It requires them to build APIs, create scripts in programming languages like PHP, Python, and Java, set up databases, and configure the server.

Backend development takes more time than front-end development and additional resources are required. Moreover, you need to make many crucial decisions here like whether you want an on-premises data center or host your data on the public or private cloud. Developers have to work with file management, security, APIs, and server-side coding when it comes to backend development.

The probable cost in backend development can be $15,000 – $50,000.

Also Read: SaaS Application Development: benefits & challenges for startups

Application Type

There is a variety of SaaS products that make them serve different audiences. For example, QuickBooks is a SaaS accounting software and Grammarly is a SaaS typing assistant. Both of these SaaS products are meant for different purposes and serve different audiences. 

To get the right cost estimate for developing your SaaS product, you have to determine the type of your app. Different types of apps require diverse combinations of features. Hence, some SaaS apps can have basic functionalities, while some could be very complex. The cost will definitely increase as you rise on the complexity scale. 

Here is a table for a quick view of the cost of building SaaS apps belonging to different types.

SaaS App Type	Estimated Cost
ERP	$100,000 – $150,000
Project Management	$50,000 – $75,000
Accounting	$65,000 – $85,000
CRM	$50,000 – $70,000

You should also note that the above costs are just estimates and the cost can go above the limit depending on project needs. However, typically the cost follows this range. 

Development Team

The cost of SaaS development depends on the development team you choose for your project. How? There are different options you have when it comes to developing your SaaS product. You can either hire an in-house team or hire developers remotely. While hiring a team seems profitable it is costlier than you think. 

As you set up an in-house team for your project, all of the responsibilities fall on you. Consequently, you pay for not just the salaries but pay hidden expenses like rent, insurance, employee welfare funds, and more. This accumulates to a sum that is higher than the cost of hiring a development team.

Therefore, most businesses prefer hiring developers from a SaaS App Development Company. With this method, you pay for what you get. It means you pay according to a predetermined payment format like paying on an hourly basis. So, you will pay for the number of hours developers take to build your application. 

If you want to hire SaaS developers, you will have to consider the geographical factor. The developer rates per hour differ around the world which will affect the cost. Hence, you check and compare the different developer rates to choose the most affordable team for your project. 

For example, developer rates in the USA are higher than the developer rates in the UK. So, the cost of developing your SaaS product will be higher if you choose a developer from the USA than in the case hiring of hiring a developer in the UK. 

The following table shows the average costs based on various developer rates in different geographics. 

Geography	Approx. Cost
USA	$160,000 – $190,000
Eastern Europe	$60,000 – $90,000
Western Europe	$100,00 – $120,000
Australia	$125,000 – $140,000
South Asia	$40,000 – $60,000

Although you can hire developers for your project and coordinate with them to build an innovative SaaS product, it requires more of your focus. Alternatively, you can choose to outsource your SaaS development project to a SaaS software development company that helps you create your app and you can put more focus on your business. 

It will remove the extra burden from your shoulders and you can just cooperate with the company, have regular virtual meetings, and track your project progress to get your done seamlessly. Outsourcing the project is a popular development model that many companies follow.

Other Components of SaaS Development

A SaaS product is built from many components like APIs, business logic, architecture, etc. These components also impact the cost of developing a SaaS platform. These components require extra effort and time. 

Here we will take a look at these components and analyze how they affect the cost of SaaS products. 

Architecture

The architecture of a software or application determines the interactions between different components. In simple words, it’s like a blueprint of a software or application that determines the relationship of different components. A complex app will have a more complicated architecture that will increase the cost of your SaaS product. 

API Integration

Your application will require APIs. It is possible that your app may require custom APIs, third-party APIs, or both. Creating a custom API will add to the development cost. Similarly, integrating third-party APIs can cost you more if you are integrating paid APIs. You may also require third-party integration like integrating the app with a CRM. 

SaaS Product Model

Vertical SaaS and Horizontal SaaS are two types of SaaS models you can choose from. The choice of features will differ based on the type of SaaS model you choose. 

A Vertical SaaS product is one that is available for a specific type of industry and horizontal SaaS is one that is available for all industries. For example, QuickBooks is available for all kinds of business customers no matter which industry they belong to. 

In the case of a vertical, you will require specialized features that meet the requirements of a specific user base. Hence, tailored features for your audience will cost more. As a result, vertical SaaS products can be more costly than Horizontal SaaS products. 

Features of App

Determining the type of features will help you estimate the pricing of your SaaS product. Undoubtedly, every SaaS product will have unique requirements based on its usage and target audience. Therefore, your SaaS product would require additional functionalities to meet the requirements of a specific target audience. 

Indeed, the features of your application also vary based on the type of the SaaS app, like a CRM will have a different set of features than an accounting solution. Hence, it is crucial to determine all the features that your app needs to get a precise estimation of the cost of developing your SaaS product. 

When you start with an MVP, there are limited features. However, more features are added incrementally by launching the next version of your application. You can integrate more features into your app after suggestions and feedback from users. 

Hidden Factors of SaaS Software Development Costs

Apart from the development process, type of app, and the development team, there are many other factors that influence the cost of developing a SaaS product. These factors are not apparent because they are hidden expenses.

These expenses are part of the cost of your SaaS product. So, you cannot arrive at a good cost estimation without understanding these factors. 

Let’s check these factors below.

Maintenance

People often ignore maintenance in estimating the cost of SaaS product development these expenses account for one-fourth of the total costs. Hence, considering maintenance is vital to understanding the actual cost of SaaS products. Maintenance involves the activities required to keep your application ‘up and running’. 

There is a long list of components like hosting, domain, SSL, cloud platform, etc. for your SaaS application. These are recurring expenses because you need regular updates for your application software and hardware. 

Once your app is built and live, maintenance will be the constant process you will be handling to ensure that your application is always up-to-date and running smoothly. For this, you will additional software and hardware resources when there is a spike in traffic. 

You should consider maintenance as a separate software development cost and handle the process with development and operations teams. 

Compliances

Regulatory compliances are critical for SaaS products and you need to make sure that your application complies with federal and state laws like the laws related to data processing. There are many types of compliances you have to follow like HIPAA, GDPR, PCI-DSS, etc. However, you may have to strictly follow certain compliances for a specific SaaS product. Like if your product is related to the healthcare business, you have to strictly comply with HIPAA to ensure strong protection for patient data.

Marketing

Though marketing is not directly related to developing a SaaS application, it has a role in the cost of your SaaS product. Once your application is ready, you want people to know about it and use it. Marketing plays an important role in positioning a product to a specific audience and encouraging them to use or buy the product. 

Therefore, you will be required to acquire new users for your SaaS product and gain a position in the market. Your marketing team will spread awareness about your product through online advertising and other methods. All this marketing effort will require funding. As a result, it will also be a part of the cost of your SaaS application. 

Updates

Your application will require constant updates and upgrades to ensure the performance and safety of user data. Also, you will need more features for your app based on the feedback from your target audience. 

Must Read: SaaS App Development: 9 Steps to Build a SaaS Application

Tips to Lower the Cost of SaaS Development

Now that you have come to know about the various factors that affect the cost of developing a SaaS app, you will want to know how you can reduce the cost. There are lots of factors that impact the development cost. 

So, some factors might be in your control but the rest are difficult to control. Therefore, you need to find ways that can help you build a successful SaaS product at as low a cost as possible. The following are some ways to reduce the costs. 

Use Ready-to-use Components

Custom development takes more time and money than developing a software solution with prebuilt components. You can leverage some of the prebuilt components for your app rather than creating them from scratch. After all why reinvent the wheel when you can use the existing ones? For example, you can utilize third-party APIs like payment processing APIs that can save money by not creating one from the ground up. 

Similarly, you can also utilize various libraries and frameworks to build front-end like Bootstrap to create UI elements that don’t require developers to write HTML and CSS code for everything. All in all, there are various readily available components and tools that you can utilize to build your solution quickly and cost-effectively. 

Testing Automation

Once a software solution is developed, it needs to go through a testing or quality assurance process. This process ensures that the solution is working fine and there are no errors or bugs in the software. The manual testing or quality assurance process will take a lot of time almost one-third of the total development time. 

Manual testing will be a significant component of your SaaS development costs. Hence, you should prefer automated testing instead. Automated testing can help you save a lot of time and money because your SaaS app will be tested through software processes instead of manually checking the errors and bugs.

Automated testing reduces the number of repetitive tasks that take up much of the testing time and streamlines the testing process. Therefore, the time taken in testing is less compared to manual testing, thereby reducing the costs. 

Flexible Resources

Your SaaS application will be hosted on a cloud platform and it’s also an important component of the cost of the SaaS app. Usually, applications start with a certain usage of the cloud resource but they need to scale over time as the user base of the application grows. The more users on your app, the more computing resources your application will require resulting in increased cost of your app. 

Therefore, you should look for cloud hosting that offers flexible plans to help you scale easily at the lowest possible costs. Various cloud companies offer different plans that can help you reduce your costs and pay as much as needed. For example, you can choose the plan that costs based on the computing resources used. In that case, you will be paying only for the amount of resources your app is using the cloud platform, unlike the plan with fixed cost. 

Look for Tech Partner

Small businesses, especially startups have tight budgets that make it difficult for them to form a development team for their projects. Therefore, a more profitable option for them would be to outsource the project to a reliable SaaS application development company. Because that company will have all the resources, knowledge, and experience, you can leverage their expertise to build an innovative solution. 

These startups and small businesses can look for a SaaS development company in the regions where developer rates are lower and hand over their project. After this, all the responsibility goes to the development company and it does everything needed to plan, build, and deploy the SaaS solution. 

In Conclusion

Undoubtedly, the demand for SaaS products is increasing as they are easy to use and accessible widely. However, developing a SaaS app requires innovative thinking, planning, and a lot of effort to build a successful solution. It is important to hand over your project in the right hands to get the maximum returns on your investments. 

MobileCoderz is a trusted technology partner for all kinds of businesses from startups to enterprises in developing innovative digital solutions. We can help you create the best-suited SaaS application for your business leveraging our expertise and years of experience. Our developers are proficient in the latest technologies and build cutting-edge solutions.

Our team of developers and industry experts can help you at every stage of your development process and take your business to the next level. Contact us for a quick consultation if you are looking to build a SaaS application for your business.