Cloud-based software as a service (SaaS) solutions are one of the crucial trends in custom web development that affects businesses of all sizes. 

Dealroom.co’s insights show that 47% of venture investments were made in SaaS solutions in 2023. The same trend is shaping enterprise software development:

According to Gartner’s forecast, total spending on SaaS applications will reach $243.9 billion in 2024, an 18.9% increase compared to the estimated $205.2 billion in 2023. 

Check out the basics you need to know about SaaS app development.

1 What Is a SaaS Product?

A software as a service product is an application that runs in the cloud. 

Unlike on-premises software, which needs to be installed on a client’s computer, users can access a SaaS app via a browser, a mobile app, or an API. 

Moreover, they can do this from multiple devices using a single set of credentials. Usually, the SaaS app automatically synchronizes data between different user devices. 

With a SaaS application, the underlying infrastructure, middleware, and data storage are located in a provider’s data center. As a result, users do not need to worry about updates; the service provider maintains, updates, and improves the application. 

SaaS solutions are available by subscription, ensuring cost transparency. Providers divide subscriptions into different levels to let end users balance the services they want with the amount they are willing to pay.

Organizations can establish role-based and location-based access to specific data and/or functionality for internal solutions. This helps improve software security.

2 Types of SaaS Apps

SaaS solutions can be delivered in different shapes and sizes and serve different audiences. To call software SaaS, it needs to be hosted in the cloud and delivered to the end user via the internet. 

SaaS apps can be categorized based on who uses them, as well as those users’ needs and preferences. Let’s analyze this in detail:

B2B and B2C Apps

Understanding the differences between B2B and B2C SaaS apps is important for a product’s sales and marketing strategies, as well as for SaaS app development.

Horizontal and Vertical Apps

B2B SaaS apps also differ based on their breadth or specialization:

Horizontal SaaS apps such as CRM systems or BI solutions provide broad and rich functionality that businesses across multiple industries can use. As a result, providers can reach a wide audience.

Top Categories of SaaS Apps

According to a Vainu estimate, around 72,000 companies operate under the SaaS model. From 900+ SaaS segments in the Vainu taxonomy, the best-represented include:

Source: Vainu

Most popular SaaS apps serve the following purposes:

  • Boosting clients’ productivity
  • Turning visitors into customers and serving them
  • Gaining insights on processes, performance, and customers
  • Recruiting/managing employees

The SaaS marketplace Vendr provides interesting insights on B2B SaaS app popularity. According to Vendr’s SaaS Trends Report 2023, these are the top 25 categories of SaaS products that Vendr users subscribed to through the platform:

Platform users prioritize subscriptions for security solutions the most. Development-related tools, SaaS apps for sales intelligence and analysis, and customer relationship management software are also high on the list, alongside learning solutions, enterprise resource management, and expense management software.

3 Advantages of SaaS Solutions

The the biggest benefits of implementing software as a service include:

  • Large audience – Wide availability and low subscription prices for SaaS solutions, compared to licenses for on-premises software, increase the potential user base.
  • Low initial investment – The cloud streamlines infrastructure setup and optimization; businesses save on expensive server hardware and licenses.
  • Decreased delivery time – Quickly ship, improve, and expand a digital product.
  • Scalability – The maintenance team can easily deploy more software instances when the load grows and terminate instances when it decreases.
  • Streamlined infrastructure management – Wide use of containers and virtualization lets the maintenance team manage SaaS apps efficiently.
  • Simple implementation – End users can start working in a SaaS app immediately from any device equipped with a browser and internet access.
  • No maintenance hassles – All users need to do to receive an update is refresh the page. They always have access to their data from all devices.

4 Specifics of SaaS Platform Development

For a SaaS app to be successful, the software development team must ensure secure, resilient, and efficient software infrastructure. Here are essential design principles for building SaaS apps:

Architecture

There is no universal SaaS architecture. It should be based on specifics of the domain, market segment, compliance requirements and regulations, and changing business requirements. 

A SaaS architecture should focus on customer and operational experiences, enabling unified user onboarding and system management that ensures agility and economies of scale.

Growth

Companies build SaaS solutions when they envisage growth. Considering how software and infrastructure will onboard a constantly growing user base without significant operational overhead is crucial.

The system should onboard new users through an automated process that ensures efficient scaling for the business and a fast path to value for new end users.

Support for Multiple Tenant Experiences

More often than not, SaaS businesses need to support several tenant profiles, which are used to manage infrastructure, services, and end users efficiently, each meeting the needs of various user groups. 

The development team should bind authenticated users to the correct tenant profile and related attributes. This lets the business identify value boundaries and create balanced, tiered offerings to meet different customer needs.

Resource Isolation

The development team should implement enhanced security measures to protect tenant resources from cross-tenant access (when users can reach resources and data they are not authorized to access). 

It is crucial to analyze how services receive and process data. Then, the development team can build a SaaS architecture to isolate resources and ensure access only for authorized users.

SaaS as a Business Strategy

The development team must design and implement a solution that enables agility, flexibility, and operational efficiency — parameters that are critical for successful competition against other SaaS providers.

Software engineers must focus on creating a SaaS environment that ensures zero downtime, fast and seamless updates, and close connection with customers, enabling best-in-class customer experiences.

Metrics and Measurement

Software engineers need to implement different monitoring and metrics tools to get insights on system load, most and least popular features, bottlenecks, the cost of a single user’s activity, etc.

Data the development team receives from user monitoring helps them align infrastructure consumption and user activities. Also, metrics dashboards and tracking let the team respond efficiently to real-time trends in user activities, preventing glitches or downtime.

5 Differences between SaaS and Web Applications

Although SaaS applications and web applications overlap, these are two different types of products. A web application may be provisioned as SaaS, but it doesn’t need to be. Likewise, a SaaS product doesn’t need to be a web application. 

Let’s check out the differences between SaaS products and web applications:

6 How to Build a SaaS Product: Five Main Stages

Now, let’s analyze the important stages of SaaS app development in detail:

Project Discovery and Planning

During project discovery and planning, one or more development team representatives (usually a project manager, business analyst, and system architect) discuss requirements, goals, and project specifics with the client. The team needs this information to prepare a development plan. 

Based on the provided requirements and results of the discovery stage, the team makes an initial development plan and an estimate that lets both the development team and the potential client understand the overall project scope and essential details including:

  • team roles and composition,
  • the team’s seniority level,
  • cost and duration estimates,
  • required integrations and associated costs, and
  • technological risks and ways to mitigate them.

The development team clarifies requirements for several months’ worth of work and describes the rest of the feature list and functionality at a high level.

Timeline: 2–6 weeks

System Design and Development

Flexibility is critical for successful SaaS app development. To meet the flexibility requirement, development teams use an Agile/Scrum approach to efficiently handle changes in initial project requirements. This allows the development team to focus on functionality containing high business value.

The team divides the project scope into two-week sprints covering all essential project activities.

Source: Medium

Due to a short timeline, developers can change the development direction efficiently (add new functionality, rework existing functionality based on user feedback, or focus on emerging system improvements). 

System Architecture Design

After software planning is completed, the system architect works on creating a robust yet agile architecture that is not too complex for the given requirements but allows for future software growth and expansion to keep up with the competition.

The engineering team can improve or rework the SaaS system architecture during development sprints. This is needed to ensure a smooth data flow and operational efficiency. 

UI/UX Design

The next step is preparing a SaaS app’s look and feel. Because competition between SaaS products is intense, it is important for designers to take a user-centric approach, removing friction and inconsistencies where possible. 

For instance, designers can simplify the signup and login process by letting users sign up/log in through a Gmail account. Users are already overwhelmed with credentials and are unhappy about remembering new ones. 

Also, onboarding can be a big barrier for users looking to switch software products. A simple interface for data transfer could be a deciding factor for a user in switching to a new app. 

Front-End

Developers often build SaaS solutions as web apps to make them available across devices. 

Front-end developers ensure the app looks great on different screen sizes. Depending on project specifics, they can apply different frameworks and technologies to decrease the load on user devices.

When a client prioritizes mobile users, the team can also deliver a native or cross-platform mobile app — whichever best fits the project requirements.

Back-End Development

The software back end (the server side) is a part of the app that is invisible to users. However, this is where the SaaS app does all the heavy lifting: collecting, retrieving, processing, and storing user data. 

Hence, the app’s performance and, thus, user satisfaction depend on how well the team has designed the back end. 

Back-end developers work on the server side of the app. They integrate databases and third-party services (payment, geolocation, authentication, etc.).

API Development

An API is required when the SaaS solution needs to seamlessly integrate with partner or client software. 

For SaaS app owners, an API optimizes processing of user requests and decreases the workload on the SaaS system. 

For SaaS app users, an API automates data exchange and related concerns. For instance, if you run a marketplace, an API can let merchants integrate their ERP systems with your marketplace and provide customers with relevant information on prices, availability, order status, etc.

Also, when SaaS app development includes mobile apps, the team must build an API to connect web and mobile apps and the back end together. 

QA and Testing 

QA and testing takes a large amount of work, but it pays off in high software quality. QA activities happen throughout the entire SaaS development lifecycle.

Requirements testing starts in the planning stage. Then, intensive QA and testing takes place during software development. Eventually, the QA team performs live testing to check that previously identified bugs have been eliminated and that no new bugs have been introduced. 

Depending on the envisaged activities, QA engineers mix test automation and manual testing to decrease effort and increase code base coverage. 

Total timeline: 2–9+ months

Deployment 

When all functionality is ready, the development team deploys it live. It is important that the development team or a dedicated maintenance team monitors the SaaS app’s performance for a certain time after it goes live to ensure everything works as expected.  

The development team can also deploy updates that become available when end users refresh the page, without interrupting users’ current sessions. Still, the team should choose hours with the lowest user load for major updates to mitigate risks of app unavailability. 

CI/CD and test automation enable the development team to decrease deployment time to minutes and make several deployments per day. 

Timeline: 15 minutes to 1 day

Maintenance 

24/7/365 maintenance is important both for ensuring 99.8%+ software uptime and preventing excessive consumption of cloud resources. 

SaaS app owners need a maintenance team to detect and prevent emerging issues through routine performance monitoring, scheduled updates, and software support.

The maintenance team can also collect feedback on the system and transfer it to the development team to aid with system improvements in future iterations; additionally, they can assist with app transfer and migration. 

Timeline: Ongoing

Optimization

The project team also works on constant project optimization, which enables the business to maximize ROI by:

  • operating cost-aware infrastructure, 
  • decreasing cost waste,  
  • matching infrastructure with evolving workloads. 

The team helps the business understand the SaaS app’s cost structure and its key drivers, identify cost reduction opportunities, and implement them without impacting app performance. 

Optimization activities include:

  • conducting regular system audits,
  • evaluating performance,
  • automating routine operations, and
  • forecasting user behavior.

Timeline: Ongoing

7 SaaS Application Development Challenges

Cloud infrastructure lets businesses improve software stability and decrease the costs to build a SaaS app

Still, costs of SaaS app maintenance and related cloud technologies should be carefully evaluated, monitored, and managed

Here are some challenges of building a SaaS app that could turn it from a value driver into a cost driver:

  • Integrations

Development teams apply ready-made solutions for different functionality. Still, integrations can be difficult, especially for newly launched services. 

Also, third-party services can require subscriptions.

  • Optimized resource consumption

Maintenance costs can easily spin out of control when the software maintenance team scales up cloud resources in response to load growth but does not switch them off when peak consumption is over. 

The maintenance team needs to constantly track resources to detect where the business is paying for overprovisioned and underutilized services and optimize workloads.

  • User data security

The security of user data becomes the shared responsibility of a SaaS business and a cloud provider. Businesses should opt for a certified cloud provider with a sufficient security level. 

Also, to enhance the level of data security, businesses can use a private cloud.

  • Technical debt

The team may focus on delivering functionality rather than improving the app architecture to reach an approaching deadline and remain within budget limits, which can lead to accumulating technical debt. 

The team must keep track of technical debt and not allow its uncontrolled growth. Otherwise, the software can become unstable.

  • Disaster recovery

A SaaS business needs a clear recovery plan and a tested workflow in case the software crashes. It’s a good idea to work on negative scenario pre-mortems and proactively eliminate possible points of failure.

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8 Developing a SaaS Application: Other Things to Consider

Here are additional considerations related to development of a SaaS solution:

  • Pricing

To best meet the needs of different groups, SaaS businesses offer various pricing plans. Still, every business needs time to figure out the best pricing for them and their customers.

  • Cloud provider

Choosing a cloud provider is an important step because transferring a project to a new provider can be expensive. To improve flexibility, some organizations use several cloud providers, although this strategy comes with higher upfront costs.

  • Rules and regulations

International companies can face contradictory regulations. An app may need architectural rework or integration with several cloud providers to serve various markets.

  • Marketing costs

Marketing costs can exceed those of SaaS development. Businesses need to spend money on finding an underserved niche in the saturated SaaS market and convincing users to switch from another provider.

  • Development team

The rule of thumb is to hire the best available development team. Although an expert team can charge a higher rate than a less experienced team, they can deliver a project faster and help avoid future expansion/scaling problems.

9 SaaS Development Team Structure

A SaaS development team can consist of 5 to 25 team members depending on the project’s size and complexity.

The main software development and maintenance roles include:

  • Project manager – focuses on project planning and progress tracking, stakeholder communication, and team coordination
  • Business analyst – collects business needs and requirements, then prepares and elaborates software requirements on their basis
  • UI/UX designer – creates the visual part of the SaaS app, ensuring the app is clear and friendly
  • Front-end developer – delivers the client part of the SaaS solution that users will see on their devices
  • Mobile developer – makes a mobile app for a specific platform
  • Back-end developer – develops the server side of a SaaS application and API
  • QA engineer – tests the software to ensure its quality
  • DevOps engineer – works on ongoing infrastructure maintenance and optimization

10 SaaS App Development Technologies

The selection of the app tech stack depends on several factors, including the:

  • complexity of the client’s requirements,
  • desired timeline and budget,
  • preferred ecosystem and available licenses, and
  • the team’s expertise in a specific technology.

Here are some of the technologies that SaaS development team members commonly use to build SaaS applications:

UI/UX Design

Popular technologies that designers use to deliver wireframes and layouts of screens and pages include:

Front End

Front-end developers use classic web technologies such as HTML, CSS, and JavaScript, which they combine with front-end frameworks such as Vue, React, and Angular. 

Frameworks decrease the development time of single-page applications (SPAs), which lets users effectively work with dynamic content. Vue, React, and Angular require knowledge of JavaScript or TypeScript.

Therefore, front-end developers use:

Mobile

When a mobile app is required, the development team can use Swift and Kotlin to launch native apps. 

They can also use a cross-platform approach, for which they can choose JavaScript (React Native, Ionic), Dart (Flutter), C# (.NET MAUI), or other technologies.

Mobile technologies include:

Back End

The development team relies on back-end frameworks to boost development efficiency. There are dozens of them, but the most widespread include:

Databases

There are several types of databases, each serving a specific purpose and use case. Still, developers must integrate databases of different types on complex projects to ensure optimal data storage and processing. 

The most popular database technologies include:

Cloud

Businesses need to decide on a cloud provider to host a new SaaS app. The choice depends on costs, ecosystem requirements, and the team’s expertise in a specific cloud.

The most commonly used cloud services include:

QA and Testing

Whereas a QA’s knowledge and experience are the most important tools in manual testing, QA engineers use various testing tools where test automation is required, such as with performance testing, regression testing, and mobile testing.

Some popular tools QA engineers use include:

DevOps

The DevOps’s toolbox encompasses a wide range of software solutions: DevOps engineers use 10.3 tools on average. There are two reasons for such a high number: 

  1. Complexity of automation and optimization tasks
  2. Need to perform tasks related to automation, deployment, configuration, load balancing, and more

The most popular DevOps technologies include:

Other Essential Tools

Tools and solutions for boosting teams’ workflows belong to this category. They include project management and tracking software, messengers and teleconferencing apps, and HR automation solutions.

To name a few:

Do you need help with improving your SaaS app?

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11 How Much Does It Cost to Build a SaaS System?

The short answer is that SaaS app development can cost you between $40,000 and $250,000+.

The cost of a SaaS solution depends on two key variables: project scope and hourly rate.

Project scope

The complexity and number of features determine how much time the development team will need to complete all project activities. 

SaaS projects can be divided into four categories:

  • Basic – often a prototype for presenting the product or conducting a market study, or a simple product with one or two key features
  • Average – an MVP that is made available to a limited user group and contains three to five important features
  • High – an advanced MVP or fully featured product with seven or more features and high scalability
  • Enterprise – a complex system that targets big businesses and contains 15+ (often highly customizable) features and has strict infrastructure requirements

Still, the number of features is not a limiting parameter. A project with minimum features can be highly complex when it includes:

  • sophisticated business logic,
  • heavy back-end calculations,
  • high security requirements,
  • a wide user base,
  • multiple integrations,
  • constant data exchange with third-party services,

and more.

Hourly rate

Developers in Southeast Asia and India offer the least expensive rates; engineers residing in the EU, USA, Canada, and Australia have the highest. Central and Eastern Europe takes the middle position, offering a balanced quality-to-price ratio.

It is worth noting that hourly rates also vary within regions. Companies with wide expertise and a proven portfolio charge more than less experienced competitors. 

Based on the average Central and Eastern European hourly rate of $50, the cost of developing a SaaS system will look like this:

12 Key SaaS Metrics That Need to Be Tracked

Quantitative metrics help an organization refine its business strategy and decide on optimization and improvement steps for both business and development/maintenance strategy. 

Essential app metrics include:

  • Burn rate – the total amount of money a business spends on an app and related activities
  • User growth – the difference in the number of users over a selected timeframe
  • User acquisition cost – the cost of the marketing and sales efforts needed to engage or return a customer
  • Free-to-paid conversion – the number of users who have switched from the free to a paid product version
  • Net promoter score – a measure of customers’ loyalty and readiness to recommend a product to others
  • Average revenue per user – how much money a user brings to the company within a given time period
  • Customer lifetime value – the revenue a customer generates by using the product over the customer’s lifetime
  • Feedback and ratings – measures of customer satisfaction with the product
  • Customer churn – the number of customers who unsubscribe from the product within a selected timeframe

13 How Can You Convert an Existing App to SaaS?

Many existing applications can be adjusted to run in the cloud. To rebuild an existing solution into a SaaS app, IT Craft developers take three consecutive steps:

1. Pre-migration

App migration starts with a system audit. The team analyzes connections between system parts and determines how they can best divide the app codebase into microservices. 

Based on the system analysis, developers prepare a prioritized migration plan and accumulate system components.

2. Migration

The team reuses the source code as much as possible while splitting a monolithic solution into a service-oriented one. Then, they migrate components one after another based on their cost criticality. 

Software engineers ensure constant availability of user data and functionality, ensuring end users do not notice any changes.

3. Post-migration

Developers establish and tune the CI/CD pipeline to decrease software deployment time and release new functionality as microservices.

The team ensures that all members work with identical software environments, which can be easily managed and controlled.

  • Icon
    Real-life case of migrating a high-load app to the cloud
    Check out how IT Craft developers built a successful web app and then turned it into a SaaS solution in the MyCarrier case study.

14 Does IT Craft Work on SaaS Systems?

Yes, we do. Developing and maintaining SaaS systems are among our company’s key competencies. 

For 20+ years in the market, IT Craft developers have accumulated deep expertise on how to build SaaS solutions while having delivered solutions for both startups and enterprises.

IT Craft SaaS development teams can help you at any stage of your project:

  • Gather missing requirements in project discovery
  • Evaluate risks and opportunities with prototyping, including a tech prototype
  • Develop a SaaS MVP from scratch
  • Improve project stability and scalability
  • Move an on-premises web system to the cloud
  • Maintain and optimize app infrastructure
  • Introduce automation at scale
  • Prepare a SaaS solution based on a legacy system

You can always count on our:

  • expertise acquired across 20+ industries,
  • transparent and swift communication,
  • full-cycle services covering all tech and related activities,
  • proactive, value-based approach to clients’ business needs,

and more.

Are you looking for an efficient launch?

Schedule a short call with our SaaS engineers to learn how we can help.

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! Summary

It’s little surprise that developing SaaS products from scratch and transforming existing software to SaaS is expected to remain a top trend in the years to come. 

Cloud-based SaaS solutions provide colossal opportunities, allowing businesses to ship software fast and with minimal upfront investment. 

Still, SaaS apps require careful maintenance and constant optimization to ensure optimum infrastructure expenses and the best ROI.

This is why businesses need to cooperate with experts who know how to build a cost-efficient SaaS system to achieve success.

FAQs

How long does it take to build a SaaS application?

It depends on the complexity: 

  • 1–2 months for a basic prototype 
  • 3–5 months for an app of average complexity
  • 6+ months for full-fledged software
  • 10+ months for an enterprise-level system
What makes an application SaaS?

The way software is provided to end users makes an app software as a service.

Users access a SaaS app over the internet on a subscription basis while all of the actual software, components, and infrastructure are located in the cloud. The app provider is responsible for the app’s availability and security.

How can I reduce the cost of SaaS development?

IT Craft developers recommend the following to decrease the costs of SaaS development: 

  • Shrink your feature list to the most important functionality
  • Go with a basic design
  • Monitor consumption of cloud resources
  • Optimize and use only necessary cloud resources
  • Consider an alternative tech stack and cloud provider
How can I create a SaaS application from scratch?

Here are the main steps of creating a SaaS application from scratch: 

  1. Compose a list of requirements
  2. Make a project plan on their basis
  3. Prepare the UI/UX design
  4. Work on app development
  5. Deploy the app in the cloud and launch it for end users
  6. Focus on maintenance and optimization
What size of team is needed to develop a SaaS product?

A SaaS app of average complexity requires five to eight team members. A simple app can be completed by three to four people. The number of team members on a complex project can grow to 13–25 engineers.

How can I find a SaaS development vendor?

To find a SaaS development vendor: 

  1. Make a list of requirements for your app. 
  2. List and prioritize your expectations from a SaaS development vendor.
  3. Go to marketplaces such as Clutch, Goodfirms, and Upwork, or use a search engine to find potential vendors. 
  4. Choose five to 10 vendors based on your priorities; filter out vendors with negative reviews.
  5. Send your requirements to the selected vendors and discuss terms of cooperation.
  6. Select the vendor offering the best plan and terms.

Find out more information in our Guide to Offshore Software Development Outsourcing.

What is the difference between SaaS and traditional software?

When using on-premises software, a business must acquire the software and install it in a data center. It must then configure and manage the software infrastructure.

In the case of a SaaS solution, the business accesses the software via a browser on demand without needing to renew licenses or manage infrastructure.

Why should I use a multi-tenant architecture for SaaS development?

Key benefits of a multi-tenant architecture for SaaS development include:

  • Efficient resource allocation
  • Reduced costs of ownership
  • Seamless scalability
  • Easy infrastructure customization
  • Simplified app support
  • Regular updates