Developing a SaaS product can be exciting but budgeting for it is generally intimidating. There are many sources of pricing estimates, but do they represent a fair value for your project? In this article, we will help you break things down by creating a smart budget that will allow you to estimate what you will actually spend to build your SaaS application by 2026.
Understanding Your SaaS Project and its Cost Scope
Every SaaS product development is different and unique. So, to estimate what the final cost will be for your project, you must first understand how complex your SaaS product will be and which level it falls into.
- A Micro SaaS application focuses on solving problems that can be solved by a single function, such as generating an invoice or developing a Chrome extension.
- Basic SaaS applications have additional features to allow the user to authenticate themselves using usernames and passwords, view data through dashboards, and run reports.
- Medium SaaS applications typically provide the user with multi-user functionality, APIs, payment system, and other advanced features.
- A Complex SaaS application is an online application that provides users with advanced features such as artificial intelligence and very complex compliance requirements, and is typically sold to Enterprise-level customers.
Real Cost of Building SaaS by Each Stage
- Discovery and Planning
This is where your project truly begins. The discovery/planning phase gives your product its technical specifications, decides on the basic structure of your product, creates early prototypes, and defines the development of your product for the MVP. Not completing this phase is one of the most common reasons why projects exceed their budget.
- MVP Development
The MVP is the version of your product that contains enough functionality and features to get valuable user feedback. Creating an MVP can cost between $25,000 to $80,000 (and can take between 6 weeks to 5 months to complete). The price will depend on payment gateways, real-time functionality, and regulations such as HIPAA or SOC.
- UI/UX
Design plays a big role in keeping users engaged. A complete design process will include: User Research, Wireframe, Prototype, and Visual Design. Estimated costs for design range from $8,000 to $30,000 this is not something you should cut corners on.
- Core Development: Cost Breakdown of Features
Here’s a rough idea of what common features might cost:.
- Establishing a Cloud Infrastructure
For most SaaS solutions, Most build SaaS platforms are hosted on either Google Cloud, AWS or Azure for cloud hosting. The setup cost is commonly between $3,000 and $15,000, while an early stage SaaS product will incur about $200 to $1,500 monthly.
- Quality Assurance and Testing
Quality Assurance is commonly one of the first departments to be cut then to create serious problems later. An average cost for QA/testing will range from $8,000 to $25,000 and include Functional Testing, Performance Testing and Security Testing.
- Postlaunch Maintenance
After launching your SaaS product, you should set aside 15% to 20% of your initial development budget for maintenance, which includes bug fixes, software updates, etc. For example, if you have $100,000 for developing your SaaS product, you should consider budgeting about $15,000 to $20,000 for maintenance.
What Else Affects the Total Cost?
- Type of developer: Be it freelance developers who charge between $25 to $50 per hour, or whether they are from the US, charging between $150 to $250 per hour. The cheapest one is not necessarily the best, it often leads to problems by considering all factors later.
- Kind of technology stack used: For developing your SaaS product it would be easier to find developers who can work on your SaaS product. The cost of developing your SaaS product would depend on the kind of compliance you would require for your SaaS product.
- Integration with a 3rd Party Developer: Adding 3rd party (such as Stripe, Salesforce, Slack, etc.) can cost you an average of $2,000 to $15,000, depending on the complexity of development.
Common Budget Mistakes to Avoid
- Building too many features in version one: Get core functionality out first and make iterative changes based on actual user data.
- Underestimating the post-launch costs: After your product has been launched, hosting, tools for support, and bug fixes should all be budgeted for permanent costs.
- Not considering scalability of architecture: If you build your infrastructure for 50 users and realize later you need to rebuild it for 5,000 users, it will become very expensive to do that.
- Chasing the latest technology trend: Use a technology stack based on what is appropriate for you, rather than what’s trending at the time.
Budget Summary
Frequently Asked Questions
- How long does it take to develop a SaaS Application?
Most SaaS applications are likely to take between 2 and 9 months to develop.
- What is the biggest factor affecting SaaS development cost?
Complexity is the biggest factor affecting the cost of a SaaS development company.
- Is it possible to reduce the cost of developing SaaS by creating an MVP?
Yes, building MVP is one of the smartest ways to reduce the cost.
Conclusion
SaaS development costs depend on many different factors. Successful founders usually take time to plan things properly, to launch lean, to partner with experienced individuals, and to plan for the long haul. When you understand your product, and it costs to run it, then you can build with confidence.
