SaaS Product Development: What’s Important to Know
What do popular products like Slack, Dropbox, Zendesk have in common? They all fit the SaaS business model, which benefits both the vendor companies and their customers. Most SaaS products are web and mobile applications that don’t require installation.
The Sumatosoft company claims that developing a SaaS application can be a strategic step toward growth for businesses. If you are thinking about whether you need to develop your own SaaS product and what is important to know for its development, this article is for you.
What is SaaS
What is the concept of SaaS? SaaS (Software as a Service) is one of the cloud service models. To use such a program, you don’t need to download and install it on your computer or connect to a working network. Just open it in a web browser. The software application can be anything from office software to unified communications among many other available business applications.
Advantages of the SaaS model for users
- Lower initial cost. The Software as a Service model is typically subscription-based. It requires no upfront licensing fees, resulting in lower initial costs.
- Quicker installation and deployment. The SaaS application is already installed and configured in the cloud. This minimizes the delays that result from lengthy deployments of traditional software.
- Easy upgrades. SaaS providers handle hardware and software updates, centrally deploying updates to hosted applications and removing the workload and liability.
- Accessibility. All you need to access a Software as a Service application is a browser and an Internet connection. This is usually available on a wide range of devices and from anywhere in the world. This makes SaaS more accessible than traditional software.
- Scalability. SaaS providers supply users with multiple subscription options, with the option to change them as needed. For example, when your business is growing or more users want to access a service.
- Ability to test the software. Most SaaS applications allow users to test or try out the application first to see if it is of commercial value.
The benefits of SaaS development for businesses
The benefits to users also apply to development companies. They get a steady and regular income through a subscription model. And lower initial costs allow them to attract a larger customer base.
Important tips on developing SaaS product
Analyze the market
First of all, you should find out how much demand there is for the Software as a Service product you want to create. Research the market segment you want to enter. Formulate answers to the following questions:
- Who is your target audience?
- What are their main needs?
- Who are your competitors?
- What important features do they have?
- What business models do they use?
This will help you discover weaknesses and inconsistencies in your idea and vision in the early stages of software product development. Market research is a great way to test your idea and gather valuable information about uncovered customer needs.
A minimally viable product (MVP) refers to core features that immediately create value for your user with minimal effort on your part. In essence, a minimally viable product is what your first followers will receive and test.
Determine your pricing model
No matter how good your product is, you will not be able to attract customers and grow without a well-thought-out pricing model.
Here are the most common pricing models in SaaS:
- Usage-based pricing – allows users to pay based on the volume of use.
- Freemium – offers a free version with limited features and encourages switching to paid plans with extra features.
- Fixed-Rate – offers the entire product or feature set at one price, usually paid monthly or annually.
- Active user pricing – offers the entire product or feature set paid per user.
- Price per feature – offers different feature sets at different prices.
The pricing model should be planned for the long term. And in the short term, the right pricing strategy will allow you to comfortably establish yourself in your market. There are several common pricing strategies for SaaS products such as:
- Market penetration – attracting customers at an initial low price.
- Promotional pricing – lowering the price from higher to lower as the product gains credibility and exclusivity.
- Premium Pricing – general pricing strategy for exclusive niche brands.
- Free trial.
The right pricing model and strategy depends on the characteristics of your product, long-term plans, and target audience.
The cost of developing a SaaS product
How much will it cost to create a SaaS application? There is no single answer to this question, because every project is unique, and so is its cost. Let’s discuss some important factors that affect the cost of developing Saas projects.
The scope of your SaaS project
First, decide what kind of Software product you are going to create. Conventionally, SaaS services can be divided into tools and platforms.
If you are new to the cloud business and creating your first Software as a Service product, you better keep it simple. Start with a tool and then scale it by adding new features.
The cost of SaaS product development depends on the complexity of your project. The more features your product will have, the higher the price you will have to pay. For this reason, choose the required features wisely.
You can turn to a team of freelancers or partner with an application development company.
Hiring freelancers will cost you less than partnering with software companies. Since the quality of service is not a top priority for freelancers, you run the risk of getting a substandard product.
Partnering with a software agency will cost more. However, it is worth it. First of all, such companies offer full-cycle development services.
Thus, the cost of development is made up of many factors. These are functional requirements, the technology stack, the amount of work, the skill level of people working on the products, the development period, the transfer of rights to the software product.