How to Calculate the Cost of SaaS App Development?

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In this article, we have covered the major factors affecting the cost of SaaS product development.

So you have decided to invest in SaaS development. It is perfect timing, we should say. Today cloud services are getting more and more sought-after. Now of course, before starting any development, you want to calculate the cost to build a SaaS app.

In this article, we have covered the major factors affecting the cost of SaaS product development. You will know how the project scope and timeline, API integration, and the required functionality influence the total price of a completed software-as-a-service solution.

The State of SaaS Application Development in 2021

Let’s start with a quick overview of the most relevant SaaS trends. These insights will suggest how your cloud solution can address your target audience’s pain points most efficiently.

The latest SaaS development trends are as follows:

The popularity of SaaS tools for remote collaboration. The most common instruments include video conference tools, online chats, time-tracking tools, project management platforms.

The rise of vertical SaaS. These solutions are aimed at serving a particular domain. Also, they are good at solving a very specific issue.

Take a look at how Veeva describes their cloud solution for life sciences:

Transfer from SaaS to PaaS. Companies are actively scaling their products to retain customers. By moving from SaaS to the PaaS model, businesses can drive up the demand for their cloud solutions.

Focus on smartphone users. Mobile users are constantly growing in number. Given that, more and more companies adapt their software-as-a-service products to stay relevant.

The rise of microSaaS. Today small tools that enhance the functionality of existing SaaS apps are getting increasingly popular. What’s the secret? MicroSaaS enables businesses to gain the upper hand and find an unoccupied niche.


Main Challenges in SaaS App Development

SaaS development is associated with certain challenges. They can increase the total cost of a completed project if you cannot address them the right way.

Let’s take a look at the typical mistakes that should be avoided in the process of building a SaaS app.


Poor Execution

Sometimes even a brilliant SaaS project idea can lead to failure if it is badly executed.

To make sure you are on track, we would recommend applying SWOT analysis. It means that you should define strengths, weaknesses, opportunities, and threats of your software-as-a-service project. Thus, you will be able to clarify the key objectives of your venture and factors that impede reaching your business goals.


Lack of Trust

Remember that users will not use your SaaS solution if they do not trust it. Therefore, your task is to make it as reliable and secure as possible. Introduce a strict data storage policy. Give users a clear understanding of how their information will be stored and deleted.

Also, it would be a great idea to provide customers with field-level encryption. This way, you will be able to specify what fields should be encrypted (credit card numbers or social security numbers).


Too Narrow Target Audience

Previously, we indicated the rise of vertical SaaS as a popular software-as-a-service trend. However, the focus on a very small target audience will do you no good either. Simply put, if you do not have enough customers, the necessary updates and optimization of your SaaS product can cost you an arm and a leg.

Cost of building a SaaS product: key factors to consider

The time has come to delve into core aspects of SaaS development. Thus, you will get a better understanding of calculating the cost to build a SaaS app.


SaaS Project Scope

The first thing you need to define is the type of your future SaaS project. What will it be: a tool or a platform? Both of these types of cloud solutions have different scope, and, consequently, price.

Since tools are aimed at solving one or two issues, they are noted for a restricted scope. It means that they have only a few primary functions.

Buffer, which is an instrument for managing social media accounts, serves as a perfect example of SaaS tools.

Platforms, on the contrary, have expanded functionality. They grant users access to the features previously unavailable in similar SaaS instruments.

The classic example of a SaaS platform is Facebook.

If you are building your first SaaS product, we recommend that you start with a simple tool and then scale it per request.


Required Functionality

Remember the rule of thumb: the more diverse functionality your product will have, the higher the price will be. Therefore, select the required functions wisely.

Draw a line between must-have functionality and desirable features. This approach will help you avoid unnecessary expenses.

It is worth noting that the key functionality of a cloud product rests on the specific issue it is designed to solve. However, the following features are common for all types of SaaS products.

  • Analytical dashboard;
  • Single sign-on;
  • Audit trail;
  • Enhanced security features.
  • Role-based access

Access level system provided be TalktoTheManager, a customer feedback solution:


Finding the Perfect Development Team: Freelancers vs. Software Consultancy

If you do not have an in-house development team, you need to hire the right specialists that will build a SaaS app for you. There are two options available. You can turn to a team of freelancers or hire a SaaS development company.

The quick overview of each of these options will help you make the right choice.

Hiring freelancers

  • It is a more cost-effective option since self-employed specialists usually set lower rates.
  • Some freelancers are not bothered by the quality of their services, so you can get a low-grade solution.

Partnership with a software agency

  • This solution is more expensive.
  • Software companies offer full-cycle development services, including conducting discovery sessions, designing and prototyping, SaaS product development and testing, maintenance and support.
  • Software consultancies cherish their business reputation and provide customers with high-quality solutions.

As for the exact rates, they are defined by the location and experience of a software provider.

The data below offered by Accelerance show average web developer hourly rates in different geographic regions (the US, Western and Eastern Europe).


Is API Integration Required?

What about the backend functionality of your SaaS app? How will it be implemented? Will you build it from scratch or via API integration.?

The second option is much cheaper. At the same time, building a SaaS application from scratch can be very costly.

API usage allows you to scale your business fast. In addition, you can skip some development steps that cannot be missed when you develop the backend of your app from scratch.


Overhead Costs

You may think that as soon as your SaaS product is launched, your expenses will be over. Unfortunately, that is not true. You should not forget about the different kinds of overhead costs.

First of all, you need to promote your solution: most likely users will not see it, unless you spend enough money on marketing.

Besides, you should consider legal costs, such as compliance with federal and local legislation. For such domains as healthcare, banking, or finance, it is especially important.

When it comes to the total cost of ownership, the following expenses should be mentioned:

  • Licensing;
  • Subscription;
  • Regular updates;
  • Providing Technical support/training.

All these factors also define the cost of building a SaaS product.


How Can Codica Help You Build a SaaS App?

SaaS development is one of the focal areas for Codica team. Since 2015, we have been building fast-loading, scalable, and secure cloud solutions for a number of domains. We have delivered quality cloud solutions for finance, travel, automotive, insurance, and other industries.

Our expertise enables us to keep the total cost to build a SaaS app down, and help you save time and budget.

If you need a custom software-as-a-service solution, our experts will build a SaaS product for you from scratch. All your particular business needs and requirements will be taken into account.

Besides, we will make sure that a new solution is easily integrated with other services used within your company.


Digital Village Case Study

We are always delighted to share the positive results of our hard work with our customers. Let us tell you about one of our successful SaaS projects, a collaboration platform developed for Digital Village, an Australia-based alliance.

The request was to build a professional network for product development in the IT-sphere. The platform should connect entrepreneurs with experienced developers and web designers to develop advanced software products.

The main challenges associated with the project included:

  • creating a straightforward and intuitive user interface,
  • providing users with enhanced search functionality and multiplicity of user roles.

As a result, our team delivered a user-friendly and intuitive cloud platform that is noted for its transparent project management and easy-to-use admin panel.



As you can see, there are many factors that influence the total price of a software-as-a-service solution.

We hope that with our guide, you will be able to calculate the SaaS development cost the right way.

If you have a SaaS idea in mind, feel free to contact us. Our experts will help your business grow with a secure and scalable cloud solution.

To learn more about the topic, read our full article: How to Calculate the Cost to Build a SaaS App in 2020