WIX, Slack, MailChimp, Zoom, and Dropbox. The Software-as-a-Service (SaaS) business is an approach to digital development that is gaining momentum these days. It is forecast to be used by over 80% of mobile startups by the end of 2022.
The core idea of Saas is to provide companies with tools to develop and maintain their products without building a custom tech skeleton from scratch.
According to the concept, one can build SaaS-based applications with a small budget using cloud-based storage and technologies.
As SaaS is an extremely profitable business area in 2020, the question of how to create a software as a service that could overcome the competitive challenge and stay reliable is rising up the agenda.
Our article will help you to understand why SaaS is believed to be cost-effective, agile, and highly accessible for many. The advantages of a ready-to-use system such as SaaS will become clear for programmers and startups too.
The idea behind a SaaS-based business is to optimize the resources of their customers. The approach helps startups and corporations to stay cost-effective investing zero capital into custom tech solution development.
Usually, SaaS vendors provide users not only with ready-made solutions but also constantly upgrade the technology, maintain the tool, and support customers 24/7.
How to start a SaaS business? Like any other startup, you should clarify the pillar points considering your future product and enterprise. Target audience needs, monetization model, promotional mechanisms, budget, and technology — are believed to be the most critical issues that will increase or decrease your chances of success. To learn more, read our blog article How to Start a Startup.
Second, Saas application development has its technical specifics, which fill influence your budget and team requirement greatly:
Best practices concerning SaaS technologies, (take Google tools, Adobe, Shopify, or Microsoft as examples), show that the proven way to become in-demand and profitable in the SaaS business is to invest time and energy in learning the target audience needs, together with developing and testing brand new technologies. At the same time, there is a tendency to build niche SaaS products on the market.
We advise you to take at least three steps to cover your Discovery project stage issues. If you’d like to know more — go to the ‘What is a Mobile App Development Lifecycle’ article.
Step 1. Research the market
Artificial intelligence (AI), niche-oriented strategy, increasing the profits of mobile apps are just some of the points you will need to learn more about. It is also possible, that in 2020, we’ll see the rise of a completely new technology connected with machine learning, AR, and VR.
Tech trends and niche innovations are things SaaS depends on as it serves businesses. We recommend you to take an in-depth look into what’s going on in the tech world or, perhaps, hire a niche specialist.
Step 2. Know your target customer
You can’t sell anything to a person you know nothing about, especially when talking about a highly competitive field such as SaaS.
The issue requires a separate discussion, however, we advise that you develop a portrait of the target audience, list their needs and fears, define your product from the Job-to-Be-Done point of view, and, finally, find out what monetization approach will work for you. More on this topic — I Have an App Idea Now What.
Step 3. How customers can use your SaaS product
Continue your market and target audience research and define what competitive advantages you have, compared with similar SaaS providers. Then, try to define in what circumstances your product could be conveniently used by your potential customers.
Think of projected user journeys as well as situations when something will get in the way of them. Share issues with your developers, UX and UI designers in the future.
The SaaS approach is based on innovative technologies. To a greater or lesser degree, companies and private parties outsource their tech tasks using cloud-based services.
A SaaS development company must keep on investing in research and tech experiments, track innovations, optimize resources, and monitor users’ needs to stay competitive.
There are several key features of SaaS products. These will depend on your product type, market research, or even the development budget you have available. LANARS also builds SaaS for its clients. Find our suggestions above:
Check another article in our blog to become familiar with other tech issues — Choosing a Tech Stack for Full-Cycle Web Application Development.
In 2020, start a SaaS business with LANARS tech support
Contact us for advanced consulting
The SaaS business concept is to sell digital services instead of products. It sounds like nonsense for today’s user to buy a program on a physical media without the ability to constantly update the product software. The SaaS approach is a good alternative for both developers and users.
One common commercial model is subscription. Users purchase access to the cloud service on the Internet and use it online (mostly) and offline without having to purchase additional hardware resources. That’s why a SaaS developer is expected to find the solution of how to keep the service sustainable and performing competitively, store data securely and reduce the risk of system failures that could lead to client data corruption.
There are 4 challenges of SaaS software development you should consider at a very early stage:
Challenge #1. Scalability
If your tech stack is not scalable, your business is not able to grow. That works both in terms of SaaS startups (which could display slower performance as the number of clients grows bigger) and SaaS clients (whose business will no longer be able to operate if the cloud service shuts down due to overload).
Although vertical development is a trend among modern digital businesses, there is still an issue connected to the target audience size. If your SaaS product is a niche one, you might not have enough customers to cover your business maintenance bills.
Challenge #2. Security
As a vendor, you must guarantee data privacy to your customers. Bank information, personal data, commercial secrets, and much more may leak because of poor cloud service security. In these cases, you’ll not just lose your business, but will also be subjected to an enormous fine.
Challenge #3. Reliability
The AWS SaaS architecture is considered to be the most reliable platform for cloud software maintenance. However, the system operates with physical servers that have a certain geographical location that could be damaged, (servers can catch fire, get wet, be blown up or simply suffer due to human factors).
AWS takes care of its hardware and backup all the information securely — which is a huge advantage.
AWS also prevents your web sites and products from being shut down due to overloading. The service provider gives you a resource deposit (surge protection) and allows you to scale server potential easily, by switching from one plan to another.
Another issue is trust. SaaS tools reduce the sense of security, as clients need to store their valuable data elsewhere (not on their own hard drive). By establishing a brand and working on a positive reputation, you may gain a lot of customers.
Logo, UI, corporate colors, and early crowd marketing promotion campaigns will be helpful. However, that is always difficult to make people trust you being a young startup.
Challenge #4. Monetization concerns (too expensive or too cheap?)
The reason why people use SaaS products is for their cost-effectiveness. Businesses as well as private users don’t always have (or are willing to spend) the resources to establish custom digital services from scratch. The SaaS approach helps users to share the tech development costs in areas where typical solutions are applicable.
At the same time, the provider’s service musn’t be too expensive, as no one would be able to afford it. You should study your target audience carefully to learn how much money they are ready to spend on your product. Second, you need to develop a sustainable monetization model where product upgrades and maintenance are periodically included in users’ bills. Think about pricing in advance.
The SaaS architecture might seem clear when comparing monetization concepts applicable in that business area. Analyzing cloud services like MailChimp, Salesforce, Twilio, or SurveyMonkey you may notice that there are a number of approaches to stabilize the SaaS business.
Choose your model considering project timelines, budgets, and marketing expectations. Here, we provide you with the most common monetization concepts. Keep in mind, that many successful businesses try to mix them to avoid huge financial risks.
Most apps on the market are Freemium and their full or expanded functionality can be purchased according to subscription plans.
More monetization tips find here — How to Monetize Your App blog article.
The development costs depend on lots of factors. The number of features and integrations, design and architecture complexity, target market, and project timelines are the most critical issues. There are also such factors as the country of development (the difference between app development costs in the US compared to Ukraine is over $100 per hour).
Finally, there is the marketing strategy, which could be cheap and well-planned or expensive and blindly expansive.
In general, the SaaS application development budget has several parts: business analysis, design, programming, servers, software monitoring and maintenance, client support, and promotion. Task outsourcing is a popular way to reduce costs if you have a limited budget. Learn how to do it from our blog article — How to Hire a Dedicated Development team.
UX and UI design (based on marketing research)
up to $15,000 — main screens, additional screens, interactions, profile
Even SaaS businesses need to have clear and attractive interfaces. To come up with one that fits your needs, designers have to conduct research or get it from the marketing research team. Use guidelines created during the Discovery project stage: target audience description (requirements and tastes), a list of features, monetization strategy.
Define the primary goal of design and use best practices to enrich your project. Don’t forget that your service should be scalable, so it is a good idea to create a design code and define the visual tone or voice of your business.
from $30 to $8,000 — depends on the number of users
Usually, a SaaS development company spends most of its funds on hosting (servers). As the number of customers increases, you should increase your server potential too.
Monitoring software and tech maintenance
from $3,000 — depending on the number of users
To increase the reliability of your product you need to track how it works constantly. Incorporate powerful monitoring software that will let you know if something goes wrong. The more users there are the more resources it will take to monitor the system.
Another question is tech maintenance. When an alert appears, there should be a programmer available to resolve the issue. That service can also be outsourced. Details — IT Outsourcing Advantages and Disadvantages.
Development and tests
from $20,000 — depends on features
Here, we are talking mainly about how to build SaaS applications and start gaining your first customers. Prototype building, MVP development, QA, deployment, and upgrading the product according to user feedback are hard to calculate without knowing the SaaS specific and your product features. The expected size of your audience also matters (more people means more resources). More about development team roles find here — App development Process.
Also, leave around 10% of the development budget for marketing. Branding, content marketing campaign, feedback study strategy and others should be carefully planned and started long before the actual development takes place.
SaaS development platforms is a business field to think about in 2020. This year, the size of the SaaS market is forecast to reach $157 billion and become an essential part of almost half of all digital businesses in the world (41%). Although the SaaS market niche is highly competitive, it is likely to be changeable too.
AI and machine learning development, blockchain technology, and mobile-first approach will shape the area in the near future, but there is still room for your innovative cloud service startup.
Those who’d like to outsource SaaS development need to be aware of certain tech issues considering the final product: programming language, database, queuing system, and server specifics. You’ll find it difficult to source a digital engineer with pure SaaS experience, that’s why you’ll need at least some tech stack experience in order to choose the right specialist within the global talent pole.
What is a SaaS application?
A SaaS application is software licensed using the Software as a Service business model. Software as a service (SaaS) is a software distribution model in which a third-party provider hosts applications and makes them available to customers over the Internet.
How do I create a SaaS application?
The SaaS approach is based on innovative technologies. To a greater or lesser degree, companies and private parties outsource their tech tasks using cloud-based services. Check how to hire developers in our article.
What is SaaS architecture?
SaaS applications are single-instance, multi-tenant architecture that provides a feature-rich experience competitive with on-premise applications.
What are the costs of SaaS app development?
Of course, the costs of developing a SaaS app vary depending on the complexity of the product, its features, integrations with other services, etc. You also have to carefully choose the country where your development team is based. This will define the price and quality of your product.
What are some examples of SaaS?
Examples of SaaS: BigCommerce, Google Apps, Salesforce, Dropbox, MailChimp, ZenDesk, DocuSign, Slack, Hubspot.
In 2020, start a SaaS business with LANARS tech support
Contact us for advanced consulting
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