Software as a Service products are changing the world. Emerged with the rise of cloud technologies, day to day they are conquering their place on the top. Their popularity is explained by the ability of making life easier, positive impact on performance and productivity, reduced costs and time. So how to build a SaaS product?
- What is SaaS Product?
- What are the advantages that define the popularity of SaaS products?
- Why create SaaS in 2021? Top trends.
- SaaS product development stages:
- 1. Market Research and Target Market Defining
- 2. Formulate Strategy and Create Implementation Plan
- 3. Determine Pricing Model
- 4. Planning & Wireframing
- 5. Put Emphasis on MVP
- 6. App Development
- 7. Rolling out Your Product
- 8. Beta Testing
- 9. Customer Onboarding and Support
- 10. Marketing Your SaaS Product
- Bottom Line
SaaS is a solution that provides users with a ready-to-use software via browser or mobile app with no need to install it. Users only rent the app and pay for the permission to exploit it for their purposes. Internet connection is the only requirement needed to make it all work.
Many of the tools you use everyday are SaaS - Google Docs, Windows Azure (mostly used as PaaS), BigCommerce, Magento Commerce Cloud, Salesforce, Canva and many others.
What are the advantages that define the popularity of SaaS products?
- It’s incredibly convenient for the customers. They avoid all the problems with software installation and configuration and can just utilize the SaaS product to solve their problems.
- There’s no need for customers to pay big amounts of money on expensive software. They can only buy a subscription for the period and functionality they need and cancel it when they no longer need the service.
- Support and automated updates. Apps updates and bug fixes are synchronous and available to users of all devices maintaining their security.
- Ease of management and productivity. Focusing on SaaS software providers’ benefits, the product has a positive impact on sales without even putting extra resources. It’s scalability allows making a customer base of 100 and 100K without making additional efforts.
- Cloud-based apps are less susceptible to software piracy so a SaaS app has its cyber security advantage.
- SaaS apps are accessible from anywhere in the world with only one condition - the Internet - required. Some of them also may work offline and synchronize only when they are connected to the Internet.
SaaS now isn’t just a buzzword, this is our today’s reality. And it’s more than understandable: solution like this brings benefits to both parties: users and software providers.
If you belong to the customer group, today is a good time to start exploring the advantages of various SaaS products. If you are one of the entrepreneurs considering bringing your new product to the SaaS market table, we created a roadmap to keep your business afloat and avoid some of the common mistakes.
Why create SaaS in 2021? Top trends
The COVID-19 pandemic continues to accelerate the digital transformation of global companies.
SaaS trends affected by the 2021 pandemic include increased market demand and increased opportunities for vertical SaaS solutions.
1. Rising market demand
The rapid digital transformation of businesses all over the world is accelerating the demand for SaaS solutions.
SaaS is still the largest market segment. The reason for this growth is the increased demand for new software collaboration tools during COVID-19. Gartner predicts that the global SaaS market will continue to grow in 2021, reaching $120.9 billion.
According to data from SaaS management company Blissfully, small businesses' spending on SaaS has risen sharply. The average five-year SaaS expenditure of small businesses climbed to nearly US$220,000 in 2019 (versus $55K in 2016). And Covid-19 just accelerated this trend.
According to forecasts in the IDC FutureScape 2021 report, by the end of 2021, 80% of enterprises will move to cloud-centric infrastructure and applications twice as fast as before the pandemic
2. Opportunity for vertically focused SaaS solutions
With the accelerated migration to cloud computing, companies are looking for SaaS solutions that specifically target their industry's pain points. This provides SaaS companies with an opportunity to develop vertical SaaS solutions for specific industries, which can provide more business value and better results for a narrower target user group. These industry-specific Software as a Service solutions also provide benefits in increasing customer insight and improving data governance.
More and more SaaS companies are beginning to take advantage of this market opportunity. For example, in 2018, the software review aggregator G2 covered more than 34,000 SaaS products in 745 vertical SaaS categories.
Some other SaaS trends we described here.
SaaS product development stages
1. Market Research and Target Market Defining
Market research is a must-to-have point of SaaS application development. Properly conducted, it will become the foundation of the product’s long-term success. Go and interview your potential clients about the challenges they face and how they overcome them. It will be essential for:
- finding out what exactly customers need and what you can bring to the table.
- a better understanding of your Ideal Client’s profile and tactics for their targeting built on the base of the research.
- identifying and analyzing business opportunities and selecting the most profitable ones.
- finally, finding your product-market fit.
Keeping an eye on competitors will provide you with an understanding of competitor software's strengths and weaknesses and the measures your opponents use to retain their customers.
2. Formulate Strategy and Create Implementation Plan
The strategy is a vision of how a product should be and how it’s going to get there. The strategy consists of three main elements.
- Vision is a fundamental reason for building a product.
- Concrete and measurable goals, the fulfillment of which will lead to the achievement of a vision.
- Actions that should be taken to achieve the goals.
When there is a strategy, it means that there is no ambiguity when it comes to making important decisions.
3. Determine Pricing Model
Pricing model specification isn’t always a simple matter. You need not only to solve clients’ business challenges but also be fairly awarded for the value you provide. The model choice should be made based on your idea and market research. It is very important to conduct customer research before determining a pricing model since a lot will depend on how your product solves the needs of your customers and how much and often they are willing to pay for this solution.
Therefore it is so important to calculate the unit economics in the early stages. If you charge too much, new customers may prefer the competitors’ solutions and adoption of your SaaS product may stagnate.
SaaS pricing models examples:
- Usage-based pricing
- Per Feature pricing
- Simple, flat-rate pricing
- Tiered Pricing
Each of them has its pros and cons and may show different effectiveness in different conditions. We’ll make an additional review about them later.
4. Planning & Wireframing
The important component of this process is the user for whom you are creating the product.
You need to understand correctly: who is your user and how they will interact with your SaaS application and what problems (jobs) they will solve using your Software as a Service application.
Once the general “jobs” are defined, the next step is to define the Customer Journey Map and go into more detailed User Stories at each step. User stories should have — who the user is, what he needs, and why he needs it.
Wireframing is the creation of a schematic and structural visual representation of a product. It provides an opportunity to define the layout of UI elements on a screen before falling into detailed design.
5. Put Emphasis on MVP
The successful story of SaaS development has to contain a minimum viable product (MVP) chapter. This is a version of a SaaS application with the basic features included to grab the attention of users and collect customers’ feedback.
Many startups and large IT companies are increasingly using MVP as a starting point for building a successful saas product. This will fast-track the market release of the product, reduce implementation costs, test the demand, and finally provide you with a clear understanding of your assumptions’ accuracy. The sooner users can tell or show you how they use the product, the higher level of success.
However, MVP is not just a version of the product with a minimum of functions, but the least resource-intensive tool for validating the economic feasibility of a business idea, which also serves as the basis for the final offer.
In summary, the main objectives derive MVP:
- To test saas application hypotheses at a minimal cost.
- Accelerated retrieval of information required to build a saas product.
- To save development time.
- Quickly deliver a product that solves at least one problem to early users.
6. App Development
After all the preparations are done, the concept is defined, the idea is validated, an analysis of the market and potential customers is made, it’s time to make all the development work. At this stage, the main component of success is the right choice of an experienced and reliable SaaS development team. This SaaS development guide usually falls into 3 steps:
6.1. SaaS Architecture and Technologies
For the past few years, the world of SaaS software development has undergone tremendous changes, from Monolithic architecture to Microservices and Micro-frontends.
The service development of the Software as a Service architecture started with the Monolithic method, which is simple and clear and the easiest to build.
You bring all APIs, databases, services, and UI into one executable program. This method (hereafter) is also called MVC (Model-View-Controller.
When you want to build a really streamlined MVP through a quick hackathon, the MVC method will work in most cases. It is more suitable for IO-driven applications than event-driven applications.
Therefore, the next stage of the evolution of the SaaS platform architecture is to use microservices architecture.
How should we divide it?
- By domain — map autonomous domains and create services for each domain.
- By scale - for SaaS application paths that may receive most of the traffic and become a high load bottleneck, we should consider separating each service/worker so that we can expand separately and choose the right "tool" (framework, language, etc.).
- By use case - if you have a specific use case that requires special technology, it is recommended to split it into different services.
6.1.3. Micro front end
The idea of developing a micro front end is to build a web application as a set of independent functions and components built by independent teams. When all components and functions are hosted on a UI Shell, the end-user experience will be seamless.
6.1.4. Technological Stack
Choosing a SaaS application technology stack is like choosing the building materials required for a physical structure. The technology stack is a tool used to create a web application and run it.
Obviously, cloud SaaS needs a powerful and simple programming language to meet today's development needs.
• Databases: MySQL, PostgreSQL.
• Other tools: Nginx, Apache.
6.2. How much does it cost to develop a SaaS product?
This basic saas development guide won’t be full without mentioning the cost of its development. The cost of SaaS application development will depend on the complexity of the product, its accompanying functions, and its integration potential with various other services.
Usually, the budget consists of several parts: business analysis, design, programming, server, software monitoring and maintenance, customer support and promotion.
Based on these parameters and the hourly rates of European developers, we can name the following ranges:
- Basic SaaS MVP (real MVP!) may cost you a total of $25,000-50,000.
- Feature-rich web SaaS applications can be as high as $100,000.
It sounds so high, it's still cheaper than if the app were developed by a North American-based SaaS development company. And that’s why we recommend starting with an MVP development.
6.3. Сommonly made mistakes (better nor be repeated)
Choosing the wrong software provider
Very often the software development team choice turns out to be crucial for all the SaaS projects, their prospects, and profit. It’s needless to mention the reputation break and customer loss. That is the reason why it’s important to do good research before relying on one or another software vendor. SumatoSoft team is an example of a reliable software partner with solid expertise in digital product creation and vast experience in SaaS development services in particular. Always check the provider’s portfolio and testimonials not only on their website but also on other platforms. Trusted companies will have the highest rates (for comparison, the rate of Sumatosoft is 4.8/5 at (clutch.co) and 5/5 at (goodfirms.co)).
Failing to pivot
The digital world in general and the SaaS market, in particular, are undergoing continuous reorganization and development, so it’s important to keep up with its pace not to be left overboard. Flexibility is the key. Thus it’s needless to change and be stuck at the first business model you came up with: leaders often have to pivot to survive.
7. Rolling out Your Product
The crucial question remains the choice of a reliable cloud provider. We advise you to pay attention to Microsoft Azure and Amazon AWS, which make it easy to deploy your SaaS solution. These services can be easily scaled according to the requirements of a project and are equipped to deal with surges in users of your SaaS platform.
For example, Amazon AWS provides a wide range of infrastructure services, such as providing computing power, various storage options, network solutions, and databases offered as services: as needed, with availability within a few seconds, and with payment upon use. At your disposal - more than 90 AWS services: from data storage to tools deployment and directories for content delivery. New services can be prepared fast and without initial capital costs. This enables start-ups, small and medium-sized enterprises to access necessary components to quickly respond to changing business requirements.
8. Beta Testing
It’s impossible to foresee all the customer requirements and preferences. All of this may be sorted out by beta testing. It may be done by a small group of users for free or at a minimum price in return for their time and feedback provided. When the results are acceptable, new customers at a pre-planned price may be invited.
9. Customer Onboarding and Support
This is a crucial moment in the life cycle of SaaS applications development because the users’ initial impression will play a significant role in their further choice: either stay loyal to the product or switch to another one.
Customer onboarding should provide initial training along with ongoing support. Its duration is defined by users’ needs in assistance with exploring all the features that they plan to use.
10. Marketing Your SaaS Product
Nothing stops after the SaaS project is officially launched. It’s important not to leave marketing out of proper attention because wise and well elaborated strategy can make a difference. Let’s pay special attention to the marketing tools:
Effective tools in SaaS project promotion:
- Content Marketing
- Product Trials
- Search Engine Optimization (SEO)
- Referral Marketing
- Google AdWords
Content marketing is used all over the world to build the brand, attract visitors and turn them into customers. The main advantage of this method is that content continues to provide leads without any additional investments, when other forms of marketing, such as pay-per-click (PPC) advertising, will not do so after you stopped paying. Don’t forget about Search Engine Optimization as it makes your content discoverable.
Talking about PPC advertising, it also remains popular because of such reasons as scalable and targeted traffic delivered to your website. Due to its predictability, marketing budget will always be kept under your control. Retargeting, used along with PPC, will help you to turn hard earned visitors into customers.
Nothing is better than the opportunity to try the product before purchasing - that’s why Product Trials must be considered as a good opportunity to get your potential customers estimate product’s value. But providing access isn’t enough. You have to be sure that users are satisfied with the service so onboarding and support from your side must also be provided.
In SaaS case co-marketing may be highly effective. Usually companies that are going to collaborate have either products that are complementary to each other, or shared views and approach. Joined efforts may bring a very high outcome.
The fact is that the SaaS market now is continuing to expand. More and more people get acquainted with all the opportunities SaaS products bring to their livers. Small and medium businesses are starting to realize that Software as a Service is a great fit for their needs. That’s why joining the SaaS market today may bring great prospects and huge benefits tomorrow. Of course, that’s not always easy and it’s important to have a deep understanding of how this domain works. We at SumatoSoft are always ready to share our knowledge and experience and guide you through this journey. Get in touch with our team and get a free consultation about your SaaS product development.