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How To Build A SaaS Product: A Complete Guide

Tapan Patel

Jun 09, 2020

8 min readLast Updated Jan 23, 2023

Build a Saas Product

SaaS (Software as a Service) is a software delivery model wherein a vendor can provide the users with software that is centrally hosted on a third-party server. It is a cloud-based software that you can access from your devices anywhere anytime. Because of the convenience it offers to the users, the SaaS industry has gained immense popularity. The SaaS industry is expected to have a market share worth $220 Bn by 2022. In this blog, we enumerate the steps involved in how to build a SaaS product and common mistakes to avoid.

Why You Should Build A SaaS Product

The following advantages prove  why building a SaaS product is a better option than building  a traditional software:

  • It’s easier and more affordable to maintain a centralized platform like SaaS than most traditional desktop software.
  • Since it’s not very easy to pirate cloud-based software, SaaS helps companies to reduce the piracy of their software.
  • It’s much easier to offer upgrades and expanded services mix to users of your SaaS products. So you can scale SaaS applications easily and boost your revenues.
  • SaaS offers a larger user base as it appeals to users more because of their easy accessibility from any device.
  • SaaS products don’t need you to make investments in heavy hardware infrastructure.

How To Build A SaaS Product

Once you have decided you are going to build a SaaS product, it is imperative to carefully study every aspect involved in transforming your idea into a tangible product. Here is a step-by-step guide on how to build a SaaS product and the important considerations involved:

1. Identify your target audience

SaaS application target audience

Before you begin the SaaS application development process, you must have a clear answer to who will use your product. Without defining the buyer persona, you will likely end up offering an average solution to multiple audiences than an excellent, focused solution to the right target audience.

Market research plays the most significant role in the success of your SaaS application development. So carry out thorough research about your industry, define your niche, and create an accurate buyer persona. Specify the age groups, geographical locations, purchase patterns, and lifestyle patterns of your potential buyers.

These insights will help you gain a clear understanding of what they want today and what they will want tomorrow. This way, you can build your product keeping those needs and wants in mind.

2. Define why users will use your SaaS product

SaaS Product

You may already have some idea about why users would want to use your SaaS product. However, you must narrow down the desired functionalities to a few core features.

To determine the most essential functionalities of your SaaS product, look at it as a solution rather than a product. Your buyer persona will help you understand what problems your potential users are facing. Having done that, you have to identify how your application will serve as the best solution for those problems.

The more clarity your problem statement has, the more accurate will be the solutions you provide to your users.

To increase your chances of recurring revenues, ensure that your SaaS product facilitates recurring benefits to your users.

3. Outline an MVP

The Minimum Viable Product (MVP) of SaaS product

By this point, you will have understood your target audience’s needs and how your product will address those needs. So it is now time to outline the Minimum Viable Product (MVP) of your SaaS product.

An MVP is the most basic version of your product that the initial users can derive value from. The main purpose of an MVP is to test whether the market is ready for your SaaS product.

Launching an MVP first before launching your full-fledged final product is important to validate your idea. If you launch your product straight away, you may end up investing huge resources in something that people don’t want to buy.

How to build the right MVP

To build an MVP right, you must prioritize the important features and solutions you came up with in step 2. Sort all the features into two categories: must-have and nice to have.

Out of the must-have features, single out the most essential feature that will serve as the core value of your MVP.

While outlining the MVP, ensure that you enable your MVP with desired user interactions. It’s not enough to offer features from your end, the user must be able to choose what they can do with those features.

Building an MVP is another chance for you to reconfirm what your ideal customer is like and whether they need the solution you want to offer to them.

4. Decide technical requirements

Saas Product Technical Requirements

In addition to the core features, it’s vital to jot down all the other technical requirements for the SaaS product you want to build. Programming languages, frameworks, UI components must all be pre-decided and carefully so. Otherwise, you might have to rewrite your code as per changing scenarios.

Options for customization, security, and data privacy must be taken into consideration before the development process begins. Another important consideration for SaaS application development is the scope for third party integrations.

In order to maximize the value your product delivers, integrate it with other applications that make it easy for the users to do more things using one software application.

Smart integration with popularly used outbound tools can also play a role in increasing your revenues. However, streamlining the integration process and ensuring ease of use are critical aspects of successful integration strategies.

5. Choose a pricing model

Saas Product Pricing model

Equipping your SaaS product with a carefully-vetted pricing model is the most important factor for maximizing your market engagement.

Based on your buyer persona, develop pricing tiers for your SaaS application so that it provides value to each category of users as per their current needs. You can choose a pricing model from a variety of options.

For most SaaS products, the strategy that works the best is offering a free version with advanced features that can be availed with premium subscriptions. This will enable the users to gauge how valuable the product is for them and once they are happy with your product, they can be more inclined towards buying the premium version.

Another popular pricing model for SaaS products is fixed monthly or annual plans after a free trial period. Again, it is easier to win the trust of potential users by showing what your product can do during the trial period than to get them to buy it without having experienced it.

Finally, you can also choose to base your SaaS product on a one-time payment model wherein users can buy your product once and use it for a lifetime.

It is important to consider the buying patterns of your target audience and the kind of solutions your SaaS product offers while deciding a pricing model.

6. Determine the total budget

Saas Product development budget

There are numerous costs associated with the designing, development, and marketing of your SaaS product. Without careful planning of the financial requirements, it will be difficult to lead your idea all the way to its final destination.

The entire cost of launching a SaaS product depends on its scale, functionalities and application marketing strategies. After considering regular costs like server costs, monitoring software costs, development and maintenance costs, make sure you also prepare for any unexpected delays or issues in advance.

Including budgets for each of these aspects will help you face any unforeseen events and keep the development process afloat.

7. Put together the best development team you can find

Saas Development Team

With all your requirements and budgets decided, it is time for the real work to begin.

It will be an understatement to say that the development stage is the most significant yet the most vulnerable stage in the journey of building a successful SaaS product. To ensure you get the best SaaS development services, choose the developers for your SaaS application like you choose your business partners.

Depending upon the technology stack involved in the development of your SaaS project, hire dedicated developers who are experts in their respective technologies. You can also consider partnering with a software development agency like Third Rock Techkno that can source the best talent for you while also offering the most affordable and flexible engagement models.

10 Essential Steps To Build a SaaS MVP

Read More

Common Mistakes To Avoid While Building A SaaS Product

Taking the above steps with utmost caution and smartness will ensure that you build your SaaS product in a way that is market-ready and profitable for you. However, there are certain pitfalls that you can fall prey to if you don’t avoid the following mistakes:

Mistake #1: Not prioritizing user-friendliness

As a technology expert or as a developer, your expectations and experiences with software applications may be very different from your target audience. Be cautious and do not be so consumed by advance features that you forget to simplify your SaaS product.

At the end of the day, the customer is the king. If they don’t find it easy to use your product, they won’t bother coming back to your application no matter what kind of features it offers.

Build the user interface of your application in a way that it appeals to the users while also being extremely intuitive to navigate.

Mistake #2: Not considering scalability

The entire software development industry works on the principle of evolution. Even the biggest tech giants are constantly changing and expanding their services mix.

No matter how you plan to position your SaaS product initially, consider that there may be a possibility to scale your product in response to factors like growing demand, diversifying user base, or changing industry trends.

If you don’t include these considerations in your development strategies, it will be very difficult to adapt your SaaS product to a greater demand in the future.

Mistake #3: Not learning from the competition

The least expensive lessons are the lessons we learn from the mistakes and the achievements of the others.

If there are existing SaaS products that cater to the same industry as you do, it is wise to have an in-depth understanding of why their customers are choosing to buy their products and which category of users are yet to be tapped into.

Keeping a close and constant watch on your competitors can help you adopt successful strategies while also finding gaps in their services that you can use to position your product better.

The Bottom Line

Following this guide on how to build a SaaS product will help ensure that you have taken all the necessary steps and precautions required for its successful development. However, your initial launch of the product is only the first milestone. The journey of successful software is marked by numerous iterations, regular testing, and constant evolution. To grab the maximum market share after you launch any application, make sure you don’t make these marketing mistakes.

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