How to Develop a Software-as-a-Service Application: Key Concepts, Cost, Benefits, Steps to Build, and More

Tuhin Bhatt

Co-founder of Intelivita

  Last updated on January 19, 2024

  21 min read

For every business, there’s a 70% probability of finding a SaaS solution.

This is a shockingly high figure for a business model that first started in 1999.

Wondering how to develop a SaaS solution as a startup founder, serial entrepreneur, or tech executive?

The process can be cumbersome, but with this SaaS development guide, we’ve broken down the intricacy of the steps involved and potential pitfalls to watch out for.

As you read this article, you’ll learn the following:

  • Definition of SaaS development
  • Key concepts that differentiate SaaS development from web app development
  • Why to own a Software-as-a-service product
  • Steps to saas development
  • Likely challenges to encounter when creating a SaaS solution
  • SaaS development cost
  • And more!

If you prefer a pictorial depiction over text, you can check out our bonus infographic section.

Let’s discuss more on the subject matter:

Intelivita provides high-end SaaS mobile app development services to its clients.

We’re one of the top Software-as-a-Service solution providers; Connect with our industry experts to access top-quality SaaS products.

What is SaaS Development?

SaaS app development is the process of creating a delivery model where an application is hosted by a solution provider and made available to users over the internet.

The process involves designing and creating a secure, reliable, and scalable application, hosting it on a server, and maintaining accessibility via requisite skills and tools.

SaaS apps can be accessed from most internet-enabled devices.

Here are some key concepts to know about saas app development before developing steps involved in its creation:

Key Concepts to Know about SaaS Development

Before developing your saas app, it’s imperative to consider specific metrics that characterize a Software-as-a-Service solution.

Consider requisite statistics on business prospects and how saas differs from web application development.

Characteristics of SaaS That Must be Included in Its Development

There are a few characteristics of saas applications that should be included in its development, these are:

  • Multi-tenancy
  • Scalability
  • Security
  • Automated management and provisioning
  • Subscription-based pricing.
Features Description
Multi-tenancy SaaS applications have features designed to be custom-used by multiple tenants or users.

That is the possibility of handling data and features separately for each user.

Scalability SaaS applications should be able to handle a significant volume of users and multiple requests per second.

You should be able to add new features and also increase the capacity of existing ones.

Security Due to the sensitivity of data on software-as-a-service platforms, you’ll need to implement reliable security features like multi-factor authentication, data encryption, and security testing.
Automated provisioning You’ll need to automate multiple features during saas app development. For example, create a self-service account creation mechanism, monitoring tools, and automated backups.
Subscription-based pricing model Most mobile applications offer subscription-based services. Thus, you’ll need a payment gateway, to handle downgrades or upgrades.

Another critical concept to keep track is statistics on saas development.

Let’s elucidate more on that:

📊 Statistics on Software as a Service

Here are some statistics depicting high demand for SaaS products:

  • According to Insivia, businesses spend an average of $2,623 per employee on SaaS.
  • The SaaS market is expected to grow at a CAGR of 27.5% from 2022 to 2028.
  • 93% of businesses will use SaaS in 2023.
  • According to market research results from experts, the global SaaS market represents 0.3% of the world economy.

Other than statistics depicting growth, another statistic to take note of is VC funding in the sector:

  • SaaS startups have raised over $5 billion from VCs to date.
  • Funding for SaaS startups rose 5x Y-o-Y to $500m in November 2022.
  • Zylo raises $31.5 million in its latest funding round.
  • Cledara raises $20 million to help people manage their SaaS subscriptions.
  • 33% of SaaS CEOs are planning to raise funds in 2023.

How Does SaaS Development Differ from Web Application Development

It’s a common misconception to misconstrue SaaS development as Web application development due to the similarities in both.

However, software-as-a-service differs significantly from web apps. Here’s a saas development vs. web application development:

Software-as-a-Service development Web application Development
SaaS applications are deployed via the internet and accessed from a website browser. Web applications are deployed via a web server or on-premises.
SaaS applications are often sold on subscription. Web applications are often a one-time purchase or free web application.
The service provider updates and maintains the application. The user updates and maintains the web application.

Beyond just knowing what saas development entails, you’re probably curious about its benefits. Let’s dig into that:

What are the Benefits of SaaS Application Development?

The SaaS model is one with benefits to both users and startups.

The advantages you’ll get from saas depend on features, functionalities, business models, and user experience design.

Below are some generic benefits it offers:

Benefit of SaaS App Development for Users

Here are the benefits users will get from saas application development:

  • Benefit 1: Accessibility

Users can access SaaS applications from any internet-enabled device. This is a desirable phenomenon for anyone that wants to use features on the saas app from multiple devices or locations.

For example, users can access Grammarly by installing its plugin within Google docs or Microsoft Word. They can also access the feature via a web browser on any internet-enabled device.

  • Benefit 2: Flexibility

Users can customize the features they access within the SaaS application based on the specific interest of users.

Most product owners offer subscription-based access so that users can offer a broader range of options based on their needs. Thus, it lets users pay per feature accessed.

  • Benefit 3: Collaboration

SaaS has technical features that allow collaboration between team members, allowing them to both contribute to a task, share information per time, and work together.

An example of a SaaS that does this is Figma, which lets multiple people add or edit design and elements contributively.

  • Benefit 4: Integration

You can integrate saas applications with other software and systems to improve efficiency and streamline workflows. An example is Salesforce.

It offers a range of tools that can be integrated into e-commerce websites, accounting systems, and email platforms.

This integration lets companies access and update customer data from various sources and automate customer support and lead generation.

Other than clients, it also offers startup founders their own range of benefits. Let’s delve into this:

The Benefit of Owning a SaaS App Startup

As a startup founder, you’re probably wondering what direct benefit a SaaS application development will offer you. Here are some:

  • Benefit 1: Continuous Revenue Flow

SaaS app development offers startup founders an opportunity to generate revenue through subscriptions, ensuring that you have a steady flow of income.

For example, Grammarly has a yearly revenue of $88 million from offering a freemium and a $29.5 payment plan per month.

Additionally, Mailchimp has a revenue of $700 million which it earns by offering numerous plans that start at $11/month.

  • Benefit 2: Low Upfront Costs

Creating a SaaS application is relatively cheaper in comparison to other types of software as you won’t have to worry about infrastructure or the receiver’s hardware.

For example, the cost of creating an app like MailChimp is $100,000, and with a marketing budget that’s 2-3x of the total saas development cost–you’ll be up and running with a $300,000 budget.

On the other hand, a mobile app platform for iOS and Android with the same feature will require about $400,000 for development, marketing, and maintenance.

  • Benefit 3: Easy Scalability

SaaS apps can easily scale up and down per interest.

SaaS owners don’t need to create new software-as-a-service features on demand, as users can easily access new offerings by paying more.

Also, some services are created through microservices architecture, which ensures that SaaS developers only need to scale individual application components independently.

  • Benefit 4: Higher Margins

Due to the means of distributing SaaS solutions and their deliverability via the internet, it offers startups high margins.

They don’t have to host on an App Store–thereby eliminating fees associated with it.

  • Benefit 5: Long-term Customer Relationships

SaaS solution development ensures long-term commitment from product users. You can ensure a recurring revenue stream with a clear and profitable roadmap.

Upon knowing the pros that SaaS web application development has to offer your company and user audience, we’re pretty sure you’re interested in creating one.

Let’s guide you through the steps involved:

How to Develop a Software as a Service

As with any solution, you should stick to a development process to create a SaaS application with guaranteed high user experience, high scalability, and top-notch performance.

The steps to creating a SaaS are:

  • Research phase
  • UI/UX design
  • Coding and testing
  • Product launch, maintenance, and update.

Let’s discuss the intricacy of each step:

Step 1: Idea Generation and Validation

At the onset of your SaaS development steps are product validation and ideation.

By ideation, we mean generating ideas and communicating them with SaaS developers.

Validation, on the other hand, verifies the viability or prospect of the idea before core development starts.

It answers the question: Is your SaaS idea implementable?

Although the startup validates the business prospect, the saas development company understudies the technical viability.

Here’s a checklist of Idea generation and validation processes:

Let’s break down what each process means:

Idea Generation and Validation Steps Description
Create a SaaS Idea Your saas idea should be tailored around solving a specific problem within a niche. Brainstorm with your team members and other trusted allies, and create a list of solutions.

Once you’ve identified a preferred solution and niche, the next is to create a proof of concept.

Develop a proof-of-concept A proof of concept is a prototype (preferably paper-based for this stage) that illustrates your idea.

The efforts here are primarily to determine the prospect of Saas development from a business point of view.

Validate your idea The Saas development team will break down the intricacy of your idea into features and functionalities.

The viability of creating each feature will be considered and used to determine the achievable goal.

Iterate and improve You can either scale your software-as-a-Service app idea to the development team, improve on your idea, or ditch the idea totally.

Once the idea is generated and validated both business-wise and technically.

The next step in how to develop a software as a service app is UX/UI design. Let’s discuss this next:

Step 2: UI/UX Design

This stage is the process where a SaaS UI/UX designer creates a pictorial view of what the idea will look like using professional tools like Figma, Adobe XD, Marvel, Craft, etc.

UI and UX design stand for two things:

  • UX design entails creating a map of the experience users will get from navigating every page of the solution. The bulk of the task here is research-based.
  • UI entails the design of icons, pages, backgrounds, colors, and other elements based on the result from the UX research phase.

It’s worth of note that every item designed here will directly influence saas development costs.

Although an icon may be designed in a breeze, the developer must write code lines to implement it.

Be careful to ensure your design from this stage stays within budget. At the end of this step, you should have the following deliverables:

  • Wireframes: A low-fidelity visual representation depicting the structure and layout of all pages in the SaaS application. Wireframes are made for varying screen resolutions.
  • Prototypes: An interactive design that lets the team navigate through the app in real-time, thereby, understanding how user interaction and experience will look like.
  • Design mockups: These are high-fidelity visual representations of a saas application. They’re usually designed after inculcating corrections made after wireframe design.
  • Style guides: This is a document detailing the design elements that should be implemented during development. Consider this as a note to the SaaS developer on key aspects not to miss.

The specifics of deliverables from the SaaS UI/UX design phase will be based on your Software-as-a-Service project’s business needs and technical requirements.

Once all deliverables are intact, the next logical step is coding. Let’s delve into more details of this:

Step 3: Development and Testing Phase

This phase aims to code all requisite features and elements in the design, turning the SaaS application idea into a live solution.

The phases here are pretty straightforward:

  • The tech lead receives the Software-as-a-Service design from the UI/UX expert
  • The tech lead drafts the SaaS architecture
  • The backend developer writes server-side code required for the solution to function
  • The frontend developer write client-side code for the aesthetics and user interaction
  • QA tester runs requisite test for bug fixes, and discover vulnerabilities
  • The project manager ensures overall deliverable adheres to the founder’s expectation.

The development and QA testing stages are pretty technical.

So we’ll delve into it for a better overview:

Phase Description
Backend Development SaaS backend development includes creating and maintaining databases, servers, and infrastructure that powers the app.

The backend developer here:

  • sets up and configures the servers
  • implements database schema
  • Maintains deployment pipeline
  • Creates APIs for data manipulation.

The backend development ensures that the SaaS application is secure, reliable, scalable, and maintainable.

The backend of the SaaS solution is treated as a separate entity.

Frontend Development Software-as-a-Service frontend development entails creating client-side components for SaaS applications.

Client-side components render user interfaces and handle interactions within the browser.

The frontend developer here:

  • Implements the visual and interactive elements of the application
  • Integrating with backend API
  • Optimizing the application’s usability and performance.
QA Testing SaaS testing includes system testing and performance testing that evaluates the functionalities in your software to determine its quality per business needs.

Once this step is done, the next step is to launch your product and maintain it for guaranteed uptime.

Let’s dig into this:

Step 4: Product launch, Maintenance, and Update

The DevOps engineer will deploy the SaaS application on a suitable SaaS hosting platform in this step.

The most popular saas application hosting platforms include:

  • Cloud providers: You can launch your solution with cloud providers like Google Cloud Platform (GCP), Microsoft Azure, and Amazon Web Services.

    These providers will offer you load balancers, databases, and storage that you can easily configure.
  • Container orchestration platforms: Platforms like Docker and Kubernetes allow you to manage containerized SaaS apps. This is an excellent option for a SaaS platform with microservices.
  • Virtual Private Server: A VPS allows renting a server to host your traditional Software as a Service solution. This option gives you more infrastructure control than other options on this list. Thus, you can manage your server’s security and updates.
  • Private Data Center: This option entails hosting your own saas application data center. This offers you improved control of your environment, but also more expensive.

Once the product is live, maintenance begins.

This is where more startup founders make mistakes, as they lack a budget for maintenance.

It’s essential to have a budget from the onset.

Ideally, your SaaS maintenance budget should be at least 25% of the total development budget.

If your entire marketing budget is $100,000, the yearly maintenance budget should be at least $25,000.

You should regularly make updates based on feedback and the latest technological trends.

Now that you’re very acquainted with creating a SaaS application.

We’ll delve into some development challenges you may encounter.

SaaS Development Challenges

Let’s discuss potential challenges your startup might face:

Challenge 1: Ensuring the Platform has Regular Uptime

It’s essential to ensure regular uptime during SaaS mobile application development.

By uptime, we refer to the accessibility available to your target audience.

A key challenge to ensuring regular uptime is designing and creating a system that can withstand unforeseen pain points.

This includes designing systems with top-notch redundancy and failover capabilities to switch components in the event of a failure.

A way to ensure this is via multiple data centers in different locations, such that if one experiences downtime, the other will be available.

Monitoring and maintenance are other aspects of ensuring uptime.

A team is required to regularly monitor the system for potential issues, schedule and undertake regular updates.

Additionally, you should regularly schedule load testing procedures to ascertain that your infrastructure can handle expected traffic and regular disaster recovery tests so that redundancy systems and failover work effectively.

Overall, surmounting this challenge requires top-notch engineering and design strategy, regular monitoring, good maintenance, and robust response and disaster recovery processes.

Another challenge you’ll face while figuring out how to make a saas product is implementing a required security strategy. Let’s discuss:

Challenge 2: Implementing Robust Security Protocols

Implementing a suitable security protocol for a SaaS application requires a comprehensive approach.

Security challenges to address during SaaS web application development are:

Security Strategies Description
Data Encryption Secures sensitive data like financial transactions and personal information. You’ll need to encrypt data in transit and at rest.
Authentication and access control SaaS applications have multiple users with different access levels and roles.

Implementing an authentication model that restricts control based on features paid for is essential.

Also, ensure that only authorized users can access data.

Network Security You can access SaaS solutions on the internet, exposing them to web-based threats. Implement prevention systems to protect your platform users.
Compliance laws When creating a SaaS product, ensure compliance with regulatory laws. Common compliance laws to watch out for are GDPR, PCI-DSS, HIPAA, and SOC2.

Another challenge in saas mobile application development is integrating with third-party services. Let’s dig into this.

Challenge 3: Integration with Third-Party Services

SaaS solutions integrate with third-party services to power the core of the solution for authentication or any other functions.

One main challenge here is ensuring SaaS application development reliably and securely exchanges information.

Especially when dealing with data formats, API protocols, and authentication mechanisms.

An example of where third-party APIs are needed is the payment system. However, the technical requirements are very complex.

Some examples of payment solutions integration for SaaS are Skrill, Braintree, PayPal, Stripe, etc.

And due to a complex procedure, these payment platforms have documentation guides for easy implementation.

The best way to overcome this challenge is to hire a seasoned SaaS development team.

Challenge 4: Scalable Infrastructure Requirements

Scalable infrastructure is important in software-as-a-service development. It guarantees successful growth.

By scalability, we mean the ability of the SaaS infrastructure to handle increasing traffic and load, while performing effectively.

As it relates to SaaS development, this traffic and load come from an increasing user-base, and data volume.

One problem here is predicting the infrastructure required for future user volume.

If you don’t design with scalability in mind, it’ll be difficult to increase your services.

There are options to increasing your SaaS scalability, this include:

  • Vertical Scaling-This approach includes increasing the capacity of your SaaS. It’s a short term approach.
  • Horizontal Scaling- This method includes increasing the number of hosting servers in your infrastructure. This way, your infrastructure can handle more requirements.
  • Auto Scaling- This uses cloud computing to add and remove features needed to scale, prevent over-allocation, and over-provisioning.
  • Microservices architecture- This type breaks down monolithic applications into smaller, independent services that you can scale independently. This way, you can scale specific applications you need, not the entire system.

This is a continuous process that requires a dedicated maintenance team.

You now know the challenges you might experience in SaaS mobile application development.

Let’s discuss how much the endeavor will likely cost.

How Much Does it Cost to Develop a SaaS Application?

The typical SaaS application development cost ranges anywhere from $35,000 to $170,000 and can also exceed $300,000 in case of customized complex apps.

The exact SaaS development cost depends on a range of factors, primarily the location of the developer.


Due to differences in the cost of living from one region to another, developer rates vary from country to country.

This creates an avenue for Startups in high-income earning countries to hire dedicated SaaS developers from low-income countries.

Let’s discuss the cost per country.

For illustrative purpose, we’ll assume that you’re creating a SaaS solution of average complexity:

Country Cost
United States $300,000
United Kingdom $250,000
West Europe $200,000
East Europe $150,000
India $65,000

As you can see, the cost of development in the USA is almost 5X more expensive than for India.

Even though the tech stack, skill-set, and quality of deliverable is the same.

Need to know the exact cost of creating a SaaS product?

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Your knowledge isn’t complete without knowing how to find the right saas team members.

Let’s dig into this:

How to Find the Right SaaS Development Partners?

The quality of your saas solution depends on your partners skillset, and development methodology.

Here are some tips to find the most ideal software-as-a-service development partner:

Tip #1: Opt for a Partner With Relevant Experience

Ensure that your partner has experience creating a similar SaaS product that you’re trying to create.

This ensures that they have the requisite skill set, and knowledge to guarantee success in SaaS solution web development.

Tip #2: Consider their Technical Capabilities

Test your prospective partner to ascertain their understanding of your preferred tech stacks.

This includes frameworks, and programming languages. Also consider their experience with cloud infrastructure.

Tip #3: Check their References

Ask their past clients for references. You may also take a glance at their SaaS development case studies to understand how they work.

Statistically, 80-85% of successful B2B purchases happen via references, thus, you may consider this option.

Tip #4: Don’t Focus on Low Cost

In Software Development, low cost sometimes means poor quality.

Thus ensure you know the reason why they’re offering you a low saas development price in comparison to other options.

A valid reason will be the country of development or first-time discounts.

Tip #5: Sign Requisite Agreement

Before work commences, it’s best to first sign requisite agreements like NDA, Statement of Work, Data Processing Agreement and other documents suggested by your legal team to ensure your interests are well covered.

Not signing certain documents may justify data leaks etc.

Additionally, let’s consider some frequently asked question related to how to build a SaaS product:

Frequently Asked Questions on SaaS

How Much Does it Cost to Develop a SaaS App?

For basic SaaS product development with small features, and a small user base, cost ranges between $20,000 to $50,000.

More complex applications range between $100,000 to $500,000.

The cost of creating a SaaS application varies widely based on a range of factors like the complexity of the features, functionality required, compliance laws, hosting platform, and seniority of developers.

How Long Does It Take to Build a SaaS App?

The development lifecycle for creating a SaaS app goes thus:

  • Basic complexity: 8-16 weeks
  • Average complexity: 16-32 weeks
  • Advanced complexity: 32 weeks and above.

It’s worthy of note that creating a SaaS solution is pretty cumbersome, as the SaaS development agency may undertake multiple rounds of design, development, testing, and deployment before launch.

This might add extra time to the initial development schedule.

What are the Most Common SaaS Applications?

There are multiple types of SaaS products, and we’ll give SaaS examples based on a range of categories:

  • Collaboration tools: Asana, Microsoft Office, Google Workspace, Figma.
  • Communication platforms: Microsoft Teams, Zoom, and Slack.
  • Customer relationship management (CRM): HubSpot and Salesforce.
  • Human resources management systems: ADP and Gusto.
  • Marketing automation, analytics, and optimization platforms: Mailchimp, Google Analytics, and Hootsuite.
  • eCommerce platforms: Magento, BigCommerce, and Shopify.
What is SaaS Application Development?

SaaS app development is a process of creating a delivery model where an application is hosted by a solution provider, and made available to users over the internet.

Ready to Create your Own SaaS Solution

Reading the article on how to develop a SaaS solution up to this point shows that you’re keen on owning a software-as-a-service solution.

And we’re here to help you attain that aim.

At Intelivita, we have almost a decade of experience building complex solutions for SaaS startups in multiple niches.

Doubt our expertise? Read through our reviews on clutch, and portfolio for better conviction.

Reach out to us today to get started.

Bonus Infographic

Here is a summary of our detailed guide on “How to Create a SaaS Application”, Learn the highlights of developing a SaaS application, benefits of creating a SaaS app, steps to build a Software-as-a-Service Mobile Application, the cost of creating a SaaS application, and more.

Infographic image displaying what is Software-as-a-Service development, key concepts of SaaS development such as Characteristics, Statistics on SaaS, and how SaaS development differs from web application development. Along with, the benefits of SaaS Application Development. Moreover, How to Develop a Software-as-a-Service. Furthermore, challenges of SaaS development. Together with, the cost of making SaaS mobile application. And How to Find the Right Software-as-a-Service development partners.


Tuhin Bhatt is a co-founder of Intelivita, a leading Web and Mobile App Development Company. He helps passionate entrepreneurs build amazing tech products. Tuhin being a peoples man who has a passion to share his technical expertise with clients and other enthusiasts.

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