SaaS (Software-as-a-Service) is an approach to digital development, which is gaining traction these days. Saas application development is forecast to be used by over 80% of mobile startups by the end of 2022.
One of the fundamental purposes of SaaS is to allow companies to build and maintain products without the expense of creating a custom tech skeleton from scratch.
Cloud-based storage and technologies can be used to build SaaS-based applications using a small budget.
As SaaS is an extremely profitable business area in 2021, the question of how to create a software as a service that could overcome the competitive challenge and stay reliable is rising the agenda.
This article will explain why SaaS is an amazingly cost-effective, agile, and highly accessible business service. The advantages of a SaaS-based system will become more feasible for programmers and startups alike.
Checklist: Before Building a SaaS Application
The idea behind a SaaS-based business is to optimize the resources of its customers. The approach helps startups and corporations to stay cost-effective investing zero capital into custom tech solution development.
Usually, SaaS vendors provide users with ready-made solutions, continuously upgrade the technology, maintain the tool, and support customers 24/7.
How to start a SaaS business? Taking into consideration the future product and business, you must clarify all pillar points. Among the most critical issues that will increase or decrease your chances of success are the target audience, the monetization model, promotional strategies, budgets, and technological capabilities.
Second, Saas application development has its technical specifics, which will influence your budget and team requirement greatly:
- Single- or multi-tenancy architecture (the second one is cheaper, while the first is more secure)
- Guarantees of data of security (higher security level is more expensive and might limit a partners’ scalability options)
- The number of features
- Service upgrade frequency
- Integration with other services using API (up to 90% of SaaS solutions are integrational)
- Monetization concept (subscription, one-off payment, custom packages)
SaaS technologies have proven to be profitable for SaaS companies by learning their target customers’ needs and testing new trends and systems. At the same time, more companies are focusing on niche market SaaS products.
Step 1. Research the market
Artificial intelligence (AI), niche-oriented strategy, increasing mobile apps’ profits 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.
The more you know about your target audience, the more we advise you to understand their needs and fears.
Additionally, you need to define your product from a Job-to-Be Done (JTBD) perspective and then determine what monetization approach will work for you.
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 explain in what circumstances your potential customers could conveniently use your product.
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.
Technology and SaaS Architecture
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 invest in research and tech experiments, track innovations, optimize resources, and monitor users’ needs to stay competitive.
There are several critical features of SaaS products. These will depend on your product type, market research, or even the development budget you have available.
Challenges of SaaS Development
The SaaS application development concept is to sell digital services instead of products. It sounds like nonsense for today’s user to buy a program on physical media without the ability to continually update the product software. The SaaS approach is a good alternative for both developers and users.
One common commercial model is a subscription. Users purchase access to the cloud service on the Internet and use it online and offline without purchasing additional hardware resources. That’s why a SaaS developer is expected to find the solution of keeping the service sustainable and performing competitively, storing data securely, and reducing the risk of system failures that could lead to client data corruption.
There are four challenges of SaaS software development you should consider at a very early stage:
Challenge #1. Scalability
To grow your business, you need a scalable tech stack. Both SaaS startups (whose performance will slow down as the number of customers grows larger) and SaaS clients (whose businesses will cease to exist if the cloud service shuts down due to overload) suffer from this.
Despite vertical development being a trend in the digital world, the target audience’s size still presents an issue. If you have a niche SaaS product, you might not be able to cover business maintenance costs with your customers.
Challenge #2. Security
It is your responsibility as a vendor to protect customer data. The cloud service security may fail, leading to bank information leakage, personal data, commercial secrets, and more. If you are found guilty in these cases, you will lose not only your business but you will also have to pay an enormous fine.
Challenge #3. Reliability
AWS SaaS architecture is considered to be the most reliable platform for cloud software maintenance. The system relies on physical servers located in specific geographical locations and is vulnerable to damage from a fire, a flood, an explosion, or simply because of human factors.
One of the most significant advantages of AWS is that it takes care of its hardware, and it copies all the information securely.
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 quickly by switching from one plan to another.
Another issue is trust. Since SaaS tools require clients to store their information somewhere else (not on their hard drive), clients have a diminished sense of security. A positive reputation may help you gain many customers by establishing a brand and working hard on a positive reputation.
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
The cost-effectiveness of SaaS products is the reason why people choose them. Businesses and 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 specific solutions are applicable.
Simultaneously, the provider’s service mustn’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.
How to Build a SaaS Business? Monetization Models
Analyzing cloud services like MailChimp, Salesforce, Twilio, or SurveyMonkey, you might notice several approaches exist to maintain the SaaS business.
Choose your model considering project timelines, budgets, and marketing expectations. Here, we provide you with the most common monetization concepts. Consider that many successful businesses mix them to avoid significant financial risks.
Free service, ads included
Your app will reach lots of users as it is free. A real-time marketing survey is an excellent way to test your marketing hypotheses.
Simultaneously, in-app advertising is the easiest way to monetize your product (in-app service vendors also work according to the SaaS concept). Another advantage — you’ll get your revenue immediately. However, in-app ads could make the UX look poorer.
What is the best way to build a successful SaaS business which generates revenue? Provide users with the basic functionality for free and then offer them access to premium features for an additional fee.
There are many Freemium apps available, but the full functionality requires subscription plans.
Freemium apps attract users due to their accessibility to many. However, it can be challenging to decide whether a feature should be paid for or free.
Our Saas product Simba Studio uses the freemium model. Click here to learn more.
How to start a SaaS business if you are aiming to satisfy premium users’ needs? Establish a service subscription system and provide customers with access to your services limited by time, not by function.
A one-time payment model is not so popular these days, given that your SaaS environment needs to be updated continually. To make software payment sustainable, you need to expand your customer base and raise your prices.
There’s another problem with that model: not everyone’s ready to buy a product they can’t try beforehand. Develop your brand image so that your objections will be minimized. Free trials may also be accessible for you.
A business field to consider in 2021 is SaaS platform development. By the end of the year, SaaS is expected to generate $157 billion in revenue and become essential to 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.
Machine learning and AI development, blockchain technology, and mobile-first approaches will dominate the field quite soon. However, there is still room for your cloud service startup.
Specific technical requirements should be considered when outsourcing SaaS development, including programming language, database, queueing system, and server specifics. You’d have a hard time finding a digital engineer with pure SaaS experience; that’s why you need a minimum tech stack experience to select the right specialist in the global talent pole. Don’t worry about it. Experts are on the job. Contact us!