How to Build Software as a Service (SaaS)
How to Build Software as a Service (SaaS)

The SaaS (software-as-a-service) market is booming, with a projected value of $908 billion by 2030, boasting an annual growth rate that’s expected to increase from 18% to 18.7%. More and more companies are opting for the SaaS model due to its cost-cutting benefits, improved scalability, and enhanced security. So, if you’re curious about how to build a SaaS product, this article is here to help.

Advantages of SaaS compared to traditional applications

SaaS, short for Software as a Service, is a model where software applications are hosted on the internet rather than on an organization’s in-house servers. Users typically pay a regular subscription fee to access a SaaS software product through a web browser or a dedicated application. This approach offers several advantages over traditional on-premise software. The primary benefit is that users can access the application from any device with an internet connection without needing to install anything. They can also start or stop using the product at their convenience simply by canceling their subscription. From a business standpoint, SaaS development brings significant cost savings by eliminating the requirement to establish IT infrastructure. Moreover, it simplifies software updates, allowing developers to work on improvements without disrupting users. This ensures uninterrupted software usage and no loss of revenue during the update process.

Key SaaS Statistics

What should you know about the SaaS sector?

  1. Recurring Income: SaaS products offer a steady income stream thanks to their subscription-based model. This makes it easier for businesses to plan ahead and invest in growth.
  2. Low Initial Costs: SaaS development eliminates the need for hefty investments in hardware and software infrastructure. This simplifies the adoption of SaaS products for customers and reduces entry barriers.
  3. Scalability on Demand: SaaS can easily scale to accommodate a growing user base without requiring significant infrastructure investments. This is especially beneficial for startups and expanding businesses.
  4. Global Customer Reach: SaaS software is accessible from anywhere with an internet connection. This allows businesses to reach a broader market.
  5. Automatic Updates: SaaS providers roll out updates and improvements to all users. This ensures your product always stays up-to-date with the latest features, security fixes, and bug repairs without the need for manual updates.
  6. Security: SaaS products benefit from centrally controlled hosting and regular security updates, reducing the risks of piracy and hacking. Additionally, subscription-based access discourages unauthorized copying since it doesn’t grant access to the product.

Different Types of SaaS Applications

To understand how to build a SaaS product that resonates with your target audience, explore the main types of software-as-a-service on the market:

  1. Customer Relationship Management (CRM) Software: These SaaS apps for businesses help build customer connections and improve their marketing strategies. A famous example is Hubspot.
  2. Content Management System (CMS): SaaS offers content management and publishing capabilities. is a prominent example of a CMS SaaS.
  3. Enterprise Resource Planning (ERP) Software: These complex solutions help big enterprises manage different business processes, including manufacturing, commerce, reporting, sales, supply chain, human resources, etc. The most well-known examples include Oracle Netsuite, Microsoft Dynamics 365, and SAP Business One.
  4. Accounting Solutions: They simplify and automate accounting and financial processes in your organization, often including billing and invoicing. Zoho is one of the first SaaS billing tools that come to mind.
  5. Project Management Software: Trello and Jira are examples of solutions that assist businesses in managing workflow and engaging with team members in a shared workspace by dealing with task assignments, resource allocation, and project tracking.
  6. Vertical SaaS Tools: These solutions are created for a particular industry. Alternatively, they can be designed to optimize specific business processes. We should also mention Veeva for pharmaceutical management, BioIQ for MedTech, or Guidewire for insurance.
  7. E-commerce Software Solutions: Online retailers need such products to manage products, inventory, shipping, and taxation. The most popular e-commerce software products are BigCommerce and Shopify.
  8. SaaS Marketing Tools: These instruments are used to help organizations execute their marketing strategies and campaigns and track the success of their business. They include analytics tools (Google Analytics), social media management platforms (HootSuite), SEO toolkits (SEMrush), etc.
  9. SaaS Tools for Remote Collaboration: This SaaS product type embraces different kinds of solutions, such as cloud storage and file-sharing applications (Google Drive), time-tracking tools (Harvest), online chats (Slack), and video conferencing instruments (Google Hangouts).

How to Build a SaaS Product: Main Steps

Now, let’s look at specific actions you should take if you wonder how to build a SaaS product for your business.

Step 1: Confirm Your Idea’s Viability

Validating an idea for a cloud-based product is crucial to ensure you build something that meets real needs and has a potential market. This way, you avoid investing time and money in something that no one will buy.

Here are the main steps to properly validate your idea:

  • Research the market.
  • Identify the target audience.
  • Evaluate the existing products in the market and assess their strengths and weaknesses.
  • After completing these steps, you can start shaping your product concept, which will serve as a blueprint for development, marketing, and execution.

Step 2: Select Features of the SaaS Product

To excel in the SaaS business, it’s essential that you provide users with features that set your solution apart from similar products. Before diving into SaaS application development, conduct a competitive analysis to define the functionality customers want, increasing your chances of becoming an industry leader.

Step 3: Choose a Monetization Model

Now, let’s delve into how to develop a SaaS application that generates a stable income. Selecting the revenue model may be tricky. As you build a SaaS product, you need to strike the right balance between offering value to customers and ensuring you receive fair compensation for your product while maintaining competitiveness.

Here are some of the most popular pricing models to consider:

  • Per-user pricing.
  • Tiered pricing.
  • Per storage pricing.
  • Feature-based pricing.
  • Pay as you go.
  • Subscription.
  • Freemium.
  • Ads-supported pricing.

Helpful Metrics

If you want to know how to create a SaaS application that will help you grow your cloud business, keep in mind two metrics defining the success of your SaaS business. These are customer acquisition cost (CAC) and customer lifetime value (CLV).

Step 4: Choose the Right Technology Stack

Choosing the right technologies is fundamental to figuring out how to build a SaaS product that can efficiently handle growth and a growing number of simultaneous users.

Step 5: Create a Product Roadmap

Now that you have established a product vision and identified and prioritized features for your product, it’s time to estimate the project scope and start building a roadmap. It will provide you with guidance on how to build your SaaS product, ensuring alignment with your vision and user needs.

  • Plan the development process in iterations.
  • Set deadlines and milestones.
  • Identify key performance indicators.

Step 6: Build the Minimum Viable Product (MVP)

Creating a minimum viable product (MVP) is one of the most critical stages of how to build a SaaS product. An MVP is a basic version of your product with only essential features that allow users to solve their primary problems. It is a valuable strategy for verifying your business concept and gauging initial customer interest.

Step 7: Launch and Promote Your SaaS Product

With a functioning MVP, it’s time to launch your SaaS product to the public. This process involves technical tasks such as hosting and deployment. Simultaneously, marketing and sales teams should start promoting your product.

Step 8: Collect and Analyze User Feedback

After launching your SaaS product, actively gather user feedback and address any issues promptly. This is a crucial step in how to build a SaaS product that evolves and improves over time.

Step 9: Continuous Improvement

Never stop improving your product. The SaaS model thrives on frequent updates and enhancements. Listen to your customers, analyze data, and adapt to changing market conditions.


Building a SaaS product is an exciting journey. By understanding the market, identifying user needs, and following a systematic development process, you can create a successful SaaS product. Remember that success in the SaaS industry often depends on continuous improvement and staying responsive to user feedback. So, if you’re considering how to build a SaaS product, remember that it’s not just about the initial development, but the ongoing commitment to delivering value to your customers.

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