How to Build a SaaS Product in 6 Steps

Are we moving at the same pace as the world is changing around us? Do you think traditional approaches to on-premises computing will be delayed? Entrepreneurs around the globe are asking themselves this same question due to cloud computing’s explosive growth – Cisco Annual Internet Report predicts 75% of total cloud computing workloads and computer instances will be SaaS models by 2022.

What is the best way to create a SaaS product? As a custom software development company, we’re eager to share our expertise in customized SaaS development. You will gain insight into what SaaS technology can do, how to develop an app using it, and why having one is essential for running and developing businesses.

What is a SaaS item?

SaaS stands for Software as a Service, or cloud computing. In this model, software that’s ready-to-use is provided through Internet connectivity on a monthly subscription basis. Customers have access to the software using any device equipped with an internet browser and connection.

SaaS provides an attractive option to save on hardware costs since software and data are stored at remote data centres. As a result, SaaS users don’t need to worry about maintenance, compliance or security issues – thus cutting down on initial startup costs in the long run.

Modern SaaS technology is used in an array of solutions. It allows the creation of platforms that connect apps, integrate Internet of things (IoT) solutions, and analyze massive data sets. IoT as well as big data are considered among the top technology trends; therefore, learning how to develop a SaaS service could prove profitable investment for businesses.

According to Gartner’s study, there are various measures of SaaS recognition and its global size. As shown below, Gartner anticipates a steady expansion of this market between 2020 and 2022.

MarketWatch projects the global SaaS market will reach $703.19 billion by 2030, growing at an annual compound growth rate (CAGR) of 18.83 percent from 2022 until 2030.

Most of you have likely encountered some of the most popular SaaS products. Google Docs is perhaps one of the best known, being part of their Drive service and accessible online.

Other prominent SaaS providers include the top three market leaders:

Salesforce; Oracle; Amazon; Google; IBM; Slack; Microsoft; HubSpot; Shopify and Figma are just a few of the cloud-based solutions that you can choose to launch your SaaS company with. However, you must be aware of any errors and take action before they lead to closure.

Let us investigate the reasons for the startup’s demise.

  • There is a lack of market demand
  • A business model that fails to generate profitability
  • Marketing Ineffective
  • Poor Product Idea
  • Lack of Funds

For further insight on why startups fail and how to prevent them, we suggest reading up on Why SaaS Startups Fail and Learn Lessons.

The SaaS model offers several advantages over traditional business models.

To understand why SaaS-based solutions have seen such rapid growth, we’ve identified their primary advantages. These insights will bring you one step closer to mastering how to create a product for this channel. Let’s take a closer look at them now.

  • Quick Set-up

Cloud environments from vendors enable both hosting and installation of software, making the deployment process quicker than with traditional on-premise models.

  • Cost Efficiency

The on-premise model allows for an upfront license fee, while SaaS provides very straightforward subscriptions.

Salesforce for instance offers their customers the following pricing plans:

Customers don’t need to purchase or install upgrade packages in order to have the most recent version of a SaaS product. Instead, customers can enjoy continuous updates throughout their subscription.

  • Flexible Subscription Models

Software-as-a-service vendors offer various subscription models tailored to any company’s evolving requirements.

If you want to understand how to create an SaaS product with success, you must examine its major elements. Let’s break down this method into manageable chunks so that we can all gain insight into its workings.

How can you build an SaaS solution from scratch?

1. Research the market
First and foremost, you must decide if developing a SaaS product is an appropriate idea. Consider which market segment you would like to target and, if traditional approaches are preferred, evaluate their advantages as well.

Before you launch your SaaS application, it is essential to be informed about the state of the market. Ask yourself pertinent questions such as:

  • Who are your ideal customers?
  • What are their primary concerns?
  • Who are your main competitors?
  • What are the most distinguishing or distinguishing characteristics they share?
  • What business models do they employ?

This will enable you to identify the market’s high-level needs. Craft a market description that effectively expresses your idea in concise yet captivating language so customers are motivated to choose your SaaS application over others.

Market analysis can assist in recognizing potential business opportunities and helping you determine those which are suitable for you. By studying your competitors’ successes and failures, you can identify the most suitable strategies to develop SaaS offerings and learn how to create a cloud-based solution that is highly sought-after.

Slack’s meteoric rise as an intra-company messaging platform is well documented. From March 2020 until April 2021, the SaaS-based platform earned 902 billion dollars in revenue. Today, Slack boasts 12 million daily active users and 156,000 companies have signed up for service.

Stewart Butterfield, founder of Slack, believes that when crafting a go-to market strategy for cloud-based products, it’s essential to create something distinctive from competitors’ offerings. Furthermore, the product should play an integral role in the lives of your target customers.

Stewart Butterfield highlighted three improvements Slack has made, such as search, sync and file sharing, that have enabled it to become a leader among similar companies. Therefore, you stand a good chance for success by focusing on what matters most to your users.

2. Construct a business plan.
A business plan is your road map to developing the ideal software-as-a-service product. Let’s examine the essential elements you should include in this document in order to decide the most efficient way of creating the ideal SaaS offering.

What sets your product apart? Your company’s identity is what you strive to give clients, so try explaining your offering in one sentence so it sticks in their mind.

What are the primary problems your prospective customers are facing and how can your solution address them? Identify which problems you hope to solve with your product.

What is the most effective way to reach your desired audience? Select a marketing strategy for your promotion, including content marketing, social media management, advertising and partnerships – there are endless possibilities here.

What is the best way to profit from SaaS services? Determine your monetization strategy. Consider various subscription plans and advanced support packages, as well as certain types of upgrades. Freemium may be an attractive option, as can flat rate pricing, usage-based, tiered or per-feature pricing structures.

Which area do you need financial protection and how will the money be put to use? Estimate your primary expenses and divide them into distinct categories. Furthermore, decide the sources of funding for your venture: personal budget, investments or crowdfunding could all be options.

Which objectives must be accomplished to reach your objectives? Moreover, create a list of essential goals for the first months of your business venture.

Plans will likely need to be adjusted, but it is a crucial step for determining what needs to be done to build your SaaS product with success.

Shopify is an online company that creates software to support both physical and online retail stores. It has quickly gained a reputation as one of the premier cloud-based platforms available today.

Shopify’s total revenues during its first quarter in 2021 totaled $988.6 millions, reflecting perfect alignment between its vision, objectives, business model, and product range.

3. Define SaaS Requirements
SaaS Cloud Computing with SaaSCloud computing systemschliesslich, each SaaS product must include some core functions to function optimally. Let’s examine these crucial requirements in more detail.

Multi-tenancy: Each customer, or tenant, has access to its own instance of the application and database. This model offers cost efficiency by cutting down on maintenance expenses for SaaS applications while adding more computing capacity.

Self-service provisioning is a method where services are delivered through automated procedures, increasing efficiency and making the process dependable, robust, and adaptable.

Security must be guaranteed. SaaS solutions incorporate encrypted user data and application security, providing protection against a range of security weaknesses. Key features like access control, identity management multi-factor authentication and step-up verification also contribute to this level of protection. It’s essential for SaaS applications to provide session management as well.

Monitoring user activity. Audit logs provide insight into changes and prevent intrusion attempts. They play a significant role in protecting data as well as addressing access and integrity problems.

Gain more specific features by studying your competitors’ offerings. Create a list of features that are essential for your market by analyzing the competitor’s SaaS offerings. Make sure to distinguish between features that help customers meet their needs and those that are nice-to-haves.

HubSpot is an example of a “fully integrated” company. Its products are accessible at every stage in its SaaS business model. This provider can offer you everything from its Social Media Marketing Platform, Content Management System (CMS), Email Marketing Tools to Analytics Suite.

Your list of features should serve as the foundation for creating a Minimum Viable Product (MVP) for your SaaS application. We’ll cover this further in Step 6.

4. Select a technical stack.
A technology stack is an arrangement of frameworks, programming languages and software tools used in software development. Today’s modern world provides many options to choose from when developing software applications.

That is why creating an SaaS product and setting up its solution stack can be quite a challenging endeavor. Additionally, your business requirements must also be taken into consideration; there is no one-size-fits-all answer as to which tools and frameworks you should utilize when developing cloud solutions.

Let’s examine the essential SaaS application development elements and the top solutions to address them.

  • Front-end

The front-end developer is responsible for creating what users see on their screens. To accomplish this task, you’ll require modern JavaScript frameworks that meet SaaS requirements like React, Angular or Vue.js. We recommend React over Vue.js as it’s currently the market leading platform. When searching for lightweight and easy-to-maintain software, Vue.js should also be taken into consideration.

  • Back-end

Back-end development is the responsibility of the server side. Though it’s invisible to users, it creates the primary capabilities in SaaS products and manages their response. That’s why selecting an efficient framework such as Ruby on Rails, Node.js or Django is so important.

Our team is passionate about the Ruby programming language. We select Ruby on Rails to build cloud-based solutions that are cost-effective, quick to deploy and scalable.

  • Database

Databases provide the foundation of any application. We suggest PostgreSQL, MySQL or NoSQL as our preferred databases.Our choice for building a cloud-based web application is PostgreSQL, the most sophisticated open-source database.

  • SaaS Hosting Service

In order to meet SaaS requirements, any reliable cloud service such as Amazon (AWS), Google, Microsoft or Heroku can be utilized.

Amazon Web Services is our go-to choice due to its dependability, versatility and security.

5. Gather Your Team
The success of any product relies heavily on its team. But who exactly needs to put together such a team for a SaaS offering? What skillsets are necessary?

In order to launch a successful SaaS product, it is essential to assemble the following team members:

  1. Business analyst;
  2. Designer;
  3. Software developers;
  4. Quality assurance engineer or Quality assurance engineer, or both!

Project manager.Finding the best experts can be just as challenging as creating a plan for building an SaaS product. Here are three options you should consider:

Internal-team. While this might be the first option that comes to mind, don’t make any snap decisions about it just yet. Companies that have achieved success and are managing an ongoing workload well can benefit from taking this approach; it also gives you control over developing processes.

Freelancers provide the most cost-effective option, and often possess extensive expertise in certain fields and technologies. However, you must manage their work and monitor it regularly as there’s always the risk that they won’t deliver on promises.

Custom software development can be outsourced to a company specializing in SaaS solutions. This model offers the perfect balance between the previous options, being suitable for businesses of any size with various project objectives. A remote team offers high-quality service without needing you to supervise its tasks – you only pay for actual work completed!

Lack of experience within a team is often the culprit behind cloud-based product failure. Only skilled and knowledgeable personnel can guarantee deadlines are met and an end product meets quality requirements. That is why our team follows only efficient processes when creating SaaS solutions from scratch as well as maintaining and supporting them once they have been launched.

Our team consists of highly-experienced professionals, such as project managers and UX/UI designers. Additionally, we have quality assurance engineers and developers. We would be delighted to work with you on developing a cloud-based solution and bringing it into the marketplace.

6. Construct an MVP
Creating a Minimum Viable Product (MVP) is the single most essential step you need to take before launching your SaaS application and validating its business model. There can be no doubt about it: creating an MVP is an essential stage in software-as-a-service product development.

An MVP (Minimum Viable Product) is not yet complete, but it offers enough features to attract early customers and validate the concept. Once introduced into the market, MVP can be expanded upon and modified accordingly.

Though not a final product, an MVP can still address your customer’s most pressing need. An MVP must appeal to your target market’s needs and motivate people to love your product. The primary reasons for launching an MVP prior to creating the fully functional SaaS product include:

Analyze and collect comments and feedback. It provides invaluable information about usability as well as user experience. What were users’ favorite features, and what didn’t they like? What functionality should be enhanced/modified/removed?

Test it out. This allows you to determine if your application is suitable for the rapidly expanding SaaS market, as well as identify which type of customers will purchase your service. Is there enough demand for your app?

Test Different Ideas. MVP provides the chance to evaluate business hypotheses. Focus on the overall effect of your SaaS app, not just its features. Which path should you take?

We recommend creating an MVP to quickly garner feedback, test technical feasibility of a concept and then present it to investors. For example, we developed an MVP that made searching for accommodation easier for expats who had found work in Australia easier. The project’s purpose was to make it simpler for these individuals to complete the relocating process once they had found employment.


It is undeniable that the SaaS model has presented us with numerous business opportunities. To take advantage of them fully, read our step-by-step instructions on creating an SaaS product and customize it to make it stand out in the crowd.

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