How to Build a SaaS Product in 8 Easy Steps

June 21, 2023

In today's digital age, the demand for SaaS products is at an all-time high, but so are the expectations of discerning users.

The challenge of building a SaaS product lies in identifying a problem worth solving and crafting an effective solution that resonates with your target audience.

The lack of a systematic approach to building a SaaS product further complicates the development process, leading to wasted time, resources, and potential opportunities.

But, worry not - we have just the solution to guide you through the process of building a successful SaaS product.

In this article, we will outline the 8 crucial steps to follow on your path to SaaS product development and success.

So let's get started.

What Is a SaaS Product?

A SaaS product is a software application or service hosted on the cloud, allowing users to access the application without the need for installing it locally on their systems.

SaaS products are often multi-tenant, meaning multiple users or organizations can share the same software while keeping their data separate and secure. This shared infrastructure allows quick scalability, development, and maintenance, thereby significantly reducing costs for providers.

SaaS Market Overview

There are many reasons to create a SaaS product, but the most prominent one is the promising market.

The SaaS market has grown multi-folds over the past few years and expects even more substantial growth in the coming years. According to a market analysis conducted by Straits Research, the global SaaS market, which was standing at $161.2 billion in 2021, is expected to grow at a Compound Annual Growth Rate (CAGR) of 10.08% to reach $382.59 billion by 2030.

This, however, also means that the SaaS market is also highly competitive. Both established technology giants and emerging startups are vying for increasing their market share. Key players in the industry include Salesforce, Microsoft, Adobe, Oracle, SAP, Google, and many others.

Additionally, there are numerous smaller SaaS companies specializing in niche markets, offering vertical-specific solutions. For example, Toast specializes in providing restaurant management solutions. Their platform includes Point-of-Sale (POS) systems, inventory management, online ordering, and other features tailored to the needs of the food service industry.

Benefits and Challenges of Building a SaaS Product

SaaS solutions offer a plethora of benefits. However, you might also face some challenges in building a SaaS product.

Knowing about these benefits and challenges is crucial to building a successful product.

For instance, building a SaaS product requires you to abide by data security compliances. Knowing this in advance will let you secure the data you collect and share through your application from the beginning to prevent data breaches.

With that said, here are some benefits and challenges you may face while building a SaaS product:

4 Benefits of Building a SaaS Product:

  • Recurring Revenue: Instead of a one-time purchase, customers typically pay a subscription fee on a monthly or annual basis. This ensures a steady stream of income for developers.
  • Scalability: SaaS products are meant to scale quickly. With cloud infrastructure and on-demand resources (like storage capacity), you can handle a growing number of users without significant hardware investments.
  • Continuous Updates and Improvements: With a SaaS product, you have the ability to release frequent updates and improvements to your users. This ensures that your customers are always benefiting from the latest features, bug fixes, and security enhancements.
  • Faster Deployment: Developing a SaaS product enables developers to focus on building the product’s core functionality while leveraging existing infrastructure and services. This reduces the time required to develop, deploy, and maintain the product, allowing faster time-to-market.

3 Challenges of Building a SaaS Product:

  • Market Analysis and Differentiation: Conducting a thorough market analysis is crucial to understand your competition and to identify the unique value proposition of your product. Otherwise, it can be challenging to differentiate your SaaS product from existing solutions and demonstrate its superiority to potential customers.
  • Security and Data Privacy: SaaS products handle sensitive user data, so ensuring robust security measures and data privacy compliance is critical. Implementing proper encryption, accessing controls, and adhering to regulatory requirements like General Data Protection Regulation (GDPR) or California Consumer Privacy Act can be challenging and time-consuming.
  • Building the Right Team: The next major challenge is hiring the right developers for the project. Your SaaS product will be as good as your team. However, if you go with only experts, it will increase your spending. So you have to find a balance between the right expertise and your budget.

8 Steps to Build a SaaS Product

Now that you know about the common benefits and challenges of building a SaaS product, let's go through the steps you need to take to actually develop it:

#1. Conduct Market Analysis

Before building a product, you must know your customers’ wants and needs and your competitors’ weak and strong points.

This is where market analysis comes in.

Start by defining your objectives for the market research. Determine specific aspects you want to analyze, such as market size, customer demographics, competition, trends, or potential target markets.

Once you have a clear idea of what you want to achieve through market analysis, start gathering data. Specifically, collect both primary and secondary data to gain insights into the market.

Preliminary data is collected firsthand through:

  • Surveys
  • Interviews
  • Focus groups
  • Observations

Secondary data is existing information from sources like

  • Industry reports
  • Government data
  • Market research publications

Following, analyze market trends and assess the competition. This will help you find the perfect SaaS idea for your project. For instance, suppose you find that the need for remote collaboration software is rising, but most competitors limit the number of people joining a meeting. In this case, you can build a SaaS-based remote collaboration product that allows unlimited people to join a meet or an event seamlessly.

#2. Create a Business Plan

Creating a business plan is the next step in the journey to build a SaaS product.

This is a document that outlines your business model.

It allows stakeholders to understand the company's vision, market analysis, competitive landscape, marketing and sales strategies, and financial projections.

A well-written business plan will give your company credibility with investors, bankers, and other financial institutions.

To achieve that, begin with an executive summary that provides an overview of your SaaS product, including its purpose, target market, and value proposition.

The other details to add to the business plan are your company's description, the market and competition analysis you conducted, product description (including all the features, deliverables, benefits, etc.), marketing strategies, and financial projections.

Lastly, you must also add risks and mitigation strategies. This should include details about potential risks your SaaS product might face and how you plan to mitigate them.

#3. Define Your Requirements

The next step to building a SaaS product is to define your requirements.

This includes determining the product’s features, the kind of user experience you want to create, the resources needed for development, etc.

Creating a SaaS product roadmap can help you determine your requirements effectively. For instance, a roadmap will get you to prioritize the app’s features, set project completion timelines and goals, and assign tasks to different team members.

Based on this information, you can easily determine your requirements.

Consider this example - if the roadmap shows that you need to include seven features to the application within six months, you can evaluate the number of developers and the amount of money that will require.

#4. Decide on a Technology Stack

The next step is deciding on a technology stack. A technology stack includes all the SaaS development frameworks, front-end and back-end programming technologies, and databases you will use to build your software.

This is an important decision, as it will affect your ability to scale and maintain your product as well as the time and money you'll need to invest in the product.

For instance, the Linux, Apache, MySQL, and PHP (LAMP) stack and the MongoDB, Express.js, Angular, and Node.js (MEAN) stack are two of the most popular technology stacks for developing SaaS products.

The LAMP stack is very cost-effective, but it has some limitations when it comes to scaling and performance. However, the MEAN stack is a little costly but it is known for its ability to handle high scalability requirements.

For this step to be successful, you must understand your requirements well.

Consider factors such as the target audience, scalability needs, security requirements, performance expectations, integration capabilities, and development timeline. This will help you identify the key features and functionalities your technology stack needs to support.

#5. Build Your Team

Once you've got a product idea, a business plan, and the technology stack, it's time to build your team. The quality of your SaaS product largely depends on the skills and expertise your team members possess.

You can build three types of teams: in-house, freelancers, and outsourcing.

  • In-House Teams: In-house teams consist of full-time employees who work directly for your company. An in-house team offers advantages like direct supervision, alignment with company values, better collaboration, and long-term commitment.
  • Freelancers: Freelancers are independent professionals who work on a project basis. They are usually self-employed and can be hired for specific tasks or short-term projects. With freelancers, you get flexibility, expertise in particular areas, and cost-effectiveness.
  • Outsourcing Teams: Outsourcing involves hiring a third-party company or team to handle specific aspects of your SaaS product development. This option offers you various benefits like cost-effectiveness, timely deliverables, 24/7 support, access to specialized talent, and access to a pre-built team of experts.

#6. Build an MVP

A SaaS Minimum Viable Product (MVP) is the first version of your software, released too early adapters with only basic features and functionalities.

Building an MVP helps you “test” an early version of your SaaS product, gather feedback from users, and make any required changes, cost-effectively.

Your MVP should include just the basic features needed for users to get an idea of how your product would fit into their daily lives. For example, if you were building an app like Mint but for managing employee benefits, the MVP could include features like:

  • A dashboard where employees could see how much money they've spent on different types of expenses over time
  • An interface for adding new expenses or removing old ones
  • Basic reporting capabilities to provide insights on employee benefit usage
  • A responsive design that works well on different devices and screen sizes
  • Basic data storage and retrieval functionality for employee benefit data

Remember, an MVP's goal is to test your product's core value proposition. Hence, it should have limited features. Focusing on the essential features and functionality allows you to quickly validate your assumptions and make data-driven decisions for further development.

Learn about how much building an MVP costs you here! 

#7. Test, Test, and Retest

Once you have an MVP, it's time to test. When it comes to testing SaaS software, there are many types you want to consider.

The first testing you would want to do is functional. It involves testing the software's functionality to ensure it meets the specified requirements. It includes validating features, user interfaces, workflows, and integrations.

Next, you must do compatibility testing to ensure that the software works correctly across different browsers, operating systems, and devices. Similarly, even before launching your MVP, you should do performance, security, multi-tenancy, usability, regression, regulatory, and disaster recovery testing.

Once you have done all the above, test your product with actual customers. Launch your MVP and let early adopters use it. Run customer interviews and surveys to understand what they like and what they don't about the product.

Based on these findings, think of ways to improve the user experience and SaaS product.

#8. Iterate Based on the Feedback

The last step in building a SaaS product is to iterate based on the feedback. Once you have collected user feedback after launching your MVP, it is time to implement the most frequently suggested ideas in your next release.

This will help improve customer experience. It will also make your target audience feel like you are listening to what they have to say, which will foster a long-term relationship.

Keep in mind that improving your SaaS product is a never-ending process. For this reason, you should keep collecting user feedback and acting on it. You should also closely monitor changing market trends and key metrics like the number of users, most used features, etc.

All this data will give you insights into how you can improve your SaaS product in the long term.

5 Popular Examples of SaaS Providers

There are over 30,000 SaaS companies, with the US holding the largest share of around 60%.

Not to mention, many more startups are launching every day. But only a few of them become successful. Learning about the journey of the most successful SaaS providers and their applications can motivate you to build a SaaS product that’s just as great.

So here are some popular examples of SaaS providers

  • Salesforce: Salesforce is a leading customer relationship management (CRM) platform that offers cloud-based solutions for sales, marketing, customer service, and more.
  • Microsoft 365: Formerly known as Office 365, Microsoft 365 provides a suite of productivity tools, including Word, Excel, PowerPoint, Outlook, and cloud storage through OneDrive.
  • Google Workspace: Formerly known as G Suite, Google Workspace offers a collection of cloud-based productivity tools like Gmail, Google Drive, Google Docs, Sheets, and Slides.
  • Dropbox: Dropbox is a file hosting service that offers cloud storage, file synchronization, and collaboration tools. It enables users to store and share files securely across devices.
  • Slack: Slack is a collaboration hub that provides team messaging, file sharing, and integration with various apps and services. It enhances communication and collaboration within organizations.

Cost of Building a SaaS Product

The cost of building a SaaS product can typically range anywhere between $40,000 to $200,000. There's also a possibility that the price may exceed this range.

This is because there's no one-size-fits-all cost when it comes to building a SaaS product. The cost can vary greatly depending on several factors, including the product's complexity, the development team's size, the development approach, and the technology stack used.

The complexity of user interface and design, testing and quality assurance, cloud vendor, ongoing maintenance, etc., can all influence the development costs.

To get a better idea of how much your product will cost, start by building an MVP. Since MVP encompasses only limited features and is built quickly, the cost of SaaS MVP development is smaller, but can still give you an overall idea of where your product’s price is heading.

Moreover, it allows you to validate your product before making significant investments.


Building a SaaS product is an intricate process that requires careful planning and execution. Following the steps outlined in this article can create a solid foundation for your SaaS product development journey.

At MakeITSimple, we understand the complexities involved in building successful SaaS products. With our extensive experience in custom software development and SaaS product development, our experts can guide you through the process and help you achieve your business objectives.

Contact our team today to learn how we can assist you in building a roadmap that drives your business forward.

Related Articles: 

Complete Guide on SaaS Development Lifecycle (for 2023)
SaaS Mobile App Development - 8 Steps to a Great SaaS App
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