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How Much Does It Cost to Build a SaaS Platform?

Max Babych

Max Babych

CEO

9 min

Are you a startup founder, product leader, or serial entrepreneur wondering what it costs to build a SaaS platform?

If so, keep reading to learn:

  • How much it costs to develop SaaS software
  • Factors that influence SaaS dev costs
  • Hidden expenses of building a SaaS
  • Case studies on real SaaS platform costs

Now that you know what we’ll cover, let’s kick things off by looking at the SaaS development cost.

If you prefer visuals over text, feel free to jump ahead to the bonus infographic.

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What Does It Cost to Build a SaaS App?

The cost of developing a minimum viable product for a Software-as-a-Service startup should typically range from $60,000 to $150,000.

However, other factors determine the exact cost, among which include:

  • The complexity of the solution
  • The type of product
  • The type of team involved
  • The location of the developmental team

Let’s consider each of them separately for deep insight into their intricacies.

SaaS Development Costs Based on Complexity

SaaS platform complexity is a term to describe the set of functionalities, user roles, and how they relate to each other in your application.

You can also describe them as the level of difficulty a developer faces while building the SaaS.

While the term “complexity” is quite relative, we can categorize them into micro, basic, average, and complex for better understanding.

As you might have imagined, the more the complexity of a SaaS app, the more time needed to be expended in its development; this will, in turn, affect its cost.

Let’s help you with a spreadsheet of the estimated cost implication based on complexity:

ComplexityAverage price, $
Micro SaaS15,000
Basic SaaS35,000
Average SaaS60,000
Complex SaaS150,000

The price stated above is not definite, as some hidden costs might pop up along with the cause of development. E.g., the cost of purchasing a domain name, integrating with APIs, etc.

Illustration shows the cost of SaaS application development, depending on the complexity of a platform

Another defining cost factor is the product type. Let’s dive into detail.

SaaS App Development Costs Based on SaaS Type

Another important factor that influences the cost of building a SaaS app is the type of software.

Some SaaS projects are very difficult to build, mainly because they should have a high level of new features and the sensitivity of the data being handled.

Take, for example, accounting software.

It requires state-of-the-art data protection technologies to prevent sensitive financial information from leaking.

This singular feature increases the price of the site:

Type of SaaSThe average cost for an MVP, $Example
CRM60,000Freshworks
ERP120,000NetSuite
Accounting80,000Xero and Quickbooks
Project management70,000Confluence
Email marketing70,000Mailchimp
MarTech100,000Hubspot
Visual website builder150,000Weblium
Illustration shows the cost of SaaS platform to build, depending on the type of solution

 

SaaS Software Development Costs Based on Team Type

Let’s dissect how the type of development team you opt for may affect the SaaS app development cost.

To illustrate, we’ll assume you’re building a software-as-a-service platform with average complexity.

Type of TeamAverage cost, $
In-house, the US140,000
The local development company, the US180,000
Freelance50,000
Outsource agency80,000

Does each kind of team in the spreadsheet seem confusing? Let’s help you have a better understanding of what they entail.

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Type 1. In-House Team

This hiring model entails employing a team of developers to work within your startup’s environment.

These developers take orders directly from the company’s administrators and report daily to superiors within your startup.

Before you decide on choosing this option or not, you should first educate yourself on its pros and cons:

ProsCons
  • Startups have quick access to the development team and can suggest requisite modifications to be handled at a prompt.
  • This hiring model keeps delicate development information and workflow within the startup’s premises.
  • Through regular interfacing with the development team, the team will have a deeper understanding of the company’s goals.
  • In-house developers tend to stick better to laid-out security protocols.
  • The startup has full control over developmental workflow and has legal rights over employees’ deliverables – including source codes.
  • There’s a continuously high cost attached to adopting this business model.
  • Employees are responsible for ensuring that management and labor laws are adhered to.
  • There are multiple hidden costs in this hiring model that also depend on the hourly rate of developers. Use our outsourcing cost calculator to have a hang on those costs.

An alternative to this option is hiring a local development company. Let’s discuss the nitty-gritty of this.

Type 2. Local Development Company

This option can be pricey for startups domiciled in the UK, USA, Canada, and other high-income nations.

We’ll consider its pros and cons to understand your options better.

ProsCons
  • The developmental team and startups are not constrained by cultural and time zone differences.
  • Also, a fallout between both parties can easily be pursued in court since both parties are within the same legal jurisdiction.
  • The cost of building a SaaS product with a local development team in high-income nations is exorbitant especially if you consider the hourly rate of developers. Countries affected by this include Canada, the UK, the USA, Japan, etc.
  • If you’re a startup domiciled in those countries, you might need an unlimited budget to develop the SaaS MVP.

The cons of hiring a local development team are too significant for most startups to bear. As such, we’ll discuss another alternative – hiring freelancers.

Type 3. Freelancers

Freelancers are independent SaaS developers with experience in several tech stacks requisite for developing a fully functional Software-as-a-Service platform.

These individuals are not committed to working for any organization but only focus on getting contracts from numerous clients and executing them as occasion demands.

Just like other options on this list, they also have their pros and cons to consider.

ProsCons
  • Freelance SaaS developers have a deep understanding of creating a fully functional and effective Software-as-a-Service product.
  • They can offer deep and unbiased insight into the product.
  • Control over developers’ workflow is practically impossible.
  • They exhibit no loyalty to the task or startup and can easily change clients without prior notice if another client offers better pay.

The last and arguably the best option to consider is an outsourced team. What does this entail?

Type 4. Outsourced Team

Opting for an offshore outsourced team is a trendy pattern for startups based in high-income nations.

The crux of this model centers around seeking a SaaS development team in a nation different from the startup’s country of residence.

For example, a US-based startup hired a software development agency domiciled in Ukraine to help build a SaaS solution.

This option offers lots of advantages, with only a few cons that can be worked around:

ProsCons
  • Offshore outsourcing offers the best value for money. Provided the development team is situated in a region with requisite technological infrastructure. E.g., Eastern Europe.
  • It eliminates the difficulty of managing a fully functional team.
  • The team is easily scalable
  • Offshore outsourcing agencies have a network of highly talented developers and can easily hire one to handle the task.
  • Communication can be hampered due to time zone constraints.
  • Cultural differences may hinder workflow expectations. This is particularly common with development teams based in Africa and Southeast Asia.
Illustration shows the SaaS product development price, depending on the type of team

Another cost-influencing factor for Software-as-a-Service projects is the team’s location.

Let’s delve into this a bit.

SaaS Development Cost Based on Location

The country where your team is domiciled is a huge factor in influencing the cost of Software-as-a-Service development.

For example, a typical SaaS business solution that costs $180,000 in the United States will cost $60,000 in Ukraine.

Below is a spreadsheet depicting the cost of developing your solution in some countries.

CountryAverage cost, $
Australia120,000
The USA180,000
The UK150,000
Western Europe100,000
Eastern Europe60,000
South Asia45,000

We analyzed the most significant factors in the SaaS development price.

Now, let’s look at some examples.

Development Cost Examples for 3 SaaS Companies

To better understand the cost of owning your Software-as-a-Service platform, we’ll use three examples as case studies.

Case Study 1: Slack Clone Cost

Slack is a communication platform where individuals can hold workplace-related conversations.

The core features of Slack

  • In-app and email notifications
  • Text, voice and video calls
  • Channel privatization
  • Apps integration (this feature helps it connect with other services )
  • Instant messaging
  • Reminders
  • Messaging channels

The average cost of developing a SaaS messaging app would range between $70,000 and $100,000. The exact price depends on your SaaS design and the level of detail you want therein.

This picture describes one example of the cost of developing a SaaS such as Slack

Case Study 2: MailChimp Clone Cost

Mailchimp is an all-encompassing marketing platform that aims to sharpen online marketing practices effectively.

The platform empowers millions of customers to start, grow, and market their businesses through the use of advanced marketing technology.

The key features of Mailchimp

  • Custom forms
  • RSS-to-Email
  • Email automation
  • A/B testing
  • Geolocation
  • Email pipelines
  • Email segmentation

The development cost of such an MVP will be around $80,000 – $100,000.

This picture describes one example of the cost of developing a SaaS web app such as MailChimp

Case Study 3: Pipedrive Clone Cost

Pipedrive is a CRM platform tailored specifically to help users visualize their sales processes and maximize their leads.

Key Features of Pipedrive

  • Salesforce automation
  • Calendar
  • Marketing automation
  • Reporting & analytics
  • Customer support
  • Social media integration

As in the case study above, let’s imagine that you’d like to develop a new CRM. The cost of such an MVP will start at $60,000.

This picture describes one example of the cost of developing a SaaS such as Pipedrive

Now that you have an idea of the cost implication of developing a software-as-a-service let’s take a dig at some SaaS-specific cost-influencing factors.

Key Factors Influencing SaaS Dev Cost

Let’s discuss how software development teams calculate the cost of building a Software-as-a-Service application.

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1. Business Logic Complexity

The business logic is a compendium of the overall workings of the app, the purpose of creating the solution, and the outcomes users get from using the platform.

The business logic determines the following attributes:

  • The complexity of the solution,
  • The tech stack to use on frontend and backend,
  • The number of external integrations,
  • The number of team members,
  • The size of the application, etc.

For example, you’d like to develop a new EHR. If you copy existing competitors, the development can cost up to $300,000.

The illustration shows the first factor that affects the cost of SaaS development, such as the business logic of the SaaS product

Let’s discuss another SaaS-specific cost influencing factor to note.

2. Tech Architecture

The technological architecture of a SaaS product entails the arrangement and interaction of entities according to the business and technical requirements.

Attributes within the technological architecture that determine the app development process and cost are:

  • Number of API integrations,
  • Multi-tenancy,
  • Scalability, and more.
The illustration shows the second factor that affects the cost of creation a SaaS product, such as the technological architecture of the product

 

Another factor affecting the cost of developing software as a Service is the UX/UI design. Let’s discuss that in detail.

3. UX/UI Design

User Experience and User Interface design determine all actionable basic features, functionalities, and pages that the application will have.

Thus, it directly influences both the developmental activities and business logic involved in development.

A complex SaaS UX/UI design will make the design process more cumbersome for the front-end developer and increase the cost of building the app.

The illustration shows the third factor that affects the price to create a SaaS platform from scratch, such as the UX/UI of the product

Now that you know the factors that affect the cost of developing a SaaS product, let’s discuss a bit of hidden costs that most founders and startups ignore.

Hidden Expenses of SaaS Development

These are costs that aren’t glaring to founders in the early face of the project.

The two more prominent SaaS product development hidden costs must be added to your total cost of ownership:

Maintenance cost

Marketing cost

Let’s discuss what each entails in detail.

1. Maintenance

Usually, support is about 25% of the software development cost. If the cost of developing your software-as-a-service is $100,000, then your maintenance cost can be as high as $25,000 per year.

Your maintenance cost will include spending on:

  • Hosting
  • Domain name
  • SSL certificate
  • Email services
  • Premium technical support

This cost is necessary to keep your platform running and provide a quick fix if an error occurs.

2. Marketing

Startup marketing is an important aspect of growing your user base and ensuring corporate goals are attained.

If your development cost is $100,000, then be ready to spend not less than $200,000 – $300,000 annually on marketing your product.

The annual cost of marketing is this high because of multiple financially demanding aspects that include:

  • Information architecture,
  • Technical, on-site, and off-site SEO,
  • Email marketing,
  • Product Hunt launches,
  • PR and social media marketing, and more.
The illustration shows hidden costs affecting SaaS application development

Now that you know the cost of creating a captivating and highly demanding Software-as-a-Service solution, let’s help you get started.

Want to Build Your Own SaaS?

There you have it – everything you need to know about the cost to develop your own SaaS platform.

As you saw, costs can vary widely based on features, team, and platform complexity. But with smart planning and an experienced development partner, you can launch an MVP for a reasonable budget.

If you want to turn your SaaS company idea into reality, the team at SpdLoad can help.

Our talented group of 70+ developers has over 10 years of expertise in building all types of digital solutions.

Want proof? Check out our portfolio and rave reviews on Clutch.

Contact us to schedule a free consultation and receive no-obligation estimates for design, development, and launch.

Here is a summary of our in-depth guide. Learn the basics about how much it costs to develop a SaaS application from scratch.

Bonus Infographics

Here is a summary of our in-depth guide. Learn the basics about how much it costs to develop a SaaS application from scratch.

This infographic designed to cover all the major aspects and factors, that impact the cost of SaaS development.

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Have a question? Look here

What are the main factors influencing the cost of developing a SaaS platform?
The cost of developing a SaaS platform is influenced by several factors. These include the complexity of the application, the type and number of features required, the design and user experience considerations, the expertise and location of the development team, and the need for integration with other systems or third-party services. Each of these elements can significantly impact the overall budget.
How does the complexity of a SaaS app affect its development cost?
Complexity plays a crucial role in determining the development cost of a SaaS app. More complex platforms typically require additional time and resources due to the need for advanced features, more intricate user roles and permissions, and sophisticated backend architecture. This increased complexity often translates to higher development costs as more expertise and effort are needed.
What are some hidden costs associated with building SaaS apps?
Hidden costs in SaaS solution development can arise from several areas. These may include ongoing maintenance and support, which are essential for keeping the platform up-to-date and secure. There can also be costs related to marketing and user acquisition, as promoting a new SaaS product requires substantial investment. Additionally, unforeseen technical challenges or changes in project scope can lead to extra expenses.
Why is the location of the development team important in determining the cost?
The location of the development team can significantly impact the cost due to differences in labor rates and operational expenses across regions. For example, development teams in North America or Western Europe typically command higher rates compared to those in Eastern Europe or South Asia. These regional cost variations can influence the overall budget required for developing a SaaS platform.
How does the choice between in-house, freelance, and outsourced development teams affect costs?
Choosing between in-house, freelance, and outsourced development teams affects costs in various ways. In-house teams offer direct control and seamless communication but often come with higher expenses related to salaries, benefits, and overheads. Freelancers can be more cost-effective and flexible but may pose challenges in terms of reliability and project management. Outsourced teams, especially those located in regions with lower labor costs, can offer a balance between cost and quality, although managing remote teams can introduce communication and coordination challenges.
What role does UX/UI design play in the overall cost of SaaS apps?
UX/UI design is a critical component that can influence the overall cost of developing a SaaS application. Investing in high-quality design ensures that the platform is user-friendly, visually appealing, and capable of delivering a superior user experience. Good design can lead to higher user satisfaction and retention, which is essential for the success of any SaaS product. However, achieving this level of design excellence requires skilled designers and iterative testing, which can add to the development cost.
What are the long-term costs to consider after the initial development of a SaaS application?
Long-term costs after the initial development of a SaaS app include ongoing maintenance and updates to ensure the platform remains functional and secure. These costs also cover hosting services, domain renewals, and SSL certificates. Additionally, marketing efforts to attract and retain users are ongoing expenses that can be significant. Regularly updating the platform with new features and improvements based on user feedback also contributes to long-term costs.
How important is it to integrate third-party services in a SaaS platform, and how does API integration impact cost?
Integrating third-party services can be crucial for enhancing the functionality of SaaS products. These API integrations can provide essential features such as payment processing, email notifications, and social media logins. While they add significant value, they also increase the development effort and cost. Each integration needs careful planning, affecting SaaS implementation costs, as well as testing to ensure it works seamlessly with the platform.
What challenges can arise during the development process that might affect the cost?
There are several challenges that can arise during the SaaS development that can affect costs. These include technical difficulties, such as scalability issues or unexpected bugs, which require additional time and resources to resolve. Changes in project scope, either from evolving business requirements or feedback from stakeholders, can also lead to increased costs. Additionally, ensuring robust security and compliance with relevant regulations can introduce further complexities and expenses.
Why is it essential to consider marketing costs when budgeting for a SaaS?
Marketing costs are essential to consider because they play a critical role in the success of SaaS companies. Developing SaaS applications is just the first step. Attracting and retaining users requires significant marketing efforts. This includes online advertising, content marketing, social media campaigns, SEO, and other strategies to increase visibility and user engagement. Effective marketing ensures that the platform reaches its target audience and achieves sustainable growth, making it a vital component of the overall budget.

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