21st May 2019・5 min read
SaaS is an excellent business to go into for new and seasoned entrepreneurs. However, developing a SaaS product comes along with some high startup costs to develop the product. In this article, we'll go over the associated costs to develop a SaaS and the various options to make it as cost-effective as possible.
A big pitfall for new entrepeneurs is to go with the cheapest option to develop their SaaS and ending up with an unsatisfactory product. This is a nightmare and to avoid this you must not go immediately with the lowest cost option when choosing a developer for your SaaS.
The average software / SaaS app developer charges around $60/hour. Let's say your SaaS takes 3 months to develop, meaning 450 hours of development. That means it will cost you approximately $30k to develop the first version of your SaaS. That's a pretty sum, but will mean your SaaS will end up high quality, and ready to attract great customers.
Development agencies tend to cost a lot more than hiring individual developers, but have a lot of advantages over hiring an individual developer. Firstly, agencies tend to have more experience as they have completed many more development projects (especially SaaS-specialized agencies) and a more sophisticated process. You will also find that agencies can self-manage and you will not need to be as involved in the project during development. This is great for busy entrepreneurs and can be super successful.
So, what's the cost for an agency to develop your SaaS. Using the same 3 months for the time of development, and hourly rate of $60/hour it will usually cost more for an agency. The reason being, agencies often assign multiple developers, or even a project manager to your project, meaning the cost could very easily triple or more meaning costs of $100k plus. If you are looking for a more smooth experience when developing your SaaS product and have the budget, I really recommend going with a SaaS development agency. This will prevent a lot of headaches.
The longer it takes to develop the SaaS, the more you'll have to pay to your developer. Meaning, the less features you develop, the lower the cost. That's why I recommend you look at all your desired features and decide whether that feature is really necessary, or just nice-to-have. For example, do you need a full admin dashboard starting out, or just a simple one to view users and payments? Do you need to accept multiple payment methods or would Stripe/card payments work perfectly? There's a lot to consider, but you should carefully consider the importance of each feature to reduce the cost of developing your SaaS.
If you're interested in SaaS, you've definitely heard of MVP, or Minimum Viable Product. This essentially means developing the first version of your SaaS with the least possible features, and only the core features. This will drastically reduce the amount of time it takes to develop, and a lower cost. If cost is a significant factor, you shall definitely consider this!
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