5 Steps to Building a SaaS Product [Detailed Guide]
Tags: saas, startup, product
Published: 2021-03-29 13:51:24

*The article was originally published on [Ascendix Tech blog](https://ascendixtech.com/steps-to-building-a-saas-product/).*

[Statista](https://www.statista.com/statistics/510333/worldwide-public-cloud-software-as-a-service/#:~:text=The%20global%20public%20cloud%20software,main%20categories%20of%20cloud%20computing.) claims that the worldwide Software-as-a-Service (SaaS) market reached the level of $157 million in 2020. 

![Total size of the public cloud SaaS market -from 2008-2020](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/88inw2pnj7itny3tif5n.jpg)
 

This illustrates the popularity of SaaS products among entrepreneurs who want to create new software that provides value to end-users. 

But when it comes to SaaS software development, many startup founders bump into a wide range of challenges that should be solved correctly to gain success. 

Today, we want to share the key 5 steps to building a SaaS product that will help you get a detailed overview of the product development and launch processes. 

Let’s get down to business. 

## #1 Market analysis 

 Alfred Hitchcock once said: 

> Always make the audience suffer as much as possible.

 

These tricky words help to realize one of the steps to building a SaaS product. Simply put, it means that you should find your target audience, detect their pains/needs, and provide a value-added solution that directly addresses their specific challenges.  

At first, we recommend you perform a market analysis to get specific answers to the following questions: 

* What challenge(s) will my SaaS app solve? 

* What is my target audience? 

* Who are the top market rivals of my future breakthrough? 

* What features do they provide to meet clients’ needs? 

* Can I improve them or develop additional functionality to provide even more value to customers? 

* What business model do my competitors adopt? 

 

Once you get the answers, you will have a clear high-level understanding of your target audience, key competitors, and potential demand of future customers. 

One of the most important aspects in the market analysis stage is to realize whether future customers will intend and wish to select your SaaS product. Here come the following methods that can help you generate more relevant and valuable data about your future SaaS product: 

* **Set up focus groups** 

* **Interview via social media** 

* **Test your assumptions.** 

 

## #2 Create a business plan 

A business plan is a structured and detailed scope of operational and financial objectives that you plan to reach within your SaaS product launch. It includes several key blocks that should be clearly answered to better realize how to build a SaaS app. 

Let’s briefly discuss them: 

* **Monetization strategy (pricing model)** 

It stands for the way you will gain profit for the value provided by your SaaS app. It’s of utmost importance to define the pricing model at first as it fully impacts the way you will build a SaaS product. 

Here are the most wide-spread monetization strategies:


* **Freemium** 

This monetization model means that your SaaS product provides limited features for free. If users want to get more features, they can upgrade to a pro plan. 

Here are the top SaaS applications that use freemium: 

![Top Freemium SaaS Companies](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/t01wjtnptnmcmwt97x48.jpg)
   

* **Flat Rate Pricing** 

This strategy is one of the most widely used pricing models which means that you offer a single set of features for a single price. 

Here are the famous SaaS application that use flat rate pricing: 

![Popular Flat-Rate SaaS Products](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/glflsoy6lssnkrktok0z.jpg) 

* **Pay As You Go Model** 

This model means that you charge customers proportionately with the amount of their platform usage. Pay as you go model provides high flexibility for customers adapting to their needs and financial capacities which brings you a huge CLTV (customer life time value). 

Chargify, ConvertKit, and SendGrid are among the top SaaS products using this pricing model. 

	 
![Leading Pay As You Go Saas Companies](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/j148x7yjhyzn5zw4bwf4.jpg)

 

## #3 Define SaaS Requirements 

The functionality of your SaaS product greatly depends on the niche and pricing strategy you choose but should include the must-have principles to be competitive by default. Here are the most crucial aspects your SaaS app should have: 

* **High security** 

SaaS cloud-computing implies that you store end-users' data in cloud which requires high security against multiple hack attacks and vulnerabilities. 

 

* **User-friendliness** 

The easier your application, the higher Trial to Paid conversion rate you will get. Try to make your SaaS product as simple-to-use as possible focusing on landing and pricing pages. 

 

* **Multi-Tenant Infrastructure** 

SaaS technology multi-tenancy is one of the key principles that drives cloud computing. It stands for a system with multiple companies or tenants that share a single SaaS installation platform. 

![Must-Have Features of Successful SaaS Products](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/lscdii2ns5ke7gxd22dq.png)
  

To define the core functionality for your niche-specific SaaS product, we recommend you analyze top market competitors. Build a list of exact features that you wish to offer and add the rivals’ functionality that seems to be valuable for their customers. 

It is a time- and cost-effective solution to build a minimum viable product (MVP) of your SaaS application to test the viability of your core functionality and gather users’ feedback. 

Let’s dive into the topic of MVP development. 

 

## #4 Define an MVP for your SaaS product 

What is one of the most important steps to building a SaaS product? For sure, MVP development should become your coachfellow in the SaaS development life cycle. 

In simple terms, a minimum viable product is a feature-limited version of your SaaS application that still offers enough functionality to users so that they provide valuable feedback. This is a beneficial approach to verify your idea and value proposition without much time and fund spending. 

So, here are the key objectives of building an MVP for your SaaS app: 
 

* **Collect feedback and verify your business idea** 

* **Sound out the market situation** 

* **Test different approaches** 

![Primary Objectives of SaaS MVP Development](https://dev-to-uploads.s3.amazonaws.com/uploads/articles/jt3x6h01udxpcqw3cox7.png)
  

## #5 Build a development team or outsource 

One of the key SaaS product development stages is to technically build the platform. There are several options that will help you create a value-added SaaS app: 

 

* **Build your own in-house team** 

An in-house team development is one of the most time- and cost-consuming methods. To succeed with it, you ideally need to find a co-founder as CTO. This person will help you perform talent acquisition, candidate interviewing, team management and leading, and the SaaS product development processes. 

 

* **Hire freelance software engineers** 

This method may become pretty risky as you cannot fully control remote developers compared to an in-house team. Different time zones, cultural differences, and other factors can greatly influence the SaaS product development process and the final product quality. 

If you still decide that freelance software developers are a great choice for your business, then such platforms as Upwork, Freelancer, Fiverr, and Credo will help you. They provide access to a global talent pool with both junior, senior, and team lead developers with diverse expertise and experience in most IT spheres.  

These listing platforms offer an internal rating system, case studies, and client reviews that will help you better understand which candidate is a perfect match for your team. 

 

* **Outsource software development to an IT agency** 

Hiring a software development company with deep expertise is also a great option for your SaaS application development. 

Firstly, a reliable and experienced IT agency provides you with a huge boost by default as they know most nuances and challenges at the beginning (if had some relevant experience). This allows you to avoid wasting time on finding the required solutions which saves much time and funds for your SaaS business. 

Secondly, a software development company can provide consulting services that will improve your overall development strategy before even starting the technical part. 

Third, [software development outsourcing](https://ascendixtech.com/software-development-outsourcing-our-story/) provides you with high flexibility which allows you to avoid active involvement in the SaaS development process. This becomes a great option if you want to delegate software development and concentrate on building your marketing strategy or finding investors for your project. 

 

## Final Thoughts 

We hope our key steps to building a SaaS product will help you succeed with your software product development and launch. 

If you want to learn more details and insights, check our full blog article **[Steps to Building a SaaS Product: Detailed Guide](https://ascendixtech.com/steps-to-building-a-saas-product/)**.