8 Steps to Develop a SaaS Product from Scratch
Most people have interacted with SaaS products from big tech companies like HubSpot, Google, and Microsoft. Businesses can use the software on a subscription without worrying about installation or updates.
Despite its many gains, the SaaS space has potential, providing opportunities for anyone to create products on a smaller scale. But do you know how to develop a SaaS product from scratch? This article provides a detailed description of the SaaS product development process. Keep reading for more.
Why the SaaS Product Model?
There are several reasons why the popularity of the SaaS product model is on the rise. All businesses can benefit from SaaS products in the following ways:
- No Installation: Customers love SaaS products because they are ready to use. Unlike on-premises software, they do not require installation. Instead, the vendor hosts the service in a cloud environment that users can access by signing up for the service.
- Cost-Effectiveness: Using on-premises software involves paying a one-time license fee. Future updates also come at a price. On the other hand, using a SaaS product entails convenient subscriptions and free, regular updates.
- Updates: As stated in the previous point, SaaS product customers don’t need to buy upgrade products before installing them. Instead, they can automatically set to get the updates when they become available.
- Recurrent Revenue: With SaaS products, a business can gain recurring revenue from customer subscriptions. Whether customers pay monthly or annually, the income keeps streaming in so long as there are subscriptions.
- Flexibility: SaaS product owners can up-scale or down-scale their customers in real-time. Besides, you can create SaaS product graduated plans with varied features. Customers can easily pick a subscription plan based on their needs.
Steps to Build a SaaS Product from Scratch
So, you want to build an entirely new SaaS product? It could be something completely new or an improvement on an existing idea. What steps can you take to ensure that your product is just right? Here are a few suggestions from the teams who do this every day:
Step 1: Start with a Real-World Problem
Where do you find a good idea for a SaaS product? You don’t have to think too hard, mix and remix ideas, hoping for an elusive light-bulb moment. An excellent SaaS product should solve a real-world problem, so start there.
What problem do you encounter that needs urgent solutions? Do your acquaintances, friends, and family have pain points you can address? Introspect and listen to people as they share their problems.
By leveraging your knowledge in a given domain, you can offer solutions to glaring problems. You may have worked in a particular career and built social networks for years. Create a SaaS product to solve the issues in that space.
Step 2: Develop a Prototype and Research the Market
Now that you have an idea of the SaaS product you wish to develop, develop a prototype. Test it to find out if it has a potential market. Like any other business, SaaS products need customers/subscribers to succeed. Also, you should find out who your competitors are and their impact on your product.
Here are some things to find out while researching the market:
- Who’s your product’s potential customer?
- Does your product have a unique selling point?
- What’s the difference between your product and the competition?
- What business model has the highest annual recurring revenue (ARR) for your product?
This research is essential in validating your idea and helping you avoid making mistakes that lead to failure in similar products. Of the essence is ascertaining your potential market’s willingness to pay for your product. The bigger and more painful the problem it solves, the more people will pay for your solution. Your business model should assure you of a high ARR from the get-go.
Present the ideas you’ve gathered from the market research to your team. Remember, they are not cast in stone. Expect your team members to criticise and suggest improvements. Give them time to think over the ideas and provide an honest review. Once you have collated the feedback, write a vision for your SaaS product.
But how do you analyse the market? How do you reach out to potential customers? Here are two strategies you may use:
1. Establish Focus Groups
A focus group is an effective marketing strategy that involves gathering and interviewing potential users with similar characteristics. Pick members of the focus groups based on parameters like demographic, social, and geographical location. While focus groups are excellent at providing usable data, they can be costly and time-consuming.
2. Social Media Interviews
Social media interviews are cheaper and more accessible than focus groups. Once you have chosen 10 to 20 users with the same demographic, social, and geographic background, you can send them a questionnaire. However, some people may opt not to respond to your questionnaire. Depending on the social media platform, offer likes, retweets, or any other incentive. A poll on LinkedIn, Twitter, and Facebook would do the trick for this activity.
Step 3: Prepare Your Product’s Business Plan
If you have a long-term vision for your SaaS product, you need a clear business plan to determine if it has the chance of succeeding in a global marketplace. A business plan describes how to launch the SaaS product in a viable business.
Here are essential questions to address in a business plan:
- What is the SaaS product’s unique selling point? How can it change the industry in which you intend to release it? A one-sentence answer is enough.
- How do you intend to monetise the SaaS product? Think about things such as income sources like subscription plans and product updates.
- In what ways will you market the product? It would help if you had a marketing plan for your product. Choose strategies like content marketing, paid partnership, social media, search engine optimisation, or search marketing. Have a clear plan from the start.
- Is the SaaS product addressing any pain points? Define these pain points clearly in your plan.
- How will I fund the product? If you have the necessary funds, no worries. It can be difficult if you have no idea where you’ll get the money to finance the product. Will you court potential investors or choose to crowdfund?
A business plan can have any format and doesn’t have to stick to these questions. Importantly, it should contain all the essential things concerning your product. Whichever form it takes, make sure you have a plan in place.
Step 4: Prepare a SaaS Product’s Action Plan
This stage involves outlining an action plan for bringing the SaaS product to fruition. The action plan includes a clear schedule of tasks and milestones to accomplish at defined points in time. With that, you can hold yourself and your team accountable for the progress of the SaaS product development. Spell out the dates, budgets, and responsibilities for each team member. Along the way, you may revise the action plan by adding more steps.
Step 5: Develop a Monetisation Strategy (Pricing Model)
Before you start developing a SaaS product, define your monetisation strategy. It is an essential guide in building the product’s functionality and how to sell it once it’s ready. While there are many pricing strategies for SaaS products, here are some you may want to consider:
1. Flat-Rate Pricing
The most basic pricing model for SaaS products is flat-rate pricing. It works well for the business and its customers. It means having an effect with a defined set of features for one price. There are no variations or graduated plans for this plan.
2. Freemium
In the Freemium pricing model, you can provide a limited feature and a free version of a SaaS product. Users who want to enjoy more functionality can upgrade to a premium paid plan.
Due to the limited features in the free plan, users get to test SaaS products before deciding to subscribe. It’s essential to include substantial free features to make your SaaS product attractive to
users. Later on, you can change to paid plans only and have all free users enrol into your SaaS platform.
3. Pay-As-You-Go Pricing
Pay-as-you-go or usage-based pricing intends to charge customers as they use your SaaS product. Those with limited usage pay less, while those with higher usage pay more. It makes it possible to adapt pricing to your current revenue performance, providing a higher user lifetime value (LTV).
4. Per-Storage Pricing
From its title, the amount of fees in per-storage pricing depends on the storage space needed. It makes a SaaS highly flexible, adapting to customers’ changing needs. When a customer wants more storage space, you have to ask them to pay more.
5. Per-User Pricing
For organisational subscribers, the pricing model for a SaaS can be based on the number of app users at any given time. You can encourage organisations to enrol more users by reducing the charges.
Step 6: Identify the SaaS Product Features and Specifications
Defining the product features is the most critical step in customer adoption of your product and determines how much it will be referred to new customers. The bigger and more painful the problem, the greater the acceptance and the more useful your features become.
Feature specification is a delicate balance between functionality that genuinely solves the most important customer problem, and minimum viable delivery of your SaaS product (see below).
Brainstorming features and then listing them in order of biggest problem solved can be a good way to prioritise features that will be most useful to your customer.
Aligning your features with your market research can provide valuable insight into what is most valuable for your customer. Competitor reviews and research is a great way to get insight into what users like and dislike and this provides guidance for creating your specification around market demand, rather than ideas and assumptions.
Choosing one feature, or a very small feature set that solves the biggest problem to gain proof of concept is the best way of getting to market.
Step7: Build the Smallest MVP and Get it to PAYING Users
A minimum viable product (MVP) is necessary for testing your SaaS product in the market. Rarely would you do this with your own developers unless you already have an in-house team. Essentially, an MVP should have basic core features to provide value to customers at the least possible cost. With an MVP, you can allow early testers to have a feel of your SaaS product before releasing its final version.
You can define an MVP by specifying the user persona, user actions to solve their problems, and proposed solutions. From the users’ interactions with an MVP, you can collect valuable feedback and determine customer willingness to subscribe to your SaaS product. We also find out if the market is willing to pay for your solution to the problem.
A SaaS MVP has the following objectives:
- Collecting user feedback and verifying the SaaS idea
- Evaluating the viability of your value proposition
- Testing SaaS product features and the business concept behind it
Step 8: Assembling a SaaS Development Team
Assemble the SaaS development team either within your company or from outside. You can also have a hybrid team that’s partly in-house and partly outsourced. If you outsource the entire team, you can invest your efforts on other business functions.
Here are three basic ways you can assemble a SaaS product development team:
- In-House: You can hire a developer or a team of developers to work for you full-time. Even though it’s a great option, it’s costly and time-consuming.
- Freelancers: You can get a freelancer SaaS developer from any online platform like Freelancer, Upwork, and Toptal, which have professionals from all over the world.
- SaaS Development Companies: Finally, you can have a third-party software development company to create your SaaS product. Such companies have experts ranging from product managers to software engineers. Therefore, you can delegate your entire development process to them.
If you want to build a reliable, functional, and efficient SaaS product from scratch, reach us here.
