Build your own SaaS: Why Software Development Might Be Smart For Your Business
Technology continues to impact businesses within different sectors. Many businesses use SaaS applications to achieve goals while helping their business save money, time, and human resources. By eliminating problems like software maintenance and incompatibility, SaaS applications can provide streamlined focus and greater productivity. Statistics show that over 80% of those using the SaaS model experience exponential growth. The estimated revenue for SaaS companies will be over $620 million by 2023.
Every business wants to offer satisfactory services and stand out in today's highly competitive world. This is possible, especially for companies that invest in SaaS models. If you are thinking about SaaS development or application integration, it is important to know what it is and how it works to enable you to make informed decisions. In this guide, we take you through the process of smart building SaaS and how it works.
What Is SaaS Development?
Software-as-a-Service (Saas) is a way of delivering applications over the Internet—as a service. Businesses do not install and maintain software applications on desktops. Instead, you access the applications on the internet, which frees you from complex software and hardware management. SaaS development includes various elements such as documentation, design, development testing, and product deployment on the service. The provider manages access to the application hosted on the cloud.
HubSpot CRM is a great example of a SaaS company that’s changed how many businesses work. Hubspot helps companies gain an inbound presence and attract new leads with their marketing software which can be used as a standalone product or as part of a larger enterprise solution.
Why Is SaaS Important?
SaaS brings simplification, access, and affordability together so businesses can access complicated software and IT infrastructural components quickly and at lower costs. Understanding the benefits of SaaS helps organizations plan their technical evolution journeys in a competitive market. Listed below are the benefits of a SaaS business model.
Increased Brand Visibility
Software development boosts the growth of your business and helps you achieve goals in real-time while creating brand visibility for customers. They can access your brand anytime, anywhere, using a smartphone or computer, as long as they have internet access. This makes your business stand out from the competition.
Increased Efficiency
With SaaS development, you do not need to worry about how and where to store your software, saving you a lot of time and money. You don't need to buy expensive hardware and look for storage space since the user can access the platform via any device as long as they are connected to the internet. This leads to increased efficiency and business growth in the long run.
Increased Security
With a SaaS product business model, you will usually get increased data security because most SaaS database providers include SSL and TLS encryption as part of their platform. Your data is secure, preventing hackers from accessing systems and manipulating data for your business and customers. SaaS modeling allows simple and fast integration of additional systems to your infrastructure without creating loopholes for online hackers.
Increased Customer Engagement
Customers are the backbone of your business, so you should invest in products that can help you increase customer engagement. A business model SaaS can help you increase the number of customers through online marketing. An online application lets your audience and customers interact with your brand effectively, increasing engagement, leads, and sales in the long run, reducing the cost and time you'd have used on marketing your business.
Flexibility & Scalability
As your business grows, you will experience high flexibility with a business model for SaaS. You can integrate more applications into your systems because the SaaS business model is highly scalable. It also benefits customers by offering high flexibility where they can grow with your software, eliminating the risk of paying high fees, especially for products that may not suit customers' needs. Customers don't need to worry about paying more if they use the product often.
Boosts Communication
The SaaS business model can improve communication between your team and customers. Customers can access your brand and interact with the team when they log in online. This eliminates sales friction and enables customers to get quality and timely services, thus, leading to increased leads, sales, and repeat purchases. Improved communication builds customer trust and loyalty, leading to long-term relationships and continuous cash flow.
Increased Scalability
Many companies experience tremendous growth and expansion of their systems, which is why investing in highly scalable products is important. One of the main benefits of SaaS as a business model is that it scales as your business grows. You don't need an additional plan to increase the server capacity because SaaS can easily integrate into your business systems as the business expands. Server space isn't an issue when the business grows.
What Is the Saas Business Model?
Software as a service business models are companies that host an application and makes it available to users over the internet. A SaaS company maintains databases, services, and software on the cloud, where users can access the software via any device and from anywhere. This service is usually available to customers via a subscription model, often monthly, annually, per user, or by package level.
Knowing how you will monetize your product to enable you to achieve your goals is essential. SaaS companies can consistently update their software and push new updates to users. But how often and the terms used for the subscription depends on your SaaS operating model. Subscriptions sometimes depend on how much data must be stored, the number of users accessing the application, and the technical support required. While this may appear complicated, a SaaS business model is relatively simple, even though you need to consider some variations during implementation.
Types of Saas Business Models
There are different types of SaaS business models. Looking at some of these models can help you decide which is right for your product. Here are the top six SaaS business model examples.
Freemium Model
With a freemium model, businesses allow customers to access free software features. However, customers can decide to pay for monthly or yearly subscriptions if they use advanced features. This model is often suitable for B2C businesses wanting to increase their customer base quickly. In most cases, businesses rely on this model as a free marketing tool rather than a pricing strategy because this service will likely draw more customers to the brand, leading to increased leads and sales in the long run. Once customers see the value of the software, they can pay for more features.
Flat Pricing Model
This SaaS model is where users pay single, regular, and non-variable fees to access and use the software. In short, customers pay a certain fee to access the software features. The flat pricing model is a one-time, monthly, or yearly subscription that customers pay to use. It is straightforward for customers to understand. Since the price is not based on usage, customers can handle their budget limits. This model is probably the most widely used for Enterprise type SaaS platforms such as SalesForce.
Usage-Based Pricing Model
The most efficient and effective way to charge customers for software usage is by letting them pay based on how much they use the software. Under the usage-based pricing model, the end users pay passed on the usage level. This is a fair way of charging customers and is why most quickly get attracted to this model. If customers use the software often, they won't need to pay a high fee, and smaller users won't have to worry about paying exorbitant prices. With a usage-based pricing model, customers can increase their usage as their needs change, making it highly scalable and flexible.
Per-User Pricing
Under this SaaS for business pricing model, customers pay based on the number of users that access the software. This standard pricing model for many SaaS businesses charges monthly or yearly subscriptions. It is most suitable for organizations that want to give many employees access to the software where you pay a regular fee but not exclusively. Per-user pricing, a model is also an excellent option if the team needs access to personalize features like the dashboard. It is most suitable where many people need to use the software simultaneously, especially where most users need access to different software features.
Tiered Pricing
Tiered pricing comes with a monthly or yearly subscription fee which could be a flat rate per usage or as the tiers increase. Customers pay based on the features they use. This model generates revenue for the business while keeping the product accessible to the end users. With this pricing model, businesses offer two or more feature bundles, but the price increases for bundles providing more. The model is often suitable for businesses offering different customer service levels. Users who want advanced features pay higher as each tier adds demonstrable value.
Hybrid Pricing
With a hybrid pricing model, businesses combine two or more models listed above. This is one of the primary benefits of SaaS solutions for small businesses. They are highly flexible based on different user needs. For instance, you can combine a freemium model with a tiered pricing model based on the features the customers want to use. Or you can also combine a per-user pricing model with a tiered pricing structure. In this case, the per-user model price increase as you use more features. A hybrid model is flexible, and businesses can easily tailor it based on the needs of their customers.
How to Build a SaaS Business Model
If you are considering building a SaaS business model, there are various steps and elements. Here is a step-by-step process for building and launching a SaaS business. This includes the life cycle the SaaS business model passes through to completion.
Step 1: Conduct Market Research
The primary step to successfully building a SaaS business model is understanding your target market. You should first identify the pain points of your potential customers to enable you to make informed decisions when building the product.
You want to know if the market is large enough for the solution you want to build and how potential customers will receive the product in the market. Therefore, engage your customers and get meaningful insights to help you build a successful product.
When engaging customers, you should demonstrate the difference between your upcoming product and other existing solutions. This is one of the most challenging processes when building a SaaS business model, and this is why you should be thorough when conducting the research.
Step 2: Create a Business Plan
After understanding your customers' needs and pain points, the second step is creating a business plan to guide you when building the SaaS business model. Get the idea on paper, including how you plan to run the process and what you want to achieve in the long run. This makes the process more interactive and easy to implement your product.
It is also important if you are constantly testing new ideas because you may need to compare notes in different stages of product development. You should include several elements in your business plan for smart building SaaS.
Determine how you are going to build the product.
Understand how you will make money from the model.
Distinguish team roles throughout the processes.
Know when you plan to begin and what you will be doing.
Compile a description of the problems you plan to solve in the market.
Determine the business's unique value proposition and description.
Know the target audience and market for different audiences.
Describe your competitors and what they do differently from your idea.
The business plan should include key partners and the essential resources you plan to use. You can also list your sales channels and marketing activities that can drive customers toward your brand. This is also a good time to create a budget forecast by listing your key expenses, primary revenue streams, and cash flow forecast.
Remember to outline your action plan for building your product, including tasks or milestones. Map these components into dates, responsibilities, and budget to give you a clear breakdown of the entire process and hold you and your software development teams accountable.
Step 3: Product Idea Validation
Once you create a SaaS business plan, you should analyze the plan and determine if what you've drafted is helpful. This requires critical thinking, so you should be thorough when validating the idea.
Product idea validation carries out the core technical aspect of the development process, which is why you need to conduct an intense market survey, define the technical parameters, and create a prototype for your application.
Various questions help determine if your idea is worth pursuing. One of the main questions you should ask yourself is this, will my idea make money? Take one step at a time and avoid rushing because this point acts as a check for your earlier defined ideas. Talk to your target audience and determine whether you have a good idea that can turn into a viable business.
Have I identified the actual problem with the audience?
Is the idea going to solve the identified problems?
What is the best way to sell the product to my audience?
What hitches might I face when selling my product?
What is my pricing structure? Is it too low or too high?
What products does my audience currently use to solve their problem?
Based on the answers you get from the above analysis, you can quickly build and launch a product that will solve the needs of your audience and help you achieve your goals in real-time. The most important thing is to get real-time feedback to help you set the parameter for success and determine if your idea has merit.
Whether you conduct your analysis online or door-to-door, paying close attention and collecting feedback is essential. Suppose you find that there is yet to be a market for your earlier generated idea. In that case, you may reconsider your option and create another idea that meets your goals and solves the needs of your target audience.
Step 4: Find an Experienced Implementation Partner
Building a SaaS business model requires experience and technical expertise. Many processes and essential steps must be followed to build and develop the SaaS business model successfully.
Effective software designing and development will not only convert customers but also help increase engagement and customer retention, thus promoting business growth and continuity. However, with multiple development firms within the industry, hiring an experienced software developer with in-depth expertise in the field and understanding all the aspects and processes of software development is essential.
With an experienced implementation partner, you won't have to worry about compromising quality and efficiency since the company has what it takes to deliver valuable service worth value for your money. Therefore, embrace a software development company that can offer customized services and help you complete your project on time. This minimizes costs, increases execution speed, and enables you to achieve your goals in real-time.
Step 5: Building the Product
Product development includes different people, such as designers, backend engineers, frontend developers, QA testers, and project managers, who oversee the entire development process from the beginning to the end.
While building the product from the ground up is challenging, these individuals work collaboratively and combine efforts and ideas to make the product live. The team goes through various processes, such as creating databases with tables, triggers, and schemes and creating login credentials, among many other processes.
The process is usually milestones with daily updates to know what is happening and the progress. The developer can provide valuable information and product recommendations throughout the process, making the product incredibly valuable to the end user.
In most cases, the process can take several months, depending on the complexity of the product. Different businesses have different standards and approaches, so the timeframes vary.
Step 6: Product Launch and Maintenance
Once your product is ready, you’re now ready to launch it. The implementation team continues to build new features and also begins to perform maintenance. For this reason, it is essential to set aside a budget for the maintenance of the product and minimize issues that may arise along the way. It'd be best to sort out this issue during the planning phase so that you do not have budgeting issues after launching your product.
Step 7: Product Marketing
Once you launch your product, it is essential to market it to reach a wider audience and attract potential users. Many businesses assume customers will automatically come once they launch a product, but this is not always true. Consider thorough marketing to have your first customers.
Look for platforms that can help you drive traffic to your site as you collect feedback and contact details of your web visitors. You can get feedback through customer interviews, questionnaires, and emails to help devise ways to make the product more significant and better.
Your first customers can provide valuable feedback that can help you to shape your product in the long run. Remember, your growth must be organic because many challenges may arise when the customer base grows. For this reason, consider strengthening your functionality and databases to improve your services, thus, leading to increased leads, sales, and customer retention.
Find a Reliable SaaS Development Partner
SaaS product development has always been challenging. Its success begins with finding the right development team to handle the project. Even if you generate a profitable idea that you think can give you much return, the wrong team can mess up your idea, thus, wasting your time and money. Mach One Digital is a technology-focused, value-driven service provider that builds great products and helps business applications stay updated. Our talented team of technologists has expertise in building SaaS business models and platforms. We can create a vigorous SaaS application to help you achieve your goals. Our teams are ready to handle all the demanding and challenging tasks from inception to launch and beyond. Schedule a discovery call with Mach One Digital.