Most of the entrepreneurs have a burning desire to establish their own startup. And nothing is a more alluring business proposition to these young entrepreneurs than creating their own SaaS company due to ever-increasing demand of software. It is the result of the dependency of people on software for their personal and professional purposes. Hence, custom software development has picked up pace in recent years.
A SaaS company seems to have a great ring due to its low-overhead business establishment costs, along with recurring revenue model which rakes in huge revenue through monthly subscriptions every month as well as the option to make a big possible exit. Through SaaS application development, you can launch a great SaaS product, start earning handsomely and even sell it for millions.
However, to achieve this objective, you need to know how to start a SaaS company. Simply hiring a software product development company doesn’t guarantee a successful SaaS product. So, let’s look at a few useful tips to create a SaaS product that can make you a millionaire in a few years.
1. Creating a SaaS product is a Marathon
It’s easier to get carried away with few exceptional stories of SaaS companies created to sell which turned around and returned millions. However, this isn’t a rule, and a SaaS development company should be aware of this.
Such a company shouldn’t rush for SaaS app development and expect to get millions of customers onboard, design unique ideas just for creating a fun atmosphere and hire boatloads of employees, etc. Remember, establishing a SaaS company isn’t a sprint, but a marathon.
Hence, you should spend your valuable time in laying down the foundation of the company, which includes features, architecture, culture, and marketing. By getting trapped in a short-term mindset, you set yourself for failure. So, in the long term, critical strategic thinking is quite essential for establishing a successful SaaS company. Since it requires some work and enormous efforts, you may get tempted to skip this particular step as well as validation and MVP, ignore failures and jump right to the scale and sustainability phases.
For a focused approach towards SaaS product development, you should stay macro-patient while micro-focused. This is quite crucial during the development phase. There will be ample instances where things will take time to come into existence. It will test your patience and resolve. Hence, you should keep your complete attention focused on the entire structured work segments. SaaS products can certainly bring you riches beyond imagination, but considering these aspects mentioned in the above paragraphs will ensure that you don’t make decisions in haste and commit an irreversible error.
Tip- In your pursuit of becoming a millionaire in a short amount of time by SaaS product development, you might face burnout. Hence, it is important to be resilient, patient, mentally and physically fit and take ample rest.
2. Quick Validation
In order to pursue custom software development to create a SaaS product that can make you a millionaire in few years, it is important that you know all the nuances associated with the development process, product, market, etc. First, you need to know the market, which is you are targeting. Whenever you are developing an idea for a SaaS product, you are essentially creating a hypothesis of demand of the market. First, you have to ensure that you have the required knowledge of the market that you have an idea of a product that solves a pain point.
Hence, you should learn about the customer segment and the marketplace. You need to know who are your target customers, what are their pain point which you intend to solve, why are these customers having this pain, is there any other solution which solves this, what does it actually cost them in terms of time, hassle, money or resources, etc. The primary goal for launching a SaaS company is to get complete knowledge of the target market.
The SaaS product will be purchased by customers only when it addresses their pain points, not just yours. Even though you may know the majority of answers, still you should be open about investigating the problems faced by the customers. You should aim to validate whether the hypothesis you have created has any actual market need. If nothing is proven during this particular period, even then you have avoided wastage of precious time and money on the project which would have been highly improbable to build as well as the market.
3. Minimal Viable Product
After the planning and validation phase, you need to move forward to create a Minimal Viable Product. It’s one thing to develop software which addresses problems of the customers, but it’s a whole different thing to provide a product which people will actually spend money to buy it. Marketing will certainly position your SaaS product so that people will certainly want to buy it, but a SaaS product that doesn’t solve the key challenges faced by people will sink quickly. It’s an uphill battle which you should try your best to avoid.
Also, it’s better to get in touch with the target market and gather as much intelligence and information regarding the customers’ demands. You can combine this part in the entire research phase of SaaS application development, in case you have sufficient validation that there’s a definite requirement in the market. You can simply begin to ask not only what the customers would be paying to have your solution implemented in their businesses, but also if they would be ready to pay monthly or annual subscription fees and hour much amount they would agree to. Remember, the more the number of customers subscribe to your monthly or annual plan, the more profit you will make. This will lead you to the road to becoming a millionaire.
Also, you are essentially allowing the market to confirm as well as dictate what exact value of your product will actually be, which is quite helpful in the pricing of your product. In case you are creating a product in a space that has healthy competition, then you can price validate in the market, but it will still be harder to stay in such space. Hence, this is exactly the best way to find the starting point.
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4. Validating SaaS Product Idea with a Minimal Viable Product
Once you have validated that your SaaS product has a sufficient market that requires it and that people are more than willing to pay for it, you can move further in custom software development of your SaaS product. It means that you have firm footing and the hypothesis is spot on. And in case it is not, it’s fine too. You have just saved yourself from developing a failed product.
Often, you can easily create a Minimal Viable Product without writing a single line of code by simply selling your MVP and then fulfilling the product or service in a structured manual way behind the curtains. For instance, imagine software that takes a video as an input and converts it into distinctly optimized slides with a particular custom theme. You can simply sell this basic premise of your product by just doing it manually for the initial batch of customers. It might seem to be a tedious process, but there is nothing much simpler way than this to validate your product which is going to solve the requirements of the people, and people pay for it, and you get more customers than actually making any sales.
The most crucial and hardest part of this is actually understanding what features to be in the MVP. After recognizing that the MVP is a simpler version, you can move forward to build on it and develop a finalized product. Keep going through it again and start removing things. You need to focus on the primary and basic hypothesis or solutions that you are building. Following this, you will get the MVP you want actually to launch with. Note that, this entire validation stage is completely about proving that you possess a product which people need, want and will actually pay for. Most of the software development companies in USA follow this process for SaaS product development. If you manage to execute this process with a high level of effectiveness and develop a flawless product, you will be able to rake millions by selling your SaaS product.
5. Observe the Market and Pivot Fast
Now, at this stage, your MVP is ready to be launched. This is a significant step in your SaaS company’s journey. At this particular point, you need to do a few early-stage validations, but you haven’t actually produced more than a basic product. At this time, you need to start listening to feedback from your first users and learn as much as you can. In order to get these early adopters of your product, you can follow the below-mentioned strategies.
i) Create an early market buzz by creating advertisements for your product and explain all the pain points that your product addresses and also that your product has been validated with the user base. Run these ads on social media, which is the most cost-effective medium for advertisement, to target the audiences of a particular customer demographic. Build a website and link your advertisements to a landing page and put an opt-in in order to allow the users to learn more about your product.
ii) A software product development company should launch a beta version to a certain list of people who have actually opted in on your website. From this list, you can bring users to use your MVP. Try to build your plan, which will take you forward in the fastest way with the right customer base. Only make any changes or addition to the product if only when you are convinced that a certain issue isn’t a situational problem for just one customer but something which can easily add true value to your SaaS product.
The beauty of SaaS product development is that with limited expenditure on developing MVP, validating and marketing, you can easily make strides towards becoming a millionaire.
Think Progress, Not Hyper-Growth
This might seems like contradictory advice, but in the case of SaaS product, you will want to really focus on the product’s progress, market fit, degree of smoothness of company running rather than simply profit. Don’t get embroiled into exerting all of your efforts into achieving early stage hyper-growth otherwise, and you will be putting your product, team, company at the risk of going out of the business. Also, you will realize what exactly profitability can do for your company in the long term. It also offers you the flexibility in decision-making and allows you to commit mistakes.
The primary goal of a SaaS company is to create powerful, robust and recurring payments that come in every month. You also need to consider new customers coming in, which is new revenue, and customers leaving, which is churn. The major problem is that as you keep growing, you will start to incur additional costs such as hiring new developers to help offset bugs and carry out new development, server expansion, etc. As you grow the MVP and the early adopters, you will require marketing help and customer support too. Expenses will start to increase with the increase in revenues, and you have to balance the new revenue coming in with expenses. That’s why you need to focus on progress and not get hypnotized with the prospects of hyper-growth.
Understanding your customer base along with knowing the market, ensuring the product offers real value, customer acquisition costs, churn numbers, etc. are the key aspects that a SaaS development company needs to consider.
Cost to develop SaaS Product
If you are developing a SaaS product, you should know the costs associated with the development process. There are certain categories of the cost when it comes to developing a SaaS product. They are:
- Business Analysis and Design
- Development and Support
- Server Costs
Let’s look at these categories in detail and approximate costs associated with them:
Business Analysis and Design
The cost of SaaS app development depends on the entire scale of the project, along with the number of functionalities as well as specific characteristics. Each one of them needs to be defined in the business analysis state in order to avoid wastage of funds due to pursuing an incorrect strategy.
This stage generally costs about $4,000 to $6,000 per month. Usually, it lasts for around two to three months.
Development and Support
The creation of the SaaS application majorly consists of developing prototypes, testing, collecting feedback from initial customers, fix bugs, and launching. It doesn’t make any sense whatsoever to speak about the exact and precise cost since it completely depends on the complexity of software, number of features as well as the size of the core audience.
In the case of software development companies in the USA, the cost of development, as well as support, starts from $15,000.
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When it comes to cloud-based SaaS architecture, it means lots of server usage. Hosting remains to be the main cost of a SaaS application. With time, this cost will continue to increase because of the increase in the number of users. Hosting can easily costs from $50 to $10,000 per month, depending on the actual business scale and the total number of users.
You can easily promote your SaaS product with inbound marketing as well as outbound marketing strategies. It can include email marketing, SMS marketing, Google AdWords, Facebook, and Instagram Ads and other marketing methods like content marketing. Even though there is no fixed amount to be spent on marketing as it depends on the SaaS company’s marketing budget. However, marketing will cost nearly $5,000-$10,000 per month after the launch of your product.
Almost everyone wishes to become a millionaire, except billionaires. Entrepreneurs look for low-budget businesses to earn millions. When it comes down to one of the most profitable businesses, a SaaS company certainly features. SaaS product development can provide an entrepreneur to create a product that brings in huge revenues every month. The beauty of the SaaS product is that it can be validated with a Minimal Viable Product, and an initial number of customers can be gained through it.
Once achieving this, a SaaS development company can develop it further and has early adopters which bring initial revenue to continue the development and spend on marketing. With the rise of users and increased revenues, you can spend on better monitoring software, servers, customer service and even hire new developers who are experts in custom software development. With the pricing of your SaaS product per user per month based on market intelligence and increasing users, you can start to generate huge revenues.
Also, tweaking your product and adding extra features, making multiple versions of SaaS products to target different customer segments helps in gaining multiple streams of revenues through different versions of your product. Due to these characteristics, SaaS product development can help you become a millionaire if the process is followed correctly. Also, the costs to develop a SaaS product is distributed in different categories: Business Analysis and Design, Development and Support, Monitoring software, Server Costs, and Marketing. The corresponding costs are duly mentioned in previous paragraphs.