How to Build a Cloud-Based SaaS Application in 5 Steps

Aug 30, 2021·10 min read

Software as a Service (SaaS) is a relatively new approach replacing traditional software license purchase. Why is it more popular among both users and service providers? How is such software created? Let's dive into SaaS app development together!

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Software as a Service (SaaS) is a relatively new sales model that is replacing traditional software licenses. Why is SaaS software popular among both users and software companies? How is SaaS software created? Let’s dive into SaaS app development together!

Do you remember when buying software meant running to the local electronics store or ordering a physical CD online? Technology has changed drastically in the last 10 years. Today, the software industry is dominated by the Software as a Service delivery and pricing model. SaaS is a popular (and occasionally controversial) topic in the tech media today. That’s why we’ve written this article to shed light on SaaS web applications and platforms. If you’re wondering how to build a SaaS product or whether a SaaS architecture is a good option for your project, read on.

What is a SaaS application?

A SaaS application is software licensed using the Software as a Service business model. SaaS is an approach to software delivery and maintenance wherein developers don’t sell their programs with a lifetime license or wait until next year’s version to release feature updates. Instead, companies market their software as a service (hence the name), typically via a subscription model.

These services are hosted in the cloud, which means they don’t need to be physically installed on your computer. The use of cloud computing gives SaaS solutions a handful of benefits:

  • Cost efficiency
    There’s no need to buy and maintain expensive hardware, and you only pay for the resources your app uses.
  • Scalability
    If your requirements increase, you can upgrade your plan in a few clicks. Downgrades are also possible.
  • Reliability
    A cloud is a network of servers that can be located around the world. Even if one server goes down, your app will remain online.
  • Security
    Cloud service providers pay close attention to security to ensure your data is stored in a safe place.

Cloud-based web apps are accessible from any device anywhere in the world. Also, users always have access to the latest version of cloud-based software, as there’s no need to download updates. Being cloud-based, SaaS applications have many advantages over on-premises applications.

Comparison of saas software vs. traditional software

The difference between SaaS and on-premises software is best illustrated with an example. Let’s consider a popular product that recently made the transition from the traditional software delivery model to the SaaS model — Adobe Photoshop. If you employ or work with visual creators, you’ve probably seen Photoshop in action. Years ago, Adobe Photoshop, along with countless other programs, were sold to consumers for a one-time price. Once the consumer paid, they were given a key to access a certain version of Photoshop indefinitely.

But if you attempt to buy the latest version of Photoshop on Adobe’s website, you’ll quickly realize that’s no longer how Adobe offers its industry-leading product to consumers. Instead of paying a high up-front cost for a one-time product license, you must sign up for a monthly subscription to Adobe Creative Cloud. This monthly fee is lower than the purchase price of Photoshop in the old model and gives access to the most recent version of multiple Adobe products as well as instant updates. Moreover, testing a product before paying lots of money for it is a significant benefit.

Though there has been pushback against the subscription trend, the SaaS model has caught on because it offers benefits for both developers and users.

Advantages of SaaS

There are a few core advantages of a SaaS architecture for both users and developers:

  • Regular and longer-lasting revenue for developers
  • Lower up-front costs for users
  • Developers can attract a larger potential customer base (due to lower up-front costs)
  • Users get regular, instant updates and new features without having to purchase new versions
  • A trial period lets users see whether the service fits their needs

Through a website, customers can get seamless and instant access to a SaaS app with all the latest upgrades and features. And they avoid high start-up costs, whether those are direct payments to developers or hardware upgrades needed to run the software locally.

At the same time, service developers win with the SaaS model because they gain a relatively stable source of revenue in the form of subscriptions. This enables them to plan and carry out regular development efforts that keep their users happy and subscribed. And because initial costs are lower for users, cloud projects are also more likely to attract new customers.

But this app model isn’t perfect, and the advantages listed above don’t necessarily make it the best fit for every type of app. Specifically, software that’s used rarely or only once — or that caters to a niche group of consumers or professionals — may lack a sufficient base of users who are ready to pay for it.

How to develop a SaaS solution

SaaS application development differs from the traditional approach to software development in several ways. These differences can seem intimidating to non-experts and those not experienced with the concept of SaaS products. But cloud-based and traditional app development actually have a lot more similarities than differences.

A key difference in creating cloud apps is the need to select a cloud services provider. One of the central features and benefits of cloud solutions is that subscribers typically don’t have to download or install software on their end devices. This is great news for users, who don’t have to pay a high up-front price for the app itself and don’t have to sacrifice valuable storage space and computing power to run the app and get the job done.

But the need for storage space and computational power doesn’t just disappear.

Instead of running on end devices, Software as a Service solutions typically do their computing behind the scenes in the cloud.

That behind-the-scenes computation requires a reliable cloud service that can host your SaaS platform and enable convenient access for users.

To build a reliable cloud app, you should select a reliable cloud host. Ideally, you’ll want to select one with low baseline costs but also the ability to scale as your platform and user base expands. Amazon Web Services (AWS) is one popular cloud services provider with a variety of tools for SaaS developers. But we recommend you do your own research after defining the specific needs of your platform.

Another tool you have to think of is a content delivery network, or CDN. A CDN ensures that users can quickly and reliably access your site or app from anywhere in the world by providing a network of servers distributed across the globe. When a user tries to access your product, the closest server responds. A content delivery network, therefore, ensures a perfect user experience no matter the user’s location. Amazon Web Services can also help you out with this.

Also, make sure to follow important trends in the Software as a Service industry. You may be surprised by how many valuable ideas you can find for your business.

5 tips for SaaS development

Here are five more tips for building cloud-based apps.

1. Offer your customers a clear and reliable service

The SaaS model requires you to offer solid and consistent service. Customers are willing to sign up for a subscription, but they won’t do so for everything. How can you tell if the benefit you provide is the right fit for the SaaS business model?

Let’s look at a real-world example of when and where SaaS doesn’t work well. Once, I was searching for a way to convert between two specific file types. Neither file type was proprietary, so I figured I would be able to find a simple online converter that would get the job done for free. But I quickly found that many converters had moved to a SaaS-based model that required me to sign up for a monthly subscription to convert my file.

This was frustrating. Why? Because I only needed to convert a single file, and I only use this file type about once every six months. There was no way I was going to sign up for monthly payments for this kind of software, though I probably would have been willing to pay a few dollars to use it just once.

SaaS application development team

The SaaS business model is typically best when your app’s benefit:

  • is clear and recurring
  • monetarily benefits customers
  • applies to a wide audience

The cloud-based approach is most profitable when a product appeals to a large user base.

2. Do market research and define your competitors

Many developers and application owners get so swept up in the SaaS hype that they forget to validate their project idea by looking at one of the best sources of real-world evidence: the competition.

Have your competitors adopted a SaaS model? If not, that doesn’t mean it isn’t a good option. You just have to make sure your customer base is willing to sign up for a subscription rather than investing in your product upfront.

If your web app is in a sphere that predominantly follows a traditional delivery model, its benefits will have to exceed those offered by your competitors.

Find out if consumers are tired of constantly purchasing newer versions of competing software. If they are, they may be willing to move to a subscription-based product.

Of course, market research is crucial for any business. As you look at your competitors, consider not only what they’re doing right but also what they’re doing wrong. Look for gaps in services or features that your platform could fill to provide added value and win over customers.

3. Select a technology stack

Selecting a technology stack for your SaaS application is akin to choosing the building materials for a house. Your technology stack is what’s used to build and run your web app.

Development company for SaaS app

First, you’ll need several tools for developing the client-facing components of your platform. These are well known and nearly ubiquitous:

For server-side development, there are a few programming languages (and corresponding frameworks) to choose from:

  • JavaScript (Node.js)
  • PHP (Laravel)
  • Ruby (Ruby on Rails)

To build a SaaS product, a database for back-end data storage is inevitable. Here are the two primary relational databases:

  • MySQL
  • PostgreSQL

And finally, you’ll need to select a server for your application:

  • Nginx
  • Apache

Each of these options aligns best with particular use cases, so it’s critical to estimate your platform’s scalability, potential profits, and start-up costs before selecting.

Need help choosing the technology stack for your SaaS project?

Our tech experts will help you make the right choice!

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4. Choose your pricing strategy

Your platform’s pricing strategy can make or break your web app. Though there are no hard and fast pricing rules, as the SaaS model has evolved, several successful pricing strategies have emerged.

Chances are your smartphone has some sort of freemium app installed. In the freemium pricing model, an app offers a certain set of core features for free. Typically, these core features cast a wide net and appeal to the widest possible audience. The app developer then makes money by converting free users to paid (or “premium”) users by offering an advanced set of features for a one-time or monthly fee.

Monetization strategies for SaaS apps

Evernote, for example, offers free note-taking and cross-device synchronization. But you can also pay to sync across additional devices and store more data in the cloud.

But you don’t necessarily have to give away a set of features for free, even though this is a great way to attract customers to a new product in a competitive environment. If your product targets a more niche customer base, it may be a better idea to offer certain features as loss leaders by offering a low subscription price for core features (at cost) and offering various service tiers at higher prices that include advanced features.

5. Find SaaS developers

Building a cloud application, especially in today’s rapidly changing digital ecosystem, is not a set it and forget it operation. Some of the core benefits offered by SaaS platforms are constant updates, feature integrations, and support.

If you or your business team aren’t prepared for or excited about making a long-term and regular commitment to product development and maintenance, it may be a good idea to consult with and hire an experienced team of SaaS developers.

As a bonus, an outsourcing company will be able to offer industry insights and advice tailored to your business needs.

Take a look at these successful SaaS startups: their stories may inspire you to create a great project.

What are the costs of SaaS app development?

Of course, the costs of developing a SaaS app vary depending on the complexity of the product, its features, integrations with other services, etc.

You also have to carefully choose the country where your development team is based. This will define the price and quality of your product. For example, if you partner with an American or Canadian agency, you’ll have to pay somewhere between $150 and $180 per hour. Companies from Asia or South America may charge $15 to $45 per hour.

Cloud-based SaaS app development costs

Prices in Europe also vary significantly. Western Europe is a more expensive outsourcing market, with prices between $90 and $120 an hour. Developers from Eastern European countries typically charge $40 to $75 per hour. Outsourcing web app development to Ukraine, Poland, or Belarus is a good deal.

According to these rates, a simple SaaS MVP will cost you $15,000 to $35,000 to build with a company based in Eastern Europe. The price for a full-featured web app may reach $100,000 with a company from this region, which is still a great saving compared to what it would cost to develop with a company based in North America.


Cloud applications aren’t the solution for every business case, but the SaaS model has quickly grown in popularity due to the benefits it offers both to consumers and application developers.

Are you considering developing a SaaS product? Would you like advice based on your industry and needs? We can help!

Want to know how much it would cost to build a SaaS web application?

We’re ready to consult on the development process and estimate the cost of your project.

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