When there is a need to develop a custom product for business, more and more of its representatives are leaning towards cloud based applications built on Software as a Service (SaaS) architecture instead of desktop ones.
Indeed, given that it is easier to deploy, support, and scale such products, and access to them is possible from any device with an Internet connection, it becomes clear why the global market for SaaS products is developing so rapidly: according to Precedence Research data, it will reach about USD 1,251.35 bln by 2034, up from USD 408.21 billion in 2025, with a CAGR of 13.32%. In this SaaS product development guide, you will be able to learn about custom SaaS development from A to Z.
What Is Custom SaaS Product Development?
When your business is at the initial stage of development, existing market solutions (like CRM, ERP, project management, accounting, HR, and other systems for various business needs) are sufficient to automate its processes. However, as these processes become more complex, the functionality of off-the-shelf products often turns out to be either insufficient/not customizable enough, or redundant/complicating its practical use. In this case, to achieve seamless automation of complex, but regular operations, it makes sense to resort to SaaS product development services.
In fact, the development team creates a custom product tailored to your business and hosts it in the cloud. Thanks to this, instead of installing it on your employees' PCs and deploying a server infrastructure, you can simply go to the browser and start working. At the same time, you gain additional SaaS benefits:
- You will be able to launch your software as a service product as soon as possible without having to spend resources on local installation and distribution;
- You will need less support and scaling costs compared to desktop solutions since updates and bug fixing will be carried out centrally, and new product versions will not need to be re-downloaded and installed;
- Your developers will be able to implement almost any SaaS integration, which is often extremely difficult in the case of custom desktop development (especially when it comes to BI integrations);
- It will be easier for your development team to ensure compliance with generally accepted standards (such as GDPR, HIPAA, SOC 2, ISO 27001, etc.), maintain an event log, as well as provide scalability and constant access from any device.
Finally, if you wish, you can start generating income from your SaaS product by universalizing its functionality and offering your competitors and/or partners to purchase a license for its use. Thus, you will be able to take an undisputed leadership position in the market, setting the “gold standard” for a number of processes, as, for example, happened in one of our SaaS case studies concerning the development of a TMS for centralized truck management. In particular, in addition to a 30% increase in employee productivity, the client managed to fully recoup development costs in just over a year thanks to license sales.
If you would like to follow the successful example of our clients and also launch your own SaaS product, book a free consultation to assess the potential for digital transformation with a custom SaaS solution and get closer to its start!
Phases of the SaaS Development Lifecycle
Now we propose to consider the SaaS development lifecycle in more detail.
Planning and Research: Defining the SaaS Product Vision
At this stage of the SaaS product development lifecycle, the development team conducts a comprehensive business analysis, performs a competitive benchmark, and defines product tasks taking into account the context of your business goals. Analysts identify the product’s target audience, determine the functionality (primary and secondary), and select the optimal architecture and tech stack, taking into account the specifics of your existing IT infrastructure, the necessary integrations, and SaaS scalability prospects. The result of these actions is a detailed technical task and user scenarios that consider the pain points and goals of the target audience.
Design and Prototyping: Creating User-Centric Solutions
Taking into account the technical requirements, user scenarios are transformed into UX/UI prototypes (it is quite possible that designers will have to ensure adaptability for some design elements to ensure the best SaaS user experience). Depending on the project’s complexity, these prototypes can be created in several stages, from low-fi to hi-fi. Also, upon completion of the stage, the team compiles a UI guide and determines the architecture of the interfaces.
Development and Testing: Building Scalable and Secure Products
Now, the team can begin the cloud product development, in particular, work on the frontend and backend, implementation of integrations, database connections, etc. Typically we follow an agile methodology here, which allows us to regularly test hypotheses and ensure continuous delivery of updates. As individual components are implemented, their testing also begins, including unit, integration, load, e2e, and security one. At the end of this stage, the team will create an MVP version with a minimal feature set, comprehensive test documentation, and bug reports.
Deployment and Maintenance: Continuous Improvement and Updates
Finally, after all the improvements and enhancements performed after acceptance testing, the product deployed in the cloud environment goes into public use. If updates are planned frequently, the team automates releases via CI/CD zero-downtime SaaS deployment with documentation of all processes, configures event monitoring and alerts, and organizes the collection of user analytics.
The Role of Software Development in SaaS Product Creation
Depending on the goals of the SaaS product, the initial features of the IT infrastructure where it will be integrated, the budget, and the requirements for the launch date, developers have to choose a specific technology stack and an approach to development.
Key Programming Languages and Tools for SaaS Development
The choice of tools and languages is determined by the architectural requirements and the scale of the project itself. As for the backend, the choice can be between Node.js, Python, Ruby, Go, Java, etc., and for the frontend – between React, Vue.js, and Angular frameworks (although other options are also possible). As for databases, the choice is often made between PostgreSQL, MongoDB, and Redis. Additionally, if DevOps implementation is planned, Docker, Kubernetes, Terraform, etc. can be added to the technology stack.
Cloud-Based Development for SaaS Products
Since development is initially focused on cloud infrastructure (which means horizontal scaling, increased fault tolerance, and reduced administration costs), it is important for SaaS product developers to choose the optimal cloud computing provider. Offers from AWS, IBM, Azure, and Google Cloud are most often considered.
Integration with APIs and Third-Party Tools
Modern SaaS applications are extremely rarely used alone and require integration with external systems, such as the CRM you are already using (as in the case of the custom SaaS analytics platform that we created), payment gateways, email services, SMS services (like in our case of developing a SaaS VoIP product for a hosting provider), etc. At the same time, each new integration provokes risks in the form of a limited number of requests and potential synchronization problems. Queues and caching are usually used to solve them.
Security Best Practices in SaaS Product Development
Finally, to ensure SaaS security, i.e., safe data transfer and storage, developers should ensure strong encryption (for both data states), implement RBAC or ABAC to differentiate access rights, implement logging and incident monitoring, and ensure SOC 2/ISO 27001/GDPR compliance if the SaaS collects customer data.
SaaS Product Commercialization
Let’s proceed with the SaaS product commercialization. We have already mentioned above that in the long term, you will be able to monetize your SaaS solution if its functionality is useful to other businesses in your niche. In particular, the two most popular SaaS pricing models are subscription-based and pay-as-you-go. While the subscription based software provides more predictable income (since you understand how many clients you already have and what the average number of new ones coming in a fixed period is), the second model can be considered for API platforms or B2B solutions as it will allow your clients to pay for your service only when they need it.
Ultimately, your SaaS customer success should be determined by the cost of attracting one paying client (CAC) and the lifetime value of the client (LTV, which determines the total revenue from one client). We also recommend taking into account such metrics as:
- Churn Rate, which determines the % of users who unsubscribed in a fixed period;
- ARPU, which denotes the average revenue per user;
- Net Revenue Retention (NRR), which identifies revenue growth from the existing customer base.
If you would like to achieve the best values of the above metrics for your SaaS solution and choose the best one from existing cloud service models, feel free to contact us.
Sales and Marketing Tactics to Drive SaaS Growth
Let's imagine that the monetization model has already been chosen, but how to attract customers? Most often, marketers build their strategies for SaaS solutions based on the following types of digital marketing:
- Content marketing, including developing a website for your SaaS solution, its SEO, creating blog and guest posts, etc.;
- Product-led growth, which allows leads to realize the value of your product through a demo or trial version;
- Referral programs.
Ultimately, each strategy is individual and largely depends on the niche and needs of your target audience, so to save your budget, it is better to contact an expert digital marketing agency.
Cloud Product Development and SaaS
The initial architecture of a product that is planned to be provided according to the SaaS model is not always cloud-based – often businesses already have some software that they want to migrate to the cloud. Whatever the case, be it migration or cloud-native development from scratch, with this approach, you will get increased scalability (due to containerization, microservices, autoscaling, caching, and load balancing that cloud SaaS providers can offer), maximum fault tolerance, reduced infrastructure support costs, as well as the ability to quickly deploy new features thanks to CI/CD.
Also, you have to be puzzled by the choice of a vendor: for example, while AWS is considered one of the most cost-efficient solutions with a rich range of services, Azure is better suited for enterprise projects that are already tied to Microsoft products. Naturally, your choices don't end with these two providers, so it's important to consider all options that fit your budget, goals, and other project requirements.
Challenges in SaaS Product Development and How to Overcome Them
The main SaaS industry challenges include the following:
- Complex integrations and dependence on third-party software providers (in this case, we use middleware and API gateways);
- Compliance with user data security standards (advanced encryption algorithms, auditing, and regular security reviews with legal consultants will help here);
- Managing multi-tenancy (at WEZOM, we implement a tenant-aware architecture with strict logical isolation to cope with the risk of data leakage and performance degradation).
To successfully bypass these problems, you can contact us, and we will build a fault-tolerant and reliable SaaS solution.
Choosing a SaaS Product Development Company
When choosing a contractor, you should rely primarily on the portfolio and industry expertise. In addition, it is crucial that your digital partner has experience working with several cloud providers. Finally, you need to find out how reporting will be performed, whether post-lunch support will be provided, and what your role in the project will be (after all, the team has to delve into your company’s internal processes as much as possible).
Future Trends in SaaS Product Development
The current digital technology market offers promising solutions that can significantly improve the functionality of your SaaS solution. In particular, together with microservices and the API-first approach, we are talking about such SaaS market trends as artificial intelligence and machine learning (they can be used to build recommendation systems, predictive analytics, intelligent search, adaptive interfaces, etc.). Low- and no-code platforms are also gaining popularity due to the possibility of accelerating and reducing the cost of the SaaS product development process (since programming will be required much less or not required at all).
Building a Successful SaaS Product
In addition to the expertise of your contractor, for the success of your project, you have to provide ongoing client support and maintenance after the subscription and regularly enrich it with new features without causing downtime for existing clients. It is also worth noting that product development as a service with a UX focus has the best retention and net promoter score, so it makes sense to pay due attention to testing the interface. And most importantly – do not forget to take into account the feedback in your SaaS based product development roadmap.
Final Thoughts on Scaling and Growing Your SaaS Product
Now, knowing the answer to the question: “What is SaaS product development?”, understanding the inner workings of this process, and knowing its potential, you can make an informed decision about its rationality in your particular case. By the way, if you are looking for a reliable SaaS based product development company, you can contact WEZOM and we will guide you from collecting requirements to a successful product launch and working on its updates. Schedule a free consultation with our SaaS product developer to get a more detailed answer to all your questions related to SaaS product development right now.