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10 min read

Category: Business

28 Apr 2023

28 Apr 2023

10 min read / Category: Business

Guide: How to Build a Saas Product in 2023?

Angry Nerds


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SaaS (Software-as-a-Service) has completely changed the way traditional businesses operate. In the past, companies had to invest large amounts of money in expensive infrastructure to access technologies such as Business Analytics and Customer Relationship Management. However, SaaS services now provide remote and cost-effective access to these technologies.

Understanding the SaaS market in 2023

The shift towards SaaS is driven by modern workspace changes, remote work, and business specialization. SaaS services are developing more targeted and vertical applications for specific industries like healthcare, education, etc.

Deployment time

Based on industry predictions, the typical amount of time it takes to implement a system has decreased considerably over the past ten years, from 54 hours to 7 hours. This is largely attributed to the integration of application programming interfaces (APIs). If SaaS businesses can't reduce deployment time, they risk losing customers to more agile platforms. The API market is currently valued at $4.5 billion and is expected to grow to $13.7 billion by 2027, significantly influencing SaaS purchasing.

AI and SaaS

Sundar Pichai thinks AI is a pretty big deal, even comparing it to the discovery of fire! While that might sound over the top, there's good reason to believe it's important. In fact, the AI market is growing steadily and is expected to bring in a $733.7 billion in revenue by 2027. Lots of different technologies, like social media tools, chatbots, and analytics software, use AI and machine learning (ML) to make their processes easier and more efficient.

SaaS and AI go hand in hand, working together to provide seamless solutions. AI can take all sorts of data, like customer behavior, to automate tasks such as CRM enrichment, chatbot automation, and even churn prediction. For subscription businesses, AI and ML can help predict cash flow and revenue pipeline. Plus, most subscription trackers use AI or ML to measure progress and KPIs more efficiently.

Vertical SaaS

Vertical SaaS applications are created for particular sectors, while micro-SaaS apps focus on narrower niches within those sectors. For instance, while a university management system is a typical vertical SaaS application in education, a separate small-sized SaaS application could be aimed entirely at financial planning for student tuition fees or bookkeeping of research projects.

Customers now demand SaaS products that cater to their specific needs and preferences, prompting developers to create customized software packages that meet these tailored requirements. The success of SaaS offerings has also paved the way for infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS), leading to more inclusive cloud solutions.

How to approach building a SaaS product from scratch?

1. Identifying the problem

Identifying a good problem to solve is crucial when developing a Software-as-a-Service (SaaS) product. One approach is to start by addressing a problem you have experienced yourself. This can be a simple issue, such as the loss of information in project management, which inspired the creation of Notion, an all-in-one product that simplifies knowledge exchange and project management within a company. Another helpful tip is to "hack" a category by creating a new alternative, rather than trying to invent a completely new product.

For example, Slack and Discord are chat apps that target different customer segments. Salesforce became a market leader in customer relationship management (CRM) despite not being the first to offer such a product. It is also important to consider the market and define a detailed customer persona before visualizing and developing your product. Building a micro-SaaS, such as a Google Chrome extension, Trello add-on, or Jira app, can be a profitable and stable side business, but it is risky to rely on it entirely. Once you have an idea for your SaaS product, the next step is to develop it.

2. Market research

To successfully launch your SaaS product, it is vital to conduct thorough market research. Before hitting the ground running, it's essential to identify a pain point that potential customers are experiencing and for which you have a viable solution. One way to achieve this is by first understanding the problems you have encountered or experienced yourself and designing a solution that can benefit others. Your product should solve straightforward as well as intricate issues such as enhancing communication between applications or replacing multiple current processes with an all-in-one system of solutions.

Competitor analysis should not be overlooked at this stage; investing effort into evaluating who currently dominates the industry - including direct competition or substitutes - provides invaluable insight. Conducting a comparative analysis of your competition including the strengths, weaknesses, opportunities and threats, is going to give you a clear overview of where you stand among them.

3. Defining the target audience

To achieve success with your business venture, it's crucial to recognize who exactly your target audience is and understand what challenges they face. The key here is honing in on one particular group or demographic where there's ample opportunity for growth. By laser-focusing on an industry and niche that show promise, you will hopefully gain a better insight of their potential reach capacity when launching the product off the ground.

Speak directly with prospective users of your SaaS product in order to better understand their needs and expectations. Using direct customer feedback, is going to give you valuable insight on who is going to use your product and what are their expected pain points, as well as what the target group is expecting to gain out of your product. To thrive in a constantly evolving market, you need to place high importance on delivering value and filling a gap in the highly-saturated market.

Your team can achieve this through ongoing innovation and staying relevant with cutting-edge features. Continual development ensures a heightened level of competitiveness.

4. Creating the user experience

If you want to create a successful product, you don't necessarily have to come up with something entirely new and reinvent the wheel. Instead, it's possible to take an existing product category and introduce a distinctive alternative. For instance, a micro-SaaS like the highly popular Dark Reader Chrome extension can be a profitable side-business that offers stability at the beginning of your SaaS journey.

Another great examples is Slack, which rose as a popular messaging app that catered towards an underserved customer segment despite facing a lot of competition. Similarly, Salesforce wasn't the first CRM to enter the market space; nevertheless, its innovative strategies and unique approach earned it prominent status as a leading SaaS vendor.

To develop a successful product, it is important to start by creating a customer journey that is based on the personas identified in previous steps. This involves visualizing and developing the architecture of your product ideas in a way that resonates with your target audience. Once you have an outline for your product, the next crucial step is to bring it to life through efficient development.

5. Choosing the tech stack

Developing a SaaS product is challenging, particularly for founders who do not have as much experience in technology. To overcome this challenge, scalability is key. Instead of doing everything at once, you can start small and implement new functionalities as you grow. Additionally, picking a tech stack option that makes subsequent changes easier can prove crucial.

There are three ways to go about building your product: Learning to code, using a no-code tool, or hiring a development team.

Learning programming can be a lot of fun, and there are plenty of ways to start! You can use various online resources like FreeCodeCamp or Codecademy, which offer interactive courses. Even though building your own product can be challenging at first, the experience is invaluable and can be an additional step in your career.

If you're not looking to build something from scratch, there are a lot of no-code tools, such as Zapier or Bubble, which can help you out. You'll be able to build your app just like you would a website on Squarespace.

Of course the next option is hiring an external team of developers, or entirely outsource development. This option definitely saves you time and allows you to focus on the sales and strategy aspect of your business.

Understanding the technical aspects of your business is important, even if you hire someone else for development tasks. The technology stack for any SaaS product consists of numerous components that must intersect flawlessly. These different elements include programming languages and operating systems, servers and server tools, back end and front end structures, data management techniques, and APIs. It is important to consider these elements carefully and choose the most appropriate technologies that will allow for scalability and growth while enabling easy hiring of skilled developers.

Challenges of building SaaS

In the world of software development, the Software as a Service (SaaS) model has been gaining immense popularity in recent years. This model offers a lot of benefits to both businesses and users, such as cost savings, scalability, and easy access to software from anywhere. However, as with any technology, there are potential downsides to the SaaS model that businesses and users should be aware of.

Especially in the age of AI, one of the most critical issues with SaaS is data privacy. When using SaaS products, users are sending their data to third-party servers, which may not always be secure or trustworthy. This means that users don't always know where their data is going, and it could potentially be used or sold by companies for marketing or other purposes. As a result, it's essential for both entrepreneurs and developers to be experts in data privacy and ensure that their SaaS businesses are running in an ethical and transparent manner.

Another issue with SaaS is the use of dark patterns, which are tactics used to make it difficult for users to do things they don't want to do, such as unsubscribing or deleting their account. These tactics are used by some companies to boost their bottom line and shareholder profits, but they can erode trust with users and lead to negative reviews or lost business. By avoiding dark patterns, businesses can differentiate themselves from their competitors and establish trust with their users.

Finally, there is a growing trend of users becoming tired of live services, particularly in the gaming industry. Games-as-a-Service, which are freemium games with microtransactions for premium add-ons and power-ups, have become the most popular business model in gaming. However, some gamers are getting tired of the predatory business practices associated with these games and are seeking more artistic and authentic gaming experiences. Similarly, users of non-gaming SaaS products may also be looking for solutions that provide value without relying on predatory business models.

Angry Nerds


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