How Much Does a SaaS MVP Development Cost?

If you have an idea for a great service or application that solves a user problem, don't rush to invest in developing a fully functional product and get ready for months of hard work behind closed doors. According to the lean startup concept of Eric Rees, it will be much more efficient to answer the question: "Do users need this product?" MVP will help you with this. 

However, often at this stage, there is a misunderstanding between start-ups and the companies they trust to develop. The misunderstanding has to do with estimating how much does a SaaS MVP costs.

SaaS Development Cost Explanation

Working with startups, we often come across the fact that everyone wants a mega-cool technological project, and how much it costs to develop - there is no understanding. Naturally, in such situations, startups turn to the developer company and ask to name the price, as a rule, even without a detailed technical specification. Then the professionals try to overestimate the project and give a higher price simply because it is risk management. And the second option - they offer to make a product design, with the help of which to estimate the real cost. 

Both options are not acceptable for a startup founder, since it is impossible to plan a budget under such conditions. There is a third option - to combine a rough estimate and a fixed cost of product design. In this case, the startup will have a choice of what is easier for them to do. Also, if a company cannot provide a rough estimate, it means that most likely they have no experience in such a project and it is worth considering whether they are ready to entrust their project to inexperienced specialists.

Our dedicated development team has come across SaaS projects from various industries and a large number of preliminary project evaluations. Based on this experience, we have developed a budget calculation formula that is suitable for almost any project. In this article, we will reveal our secret of project evaluation.

How to Do the Budget Planning to Build a SaaS MVP 

You are certainly looking forward to a quick response. Here you go: the MVP in our company will be worth between $ 70-150,000. And now we will show you why the answer to “how much does it cost to make an MVP for SaaS?” is almost the same for all SaaS MVP will cost in this range.

Yes, it is quite unusual to give such a typical rating for the custom development of a SaaS development. We thought so too before. But after the 15th project, we realized that no matter how custom the project is, it always falls into this price range. 

All this requires high qualifications, so we have a team of back-end architects, business analyst, and product designer working on project assessment. They help to design the project correctly and not spend money on unnecessary functionality.

Team Composition for SaaS MVP Development

The composition of the team affects the cost of development because each specialist has his own rate. The team for developing Saas projects is often the same:

  • Manager/analyst (100%) or two people 50% each;
  • Front-end developer (100% -200%);
  • Backend developer (100% -200%);
  • UI / UX designer (30%);
  • DevOps (30%);
  • QA (100%) or one for frontend + one for backend (50% for each).

The percentage indicates the workload of specialists at the time of project development. 

SaaS MVP Development Cost Based On Team Model

Undoubtedly, creating an MVP is cheaper than developing a full-fledged mobile application. That's why it makes sense to invest in this product - to save money by learning everything there is to know about the market and target users. This gives you the opportunity to refine the idea to create the perfect app later.

No one can predict exactly how much your MVP will cost. Its cost is always influenced by many factors: the vision of the product owner, the number of functions, the technology used, but most importantly, what level of team you will choose for this work.

In-House Team

In-house development is all about having your own full-time team that is located in your office and directly managed by you. Moreover, the whole idea is that you don’t just hire them for specific projects but for your company in general. This puts you in “employer-employee” rather than a “client-contractor” relationship; however, that usually comes together with additional expenses.

Outsourcing Team

Outsourcing is usually a cheaper option since you hire an already settled team from abroad. Moreover, you also save time by not having to build such a team from scratch on your own.

For a Startup that is built around a Mobile or Web app and depends a lot on it, having its own In-House team may be essential. However, outsourcing is quite a good interim solution for MVP development while you’re creating your In-House team. For this kind of process, you may even consider outsourcing a CTO!

Freelancers

They also fall under the same category as remote teams. Thus, the factors that define MVP costs when working with freelancers are their hourly rate and expenses related to third-party services.

Team Type Approximate Average Costs
In-House ~$140,000-150,000
Local Agency ~$180,000-190,000
Freelancers ~$50,000-55,000
Outsourcing Agency ~$70,000-80,000
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Please note

The digital industry is fast-paced and constantly changing. Accordingly, the prices indicated by us are not final, but only approximate. Our specialists will help determine the development cost of your own SaaS MVP.

Click here for a free consultation

Team Location

The country where the developers are located also seriously affects the cost of developing SaaS software. At the same time, a developer from Eastern Europe may have a lower rate than a specialist of the same level and technical skills in the USA.

Let's look at the approximate numbers.

Region Approximate Cost
USA ~$190,000-200,000
Australia ~$110,000-130,000
UK ~$150,000-160,000
Western Europe ~$100,000-110,000
Eastern Europe ~$70,000-100,000

SaaS Complexity

The complexity of a SaaS product is a concept that includes a set of functions and the complexity of their implementation, user roles, infrastructure, architecture, third-party integrations, security measures,  etc. 

For example, a simple SaaS e-commerce application with a ready-made integrated payment gateway will cost less than an entire customer service system with functionality for processing invoices, monitoring sellers' performance, etc.

The more complex the platform, the more time and resources it needs to develop and the higher its price. In general, there are four main options.

Complexity Type Approximate Cost
Micro ~$13,000-15,000
Basic ~$35,000-40,000
Average ~$60.000-65,000
Complex ~$130,000-150,000
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Please note

The cost we discuss is only an APPROXIMATE, as different products and industries require the involvement of different technologies, specialists and different integrations. Therefore, the exact price of development can be determined only after a free consultation with specialists

SaaS Type

The type of software also affects SaaS MVP development cost. Some types of programs require the implementation of more complex functionality and the involvement of highly specialized specialists; they have a more complex infrastructure and require more protection and cyber security efforts.

Therefore, approximate costs may vary by product type.

Software Type Average Cost
CRM ~$60,000-65,000
Accounting software ~$75,000-80,000
Marketing and sales software ~$70,000-72,000
ERP ~$100,000-120,000

Average Time to Develop a Minimum Viable Product for SaaS

It usually takes 3-6 months. This period is more of a business reason than a technical one since no matter how complex the project is technical, its implementation cannot be delayed.

total cost to build a SaaS MVPIf the release is delayed and you cannot offer the client anything in the first 6 months, then there are two options: either you have taken on a very difficult task that requires completely different funding, or you have not correctly estimated the average cost to develop a Minimum Viable Product for SaaS.

MVP Development Stages And Costs Involved

The cost of developing a minimum viable product can vary from zero to infinity - the final figure largely depends on the budget and complexity of the project.

The price of an MVP is largely determined by the decisions that were made at the start. So, for example, you can:

  • Ask for help from fellow developers or assemble an in-house team (recruit developers, designers, testers).
  • Make a simple landing page or build a technically complex solution with a bunch of different features (some are convinced that at the MVP stage it is critical to fit everything that fits within the budget).

The total development cost will vary greatly depending on the scenario you choose. From all this, we can conclude that there is no such thing as "the exact cost of an MVP".

Proof of Concept\ Research Stage

Proof of concept, or proof of principle, is typically an internal project that helps you to verify that your theory has the potential for real-world application. However, we’ve taken proofs of concept to market in a controlled test environment for clients, particularly when developing B2E applications. In testing your proof concept, you’ll be able to determine two important things: a) whether people need your product and b) whether you have the capabilities to build it.

Minimum viable product, on the other hand, helps you learn how to build that product in the most sustainable way, with the least amount of effort. Through marketplace testing, you’ll learn how people react to different iterations of your product and its potential features. The MVP process enables you to determine precisely what it is your customers want, so you can add only those features needed to make it marketable.

Prototyping

A software prototype is exactly what you would expect from the name. It is an initial mockup of a software product to demonstrate the feasibility of a feature.

The level of detail and useability of the prototype can vary. It could be a quick sketch on paper, a digital demonstration of how a single feature would work, or a full working model of the app.

Software prototyping has become increasingly popular as an invaluable way for developers to understand the client’s needs, and for clients to demonstrate to investors and clients what they will be offering.

Depending on the specification of the prototype, it can be clickable and “work”. However, it is not a working product, simply a demonstration of what it will look like.

Plus, the prototype might differ a lot from the final product, but that’s to be expected. This is because the prototype is meant to gather data, not to be a fully-fledged application.

After the prototype is tested and feedback is gathered, the software will then go through the next stages of development to be improved into the final product.

Design Stage

Once the client gives prototypes a ‘go’, it’s time to dress them up. To do so, designers need to think through the entire UI part with the ‘rough’ MVP design concept in mind (you remember about those 1-2 app screens, don’t you?).

To make MVP design stand up, designers add colors, fonts, animations, logos, and all necessary brand-related elements. Because without a sexy look, it’s hardly possible to hook users — no matter how helpful or easy-to-use your thing is.

Development Stage

Once you’ve determined key features and learned about market needs, you can assemble your MVP. Remember, that prototype does not mean bad or average quality. Your product still has to satisfy the user. Thus, it has to be easy to use, appealing and most importantly, fit the main user needs.

saas software development costs

Testing

Everything is part of a process: first, define the scope of work followed by moving the product to the development stage. After the completion of product development, the product needs to be tested. Quality Assurance engineers, who work to improve the quality of the product (even if the product is not released) conduct the first testing stage.

Review everything thoroughly after launching the MVP. That is, the business must collect their client’s reaction to the release. With their feedback, they can determine the acceptability and competitiveness of their product in the market.

Why Can the Costs Build a SaaS MVP Be Way Different?

Nevertheless, there is a situation when the price will differ significantly from the calculations provided above. 

POC

Budget Planning to Build a SaaS MVP Could Be Much Less

Clients often confuse goals: to make a profit center and to do something to get an investment in a profit center - these are 2 big differences! To get an investment, you do not need an MVP, but you need a demo for the investor, as it is usually called the POC.

When we analyze the project, we always discuss the goals with the founder, helping him to better define the strategy. If you do not need MVP, but need a POC to show the investor or start pre-sales - this is significantly less work, according to Ardas experience you can stick within 15k-30k;

Be Careful to Not Have Much Expensive SaaS MVP Development Cost

If you want a lot at once, then this is not right and the MVP needs to be cut and most often we are faced with this situation. Customers often want more, it seems to them that the functionality cannot be removed, they worry that this will make the product bad, but this is not so. We always help to build the MVP without compromising the product, focused on the fastest entry to the market.

Top-5 Factors When Your MVP Has to Be Cut

Implementation period

As we explained before the average implementation period is 3-6 months. Hardly it will work properly within less time. But, usually, a client always wants to add something else and it takes more time. That can be done later after MVP is launched.

Range of functionality 

Clients are often not ready to downgrade their MVP, because they believe that the project will not survive without them. It's a delusion. In the first release, only the most key features are enough that distinguish your project from all the others.

Administrative functionality 

Do not rush to develop web applications for the project staff themselves that will help manage the project. As a rule, this will be needed after the first customers, and at the initial stage, you only need what can sell your product.

budget planning of MVP

Work on security 

Security is an extremely important part of development, but at the initial stage, no one will try to break your project. Therefore, for now, you can reduce your efforts and deal with this issue later.

Working on perspectives 

It is not worth spending money at the stage on those functions that pay off in the long term. Accordingly, it will be possible to work on the quality of the code, data storage, etc.

How Much Does MVP for a SaaS Cost in Total

  • team productivity: 4.6 - 6.6 full-time person per month, real hours per month 140 (which is done by one person because we usually subtract from the standard 176 hours the time for vacation, sick leave, self-education, etc.), i.e. total 644 - 924 hours per month;
  • team price per month: 25,760 - 36,960;
  • multiply by a period of 3-6 months: 77.280 - 221.760.

However, usually, the price is 70k-150k according to the experience of 15 SaaS projects in 10 years. Please note, we calculate the cost based on the fact that our Any expert costs $ 40 per hour on average. Of course, there are companies that can offer a cheaper price, but they can hardly promise a quality guarantee.

What we have described above also includes product design, i.e. price for development from scratch, starting from the list of requirements. Your next step is a product design and nothing else, which costs 5000 dollars with us.

From all of the above, we can conclude - don't waste time, take an estimate of 70k-150k and use it for your business plans and budgets. However, if you still have doubts and you feel that your project contains something that may not fit the standard that we described above, leave your contacts and we will make a rough estimate for free.

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Please note

$70k is an approximate minimum cost, which is not relevant for all products. You can get exact numbers after a free consultation

SaaS MVP Cost Example

Ardas has its own product that became #1 in the world. Thanks to our engagement and business analysis we spent 1/3 of the budget the customer aimed to spend, letting it grow fast and invest more in marketing. The best email template builder used by Amazon, McDonald's, Oracle, CocaCola, Airbnb, Uber, HP, and Cisco. However, the email template visual builder with AMP support used to go through the MVP development stage itself.

We started in 2016 with an idea and built a very detailed MVP plan mostly thinking about how to compete in a very busy market. We investigated all disadvantages of existing builders and designed a WYSIWYG builder that saves 50% more time than others. 

The MVP development took us about 4 months and we released the email template builder that included 5 basic blocks: picture, text, button, video, and HTML. Such a development cost us approximately 50 000 USD.

Later in 2019 we supported AMP language by Google for dynamic emails and became one of a few builders with the best AMP support.

Final Thoughts on SaaS MVP Development Pricing

Remember that the first version of your product or project should be as simple as possible (only the basic functionality). The deeper you go into development, the higher the cost of making a mistake. No need to be brought up to perfection. The later you get user feedback, the more expensive the error will be.

For outsourcing companies, a startup is a set of technologies and applied tasks. Sometimes it is more complicated, sometimes it is simpler, often in essence they come down to either an online store or CRM, ERP, aggregators, messengers (that is, modularity).

All the innovation and complexity of the cost of MVP SaaS development will rest on your roadmap, use cases, and business process automation. Therefore, the ideal option at this stage is not to assemble your team but to trust those who already have a "hand full" in this matter.

Looking for your ideal outsourcing team, we advise you to consider Ukraine in this regard. It is a large source of specialists and optimal in terms of price and quality ratio. Therefore, if you are currently looking for an objective assessment of your project at the MVP stage, we will be happy to consult you and help you with custom software development.
 

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Andrew
Ryzhokhin
Chief Executive Officer

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