How much does it costs to build an MVP for SaaS?

20 Mar 2020
Kate, copywriter
If Beatles were software developers, they would sing “All you need is MVP” because that’s the place to start.
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Why is MVP important?

All roads lead to MVP

To begin your project successfully you don’t need to invest all money in the world, or wait for your product to be perfect, or expect the Moon to have the right phase. If Beatles were software developers, they would sing “All you need is MVP” because that’s the place to start. MVP stands for Minimum Viable Product. Minimum here means that you include basic features and simple, still appealing design. Viable means that these features and this design will be enough for your users to be satisfied with the product.

As soon as you google “MVP”, you’ll come across a picture that explains it on the example of the car. It is yet the best analogy. Let’s say that your product is a movement. So, you produce things that help people move faster than they could on foot. Your final target would be a fast and convenient car. So, to provide your users with the minimum, will you give them wheels first? Or the engine? What are they supposed to do with them?

First, you provide them with the most basic tool for movement — the bicycle. It is relatively easy to produce. Then you invest in the motorcycles. Then – in the basic car until you finally end up with a smart electro car and compete with Elon Musk. To go through all these stages faster and build a complex product right away, without Minimum Viable Product, you will need money. A lot of money.

Usually, MVP is enough for most early users. Jack just wants to watch videos of cats during his free time. He uses the basic features of Youtube. Jane wants to listen to music without ads. She will not be satisfied with just basic features, so she will pay for Youtube Music. In the beginning, you will target on Jacks. Later, when the project results in the first perceptible revenue, start thinking about Janes. For early users, MVP is more than enough for reasons stated in the below picture.

SaaS sprint

For your startup, MVP will create many benefits. First of all, it consumes little money because: 1) the developers spend less time implementing basic features = you pay for fewer hours of work; 2) the marketing strategies for MVP are simple and may not even require professionals. Second of all, it reduces business risks because of money-saving and user feedback. Reading the reviews and evaluating the reaction of customers, you will understand which aspects should be changed. There is the possibility that your ideas are already successfully implemented with other companies. That means that you either have to give up reinventing the wheel, or you should make your wheel special (flexible and puncture-proof). Would you think there is a need to create another search engine, apart from Google? Yes, only if you give the users what Google fails to give. After many data leak scandals, the search engine DuckDuckGo got the recognition for its security standards. It also began with MVP. It is easier to enter the market this way because your early users will not have high expectations and will take a positive attitude anyway. MVP is the first step you take when learning how to walk in the business world.

SaaS MVP development and how it looks

The development of a SaaS product goes through several stages. The first three phases — envisioning, evaluating and planning — include preparation for the actual creation of the app. Here, you evaluate the market, create a risk-preventing plan, hire a development team and raise the first budget. Then we come to development directly. Here the devs create the product (backend, frontend, and design). Afterward, you include marketing solutions, promote your product and launch it. Then you gather the feedback from the users. The last stage is vital for MVP because it is its main mission — to make sure your product is ready for the market. There are examples of companies taking the risk and not even creating an MVP for feedback. Dropbox simply posted a preview video that advertised the product. Buffer (an app for social media scheduled posting) only created a landing page to gather the reviews of whether users needed the product at all. Only later did they implement their MVPs. However, it doesn’t change the fact that even such giants of the SaaS business began with basic features. 

Usually, the development is divided by sprints. It means that at the beginning of each iteration you explain the requirements to your team. They will make time (usually a weak or two) for the completion of the task. After the deadline, you evaluate the quality of work and decide where to move next. The process of improving the SaaS product is cycled. With each sprint you evaluate the success of the previous version, adding new features and improving existing ones. This way, it is easier to come from MVP to a more complex product without changing the model of structuring work. 

 

saas mvp steps

Features of SaaS MVP

  • Pricing plans (Basic, Standart, Premium);
  • Payment reminder (when the deadline is close and the user has not enough money on the account);
  • Service turn-off (if the user did not pay monthly/quarterly fee);
  • Different Payment Solutions (Online wallets, Apple/Google pay, Paypal, Visa/Mastercard);
  • Registration (sign in, sign out, “remember me”);
  • Security (multi-factor authentication, encryption);
  • “Forgot my password” feature;
  • Documentation and customer support (chatbots, review and feedback section);
  • Analytics tools.

5 things to remember when creating SaaS MVP

1. Customer feedback is the most important thing during the early stages. That’s why you need to arrange many platforms for reviews (app store, websites, direct messages). Usually, companies try to entice their users with perks to get feedback.

2. Keep it simple. It’s the MVP. The basic features must be easy to understand. The design should be user-friendly. No one will spend time trying to understand how to use your yet unknown app.

3. Set a final goal. Recall the example with the car in the beginning. The final aim was a smart car. The first step was producing bicycles.

Stages of development and its costs

Step 1. Research. Here you study everything about your product, detect a target audience, analyze your possible competitors, and define the price for your services. You can do it yourself entirely. However, there will be a chance of doing it wrong. For better results, hire a business analyst. Hourly rate is between $20 and $40, depending on the qualification, complexity of the project, and the residence.

Step 2. Feasibility study. Here you need to hire a development team. Along with business analysts, they will help you to detect the platform to build upon, the necessary features, and the most convenient cloud. Some companies do not charge for consulting. Some charge a usual hourly rate (from 20 to $100 depending on the country of residence)

Step 3. Prototyping. Here you create the first version of your product. However, you still don’t launch it.

Step 4. Design. Here UX/UI designers take into consideration your requirements and the nature of the product. Then they devise the convenient navigation and aesthetic looks of your website/app. The hourly rate is between $30-$60 per hour.

Step 5. Development. Frontend devs turn the design into code. Backend devs set the architecture. QAs test the final variant. The hourly rate for each teammate varies, depending on the qualification. Project Manager will have a higher salary than the developer. On average, it is somewhere between $30-$70 per hour. However, it can rise to $130/hour if we talk about the development companies from West Europe and the USA. During this step, the website/app is ready for the launch. Houston, let’s hope there will be no problems.

outsourcing vs in-house

The price depends on the number of features, the complexity of the design, the domain, and the cloud. Usually, the price for SaaS products with most basic features begins somewhere from $15 000, supposing you’ve found a cheap cloud and an outsourcing team with low hourly rates. There are articles on the Internet filled with tips on how to build a SaaS product for $0. Well, it is possible only if you use open source platforms and have experience in software development. This way, Rejoiner and Envoy created MVP for just $0. However, all of their founders had technical backgrounds.

Other articles state that the SaaS market is so huge right now that you need to add more zeros to the sum everyone tells you. It is true if you skip the MVP phase and start building a complex project from scratch. It is a waste of time and money if you have no experience in working with SaaS. We say the price is very individual for each project. In Ukraine, the hourly rates are from $30 to $60 per hour without affecting the quality of development. That’s why Ukraine is the best solution for MVP (and not only this)

Choosing the team: outsourcing or in-house?

The in-house team is the one that works on your project full-time in an office. This way, you will control all processes yourself and solve the problems face-to-face. Because the communication level is high, the productivity and the dedication of the team rises. However, if you choose to go in-house, be prepared for additional expenses on recruiting, office maintenance, and bigger salaries. The process of finding suitable candidates is usually long because you need at least 5-6 people. All of them must be from the area of your residence and that restricts the choice of talents. To find out more about creating the team from scratch read out the article “How to build a development team”. However, it is better to build an in-house project after you get your fist perceptible revenue

Outsourcing teams work remotely. This way, you will have access to professionals throughout the world. It will give you the freedom of choice for not only the quality of your team but also its cost. In different countries, there are different hourly rates. In West Europe, they differ from $30 to $60 per hour. In Asia — $15 – $25. West Europe — $60- $100. However, communication will be a bit challenging because of different time zones, cultural clashes, and language barriers. If you are building MVP, outsourcing will be the best solution because it reduces the risks. If you are considering outsourcing, we have an article special for you — 10 reasons to outsource SaaS development.

All in all, the sum of money you’ll spend on SaaS MVP depends on many factors. If you need the evaluation, feel welcomed to contact SapientPro. We could write hundreds of articles, including all the factors influencing the price. Even in that case, the figures would be relative. What we know for sure is that a recipe for low-cost MVP is an outsourcing team, open-source platforms, and easy-to-prototype languages.

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Kate, copywriter
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