How to Build a SaaS MVP Quickly and Cost-Effectively

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• MVP SaaS development focuses on creating a minimum viable product with essential features to validate the product concept and gather user feedback.
• The goal of MVP in SaaS is to reduce development costs and time to market by prioritizing core functionalities and deferring non-essential features.
• MVP for SaaS follows an iterative approach, allowing for rapid iterations based on user feedback to refine the product over time.

Finding the right product-market fit is one of the top five pain points for early-stage and growing startups. True, you can’t predict whether your SaaS will find its niche until you test it on real customers. But that doesn’t mean you have to commit to full-scale development head-first and hope for the best.

Instead, build SaaS MVP to give your clients a peek into your product with just enough investment of money, effort, and time. The SaaS market is relatively stable even in the context of startup funding, accounting for 26% to 32% of all investments. However, don’t just assume your clients will like your product because you do.

At Acropolium, we see this tendency first-hand because we’ve developed our fair share of SaaS solutions. And now, we’re here to show you how to make an MVP for SaaS and generate user feedback as cost-efficiently as possible. We’ll also teach you to avoid the common SaaS MVP challenges, share tips on speeding up the development, and demonstrate case studies.

What is MVP in SaaS?

As businesses seek cost reduction and scalability, the adoption of SaaS solutions rises. Configuring and customizing these platforms becomes more accessible, enabling logistics and other companies to tailor them to their specific needs. The global SaaS market is forecasted to reach $1,016.44 billion by 2032 from $276.11 billion in 2022, growing at a CAGR of 13.92%.

A SaaS minimum viable product (MVP) is a simplified version of the product you should use to verify your concept and collect customer feedback. It is far from the full version of your application or even a working prototype, being more of an investment in validated learning about your audience and its needs.

SaaS MVP Development Benefits

Let’s take a look at the benefits of developing SaaS MVP:

Efficiency

Developing an MVP allows your team to focus exclusively on the mission-critical features needed to deliver value to users. Define priorities to streamline the building process, avoiding unnecessary complexity. You will also be able to allocate resources more efficiently.

Low-Risk Investment

Launching an MVP is a low-risk investment compared to creating a full-fledged prototype or product. Quickly test assumptions, assess market demand, and identify potential areas for improvement. This reduces the risk of investing significant time and money in a product that may not resonate with users.

Easier Funding

Demonstrate your product’s core features and value proposition to effectively communicate the business viability and scalability to potential investors. This, in turn, improves your chances of securing funding to support further development and growth.

More Time to Refine

When you launch an initial version of your SaaS solution, you can gain valuable insights and feedback from early adopters. It allows you to identify areas for improvement and prioritize future development efforts. An iterative approach lets you quickly respond to user feedback, address critical issues, and introduce new features based on actual usage data.

Faster Time-to-Market

By focusing on core features and streamlining the building process, you accelerate your product development lifecycle and take advantage of market opportunities sooner. Early entry into the market allows you to gain a foothold, build brand awareness, and generate revenue.

Competitive Advantage

Release an initial version of your product quickly to attract early adopters and capture market share before competitors have a chance to show their products. Gain credibility and position your SaaS solution as a leader in your industry to gain a competitive advantage.

All in all, a SaaS MVP helps you validate, promote, and refine the core of your app quickly, even if your budget is tiny. But that doesn’t mean MVP development is easy.

Common Challenges of Building a SaaS MVP

Many things can go wrong during SaaS MVP development, but fortunately, most of them are avoidable.

A Broken Feedback Loop

It’s not uncommon to have several iterations of an MVP before starting full development. Still, some companies fail to gather accurate feedback from their audience.

Create a community for your early adopters communicating with them on forums, social media, email forms, surveys, and exploratory interviews. Incorporate qualitative (user-friendliness) and quantitative (how difficult the task is to perform) feedback.

Inefficient Development Methodology

Developing software without following a set methodology affects productivity and drives costs up. According to the 3rd State of Agile Culture Report, just 42% of employees are being trained or coached in agile methods. Yet, a robust, agile culture can boost commercial performance by 277%.

The Accelerate State of DevOps 2023 report identifies foundational DevOps capabilities like CI/CD, robust documentation, trunk-based development, and rapid code reviews as key pillars of improved performance.

Flexible infrastructure is associated with 30% higher organizational performance. Quality documentation enhances technical capabilities and performance by nearly 13 times when combined with trunk-based development. Moreover, it positively impacts job satisfaction, productivity, and burnout prevention.

Not Prioritizing Security

Your SaaS application will likely collect personally identifiable information about your customers. That’s why you need to implement security solutions in the MVP stage to test external and internal risks.

Follow ISO/IEC 27001 security policies and frameworks and incorporate effective mechanisms, such as multi-factor authentication, dynamic password change, encryption, and role-based access control. Adopt the DevSecOps methodology to make cybersecurity an integral part of SaaS development.

Scalability Problems

Having too many concurrent users in a cloud environment might create performance issues if your SaaS architecture isn’t scalable enough.

Amazon Web Services, Microsoft Azure, and other cloud providers deliver cost-effective infrastructures, allowing you to scale resources up as your MVP gets more features and users. Plus, they come with helpful tools for data analysis, monitoring, and load balancing.

Unrealistic Budget Estimates

Our experience shows that it can take from $25,000 to $60,000 to create basic SaaS for a startup. And that’s if you have a team of certified engineers, experienced managers, and an established workflow.

The development costs also depend on your team’s location. When choosing a remote dedicated team, study pricing, available talent, and expertise. For example, top outsourcing vendors in the US and the UK charge up to $199 per hour, while experienced providers in Ukraine will cost you $20-$30 hourly.

How to Build a SaaS MVP in 7 Steps

An MVP helps you learn what your audience thinks of your SaaS early on, making it invaluable for smaller startups with limited resources. But a successful MVP requires thorough market research and planning. So, to make the process simpler and avoid bottlenecks, we divided it into the following steps.

1. Identify the Target Audience

Before committing to development, you should create a detailed customer persona. To do this, try answering the following questions:

• Who is your customer?
• What are their desires and pains?
• Are their problems validated and significant enough?
• What devices do they use?
• What are current solutions on the market?

If your idea for a project doesn’t have an audience, maybe it’s not the best idea. On the other hand, don’t spread yourself too thin if your audience has many pains. Instead, focus on one specific problem and decide on the best way to solve it.

2. Study the Market and Competitors

You need to thoroughly research the market before you build SaaS MVP:

• What is the size of your market, and is there a demand for a new solution?
• Is your audience heavily concentrated in specific locations?
• What laws and regulations apply to your target locations and industry (GDPR, PCI DSS, APPI, PSD2, HIPAA, and others)?
• How do your competitors solve the same problem?
• How does your target audience perceive your competitors?
• How will your app stand out from the rest?

John Horn, the author of “Inside the Competitor’s Mindset,” outlines a concise process for competitor research:

• Step 1. Monitor competitor communications and activities, including earnings calls, reports, and media releases.
• Step 2. Assess competitors’ assets, resources, and capabilities to understand their strategic advantages.
• Step 3. Understand the background and decision-making patterns of key individuals within the competitor’s organization.
• Step 4. Make predictions about competitor behavior and track their outcomes for validation.

To understand what works and what doesn’t, study both successful and failed startups in your niche, using platforms like Crunchbase and Product Hunt.

3. Determine the Core Features

Many companies stuff their SaaS MVP with non-essential features or make them too complex. Don’t forget that it’s not an end-product or a prototype — focus on the bare minimum functionality needed to test your product’s viability.

You can use prioritization techniques to decide on the functionality to include. Write down features, take each of them, and filter them based on the following criteria:

• Can your SaaS product work without this feature?
• Does your target audience want it (as found during the research phase)?
• Does it solve a critical problem?
• Will it have a significant impact on your revenue?
• Is this feature a part of your product vision?

Put the features that meet these criteria in your list of must-have initiatives. Everything else should be postponed till future versions of the product.

For example, an MVP for a healthcare SaaS platform might need document, client, and invoice management, as well as robust security to guarantee regulatory compliance. However, you wouldn’t need time-tracking, customer relationship management, and marketing expansion extension from the get-go.

4. Choose a Business Model

McKinsey advises companies to redefine their business models in times of uncertainty and adopt the ‘everything-as-a-service’ (EaaS) approach. This subscription-based approach minimizes upfront costs for clients, broadening accessibility and potentially increasing market share and profitability. It lets you gather valuable data on customer behavior, leading to tailored offerings, stable revenues, and enhanced client loyalty.

And what about strategy? Competitor pricing is the most frequently mentioned strategy (37.5%), trailed by value-based pricing (32.5%) and cost-plus pricing (29.5%). Interestingly, SaaS companies with an annual income of up to 1 million are more focused on competitors, and businesses with a yearly revenue of more than 500 million prefer value-based pricing.

Another popular classification include:

• Flat rate — a complete package of features for standard monthly payments
• Tiered pricing — different price points based on a number of criteria
• User-based pricing — charging based on the number of users the company adds to their account
• Usage-based pricing — the rate depends on the data and usage consumption metrics
• Variable pricing — individual payment model and feature packages for every client
• Freemium — free version of your SaaS with additional features available after a paid upgrade

In 2023, most B2B SaaS leaders opted for premium-tier free trials (44.2%), followed by freemium offers (18.7%). Offering premium-tier free trials is vital for a product-led growth strategy, as it prompts sales involvement and creates urgency with preset trial time limits.

5. Build a Product Roadmap

Before the start of the development, your engineers, architects, and designers should analyze and document all project requirements, including:

• Software specifications with functional and non-functional aspects of the MVP (technical stack, frameworks, APIs, and subsystems)
• Design specifications with key features, UI, application logic, and ways to implement requirements during the coding phase
• Cloud assessment to determine the optimal architecture and infrastructure for your app
• Security analysis to identify, evaluate, and prevent risks
• Post-deployment documentation to help the maintenance and support teams after the launch

Additionally, you can map out MVP development for executives, the marketing department, and customers. The key stakeholders should see the short-term and long-term goals, progress metrics, and success criteria. Your sales and marketing teams must have plans with prioritized channels. And an external roadmap helps to keep customers interested until the project’s launch.

6. Promote Your Product Before Launch

You won’t know if your MVP is up to the mark unless a sufficient number of people get to try it out. This is why you must showcase your product to clients, influences, and potential investors before the launch.

You can begin with a landing page or a video that illustrates audience problems and shows how you can solve them better than other companies. Make sure to communicate your idea accurately and as straightforwardly as possible.

Take a lesson from Dropbox — one of the largest file hosting services — that laid out its concept in a three-minute video. With little to no investment, the company validated its idea and skyrocketed the number of beta testers from 5,000 to 75,000.

7. Deploy the MVP to Incorporate Feedback

Post-launch is just as important for your MVP since it allows you to check your assumptions about the market and customers. You should create a tight feedback loop to learn:

• If your MVP generates enough demand to warrant full-scale development
• What clients like and dislike about your product
• If your business model fits your solution
• If the pricing strategy is appropriate compared to other products

During integration testing, your team should weed out bugs and errors. You also need to ensure your system handles a heavy load, system updates, and real user scenarios well.

Ways to Speed Up SaaS MVP Development

While an MVP is small and can usually be delivered quickly, there are tricks to create MVP for SaaS software even faster:

BaaS

Backend as a Service (BaaS) platforms allow automating backend processes so you can focus on frontend development. BaaS providers can integrate third-party services into your app via APIs or automate background processes like database and authentication management, system updates and notifications.

Low-Code Platforms

Low-code platforms are dedicated software development environments with graphical interfaces, reusable modules, ready-made code, and templates. You can use these tools to deploy your MVP with minimal coding, drastically speeding up the development.

In low-code setups, sprints are shorter, experimentation is easier, development is collaborative with shared understanding, and the gap between technologists and business customers diminishes.

Popular Tech Stack

The essential stack will mainly depend on the project’s complexity, but we prefer using the following programming languages and frameworks:

• JavaScript (JS), the most widely used programming language, is perfect for frontend development.
• Python, a dynamic programming language that works with many high-level frameworks
• Node.js runtime for concurrent web development and fast client-side rendering
• React Native framework for cross-platform development of mobile apps

Open-Source Tools

Open-source toolkits (like Bootstrap and GitLab) are the cheapest way to boost your development. Despite the risks of bugs and lack of documentation, these can save you lots of time at the early stages of the project. You can also save by using free databases like MySQL, seeing as your SaaS probably won’t have millions of users at launch.

Manually Processed Services

Manual-first MVP, also known as Concierge MVP, is a technique that mimics complicated backend processes with humans to save your money and time.

Let’s say you have an idea for a SaaS app that recommends movies based on behavioral patterns and past searches. You want to validate your idea without spending time or money developing machine-learning algorithms. The solution would be to write the recommendations manually to see if customers would want such a product in the first place.

IT Outsourcing

Delegate all the tasks to an external SaaS MVP development firm:

• First, SaaS outsourcing allows you to attract qualified professionals specializing in different technologies, reducing the time needed to hire and train an internal team.
• Second, outsourcing firms often have established workflows and development processes that streamline the development cycle and ensure effective project management.

SaaS MVP Development with Acropolium

At Acropolium, we provide SaaS MVP development services to validate complex and non-standard projects, especially for HoReCa, healthcare, fintech, emergency centers, and logistics businesses. This approach helped us deliver high-quality SaaS applications for some of our clients.

For example, our team developed an operational command SaaS solution for social safety and citizen security services. Also, we helped an international transportation company go digital and ditch paper-based management and reduced personnel costs by 60%. Some other SaaS MVP examples include:

SaaS Warehouse Management System

We developed a cloud-based warehouse management software to increase the automation and integration capabilities of a 3PL provider’s operations. Our solution enabled real-time coordination across warehouse divisions. As a result, the client reduced order processing time by 31%, lowered operational costs by 17%, and increased warehousing efficiency by 29%.

SaaS Appointment Scheduling Software for a Medical Clinic

Our SaaS appointment scheduling solution enhances customer service and clinic workflow through online booking, automated reminders, and medical record access. The results include a 30% decrease in patient no-show rates, a 25% reduction in average wait time, and a 40% increase in patients accessing their medical records.

SaaS-Based Cryptocurrency Application Development

The client asked us for a cryptocurrency platform offering access to trading bots, index investing, and automated portfolio management. Key elements include risk-profiling tools, diversification options, and robust security measures like multi-factor authentication and cold storage. This led to a 250% increase in user registrations and a 119% rise in trading volumes.

What’s Next?

A million-dollar idea can become a failure if you rush development without validating your idea first. Create an MVP for SaaS to learn if your product has a real audience and an effective business model.

Spotify, Airbnb, and many others were simple at first, but they allowed companies to get invaluable feedback to grow ideas into successful businesses.

Development can go off the rails even with an inexperienced team. But Acropolium’s vetted engineers and project managers can help you research, plan, and outline the core features of your product. Make sure to reach our SaaS MVP development company if you’re interested in a quick solution on a scalable architecture.

Sources of Information

• Software as a Service Market
• 2023 State of SaaS Pricing
• 2023 State of Startups Report