SaaS Product Development Process

Process is corporate DNA at Webapper… We are a small team of cloud engineers managing numerous engagements, which means intelligent processes are the only way to ensure projects deploy on time and delight users. We embrace an agile methodology in our DevOps environment as we work on a variety of SaaS applications. With that backdrop, we want to share our guidelines for an effective SaaS product development process. If you’re considering developing a software as a service offering, these tips are for you.

Conduct Market Research

As with any new venture, you don’t want to build something nobody wants (what ever happened to the manager behind new Coke?). Any startup book you pick up will talk about target market and market size. There has to be an itch to scratch. And hopefully many people have that itch, whether they know it or not. Market research should include those topics as well as competition and branding — who or what do you compete against and how are you different?

Develop a Strategy

Market research gets the ball rolling, and next you have to map out where you envision things going. Is there a realistic business opportunity? What does the business offer? How would you attract customers? Define your ideal customer – maybe you met someone while doing your market research. Consider your approach to creating a business – the resources you have and need to build a product and company.

Gather SaaS Requirements

You’ll need to know what you’re building, so start making a list of the most common tasks. For example, in a customer relationship management (CRM) system, you might create new prospects, add notes, and schedule activities. If the CRM is for the health industry, you might need to plan for managing electronic health records. And if the system is for use on mobile devices and desktop computers, you might need to have distinct versions for each device type. A comprehensive list is fine, but you won’t build it all in the first product. The list of SaaS requirements will add and contract as you go.

Choose a Technology Platform

One of the most important business decisions SaaS developers make is in the technology stack. If you or your team already know a programming language, your decision may make itself. If you are starting fresh, you should evaluate the best options for your application. Key factors include:

Cost

Platform cost can include a range of elements: labor, infrastructure, licensing. Look before you leap into an unrealistic budget.

Reliability

Some of the most important success metrics in SaaS tie to customer experience. If your platform crashes, runs slowly, or looks unappealing, customers will move on.

Scalability

A SaaS business performs best if it’s growing. More users put more stress on the system, so it needs to be able to grow (which is why the cloud should be a SaaS home).

Versatility

If you look at the unicorn SaaS products, nearly every one offers integration points with other SaaS products. For example, you can send messages to and from Slack to hundreds of SaaS products.

Security

Since SaaS first happened, security has been a concern. Being hacked is expensive, embarrassing, and detrimental to recurring revenue.

Build a Minimum Viable Product

The rubber meets the road when you build something. And ship it. A minimum viable product, AKA MVP, does the basic job(s) defined in your SaaS requirements, targeted to your ideal customer, in a simple but memorable fashion. There’s a well-known saying by Reid Hoffman, the founder of LinkedIn: “If you are not embarrassed by the first version of your product, you’ve launched too late.”

Onboard Users & Get Feedback

With some kind of software in users’ hands — perhaps even embarrassing software — you can gather feedback and start iterating. We recommend personally onboarding a few early customers too. Walk them through the process of starting, listening carefully for friction areas or likable areas. And it’s paramount to prepare to recover after shipping your MVP. Collect feedback and iterate as quickly and effectively as possible. Ultimately, your MVP quickly tests your hypotheses built in your business model, product plan, and go-to-market strategy.

Experiment with Pricing

When it comes to pricing, the golden rule is “plan for change”. You have so many options, and you’ll potentially switch between options more than once.

Pricing Models

Flat Rate Pricing

SaaS flat-rate pricing is completely basic: one price, one plan, one set of features. Few SaaS companies use this model, but it’s easiest to manage. One noteworthy example is Basecamp Business at $99/month with every feature, unlimited projects, unlimited users, and no per user fees. It’s an easy plan to understand, so no friction at signup!

Usage Pricing

Usage or consumption-based “pay as you go” pricing connects how much users pay to how much they consume the product or service. Metered usage could count the emails sent, API calls, or processed transactions. Stripe’s pay-as-you-go pricing is 2.9% and 30¢ per successful card charge, with no setup, monthly, or hidden fees.

Tiered Pricing

The most common approach to SaaS pricing is tiered (e.g., Silver, Gold, Platinum), with each tier offering additional features, services, and/or usage. Spotify offers four streaming plans: Individual at $9.99/month, Duo at $12.99/month for a couple under one roof, Family at $15.99/month for up to 6 family members under one roof, and Student at $4.99/month. Each tier accommodates a particular listener scenario.

Freemium

A free trial can get more users hooked on your product. Users like free things, and they are more likely to sign up to give it a try if you require no up front payment. A hugely successful example of using a freemium model is MailChimp, which allows up to 2,000 subscribers and 12,000 emails per month for free. Paid plans kick in when you cross either of those thresholds.

Plan a Product Roadmap

Sometimes what you think your customer wanted turns into something else. For example, Instagram’s creator originally built a prototype for an app he called Burbn that allowed users to check in, post their plans, and share photos (of their tasty brown methylated spirits!). Social photo sharing made Burbn unique compared to all the “checkin” apps of the day. The Instagram parable shows what can happen — you build something, but the market says it should be something else. The feedback loop can lead you to your product roadmap.

The product roadmap is where your product vision is translated into a plan for execution. It guides your organization to the strategy to make your team’s vision a reality. The best SaaS product roadmaps include a vision for the product, the direction to realize the vision, short and long term priorities, and metrics of progress over time. And no roadmap is remotely accurate in timing or expectation. It merely reflects the reality of the present and the vision of what lies ahead.

Develop a Budget

Resource your SaaS application properly! Invest in people, technology, and processes. Hire or engage the best developers you can afford. Invest in a good technology stack — don’t build on a weak or outdated one. Use smart development, deployment, onboarding, and support processes. If you’re a startup, your tech stack can earn you credits to use something in particular (e.g., AWS, Microsoft, and Google all have incentives for new applications). Use other SaaS products to manage your processes (SaaS, after all, is cost-effective). Wherever you cut corners will result in technical debt. And at some point, you have to pay it off. But do keep track of technical debt so you can fix it.

Product Led Marketing

Your customers’ most frequent interaction with your company is through your product. Product Led Growth (PLG) contributes to the success of almost all the major SaaS solutions. You can learn more about PLG from this article.

Iterate

You need an environment that puts a high value on learning. Whether in product development, marketing, or customer success, learning leads your progression to the next level. Using customer feedback, the next iteration improves and moves your business in the right direction. With a listening & learning mindset, a flexible product roadmap, and an agile software development process, you’ll move the needle.

SaaS Product Development Process

We’ve collectively worked on dozens of SaaS solutions, and we’ve started companies and stepped in when things went wrong for others. This process reflects lessons learned both the hard way and the easy way. To build a successful SaaS solution requires putting these processes in place and executing well. The potential is virtually limitless — CB Insights reports that there are over 450 unicorn and 24 decacorn companies around the world. SaaS unicorns include Zapier, ClickUp, and Calendly, and decacorns include Canva, Roblox, and SquareSpace. Maybe we’ll need to add your name to the list in a future revision to this article.