How Much Does It Cost to Build a SaaS MVP In 2021?

what does it cost to build saas MVP

You have an excellent idea for an application or service. You’ve researched its potential and found that it solves a user problem. You got some capital, and you’re ready to invest, but don’t rush into building a fully functional product…yet. 

While your research may suggest that it solves a problem, you have to put it to the test. The best approach is to build an MVP first and determine if users really need this product.

But What’s the Average Cost of Developing a SaaS MVP?

More often than not, there’s a lot of confusion at this juncture. There are demands to develop a terrific app at a fixed cost. Startups often turn to third-party development partners to name their best price even without a detailed list of its technical specifications. 

Because of the lack of information, developer companies tend to overestimate project costs to better manage project risk. Alternatively, they suggest working on the product design to estimate development costs accurately.

Both options don’t bode well with founders as they can’t plan, strategize, and formulate a workable budget. So, we created a third option by combining a rough estimate and a fixed product design cost. 

In this scenario, the startup can think about what’s easier to do. They can calculate a budget that’s within reach and get to work.

But before we get ahead of ourselves, let’s figure out some definitions.

What’s a SaaS MVP?

A SaaS MVP, or Software-as-a-Service Minimum Viable Product, is a working prototype of a cloud-based application that boasts all critical features that’ll define the final product. 

This approach creates an opportunity to collect useful data on how the end-user interacts with the product. It also allows you to test new features, identify and resolve potential issues, find new use cases, and more. This is vital to overcome potential challenges faced by startups.

When you start with an MVP, you have a better understanding of the pros and cons before the product goes live. It’ll also help you save loads of time and money if the MVP fails to deliver. This approach is highly attractive to investors who’d rather spend a small amount over a few months to test an idea rather than risk losing it all on a full-fledged (untested) product.

Check out how we built an MVP and MLP for a UK-based fintech startup Hastee.

How Should You Plan Your Budget for SaaS MVP Development?

From our experience working on a wide range of projects with an extensive range of customisations, we can say that a SaaS MVP costs about £60,000-£150,000. It falls somewhere in that price range, and we can say it with a high level of certainty. 

The cost estimation is based on a highly qualified team of business analysts (BAs), back-end architects, and product designers working on the project assessment. They’ll design the project correctly and eliminate all unnecessary functionality to keep costs down.

Also read: From MVP to MMP to MLP Using an Extended Team Model. 

Our SaaS MVP development team has the following professionals (with percentages indicating the workload during the development cycle):

  • Backend developer (100% -120%);
  • DevOps (30%);
  • Front-end developer (100% -120%);
  • Tech Lead/Scrum Master (100%) or two senior software engineers (50% each);
  • QA (100%) or one for backend + one for frontend (50% for each);
  • UI/UX designer (30%).

SaaS MVP development takes about three to six months. This has a lot more to do with the business side of things (than anything technical), as product implementations can’t be delayed.

What Are the Total Costs of Developing a SaaS MVP Product?

The total cost of building a SaaS MVP comes down to team productivity and the total cost of “owning: the team. This includes 4.6 to 6.6 full-time staff (with each working about 140 “real” hours every month). That works out to be around 644 – 924 hours per month, costing £21,896 – £31,416 per month. Now multiply that by the number of months, let’s say six, and you end up with a total of £131,376 – £188,496.

But for the most part, MVPs cost around £70k-150k. These costs are based on the UK’s national IT consulting average hourly rate of £34.

At Evolve, we’re able to significantly reduce your cost of SaaS MVP development thanks to our nearshore R&D Centre in Ukraine where the average hourly cost of mature software development talent is around $30 (i.e., £22). Unlike the UK, where you’ll also have to pay social benefits on top of the hourly rate, in Ukraine, the software developer rate already includes a social tax and benefits, which translates into better cost-saving in the long run.

Check out how we built an MVP for the UK's leading rebates management startup e-bate and how they used it to raise £1 million for the full-fledged product development.

The costs above include the costs of developing from scratch, the product design, and the required functions and features. The best approach here is not to waste time and go with the average estimate to develop your business plan and budgets.

However, it’s vital to be clear with your goals. Are you building to make a profit or attract investment? There’s a massive difference between the two, and it’s important not to confuse them.

Often, we find that our customers want more and more. Sometimes customers think a functionality that didn’t work as intended is impossible to remove (but that’s rarely the case). As a rule, always choose a partner with a track record for building MVPs without compromising it and providing the fastest path to market.

Also read: How Using an MVP Development Company is Cost-Effective.

The following factors will determine if work on your MVP needs to be scaled back:

  • Administrative functionality: Don’t rush into developing tools for the project staff. Wait until you find your first customers.
  • Implementation period: The average implementation period is about three to six months. It won’t start working as intended any earlier. Whenever you want to add more functions and features, it’ll delay your time to market. Always ask yourself if it can be done after the MVP goes live.
  • Work on assessments: Don’t waste your money building functions that’ll pay off in the long run. Instead, work on building a product with quality code, low to no technical debt, and robust data storage.
  • Work on security: Don’t make security an afterthought, but don’t invest too much into it in the first few iterations.

A SaaS MVP is the first “basic” version of your product. It’s straightforward and gets the job done. If all stakeholders are satisfied and the product works as intended, then you can dive deeper into development. However, it’s crucial to note that late feedback equals higher costs, so make sure to get earlier on the build cycle.

It’ll also help startup founders to invest in their relationships with third-party software development partners. You’ll benefit from their wealth of experience building SaaS MVPs, so don’t be afraid to ask questions. Tech consultancies can work like your mentors who’ll guide you through the product development cycle.

At Evolve, we’ve built robust SaaS MVPs for startups and established businesses for years. If you'd like to pick our collective brain to formulate your SaaS MVP strategy, schedule a commitment-free consultation with one of our product experts.

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