How to Build an MVP for a SaaS Startup - A2 Design

How to Build an MVP for a SaaS Startup

In today’s digital age, Software as a Service (SaaS) has become a prevalent way to access and use software. It offers a more flexible and cost-effective solution to traditional software that requires installation on personal computers. With the SaaS market projected to reach $623 billion by 2023, it’s no wonder that startups are interested in creating MVPs (minimum viable products) for their SaaS ideas. An MVP can help validate an idea, launch a product quickly, reduce costs, and receive feedback from customers. In this article, we will delve into the core steps required to create an MVP for SaaS and explore the costs involved in developing it.

What is an MVP for SaaS?

In the world of SaaS startups, the minimum viable product (MVP) is an essential tool for launching a product quickly and efficiently. An MVP is the most basic version of a product that still solves the customer’s pain point, without including any bells and whistles that aren’t essential to the core functionality. Essentially, an MVP is the most stripped-down version of the product that still provides value to the customer.

An MVP provides numerous advantages for SaaS firms. The main benefit is that it enables quick product launches, which are crucial in a market where time is of the essence. Startups can start making money and get early client feedback by immediately creating an MVP. This input is essential for figuring out whether the product is fulfilling the demands of the consumer, what features they appreciate, and what could be improved. SaaS firms may immediately make modifications and pivot as needed by getting this input early on.

In addition to rapid product launch and customer feedback, creating an MVP for a SaaS startup is budget-friendly. As startups often have limited resources, launching a full-blown product can be expensive and time-consuming. By focusing on the core functionality of the product, startups can save time and money on development costs, marketing, and other expenses.

Another key benefit of creating an MVP is idea validation. By creating an MVP, startups can test their assumptions about their product, including the viability of their business model and whether there is a demand for their product. This can save startups from investing in a full product that may not be successful in the market.

SaaS Market Overview

In this section, we will dive into the SaaS market and its growth in recent years. SaaS stands for Software as a Service, which refers to a cloud-based software delivery model that allows users to access applications through the internet. The software is hosted by a third-party provider, and users can access it with a subscription or a pay-as-you-go model. SaaS has become increasingly popular in recent years due to its many benefits, including cost-effectiveness, scalability, and ease of use.

According to a report by Grand View Research, the global SaaS market size was valued at USD 158.2 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 9.4% from 2021 to 2028. The dominance of SaaS is most evident in North America, where it has become the largest segment of the software industry, accounting for more than half of the total software market. Europe is the second-largest market for SaaS, while the Asia-Pacific region is expected to show significant growth in the coming years.

There are various types of SaaS applications available in the market, including enterprise resource planning (ERP), customer relationship management (CRM), human resource management (HRM), and project management software. These applications have become increasingly popular in recent years due to the ease of use, flexibility, and cost-effectiveness they offer.

The future growth of the SaaS market is closely connected to artificial intelligence (AI) and machine learning (ML). According to a report by Markets and Markets, the AI in the SaaS market is expected to grow from USD 2.5 billion in 2020 to USD 11.1 billion by 2025, at a CAGR of 34.4% during the forecast period. This growth is driven by the increasing demand for automation and digitalization across various industries.

Core Steps to Build a SaaS MVP

Building a minimum viable product for a SaaS startup involves multiple steps that require careful planning and execution. Below are the core steps involved in building a SaaS MVP:

Step 1 – Competitive Research

Before creating a SaaS MVP, it is essential to analyze the market and potential competitors. This step helps to identify market gaps and understand the needs of the target audience. Conducting competitive research allows the startup to refine its business strategy and identify unique selling points that differentiate it from other players in the market.

Step 2 – Create a Customer Persona

Creating a customer persona is an essential step in the process of building a SaaS MVP. It involves defining the characteristics and preferences of the ideal customer for the startup’s product. This information is critical for building a product that resonates with the target audience and meets their needs.

Step 3 – Choose a Monetization Strategy

The next step in building a SaaS MVP is to choose a monetization strategy. Some popular monetization strategies include offering paid features, running ads, or partnering with other companies. The startup needs to choose a strategy that aligns with its business goals and target audience.

Step 4 – Define and Prioritize Core Features

Defining and prioritizing core features is another critical step in building a SaaS MVP. It involves identifying the minimum set of features that are necessary for the product to function and create value for the target audience. These core features need to be prioritized based on their importance and the resources available.

Step 5 – Develop a Product Roadmap

Building a SaaS MVP culminates in creating a product roadmap. It entails putting together a thorough plan for developing and launching the product. The roadmap should outline the deadlines, checkpoints, and materials needed to finish each stage of development. The startup can stay focused and on track with the aid of a well-designed product roadmap, ensuring that the product is released on schedule and under budget.

By following these core steps, SaaS startups can build a viable product that meets the needs of their target audience while staying within budget constraints. The next step is to estimate the cost of building a SaaS MVP.

Cost of Building a SaaS MVP

While creating an MVP is budget-friendly compared to building a full-featured product, it still requires an investment of time and money. The cost of building an MVP for a SaaS startup depends on several factors such as the number of features, the complexity of the software, and the location of the development team.

Here are some factors that influence the cost of building an MVP for a SaaS startup:

Number of features

The more features you want in your MVP, the more it will cost. It’s important to focus on the core features that are essential for launching the product and can attract early adopters.

Complexity of the software

The more complex your software is, the more time it will take to develop, and thus the more expensive it will be. The complexity can depend on the technology stack used, the integrations required, and the level of customization.

Location of the development team

The location of the development team can have a significant impact on the cost. Hiring a development team from a region with a lower cost of living can significantly reduce the cost.

Hiring a development team

You can either hire a development team in-house or outsource the work to a third-party development agency. Hiring an in-house team will be more expensive as you’ll have to provide salaries, benefits, and workspace. On the other hand, outsourcing can be more cost-effective, as you can find an agency that specializes in building SaaS MVPs and has expertise in your technology stack.

Technical infrastructure

In addition to development costs, you’ll also need to invest in technical infrastructure such as hosting, domain name, and other software tools required for the project.

It’s difficult to provide an accurate estimate of the cost of building an MVP for a SaaS startup, as it depends on several factors. However, a rough estimate for a SaaS MVP can range from $50,000 to $150,000.

While this may seem like a significant investment, creating an MVP can save you money in the long run. By launching an MVP, you can validate your idea, gather feedback, and make changes before investing in building a full-featured product that may not be successful in the market.

Choosing the Right Technology Stack

Choosing the right technology stack is a crucial step in building a SaaS MVP. A technology stack is a set of tools and frameworks that developers use to build an application. It includes the programming language, framework, database, server, and other tools necessary for building and deploying the application.

Selecting the right technology stack requires consideration of several factors, such as the nature of the application, the team’s expertise, scalability, and cost. The technology stack can have a significant impact on the development process, the quality of the product, and the scalability of the application.

Startups should take the needs of their target market and the complexity of the application into account when choosing a technological stack. A specific technological stack could be required if the application needs real-time capabilities or needs to analyze a lot of data. On the other hand, a simpler technological stack might be adequate if the application is just somewhat complex.

In addition to considering the application’s requirements, startups should also take into account the team’s expertise. Choosing a technology stack that the team is familiar with can help reduce development time and minimize the risk of errors or bugs. However, if the team lacks the necessary skills, it may be necessary to hire additional developers or outsource the development.

Scalability is another critical factor in selecting a technology stack. The technology stack should be scalable to accommodate the growth of the application and handle the expected user traffic. Startups should consider the potential demand for their product and choose a technology stack that can handle that level of traffic.

Legal Considerations

When building a product or service, there are several legal considerations that should be taken into account to ensure compliance with relevant laws and regulations. Failure to do so can result in legal disputes, financial penalties, and reputational damage. Here are some important legal considerations to keep in mind:

Intellectual Property

You need to ensure that your product or service does not infringe on the intellectual property rights of others. This includes trademarks, copyrights, patents, and trade secrets. Conduct a thorough search to ensure that your product or service is not violating any existing patents or trademarks. If you are using third-party libraries or services, make sure that you have the necessary licenses and permissions to use them.


Depending on the type of product or service you are building, you may need to comply with data protection laws such as GDPR or CCPA. You must ensure that you have the necessary consents and mechanisms in place to protect the personal data of your users. You should also provide clear and concise privacy policies that explain what data you collect, how you use it, and who you share it with.

Terms and Conditions

It is important to have clear terms and conditions that outline the rights and responsibilities of both you and your users. This includes information about payment terms, liability, warranties, and termination. Make sure that your terms and conditions comply with relevant laws and regulations and are easy to understand.

Consumer Protection

If you are selling products or services to consumers, you need to ensure that you comply with relevant consumer protection laws. This includes laws related to product safety, advertising, and consumer rights. Make sure that your products and services meet relevant safety standards and that your advertising is not misleading.

Employment Law

If you are hiring employees or contractors, you need to comply with relevant employment laws. This includes laws related to minimum wage, working hours, discrimination, and harassment. Make sure that you have clear employment contracts that outline the rights and responsibilities of both you and your employees.


In conclusion, building an MVP for SaaS startups is crucial for their success. It allows them to validate their idea, launch their product rapidly, and get feedback from customers. SaaS has seen tremendous growth in the past decade, and the trend is expected to continue, especially with the integration of AI and machine learning. To build an MVP for a SaaS startup, one needs to conduct competitive research, understand customer pain points, choose a monetization strategy, prioritize core features, and create a product roadmap. The cost of building an MVP depends on various factors, such as the number of features and the complexity of the software. However, a rough estimate can help startups plan their budget. Overall, building an MVP for a SaaS startup is an essential step towards creating a successful business in the SaaS market.

Updated 23rd May 2023