Software as a Service (SaaS) has become an increasingly attractive and lucrative business model in recent years. The SaaS market is forecasted to reach $623 billion by 2023, with an annual growth rate of 18%. Top SaaS vendors include such big names as Microsoft, Oracle, Adobe, and Salesforce.
With these numbers and market leaders, it’s hard for SaaS startups to get noticed and find customers. However, when a great idea is combined with the right technologies and tools, everything is possible.
Building a minimum viable product (MVP) for SaaS projects helps startups get their ideas out there quickly. With MVPs, SaaS startups can validate their ideas and get feedback in order to develop in the right direction. Even mature companies build MVPs to test their new product ideas.
In this article, we explore what exactly an MVP is, how an MVP can help SaaS startups, and what you should keep in mind when developing one. This article will be interesting for those who are considering creating an MVP for their SaaS product and want as many insights as possible.
An MVP is a version of an application that only has features sufficient to satisfy its early users. Once the software development company receives and analyzes feedback from the product’s initial users, it can begin to design a full version of the application with a complete set of features.
While everyone knows what the term MVP stands for, there are still some common misconceptions. For instance, an MVP is often confused with a Proof of Concept (PoC) or a prototype. Let’s compare these deliverables to make sure that an MVP is exactly what your company needs:
Despite the simplicity of the concept, there’s no universal agreement as to what constitutes an MVP, especially in the SaaS world.
Some people think that prototypes can be considered MVPs if they’re able to attract investors or bring in leads. That’s certainly one way to validate an idea in the wild, but there are no guarantees that the market will give your idea the same positive feedback that investors do. Other people argue that the very term should be changed when it comes to the SaaS model, suggesting Minimum Valuable Product or Minimum Sellable Product as alternatives.
But no matter how we define it, an MVP has three key characteristics:
- Provides enough value to make the target audience want to use and purchase the product
- Demonstrates the product’s benefits to engage early adopters
- Creates a feedback loop to get valuable information needed for future development
Your MVP should be developed with the specifics of your SaaS project in mind.
Now let’s explore the benefits of an MVP for SaaS startups.
Developing an MVP is a great decision that helps you create your application faster, as you can work on a version of the product that only offers the most necessary functionality. Also, you get the chance to know what your target audience thinks of your product so you can adjust your plans to meet their needs.
Moreover, MVP development for SaaS projects is considered a low-risk investment, as you don’t put all your efforts and resources into developing a fully featured product right off the bat.
Let’s take a look at the top five benefits SaaS startups get when they create an MVP.
Prove the idea — SaaS products are often not trusted in their early stages of development. Proving the feasibility of a new concept with marketing materials alone isn’t enough to convince potential investors and users. An MVP is a functional model of the application. It’s the best way to show the potential of your product and prove its worthiness.
Probe the market — Being a complete and ready-to-use solution that has only a core feature set, an MVP offers a careful way to enter the market. It helps you check whether there will be enough demand for your solution, which is essential to know in the fast-growing SaaS market.
Reduce rework time — Building an MVP prevents your product from being cluttered, as it focuses on core functionality. When creating an MVP, you avoid time-consuming issues that often arise when developing fully featured products, therefore minimizing time spent on rework. Also, it’s much easier and faster to fix bugs in a small, simple application than in full-scale software.
Generate the first revenue — According to a 2016 conference paper by researchers at Tampere University, Finland, an MVP is “an offer that generates revenue for the company.” MVPs of SaaS startups are usually fully functional applications that meet the needs of early adopters, which is why they’re paid. Moreover, building a decent MVP is a great way to get funds from investors. Money raised thanks to the MVP launch can be used for further development of the full-featured product.
Receive the first feedback — You can create an MVP for SaaS software to gather feedback from users and adjust the application’s functionality to their demands. By being attentive to customers’ opinions, you have a better chance of developing a successful product.
Also, user feedback is important for detecting and fixing bugs faster. Such feedback can be gathered using a variety of methods such as polls and questionnaires, feedback forms, and opinions expressed by users on social networks and other sources.
Save money — When developing an MVP of your application, you only spend money on core functionality and don’t pay for secondary features or unnecessary design. You can plan additional features and user experience improvements at any time, but you’ll be able to decide whether they’re needed only after receiving feedback from users. Thus, you can save money on secondary efforts until you know for sure that they’re wanted by your users.
How to create a SaaS accounting solution
The definition of and budget for a SaaS MVP heavily depends on the business idea and the specific vision of the entrepreneur.
However, there are several practical tips that will be helpful for any MVP project to achieve the most business benefits:
- Don’t wait too long
One of the major mistakes with MVP development is waiting for the right time or spending too much time polishing and adding new features. Don’t treat an MVP as the full-blown product launch. You should instead think of it as version 0. Plan a short development cycle and take all the shortcuts available in order to validate your product idea with minimum investment.
- Watch out for competitors
There are thousands of SaaS companies out there, so there’s a chance that someone has already tried to solve the same problem you’re working on or is just starting to do so. Explore similar startups and try to analyze their successes and failures to consider all the possible pitfalls. Use sources like Product Hunt and Crunchbase to look for direct and indirect competitors.
- Test pricing models
If you manage to sell your MVP, you’re likely to sell your complete SaaS solution in the future.
At the MVP stage, you have an opportunity to test various pricing models and selling techniques to find the most suitable ones. You can test which features should be added to the free trial or to the basic version of your MVP and which functionality should be implemented in paid versions.
You can run surveys, asking your target audience direct questions about whether they find the MVP expensive compared to similar products on the market. You can also offer a free trial period if customers choose the paid version.
- Take your scope and cut it in half
Consider the minimum necessary requirements to successfully implement your product’s core idea. Once you have your scope ready, look at it again and think about how you can cut it in half. An MVP should be focused and distilled.
To prioritize features for your MVP, try to understand customer pain points. Create a detailed customer persona and focus on who your customers are, what challenges they have, and which features can meet those challenges.
You can also try the MoSCoW method to separate essential features from nonessential ones using a feature bucket with must-have, should-have, could-have, and won’t-have categories.
- Beware of indifference
The perfect launch for an MVP is when your customers are satisfied and subscribe to your service. But this is rarely the case. Even if your MVP gathers negative feedback, it means that people care about the idea. They want a product based on this idea, and they want it made a certain way.
Such feedback is the perfect indicator of where to move next and how to develop your business. A much worse situation arises when you get no feedback at all. Perhaps it’s a sign for you to move on to the next project.
Although there are many techniques and tools out there — both paid and free — to help you create an MVP for your SaaS startup, there are still a lot of challenges on the technical side of things. This is why the majority of successful SaaS projects are created with the help of outsourcing companies like Apriorit that have experience creating custom SaaS products.
However, the accessibility of the SaaS model for business owners doesn’t necessarily mean that every SaaS project will be a success. Success depends not only on the quality of your idea and the set of features you provide but also on the technical decisions you make.
There are some must-have technical components for any SaaS MVP. For instance, you should decide on the architecture at the early stages of development. Design and use the “final” architecture even in your MVP. Reworking your architecture later is painful and time-consuming.
Let’s explore some other must-have technical qualities in detail.
The first thing you need to do when building a SaaS solution is make sure your customers feel secure using it — especially when you’re using cloud services. If your system is gathering and processing personal data, you need to make sure that only the minimum required data is collected and that it’s thoroughly protected.
Data protection for SaaS solutions should respond to both external and internal risks. Protect data from unauthorized access from the outside and guarantee that users won’t be able to access the data of other users. Techniques you may want to use here are multi-factor authentication, encryption, multi-tenancy, and separate databases for each user.
SaaS systems are created to service a huge number of users, and this should be reflected in the architecture, even at the MVP stage. If your software instance is designed to handle a certain number of users, then you need to plan your actions in case this number is exceeded.
A solution to this issue — for example, using multiple instances of software when capacity is exceeded — should be built into the software architecture, making your SaaS project inherently scalable. By planning the scalability of the application at the early MVP stage, you save yourself from troubles and extra expenses later.
Users need to feel comfortable using your SaaS solution. Additional features and visual design are critical factors, but when it comes to an MVP, they’re becoming less important. Many users will be able to overlook GUI flaws and the absence of basic features if the project is focused and answers their needs.
However, one thing people will not be able to overlook is performance. You need to create a fast and responsive system capable of reacting to user actions in a psychologically comfortable 300 milliseconds or less. In some cases, heavy optimization will be required, but this is one area where you shouldn’t cut corners, even for an MVP.
How to Create a SaaS-based ERP System
When developing an MVP for a SaaS application, you should try to make it fast and economical — but this is often hard to achieve. Ambitious ideas mix poorly with limited budgets, and as a result, many startups struggle to put even a minimum viable product together.
Here are some methods to consider when trying to make SaaS MVP development easier, quicker, and more affordable:
- Use languages for fast prototyping
Programming languages such as Ruby, PHP, and Python allow for fast development and are widely used to create quick prototypes. The main disadvantage of creating solutions with these languages is that such solutions don’t scale very well, and it may be impossible to get the necessary performance out of them. More complex languages and commercial frameworks, such as ASP.NET, will give you better control and better performance with high loads but require much more time and experience to work with.
If you choose to deliver your SaaS MVP to market faster with fast prototyping languages, be ready to spend additional resources later to scale your solution. Using tools like ASP.NET can take more time and resources at the MVP stage, but when implemented by experienced developers, they can save resources during the further development stages.
- Use open-source tools
Open-source software can be a cheap and effective way to implement features, but this approach has its own limitations. The main downsides to open-source software are lack of documentation, a high risk of multiple unknown bugs, limited backward compatibility, and no guaranteed support for older versions. As a result, open-source solutions may even prove more expensive than commercial solutions if you don’t have enough experience working with them.
However, if a developer knows all the ins and outs of open-source software, it can be a great money saver at the beginning of the project. After your product moves past the MVP stage, it may be wise to replace open-source bits with commercial products.
- Use available solutions
There’s no need to write common modules and features yourself. Features such as payment processing, usage statistics, and support chat can be resource-consuming to create from scratch.
There are a lot of solutions that are already available for a moderate price. Integrating as many of them as you can into your MVP will help you save time, money, and effort that can be focused on implementing your own unique ideas.
- Use free databases
Commercial databases are reliable, well-supported, documented, and can accommodate a large number of users. It’s paramount to use a commercial database when creating an application designed for millions of users. However, when you make an MVP for a startup, chances are you won’t have that much data at the first stages. If you aren’t expecting a huge influx of users on your first day, you can use free databases such as MySQL.
When your number of users grows to the point where a free database isn't sufficient, you’ll be able to migrate to something commercial such as MS SQL or Oracle, but note that this migration will inevitably incur additional costs.
- Consider reasonable load testing
Load testing is designed to assess how the system will behave under peak loads and extreme conditions. Even if you plan to accommodate millions of users in the long run, it doesn’t necessarily mean that you’ll get this many initially.
When you develop a SaaS MVP, you should gauge the potential number of users you’ll be able to get immediately and test for that number. Load testing is the most expensive type of testing, and pushing these tests back to when you actually need the capacity is an excellent way to cut costs.
HR SaaS Solution Development
Whether you’re going to build an MVP for a B2B SaaS project or any other type of project, a minimum viable product is a great way to start in this rapidly growing market.
Although creating an MVP requires less development time than creating the full version of your application, you’ll still have to focus on planning and market research. Moreover, lots of technical issues have to be considered at the early stages of development to eliminate the need for architectural adjustments that may arise in the future and steal both time and resources.
At Apriorit, we have vast experience developing SaaS platforms that focus on customers’ business goals and show high performance. Our experts are ready to start discussing your ambitious startup project and help you create a successful product.