Develop a SaaS Product or Buy a SaaS Product: Which Is Better?

Should you purchase software solutions to meet the business's latest demand, or do you want to build your own? Every Software as a Service (SaaS) company asks the question at some point in their business growth or expansion. Thus, the reason behind this query is simple, like an automated delivery system that can quickly be developed. But for others, it is a more complex use case that requires a dedicated developer’s team to maintain it.

When the requirements are fulfilled, there are some crucial questions to ask for developing a SaaS product:

• Is there a straightforward way to ROI or return on investment?
• Can it absorb the project's resource coverage, time, and financials if it costs 50% more than expected?
• Is the in–house team compatible with developing the product?

If the answer to the question is yes, then an organization leader, before choosing any option, should weigh multiple factors like the goals of the business, size of the team, complexity, business revenue, and many more. 

This article enables business owners to decide which options to choose - Develop a SaaS Product or Buy a SaaS Product and select the right solution for their business. 

Develop or Buy a SaaS Product: The Decision Framework

While choosing between buying or developing a SaaS product, the business should consider three leading considerations. It is set out in a three-part decision framework:

The Problem

One thing is sure businesses would face the problem in running it. But the main thing is to evaluate which issues will solely affect business and which problems most companies face. However, if the business field is widespread, various pre-made software is available. But, if the business is unique, then it is tough to find a SaaS platform and may require building custom software.

The Timeline

The organization should decide how quickly they need software to build. Building software can take months or years and depends on the complexity of the structure. If the business needs it urgently, buying a pre-made solution is the best choice, and it starts running in a few minutes.    

The Budget

Creating in–house software programs can be expensive, so the company should plan accordingly. The company should consider the following considerations: yearly maintenance and hosting charges. But, on the flip side, ready-made software solutions only require a one-time investment or monthly payments for support, maintenance, and hosting.

Key Factor: Whether to Develop or Buy a SaaS Product for Business?

After determining the three crucial frameworks, it is time to dive deeper and evaluate the essential things to consider while developing a SaaS application. It enables the business to decide which option is appropriate:

Opportunity Cost

Developing a SaaS Product:

The most important thing for any company is budget. When the business allocates funds in one sector, then loses for another industry. For instance, if the business develops an application by using 60% of the budget, then it probably has fewer funds to spend on other opportunities which arise in the future. 

Buying a SaaS Product:

SaaS solutions will cost a fraction of what creating software does, meaning the business should have enough budget to spend on the other opportunity. 

Control

Developing a SaaS Product:

If a business decides to develop customized software, it would be helpful. It gives the power to determine which features and elements are required and know every detail related to color schemes and margins. The businesses are not required to pay for new features. 

Buying a SaaS Product:

If an organization wants to relinquish some access to the SaaS platform in exchange for convenience and ease when purchasing readymade software is the ideal decision. Purchasing decisions should ultimately depend on industry needs and requirements. 

Maintenance

Developing a SaaS Product:

If an organization has a large budget, it may be affordable for software maintenance. But it is also crucial to evaluate what maintenance costs are included, like fixing bugs, password setting, updating, meeting industry standards, and setting user profiles. Thus, businesses must pay for more bandwidth with staff if it is a significant uptick in users.

Buying a SaaS Product:

After evaluating the development part, it seems daunting to them that purchasing pre-built software is the best choice; subscription fees include all the maintenance fees and support from the backend team, who are experts and always available with the solution. 

Time to Value

Developing a SaaS Product:

When you are struggling between choosing pre-built or buying a SaaS platform, think about the goals you want to achieve. However, creating software may take even year and long. So, it is up to you how long you can wait to achieve the goals. Is it affordable for a business to stay for too long? 

Buying a SaaS Product:

Purchasing the SaaS platform enables users to use the software in minutes and offers instant access to the complete program. However, readymade software provides the fastest window to connect goals into actions. 

Monetary Cost

Developing a SaaS Product:

If an organization has a considerable budget, developing in–house software is affordable. But remember that the companies must bear their initial investment and include maintenance costs. Other costs include hosting, platform migration, upgrades, support, system repairs, and, most notably, following recent trends. Depending on the size of the business requires paying thousands to develop software. 

Buying a SaaS Product:

The SaaS platform of business choice will charge all amounts, including building and maintenance and ongoing subscription, because the SaaS provider wants to obtain efficiencies across the large customer base and will charge an amount at a fraction of the cost, which requires paying to support the application.

Developing a SaaS Product or Buying a SaaS Product Is Only Depend on Financial Decision

 It is important to note that even the most accessible user prompt, when–built, can take weeks or even months to go live. In this time gap, the business has many users sign to the platform, and if they don't find anything valuable, then churn is imminent. So, if an organization fails to onboard users due to a development gap, it loses its bottom line.

Having a dedicated in–house development team is not the vast cost of creating software, but the time it takes to develop a product and implement on strategy is a considerable cost that businesses should consider. It does not matter whether the company is multinational or a startup; time is a valuable asset here.

Conclusion

When it comes to software products, you have two primary choices: either develop a SaaS product or buy one that’s already been developed. But evaluate the process by decision frameworks and these above-mentioned five factors. If the business is armed with inputs, you can make a wise decision for the organization's success.