The demand for enterprise SaaS applications is an all-time high. Companies are rapidly moving towards the cloud for higher productivity and agility. This growth is an opportunity for SaaS providers to expand their user base and achieve their desired objectives.
Here lies a problem.
Although the SaaS industry is growing rapidly, the costs related to the development of SaaS products continue to rise consistently. SaaS companies have to spend more on product development, bug fixing, and quality assurance. Besides, the scalability, infrastructure, and opportunity costs are also high.
As a result, the subscription costs of cloud solutions are also increasing. Users have to pay more, and SaaS pricing inflation is four times higher than global inflation, according to TechCrunch.
In this article, we will discuss the five most effective strategies that can reduce SaaS development costs and provide flexible pricing options to cloud users.
Let’s explore these strategies!
1. Optimize Infrastructure Costs
Infrastructure is one of the costliest aspects of SaaS development. The best way to cut down on these expenses is to leverage the available cloud services from AWS, Google Cloud, and Azure.
According to 2023 findings from the Flexera State of the Cloud Report, 93% of enterprises have a multi-cloud strategy, and 87% have a hybrid cloud strategy. These models eliminate the need for investment in expensive SaaS infrastructure and systems.
Netflix, for example, has adopted the cloud to economize organizational effectiveness. Moving to the AWS cloud allowed Netflix to scale its infrastructure. As a result, this online streamlined platform today serves millions of users across the globe without the burden of maintaining large data centers.
Here’s how you can do this:
- Embrace Spot Instances: All public cloud providers offer their unused computing power at an extremely reduced price known as spot instances. This can save up to 90% of the total cost.
- Auto-scaling: Include auto-scaling capabilities within the infrastructure to scale out or scale in the number of instances as per demand—it’s a sure way to not pay for idle resources when the number of instances is low.
- Reserved Instances: The commitment for particular resources for one or three years can offer considerable discounts.
2. Adopt Microservices Architecture
The microservices architecture distributes applications into smaller independent services. These services are developed, deployed, and scaled separately. With this approach, SaaS companies can reduce the expense needed to develop and maintain an application.
Research shows that 61% of organizations today were using or planning to use microservices in 2022. Besides, microservices provide companies, such as Amazon and Spotify, with a high level of efficiency in terms of scalability and cost reduction.
For example, Amazon transitioned to billions of back-end calls and increased the speed of deployment with microservices.
SaaS developers should take the following steps:
- Independent Deployment: Update each microservice independently without impacting the entire system. This step can reduce downtime and cut down the maintenance costs.
- Resource Optimization: Better allocation of resources entails scaling only the services that must be made stronger.
- Improved Fault Isolation: Malfunctions in one microservice will not influence the overall system and subsequently reduce the costs associated with debugging and fixing.
3. Implement DevOps Practices
DevOps practices improve collaboration between development and operations teams. This model is very effective in easing the workflow and making the release cycles shorter. Eventually, DevOps brings in a significant amount of cost savings over time.
Puppet’s State of DevOps Report 2023 shows organizations practicing DevOps experience 60% more employee satisfaction and can recover from failures almost 24 times quicker. The approach allows SaaS developers to deploy changes around the code faster increase the agility level, and eliminate costs for downtimes.
For successful implementation of DevOps, cloud companies should take these steps:
- Continuous Integration and Continuous Deployment (CI/CD): Automate testing and deployment processes to decrease manual errors and increase speed.
- Infrastructure as Code (IaC): Controlling and provisioning of infrastructure through code makes the process more repeatable and reduces configuration errors.
- Monitoring and Logging: Implement “proactive” monitoring to catch and fix issues as early as possible. This will help reduce downtime, among other business losses.
4. Outsource Non-Core Activities
Outsourcing is another great way to reduce SaaS development costs. Collaborating with a reliable outsourcing partner enables SaaS developers to hire qualified resources at low prices. Besides, an in-house team can work on the most important parts of the project by outsourcing non-critical tasks to a third party.
Consider the example of Slack. They outsourced their mobile app development to a Canadian company called MetaLab. As a result, they launched the mobile app faster and focused more on building mission-critical features.
Below are critical steps to make the most out of outsourcing:
- Core Operations: Identify what one can outsource without compromising on the core operations; for example, customer services, QA testing, and routine maintenance.
- Select Dependable Partners: Select the partners who are well-experienced and knowledgeable in the specific field where work is being outsourced
- Effectual Contract Management: Well-defined contracts with milestones, schedules, and desired quality ensure the proper alignment of business goals
5. Automate Routine Tasks
Incorporating automation in routine work can prudently reduce manual efforts and save cost and time. SaaS companies can automate application testing, deployment, and monitoring using various tools and technologies.
Different automation tools are available for the development process to save time on manual work. These tools also enable developers to make easy improvements for more strategic work with the team.
Here’s how SaaS companies can effectively automate routine tasks:
- Automated Testing: Leverage tools like Selenium, JUnit, or TestRail to get key testing tasks done in less time, maintaining the reliability factor as well.
- Continuous Deployment: Implement tools available on the market, such as Jenkins, GitLab CI, or CircleCI. These tools simplify processes for deployment by eliminating errors and speeding up manual operations to run within shorter timelines.
- Monitoring and Alerts: Implement automatic checks and notice systems by using tools such as Prometheus, Grafana, or New Relic. They will keep you updated on problems that may arise in the shortest time possible, lowering downtime.
Final Thoughts
Reducing SaaS development costs is crucial to stay competitive and increase profitability. Lower costs mean flexible subscription options for users and long-term sustainability.
We have discussed a few ways cloud providers can cut down their SaaS development costs. These include optimizing infrastructure costs, embracing microservices architecture, implementing DevOps practices, outsourcing non-core activities, and automating routine tasks,
These strategies not only reduce expenses but also enhance efficiency, scalability, and overall product quality. Eventually, SaaS development companies can thrive in the competitive SaaS market.
