Note on earnings: Specific revenue figures and income promises that appeared in an earlier version of this post have been removed because they could not be verified. Results from launching a SaaS company vary widely, and most new software products do not reach significant revenue. No income, revenue level, or business outcome is promised or guaranteed.
What is SaaS?
SaaS stands for Software as a Service. It is a cloud-based model in which users access software over the internet without needing to download it. One attraction of the model is that a product built once can be sold to many customers, but that does not mean sales are automatic: you still need a product people want, a way to reach them, and ongoing support and updates. By the end of this post, you will know the general steps involved in launching a SaaS company, and how to validate, market, and scale it — with no guarantee of any particular outcome.
Why Start a SaaS Business?
SaaS companies have a possible advantage in the marketplace:
- Recurring revenue — if customers stay subscribed and keep paying, which is not guaranteed
- Scalability — software can serve more users without the same costs as physical goods, though growth still brings support, infrastructure, and staffing costs
- Global reach — software can be offered to users in many places, subject to language, payment, and legal requirements
But how do you make sure people are willing to spend money on your product?
Step 1: Market Research
The most important part of any business is ensuring there is a market for it — meaning people are already spending money on similar solutions. Before anything else, answer these two critical questions:
- What problem is your SaaS product solving?
- Who are you solving it for?
Use Google to research:
- Your competition
- Market size
- Industry trends (growth, top spenders, emerging trends)
Market size estimates are only estimates, and a large market does not guarantee that your product will find customers.
Step 2: Build a Prototype (Before Spending a Lot)
Instead of spending a large amount on development before validating demand, build a prototype first. An easy way to do this is by creating a wireframe (a visual blueprint of your software):
- Sketch it with pen and paper
- Use tools like Balsamiq or Figma
This helps developers understand your vision before coding begins.
Step 3: Validate Your Idea (Before Building the Full Product)
This step will help you avoid wasting money. The moment someone pays you for a product, even in advance, that is a stronger signal than praise alone — but a few early payments do not guarantee a sustainable business.
Method 1: Start a Waitlist
Get users to sign up before building the app. Incentivize sharing with:
- Points
- Discounts
Tools to create a waitlist include Waitlist, Viral Loops, Shopify Forms, and Google Forms.
Method 2: Early Adopter Program
Offer participants a discounted license in exchange for early access. Benefits could include verified status on the platform and involvement in feature creation. Validation is widely regarded as a crucial step, but it does not promise later sales.
Step 4: Build an MVP (Minimum Viable Product)
An MVP is a bare-bones version of your product with just enough features to demonstrate value and test demand. Tools to build an MVP include Figma, Bubble, Shopify, and Glide.
Examples of Well-Known MVPs:
- Buffer started with a landing page explaining social media scheduling.
- Zapier began as a manual process (the founder connected apps by hand).
- Airbnb tested demand by listing their apartment.
These are well-known examples, not typical outcomes, and most MVPs do not become large companies.
Step 5: Pricing Your SaaS Product
Before setting prices, research competitors in your space. Also, factor in:
- Monthly costs
- Break-even timeline
Popular SaaS Pricing Models:
- Subscription-Based (Netflix, Shopify, Spotify)
- Freemium (CapCut, Dropbox)
- Usage-Based (Stripe)
- Flat-Rate (Notion, Adobe Express)
- Per-User Pricing (Slack, Zoom)
“A great pricing strategy does not just maximize revenue — it maximizes your customers’ success.” Pricing affects both sales and churn, and the right price for your product can only be learned from real customers.
Step 6: Marketing & Customer Acquisition
How will customers find you? Marketing is essential.
Top Strategies:
Partner with influencers & thought leaders (give free access in exchange for honest reviews or exposure, and follow disclosure rules). Tools to find influencers include LinkedIn Sales Navigator, Apollo.io, and Shopify Collabs. Marketing results vary, and spending on marketing does not guarantee customers.
Step 7: Building Your SaaS Team
You may need:
- Developers (to build the software)
- UI/UX Designers (for interface)
- DevOps Engineers (optional)
- Customer Support
Where to Hire Talent:
- Toptal
- Wellfound (for startups)
- Gun.io (software specialists)
You do not need a big team to start — outsource development if needed, and compare the cost against your actual revenue.
No-Code Alternatives:
- Bubble
- Glide
- Adalo
(Downside: You do not fully own the software.)
Helpful SaaS Tools:
- Firebase (app development)
- Maxio (billing)
- FullStory (behavioral analytics)
Step 8: Keeping Customers Happy
- Provide ongoing support
- Update software regularly
- Fix bugs quickly
- Monitor feedback
Goal: Reduce churn & increase retention. Retention is never guaranteed, and customers leave for many reasons.
Step 9: Scaling Your SaaS Business
Use the 80/20 Rule as a guide:
- Most results often come from a minority of efforts — check your own data rather than assuming this ratio
- Double down on what works for your product
Scaling Strategies:
- Refine target customers & retarget them
- Upsell (solve additional problems)
- Expand to new markets
- Automate processes
- Raise funding (if needed)
Common SaaS Challenges (& How to Overcome Them)
- High Churn Rate
- Survey customers who leave
- Improve weak areas
- Competition
- Stay ahead with better features
- Listen to customer feedback
Future of SaaS Trends
- AI Integration
- Micro-SaaS (smaller, niche products)
- White-Label SaaS (rebrand existing software)
- Market Consolidation (big companies buying smaller ones)
Final Thoughts
Success comes from taking action, but action alone does not guarantee success. Do not let ideas sit in your head — test them cheaply, learn from real users, and be prepared for the possibility that an idea does not work. Most new software products fail or stay small, and that is a normal part of building a business.
