Building Software-as-a-Service (SaaS) solutions presents incredible profitability opportunities, as the world’s largest enterprises thrive on SaaS businesses. Commercial marketplaces like Salesforce AppExchange and Microsoft Commercial Marketplace have created entire ecosystems, allowing SaaS developers to monetize their ideas while extending the capabilities of these big tech solutions. Meanwhile, small businesses, such as coffee shops and martial arts dojos, rely on SaaS solutions like QuickBooks and Jitzs.com to manage their operations.

So, as a developer with a great idea and impressive coding skills, how can you turn those into a successful SaaS business, leveraging economies of scale? What are some of the key ingredients (best practices) from both a business and technical perspective? Let’s explore my biggest lessons learned from working with Silicon Valley startups and building my own personal ventures.

Business Ingredients:

1. Do the business basics right. Validate the market opportunity and get to market quickly with an MVP. Ensure the problem you’re addressing genuinely exists and that customers are willing to pay for a solution. Validate the market size (TAM/SAM) and ensure this opportunity aligns with your personal goals. What might be a good lifestyle business for additional income may not be an investable venture. Adapt to your customers’ needs. Use Design Thinking and a thorough discovery process to validate your idea. Leverage the Lean Startup methodology for continuous validation. Needless to say, build an MVP to get to market fast and start validating the idea.

2. Focus on Scalability. Building a scalable business is crucial, from operations and costs to architecture. Operations should be streamlined—think easy onboarding and efficient support. Can you create an autonomous platform that scales effortlessly?

3. Build a Sustainable Pricing Strategy. Develop a t-shirt sizing pricing strategy and consider a freemium approach to attract customers and increase brand awareness. Tailor your pricing tiers to accommodate different customer segments and needs.

4. Simplify Onboarding. While it’s beneficial to guide customers through the onboarding process, aim for a self-sustaining system that allows your business to scale without constant hand-holding.

5. Leverage Strategic Partnerships for Easy Marketing. Great partnerships can become your best marketing channels. For example, if you’re building a tech SaaS like a plugin for a CRM or ERP, establishing a partnership with the supplier can generate significant leads. Utilize tech vendor marketplaces like Salesforce AppExchange and Microsoft Office Store for lead generation and in-product promotion.

Technical Ingredients:

6. Architect for Scalability. Design your solution to scale as user growth increases. All layers—web, data, caching, authentication—should be scalable. Your system should be elastic to meet user demand, but your pricing shouldn’t be linear. Measure and define a target cost per user.

7. Multi-Tenancy is Essential. While a single-tenant SaaS solution can be manually deployed to multiple customers, successful SaaS platforms are multi-tenant, allowing for easier management and faster scaling. However, not all tenants are created equal—be aware of the “noisy neighbor” problem and consider an architecture that allocates more resources to tenants with higher demands. Perhaps create pools and group tenants based on their needs.

8. Implement Robust DevSecOps from Day One. Build a strong infrastructure-as-code and CI/CD pipeline to enable agile deployments and a daily release cycle. Testing is the foundation for quality and reliable growth, especially if this is a side business.

9. Support an API Economy. Since SaaS solutions are part of an ecosystem, consider an API-first approach from the start. This will facilitate integration with other solutions and encourage modular design. It will also make it easier to deploy your solution across multiple channels, such as mobile and messaging platforms. Building a developer portal is essential.

10. Think Globally, Act Locally. While focusing on your pilot customers, design your architecture to support users from multiple regions. This not only increases your TAM but also serves as a good disaster recovery/high availability strategy, ensuring your solution is accessible from various locations.

In closing…

“A smart person learns from their own mistakes, a wise person learns from others’ mistakes.”

These are the ten ingredients I’ve found to be most effective throughout my career, whether learned the easy way or the hard way. Each of these topics could fill a book, but I hope this serves as a practical checklist for any developer looking to turn their ideas and coding skills into a successful SaaS business. Hopefully, you can learn from both my mistakes and achievements.