Today, many successful businesses in the SaaS and app industry start with a solution to a specific problem. What starts as a niche tool can grow into a commercial powerhouse, serving millions of users globally.
This guide shows how to turn an idea into a successful SaaS or app, find ways to make money, and create lasting revenue strategies. We explore what makes SaaS companies succeed or fail, using research and real-life examples from the industry.
Idea Validation:
CB Insights reports that 42% of startups fail because there’s no market need for their product. This makes idea validation the most critical first step. For SaaS or app products, this typically involves market research, gathering feedback from potential users, and identifying unmet needs.
Slack, for example, began as an internal tool for team communication before its founders realised its broader market potential. By solving a common pain point with easy-to-use software, Slack transformed into a globally successful SaaS platform.
Market Research and Competitor Evaluations:
A study by Gartner found that companies that do market research before launching a product are more likely to succeed. They are 2.5 times more likely to succeed. Competitor analysis is crucial in the SaaS and app industry, where differentiation can make or break a product.
For example, Shopify entered a busy e-commerce market. It stood out by providing an easy-to-use platform for small businesses. Today, Shopify is one of the leading e-commerce platforms globally, generating billions in revenue.
Defining Scope and Features:
One of the key success factors in the SaaS world is focusing on a Minimum Viable Product (MVP). Eric Ries’s Lean Startup Methodology shows that an MVP helps you launch quickly. It lets you gather feedback and make changes without spending too much on features.
Dropbox started with a basic cloud storage service. They used a freemium model to attract users. As more people joined, they added more features.
Technology Stack and Infrastructure:
The technology stack you choose will significantly impact your ability to scale. According to Delimited, companies leveraging cloud platforms like AWS or Azure see 50% faster scalability when demand spikes. Netflix is a great example of a SaaS company. It uses cloud technology to reach millions of users around the world.
Cloud platforms help SaaS products grow easily. They allow for adding third-party solutions and entering new markets. You can achieve this without spending a lot on infrastructure.
User-Centred Design:
Forester Research indicates that well-designed user interfaces can increase conversion rates by up to 200%. This aspect holds special importance in the SaaS world because user experience often determines customer subscription retention. Canva, for example, grew rapidly by offering a simple, intuitive interface for graphic design that catered to non-designers. Canva’s focus on user-friendly design helped it attract many loyal users and earn money from premium subscriptions.
Development and Iteration:
In the SaaS and app world, development is never truly complete. Constant iteration and improvements based on user feedback are key to staying competitive. Agile development methodologies, highlighted in a report by Harvard Business Review, show that SaaS companies using continuous integration and regular updates outperform their peers.
For example, Atlantis, the company that makes Jira and Trello, regularly updates its products. These updates reflect user feedback. This practice helps Atlantis stay a leader in project management software.
Many SaaS and app products start as internal solutions to specific problems. To identify whether your custom app can be successfully commercialised, consider the following factors:
Market Size Evaluation
Evaluate the total addressable market (TAM) for your app’s solution. ZenDesk began as a support tool for small teams.
ZenDesk started as a support tool for small teams. It then expanded into a global software product. This growth happened because it met the need for easy-to-use helpdesk solutions.
Now, ZenDesk serves thousands of businesses. Statistic projects the global SaaS market to reach $307 billion by 2026, illustrating the massive opportunity for scalable solutions.
Differentiation and Competitor Evaluating
McKinsey says 70% of successful SaaS startups had a special advantage, like better price, features, or ease of use. Zoom stood out in the crowded video conferencing market.
It offered better performance and was easy to use. Additionally, it could grow with users’ needs. This enabled Zoom to grow rapidly, particularly during the COVID-19 pandemic when its user base surged.
Assessing Scalability
Scalability is essential in the SaaS industry. Apps like Dropbox were able to rapidly grow because their architecture allowed them to scale effortlessly. A study by Accenture found that businesses focusing on scalable architecture have a 40% higher chance of succeeding online. If your app cannot scale to meet user demand, it will struggle to maintain momentum.
Revenue Model Validation
Choosing the right revenue model is essential to monetizing your app. Common SaaS revenue models include:
Subscription: Apps like Salesforce and Slack use subscription models to generate recurring revenue.
Freemium: Apps like Spottily and Evernote attract users by offering basic features for free while charging for premium features.
In-App Purchases: Mobile gaming apps like Clash of Clans generate significant revenue through in-app purchases.
Advertising: Social media apps like Instagram and TikTok monetize through ad placements.
Success Stories of Commercialised SaaS and Apps
Slack
Originally an internal communication tool, Slack realised its broader potential when it recognized that other businesses faced similar team collaboration challenges. Slack became immensely popular by solving a common problem.
It has a simple interface that is easy to use. This helped it grow into one of the top software platforms. Slack makes millions of dollars each year from its subscription model.
Shopify
Shopify began as a custom e-commerce platform for selling snowboards. The founders saw that small businesses needed a simple way to create online stores, so they launched Shopify worldwide. Today, Shopify powers over a million businesses and generates billions in revenue through subscription models and app integrations.
Dropbox
Dropbox started with a simple goal: to provide easy-to-use cloud storage. Its freemium model allowed users to try the service for free, with the option to upgrade for more storage. This approach helped Dropbox grow rapidly and become a leader in cloud storage.
Zoom
Zoom entered a saturated video conferencing market but quickly differentiated itself with superior performance, ease of use, and reliability. Its ability to scale helped it grow quickly during the COVID-19 pandemic. This made it a global leader in video conferencing, with millions of users around the world.
Spotify
Spotify began by solving a common problem—music streaming. Users can access basic features for free and choose to upgrade to premium for additional functions.
Spotify stands out from competitors like Apple Music. It focuses on personalized playlists and helps users discover new music. This has made Spotify one of the most popular music streaming services in the world.
Lessons from Failed Apps
Not all SaaS apps succeed. Here are lessons from some notable failures:
Google Wave
Google Wave was a major project aimed at improving communication. However, it failed because it was too complicated. Additionally, it did not have a clear target audience.
Forester Research found that Google Wave had problems. Using it was hard and it did not fix a clear issue for users.
Quibble
Quibble, a short-form video streaming service, failed despite significant investment. Quibble was unsuccessful because it didn’t know its audience. It spent too much on expensive content. It should have checked if people wanted that content.
Everpix
Everpix, a photo storage service, failed despite strong user satisfaction. TechCrunch reported that the company’s failure was because of poor financial management and an unsustainable business model.
Best Practices for Commercializing a SaaS or App
Start with an MVP
Focus on building a Minimum Viable Product (MVP) that solves the core problem your app addresses. For example, Trello began as a simple task management tool before expanding its features based on user feedback.
Iterate Quickly
Constantly gather feedback from your users and iterate on your product. Atlantis makes Jira and Confluence. They often update their software to meet user needs. This helps them stay a leader in project management tools.
Build a Community
Building a community around your app can accelerate its growth. Notion is a productivity app with many dedicated users who help promote and improve its features. By engaging with users, Notion has rapidly expanded its feature set and improved its offering.
Strategic Partnerships
Working with other companies can help your app grow. Here are some hashtags to make it easier for people to find your app: #AppGrowth #Partnerships #DiscoverYourApp
Summary
Custom app development can change an internal solution into a worldwide software product. This can create new ways to earn money and boost customer engagement. From idea validation to continuous iteration, commercialising and monetizing a custom app requires a focus on market needs, scalability, and the right revenue model. With the proper planning and execution, businesses can turn their app ideas into highly successful ventures.
