APIs · Cloud-based Software Delivery

API-based SaaS software: pricing?

Julia Entrepreneurial minded

February 20th, 2017

I have this idea, where I need an API-based SaaS built adapted for digital invoicing. Given I have no experience with software development, I am planning to hire a software development company. What can I roughly expect when it comes to pricing? For a prototype and for a finished product?

Appreciate all inputs.

Rob Davis Managing Partner at Critical Start

February 20th, 2017

You need a technical co-founder in my opinion that has developed something similar in the past. By similar, I mean the architecture/tools used versus industry experience with digital invoicing.

My assumption is you are providing the industry expertise and knowledge.

At this stage you need someone who is all in and deeply cares about the success of the company. To an outsourced company, you are just another customer. Your success or failure doesn't REALLY impact them one way or another.

Outsource specific tasks or functions as needed, but you MUST have someone on board to guide you through all the technical decisions that will make or break you longer term. Ideally this person should be able to build the prototype and then use a combination of additional developers/outsourcers as needed.

Aria Consulting Clear, Practical, Solutions in Action

February 20th, 2017


First, something that is API based is, by definition, not SaaS. It would be PaaS as clients would obviously require development resources, however minimally or not, in order to connect and leverage such an offering.

Second, as Patrick pointed out, costs could be between $500 and $50,000,000+ depending on what you would want built and put into a production environment. As well as having test/QA environment(s). And since you've stated you don't have the technical background to be the initial SME for such a venture, it becomes even more critically important than it would be otherwise that the solution would be heavily tested and documented because you would be using a 3rd party to create it. In that scenario, it is inadvisable to have the development vendor do all the testing as they obviously have a vested interest in not necessarily disclosing any "issues" that might come up. Which means that it is best to also find a testing vendor. Having spent 20+ years in technology, I can tell you (from much experience), that while this scenario is "best" to help ensure that even a MVP actually meets the "viable" part, it also introduces costs, time, complexity in managing the multi-vendor relationship. You should be prepared for that. A couple of things that development vendors most certainly will NOT point out to you!

Third, keep in mind that the costs of doing this in a way that could be reasonably offered, and consumed, by client companies include a LOT more than development. Especially as such an offering really seems to only make sense to large volume invoicing environments like telcos, FI's, etc. There is setting up, or contracting with, a support/helpdesk/call center which entails having training materials and a training program of some sort (hence the aforementioned criticality of documentation), support tools including secure remote access, basic (at least) telephony automation, development and some way of distribution of some form of advertising/marketing/sales materials as well as demo environments and so on. Plus all the 'normal' costs that a new business needs to consider such as back office software Even if it is QB there is still costs associated), office space and furnishings and such for the support people (at least), and so on.

Manash Chaudhuri Entrepreneur, CRM Evangelist, Cloud Computing Architect, Product Management and Business Strategy Consultant

Last updated on December 3rd, 2018

Julia, as few of our friends have shared; it is important to define the functional requirement boundaries for your API based product/service and accordingly it can become a finite document for an IT firm to provide a high level ball-park estimates. Few things that can help get to the next level are:

1. Draw a very high level block diagram or mind map of what you plan to offer - will this for B2B or B2C

2. Conceptualize what 3rd party products or services you may need to be integrate

3. Will this PaaS platform you are planning; is this going to assist Users in their buying behavior, social behavior or Lead generation or server management

4. Do you want to keep track of all Users accessing your PaaS platform and how you plan to price it.

We assist startups as their CTO organization and help deliver MVP to final product launch. I am sure you already have most of your concepts ready... once you have compiled the overall list of services that will be delivered using API stack then it can become bit more manageable to provide some estimates.


February 25th, 2017


I see many nice replies here . However I am afraid that your first statement "I have no experience with software development" is going to be the biggest risk and potential failure point. The pricing at this point i would not make any guess as many other said because based on complexity it can vary and also it will vary based on if a you are executing a freelancer to execute it or a organization . It will also vary if ite being done in USA. Europe or Asia.

I know hiring a technical co-founder in short notice is not easy. this is what i will recommend - talk to say 2-3 companies , try to get quotes form them use small companies only companies with say 20-100 engineers . (reason is if they are too big they have no reason to see you succeed. They they are small you will get the attention and treatment you expect) . if the quotes of companies vary in range of 10-25% then you know the estimation is being done right. But please donot give the work to the cheapest bidder. Give it to one you feel is most professional and easy to work with.

check with them how they are going to keep you posted on progress. what is the exposure you will have into the team etc.

If you need to know more message me and can share more


Steve Procter ... Venture Technologist Tech Entrepreneur seeks sales & referral partners for www.nearevo.com

March 28th, 2017

Julia, may i offer an alternative answer that hasn't already been suggested...

write up a detailed description of what you want and go out and find 3 providers who can help you build this for a fee. Get them all to offer you a formal quote. Sit with them in meetings or on the phone as much as they want to help them understand your requirements. Inform them all that you are getting several quotes, to keep them on their toes.

At the same time as above, come on here and use the networking option to find someone who is also techie (but has experience as a software consultant) and is willing for a one-off fee to spend perhaps half a day going through your requirements and the finished quotes and discussing them with you. Get them to help you formulate what is good and bad about the quotes and what follow up info is needed from the providers. they will help you evaluate whether the 3 quotes all saw you coming and are just taking the mick, or if at least one of them is worth persuing.

you could alternatively hire someone on here to help you write the requirement specifications and present them to 3 development companies in the first place. but actually i believe it is more important for you to do that - at some point an entrepreneur needs to take that first leap off the ledge and try to fly yourself.

try something, possibly make a mistake, but have a support group (like this forum) to support you 'after' you have tried things, rather than tell you what to do every step of the way.

Ikbol Kobulov I run a Software Development Company

Last updated on December 3rd, 2018


Mark Lummus

Last updated on December 3rd, 2018

It's impossible to answer your question with any reasonable range of accuracy. You are not providing enough details to be able to answer.

I just helped someone with an SaaS/API app that had 2 mobile clients. My client spent more than $1million before it was in production. That's not typical, but it is possible to spend $500k - $1million for sophisticated systems.

for prototypes, expect anywhere from $10k - $100k.

Planning to hire a software development company without any prior software development experience? Expect a rough ride and to lose your money at least once, unless you have someone very close to you (that doesn't work for the development company) that's running development for you.

Prem Jain Big Data Solutions and Services

Last updated on December 3rd, 2018

I agree with what Rob stated - You need a partner/coFounder who is a software ace, motivated and skilled in your required area. There are many you can find on this forum.

Steven Dearborn Web Services and APIs Solutions Architect, Innovative R&D, Agilist, Web and Mobile Apps

February 21st, 2017

I would recommend to separate into three parts. I would first get a firm who has past experience designing APIs to collect and complete your specific requirements and define the APIs in a "ready-to-develop" state. They should provide you with a feasibility assessment of your idea and therefore should also prototype. Second, share this proprietary information (i.e. NDAs) with a few implementation contractors for pricing (the previous firm may be one). The third would be concerned about hosting. Hosting will have the most pricing options and should be based on your requirements. Also, it will likely change as your APIs become more popular, due to scaling and performance. You may want to approach this using Lean Product Design or Value Proposition Design where you get immediate feedback from a few key stakeholders/clients and continuously improve the product towards a mature, ready for investment stage.

Tom Buiel

February 23rd, 2017


Just for clarification, do you have a digital invoicing application you want to offer in a SaaS model that also requires an API?

I also agree that you should hold off on partnering and hiring until you can clearly articulate and protect your requirements.

FYI I have been down this road a few times and would be happy to have a conversation.