How to Sustainably Improve Profit Margin at Your Software Development Agency
Improving your margin is an exercise in balancing costs against the tactics you are using to generate revenue while continually working to make your team more efficient.
SaaS development costs can be split into five major areas:
Usually, people see those as separate and try to tackle them individually. However, using better tools can reduce all of them at once.
Low-code technology is taking the development world by storm. And it's no wonder because who can resist getting a 3-5X increase in development effectiveness while having almost no learning curve?
This is truly a game-changer. And any project not utilizing this technology will be severely disadvantaged. It's like competing against developers who are still coding on punched cards - they stand no chance.
And the same can be said for any SaaS project that still uses old-school programming.
When creating a SaaS product, most of the costs will be related to development. And there is very little you can do about it using traditional development.
You can hire a faster development team, but they will likely be more expensive. You can try outsourcing to other countries, but that introduces additional risks and challenges. For example, coordinating work in different time zones, etc. And if you hire developers with less experience, they might produce software with more errors and buggy behavior.
In short, there is very little you can do to significantly reduce the costs of your project without some major breakthrough. And the good news is this new breakthrough is already here in the form of superior development technology.
Specifically in the form of low-code technology:
To be more specific, you can speed up your development by 3-5X. At the same time, the user interface is intuitive, which results in a very fast learning curve.
Low-code technology is immediately usable by 17+ million JS developers who can radically increase their productivity overnight.
Whether you use it in your next SaaS project or not, rest assured your competitors will not miss an opportunity to gain a strategic advantage over you.
Software bugs are correlated to development costs. We could talk about the causes of technical debt, but if you want higher development speed, you'll likely introduce more bugs into your code.
So you end up paying for the bugs sooner or later. Slower development, better planning, and writing more and better code tests are ways you pay in advance.
Letting your unsatisfied users report the software issues is how you pay later. And the price you pay later is always higher.
Low-code technology circumvents this problem by automating generic tasks like building default API endpoints and creating reusable drag-and-drop frontend components.
These pre-built components are already used in many projects and for various use cases. Therefore, any potential bug can be spotted sooner because of the components' diverse use.
This leaves more time for programmers to develop and test their business logic. The end result is a better-tested product while spending less time testing it, which reduces bug-related costs.
Building scalable web applications is not an easy task. But it's a lot easier if the tools you're using to build your SaaS app have scalability enabled out of the box.
And low code is such a tool. Whatever you're building, it is automatically scalable from one to a million users (and beyond).
This has 2 significant benefits:
Both benefits are included in your product if you choose to build it using low-code technology.
Besides, manually implementing scaling capability is taking away precious time from your developers, who could be developing new features. Because the end users will not notice any difference before and after your team implements "scalability".
In fact, that is the whole purpose of scalability. Regardless of the number of users, your SaaS app works the same. But to your end users, it seems like you're not doing anything useful.
Plus, scalability is not something that users will sign up for. Your customers will only buy based on the features and benefits your product brings to the table. And they already expect your app to scale and work regardless of the number of actual users.
Infrastructure is tightly related to scalability. If you acquire infrastructure before it's really needed, you will have to pay for it ahead of time.
If you wait too long and your user growth takes off sooner than expected, you will pay the price for a bad customer experience. And in today's day and age, bad customer reviews are enough to destroy the SaaS project you were working on so hard.
These problems can be easily avoided if you're using low-code technology:
Building on low code also prevents unnecessary infrastructure technical debt because everything is automatically built in a sustainable way. No further architectural changes are needed.
By far, this is the highest cost of them all. The resources you allocate to any SaaS development project are limited. And whatever you invest in one part of the project cannot be used in other parts.
For example, every dollar you use on software development is a dollar that is not being used on marketing, advertising, or content production.
Let's say you know that using a low-code technology can increase software development effectiveness by 3-5X. Then you also know this will lower the software development costs proportionally.
And all these extra resources can be used in other places where they are crucial for the survival and growth of the entire SaaS project. A place like an online promotion that is used for customer acquisition.
Because no matter how good your software product really is, if no one hears about it, it will never succeed.
The development cost was just one example, though. What if you combined all the cost reductions achieved through low-code technology…
…and put them all toward product promotion?
How much more likely is it for your SaaS company to succeed? How many more people will it reach? And how much faster could it grow if you choose to use the best development technology available today?
Low-code technology is an absolute game changer when it comes to reducing SaaS development costs. And it primarily does this through radical productivity and an extremely short learning curve.
Specifically, we're talking about an increase in development effectiveness by 3-5X and automatic scalability that doesn't require the DevOps team to grow. All of these benefits end up reducing your SaaS development costs.
Try it out for free
Read about the 8base Backend
Read about the 8base Frontend
Visit the Community or Documentation
Contact sales and partnerships