Building a Tool vs. a Platform – Know the Difference!

Category: SaaS
tool vs platform

Note: This article was updated September 12, 2023

Hey there, future SaaS superstars! Let’s take a quick timeout to clarify something crucial—particularly if you’re a newcomer to SaaS development. The terms “tool” and “platform” get tossed around a lot, sometimes even used interchangeably. 

Spoiler alert: they’re not the same, and understanding the difference could be the game-changer for your SaaS startup.

What’s in a Name: Platform vs Tool in SaaS

Tools are as straightforward as they come: designed for a specific purpose, they excel in doing one thing incredibly well. Think of a tool as a knife—it’s great at cutting things, period.

Platforms, on the other hand, are your Swiss Army knives. They’re versatile, capable of handling multiple tasks by integrating a variety of tools into a cohesive ecosystem.

It’s a SaaSpectrum

Life’s not black-and-white, and neither is SaaS. Most software falls somewhere on a spectrum between being a “pure tool” and a “full-blown platform.” As you tack on features to a tool, it inches closer to becoming a platform. Conversely, platforms can be streamlined to be more tool-like.

For instance, Facebook is unarguably a platform, while Asana leans toward the platform side but with a tighter focus on team management. Google Docs, with its sole focus on collaborative documents, is even closer to a tool but still qualifies as a platform.

Money Talks: Why You Should Start Small

Developing a robust platform can burn through cash like a wildfire. So, if you’re making your first foray into the SaaS world, my very firm recommendation is this: aim to build a stellar tool first. More complex projects are more susceptible to failure, and let’s be honest–your first few projects have a high chance of face-planting anyway.

A Tool Doesn’t Mean a Bore

Focusing on a single functionality doesn’t make your tool ‘limited.’

Take Calendly—it only schedules meetings. But it does a lot within that very narrow scope. It connects to your Google Calendar or iCal, includes a host of control options such as limitations on certain event types and buffers between events, integrates with a lot of other platforms well, and focuses on making meeting scheduling easy. In fact, it does its job so well that it has become indispensable.

By concentrating on one task, tools can hone their skills to perfection, and their lower build and lower operating costs can allow you to offer them at more competitive prices.

No Shortcuts to Quality

Good tools still need solid UX design. Never compromise on the user experience. Your tool should:

  • Be smooth and easy to navigate
  • Load quickly
  • Anticipate and address user needs

Simple as this checklist may appear, executing it is another ball game and will require a considerable investment of time and money.

Wrapping Up

So, if you’re at the starting line of your SaaS journey and wondering if you should build a tool vs platform, the short answer would be: build a tool. Even if you had unlimited money and time (which you don’t), remember you’re also operating on an ‘experience budget.’ Learning from smaller failures early on will make your recovery more manageable, saving you from more significant setbacks.

Best of luck, and remember, the secret sauce to SaaS success is experience. We’d be thrilled to lend you our two decades of expertise to make your SaaS journey a home run. Contact us to lay the first brick of your SaaS empire!


What is the difference between a platform vs a tool in SaaS?

In SaaS, a tool is designed for a specific function and excels in doing one thing extremely well. A platform, however, is versatile and integrates multiple tools to handle various tasks within a cohesive ecosystem.

What is a SaaSpectrum?

The SaaSpectrum is the concept that SaaS systems exist on a spectrum between being a “pure tool” and a “full-blown platform.” As features are added to a tool, it gradually becomes more like a platform. Similarly, as a platform’s functionality is streamlined, it gradually becomes more like a tool.

Is Facebook a platform or a tool?

Facebook is a platform. It’s designed to handle multiple functionalities, from social networking to business marketing, by integrating various tools within its ecosystem.

Is Asana a tool or a platform?

Asana is a platform, but with a specific focus on work management. It integrates various functionalities but stays centered on team collaboration and project management.

Should SaaS startups begin by building a platform or a tool?

For SaaS startups, it’s generally recommended to start by building a well-designed tool. Tools are less complex to develop, have lower initial costs, and offer a clearer path to validating market fit.

Why are tools generally easier and cheaper to build than platforms?

Tools focus on a single functionality, allowing for specialization. This leads to lower build and operational costs compared to platforms, which aim to integrate multiple functionalities and tools.

What does it mean to operate on an 'experience budget' in SaaS?

An ‘experience budget’ refers to the learning curve and the experience you gain as you work on SaaS projects. Starting by building smaller, less complex tools allows you to learn from failures more easily.

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