Multi-tenant applications are everywhere. Most modern SaaS projects handle multi-tenancy in different ways depending on their scale and security needs. In this post, I will share what I’ve learned about multi-tenancy architectures and how to choose the right one for your project.

What is a Multi-Tenant Application?

If you are building a B2B application with multiple clients (tenants), you need a way to separate their data while minimizing server costs. Instead of deploying a full stack for every new client, a well-designed multi-tenant app allows you to onboard new users with simple configuration changes, utilizing shared resources efficiently.

Database Implementation Strategies

While I will use PostgreSQL as an example, these concepts apply to most relational databases.

1. Server-Level Isolation

Each client gets their own dedicated database server (e.g., a separate AWS RDS instance).

• Pros: Highest level of security and physical data isolation. No “noisy neighbor” effect.
• Cons: Extremely high maintenance and cost. Scaling to hundreds of clients is difficult.
• Best For: Government/Bank grade security

2. Database-Level Isolation

Multiple clients live on the same database server, but each has its own named Database.

• Pros: Cheaper than server-level isolation; data is still physically separated into different files.
• Cons: Hard to manage connection pools; running migrations across 100+ databases is slow and risky.
• Best for: High-compliance industries like FinTech or Healthcare.

3.Schema Level

Using PostgreSQL Schemas. You have one “public” schema for global configs and separate schemas for each tenant. You can use the SET search_path TO tenant_name command to switch contexts.

• Pros: Good balance of isolation and cost. Only one database connection pool is needed.
• Cons: Performance can degrade as the number of schemas reaches the thousands (due to system catalog bloat).
• Best For: High-value Enterprise clients

4.Table Level

Creating tables with prefixes like tenant1_users, tenant2_users.

• Pros: Can offer some logical isolation.
• Cons: Not Recommended. It is a maintenance nightmare and most databases have limits on the number of tables per schema.
• Best For: Avoid this approach; it combines the weaknesses of all other methods. Don’t use this as my opinion

5. Row-Level Isolation

All tenants share the same tables. Every table includes a tenant_id foreign key. You use Row-Level Security (RLS) in Postgres to ensure one tenant cannot see another’s data.

• Pros: Highly scalable, lowest cost, and easiest to run migrations (you only run them once).
• Cons: High risk if the tenant_id filter is forgotten in a query (though RLS helps prevent this). Hard to perform a “backup and restore” for just one specific client.
• Best For: Thousands of small-to-medium users and B2C applications

Below is comparison table for all

Feature	Row Level (RLS)	Table Level (Prefixes)	Schema Level	Database Level	Server Level (RDS Instance)
Isolation	Logical (Policy)	Logical (Manual)	Logical (Namespace)	Physical (File/Process)	Physical (Hardware/Compute)
Maintenance	Easiest (1 table)	Hardest (1,000s tables)	Moderate	Hard (1,000s DBs)	Extreme (1,000s Instances)
Infrastructure Cost	Lowest	Medium	Medium	Highest (per DB)	Astronomical (Idle waste)
Server Management	Simple: One server to monitor & patch.	Complex: High metadata/memory load.	Moderate: Single server, but many objects.	Extreme: Managing thousands of DB instances/files.	Massive: Fleet-wide patching and orchestration.
Best For	High-growth SaaS	Not recommended	Balanced Enterprise	Banks / High Compliance	Ultra-Secure / Tier 1 Gov & Defense

Application-Level Implementation

How do you tell your app which tenant is currently logged in?

• Middleware: The most common way. Intercept the request, identify the tenant, and set the database connection or search_path.
• Reverse Proxy: Using Nginx or specialized proxies to route requests to specific internal services based on the tenant.
• If you find any other ways please let me know also.

How to detect the Tenant from a request:

1. Subdomains: client-a.saas.com (Most professional/common).
2. Custom Headers: Passing a X-Tenant-ID in the API header.
3. URL Path: saas.com/tenant-a/dashboard.
4. JWT Claims: Encoding the tenant_id inside the auth token (Very secure). There can be many other ways you can detect tenant from request.

That’s all for the blog if you have any feedback on the blog or want to ask something please mail at [email protected]