So, you’ve come up with a grand idea and now you want to know what the necessary amount of money you actually need to raise for your new venture will be.
How much does it cost to make an app and what influences its price formation?
First of all, as with any other complex solution there’s no distinct budgetary framework which you can absolutely go by. The closest analogy would be building a house. It is difficult to answer the question, “how much will it cost to build a house?” without specifying any details. It may be a single-storey timber house, or it may be a three-storey mansion with a swimming pool, a garage and a helipad. Even identical looking houses can have different interiors which can greatly affect the cost. The same is true for mobile app development. Will it be a standalone app with no backend system and no API integration or a more sophisticated app that integrates with social media, databases, advanced payment services, etc.? It is easy to come to the conclusion that costs will vary greatly.
To pinpoint the value of a product or service it is necessary to understand and analyze what exactly drives the costs of this product or service. There are three main drivers of cost in mobile app development – who, what, and where:
- who will build it, i.e. development team (how many people will be involved, their hourly rates, level of competence)
- what it will be, i.e. what type of app it will be and it’s level of complexity
- where it’ll actually be built (location)
Platforms for which an application will be developed on and post-release expenses are additional factors worth considering because they will also affect the cost of development.
Develop for Android, iOS or both?
It is needless to say that developing for multiple platforms at the same time will cost you much more time and money than developing for only one specific platform. As practice shows it’s more preferable to start building for one platform first.
Deciding between native or cross-platform development may also affect the cost of a mobile app.
How long it will take to build a mobile app, and therefore its cost, largely depends on how complex the app’s functionality will be. It’s clear that each application is unique to some extent, but in general they can be classified into three categories based on their sets of features and UI complexity.
- Apps with basic functionality and UI are typically standalone apps with standard UI components such as email login, basic data storage etc. There is no backend development and it could be completed in 300 hrs or less.
- Your middle-of-the-road app includes custom UI, login via social accounts, backend development, databases, social media integration, personalization, geolocation, API integration, push notifications, etc. Development will take approximately 300-800 hrs;
- Complex business or enterprise apps will take more than 800 hrs and may include additional features apart from those listed above. These include custom animation, security, data encryption, web portal for app administration, monetization, payment system integration, scalability, hardware integration etc.
Of course these are all ball park figures and even apps without any server component or API integration can be complex and challenging. It really boils down to the specific set of features which the app will be comprised of. and without comprehensive detailed documentation, it’s impossible to make even a rough estimate on a project.
Inadequate or vague requirements may lead to constant changes during the development process and thus to greater costs. Keep this in mind.
Read also: How to reduce app development cost?
There are three engagement models available when it comes to actually hiring people to work on your project. These include Hiring an in-house team, outsourcing it to a professional development agency (onshore or offshore) or hiring freelancers. In any case, you’ll need 4-5 people, minimum. A project manager who will coordinate the work and oversee the development, a designer, who will create all the visual content,a couple of developers and a tester.
As far as hiring an in-house development team is concerned, hiring all these people will not only be time consuming but it will also be quite expensive. In addition, taking into consideration additional costs apart from salaries, organizing workplaces, buying necessary equipment, employment taxes insurance, etc., an in-house team is a good idea for an already established business and for long-term development needs, not startups.
Hiring freelancers results in a decrease in costs but an increase in risks like: miscommunication, less control, availability, confidentiality issues, etc.
Hiring a development firm that’s already experienced in working with startups and similar projects, can easily understand your requirements and compose a team of developers that will have all that is needed in order to create the first version of your product quickly and at a reasonable price. This model is the best solution for startups because it will get your initial product onto the market as quickly as possible. Once you see a real market demand for your product, you can then shift the development and maintenance in-house.
Now let’s see how much agencies charge for their services based on where they are located.
Let’s take look at average hourly rates charged by development agencies around the world:
- United States & Canada: $50-250
- UK, Australia and Western Europe: $50-150
- Eastern Europe: $20-50
- India: $8-20
It’s important to remember that a higher rate does not always equate to higher quality and vice versa, a lower rate increases the likelihood that you will pay more in the long run. When you select a business partner for your project, you should always put expertise above hourly rates.
Try to pick those who have experience developing similar products, it can significantly reduce development time and hence the cost.
Remember that the cost of bringing your product to the market extends beyond the initial v1.0 budget. You will need to invest some money into areas such as ongoing maintenance and support, advertising and also perform some enhancing modifications based on customer feedback. Typically development agencies don’t include post-release maintenance in the initial budget estimate, but rather provide it as an extra service. That’s why it is important to choose a mobile app development company that is not only professional and reliable but is one which you can envision the growth of a long-term cooperation with. For one thing, this will help keep your product up to date and for another, you will have solidified a relationship with a software development firm that you can trust.
Now after having analyzed the key factors that influence the cost of developing a mobile app, let’s try to, with all the factors taken into account, make a rough estimate.
Let’s calculate what it’ll cost to build a simple app (300 hrs) when dealing with a development firm based somewhere in the US or Western Europe and charges $100 per hour. Again, all these figures are purely hypothetical:
300×100 = $30,000
As you can see, numbers speak for themselves. A medium app with backend services and some API integration that takes 600-700 hrs to build will cost you anywhere between $60,000 and $70,000. A complex app will start at $100,000 and higher.
If you have less than $10,000 you will most likely not be able to work with a reputable agency at all. Some of the largest development shops won’t even bother answering your request if your budget is less than $200,000.
To get a clearer picture, let’s also highlight the known costs and initial budgets raised for well known apps, like Instagram or Uber. Instagram’s initial v1.0 launch only for one platform cost them $500,000. Uber’s initial budget was $1,500,000.
First things first, we make a rough timeframe estimates and provide hourly rates based on the project’s requirements. If this rough estimate is OK with the client, then we; perform a more detailed analysis of all the features the app needs to include, make some preliminary designs with sketches and wireframes of how the app might look like, prepare all the necessary documentation and only then present the client with a detailed budget.
Every project is unique and has specific requirements, and our price is based more on its specificity than on hourly rates. Remember that every price is negotiable and we are always open to discussion!
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