Apps are an integral part of today’s life. But when it comes to building an app the million dollar question is what is going to cost?
There is no specific answer to this question. However, the truth of the matter is – it depends on the app! To be more elaborate, the cost involved in building an app largely depends on the complexity, platform and the features. Apps requiring back-end servers could cost higher. Again, the cost is also dependent on the professional and his location (offshore vs onshore).
Before we proceed
Since there are a large number of apps available as free, many entrepreneurs feel that a good app can be created in no time and at a very cheap price. Building an app is more or less like filming a movie. Apart from the budget, you need to have a good plot, characters and the environment to film the movie. Unless efforts are not put in by all those involved, it could result in just a bad movie. Similarly, if you are interested in making a world-class app, you need to invest time and efforts on the product. You clearly need to know beforehand what the app intends to do, what are the inputs & security measures, the interface and visualize them before setting out to build the app.
So, solid conceptual foundation, good planning, excellent ecosystem and top-notch talent are required in both design and development stages. Even if one of these elements is not up to the mark, the risks are high on the final product. The first and foremost step in building a great app is by doing research on your idea. By doing so, a few core use cases, target audience, your app functioning in both long and short term could be well understood and analyzed.
Several app development companies provide calculators to help in achieving a ballpark estimate. These calculators are mostly based on technical specs of earlier developed apps and calculations involved in developing the Minimum Viable Product and integrating the key functions. For clone ideas, these calculators might be more accurate. However, for a new concept or a world-changing app, the accuracy of these calculators is yet to be determined.
Factors involved in App cost
The cost could vary based on different factors and the combination of these factors. Engaging a freelancer in your location versus engaging an offshore freelancer, can see cost variation. Cost could vary if we were to engage an app development agency instead of a freelancer. Not to mention, the earlier described complexities of the proposed app. Standalone apps could cost less than ones which are API integrated or require back-end servers.
VCs’s Estimation of App Development Costs for Start-ups
Jason Calacanis published a great post a year ago. In this post, he suggests a figure of $750000 to be raised for the total first round, which lasts for around one and half years. True, this may not necessarily be the cost of an app to build. However, there is some reasoning involved there.
Of his estimated figure, $120000 has to be allocated to operational expenses which include accounting, legal or any similar expenses. He assumes that the development team for building the app would be of the standard team size , which most agree as four. The breakdown of the remaining amount of $630000 is for this team in a time frame of 4-6 months. This is in order to build the first version of the app. Considering the monthly expenses and multiplying that with the time frame, we have an interesting answer, which is a V1.0 app may cost in the range of S140000-$210000.
This perspective is also backed by Manu Kumar in his article. According to him, for building a team and for the initial prototype/first version of the product, the estimated amount required is approximate $500000. There is a similar consideration like Jason’s for operational expenses and timeframe involved. Even in this reasoning, the first version of an app for around 4-6 months would come out in between $90000 and $140000. Please note, the first round is mentioned as “pre-seed” by Manu. If the seed funding amount is considered and computed, the numbers could go very high. Many seed funding ranges have increased over the years.
Cost for Non-Standalone Apps
Many were surprised to hear that Instagram spend around $500K from its venture funding to build a new front end and back end. Looking at the above two perspectives, it now seems more reasonable to have spent that much.
Prior to three years, most apps built were mostly standalone. In today’s world, however, it is the other way around with most apps requiring back-end server and extremely rare apps being standalone apps. In the US, most apps built in around 2014 and 2015 were mostly Uber for X clones. The initial funding for Uber was $1500000, which was later followed by another higher round of funding. This was mainly due to heavy back-end server involved.
This analysis also provides another aspect of app development related to the cost. Apps built for smart devices which needed a significant backend like that of Uber’s or which had a complex user interface cost around $250000-$1500000.
Comparison of App Development Cost: Brands, Agencies, and small teams
Most brands/large app-focused firms are interested in high budgeted apps, perhaps at least half a million. Many prospects that approach these firms get a ballpark estimates within a quick 15-minute discussion.
Agencies or small companies might be able to do the same work for lesser cost, perhaps 30-40 percent cut.
Coming to hiring a freelancer- well it would definitely help in reducing costs but then it also increases the risk quotient. There are many risks involved in hiring a freelancer such as lack of consistent efforts, availability, work ethics, and miscommunications. Most start-ups prefer other options than hiring freelancer simply because the end product might not be matching the initial footprint.
This provides the cost involved in an app development from another dimension:
Standalone apps or apps without any API integration/server component could also cost high. This is because of challenges and the complexities involved in developing the interface. Again the number of features of an app also affects the cost. Assuming we cut the cost of developing an app with back- end server support by half, still for a quality standalone app developed by a professional could cost anywhere around $25000 or more.
Android Apps Cost more to develop
The different platforms available for building apps have different operating system, different programming languages, and different native SDKs. A clear go-to-market strategy needs to be developed targeting your market segment. In this way, an idea would be available for which platform to go with.
Talk to any app developer, and they have the same story to tell that Android apps are much harder to develop compared to iOS ones, especially when it comes to the design side of the app. Steve Cheney in his article finds that Android app usually take around 2 times longer than iOS apps. Considering this, most apps are first built in iOS and then moved to Android. The approach helps in minimizing many efforts and time especially when it comes to start-ups.
Most of you would have realized by now that the expenses involved in bringing an app to market go well beyond developing the initial version of the app. There will always be a minimum budget that needs to be considered for ongoing activities such as updates and server expenses. There is more cost involved than the estimators used in a typical project management system.
There are also other costs that need to be considered such as costs for marketing or advertising or paying yourself for the activities conducted. For organizations who hire firms for developments, these costs are mostly taken care.
Investment in an app is the current trend. For an app to stand out, you do need a considerable investment in quality and uniqueness. This helps the app as well as your business to stand out. There are many apps which are worth more than what was spent on developing them.
So, if you are an individual or are part of the early-stage venture, check out these expenses to truly understand and analyze the minimum cost involved in bringing your app to the market.