Mobile is taking the world over, the app economy is booming, and entrepreneurship has never been more popular than it is today.
According to the latest study by comScore, mobile now represents 65% of digital media time, while the desktop has become a “secondary touch point.”
The total revenues in the App Store reached $28 billion last year, while developers earned over $20 billion on app sales.
Developing an app is like buying a car – it’s impossible to say how much it costs unless you know the details. The car you’re looking for can be a $10k Hyundai, $80k Tesla, or a $100k Truck.
First, there are different kinds of technologies. Then, there are features. Let’s have a look at the technology:
As noted earlier, features determine the final cost. In general, mobile apps can be broken into four major groups, depending on the amount of work involved in developing them.
You can expect to pay up to $80,000 for a simple app. Basic database apps range from $100,000 – $150,000, while more advanced multi-feature apps will cost you $150,000 – $250,000. Games are hard to estimate as, based on quality, they can cost anywhere from $100,000 to $250,000+.
Delivery times vary too. From a couple of weeks to a month for a simple app, three plus months for a database app, and three to nine months for more complex multi-feature apps.
Then there are additional features that come into play. On top of the basic functionality, you may require some other features like email login or geolocation tracking. Here are some examples and their pricing:
Simple features like social login and integration can add between $3000 – $15000 in costs. The more advanced user profiles or geo-location can add about $7500 or more to the basic cost.
Who will build your app affects the cost about as much as the functionality it’s going to have. But while in app design, a cheap and simple minimum viable product works great; in choosing your developer, you have to be careful.
Cheaper isn’t necessarily better; in fact, it can be a big mistake. We’ll get to that later.
If you’re looking to build an app, you have several options available. They include offshore teams, freelancers, technical co-founder, and an established development shop.
They all have some positives and negatives. For example, when it comes to offshore teams, they’re probably your cheapest option. This means you’ll hire a team in India or Russia and work remotely.
The price is low, but the risk however is in the quality of the final product. You’re not seeing the people you’ll work with and usually these shops have little to show for their portfolio, as the apps that are actually successful and make millions of dollars are rarely built that way.
What you’ll get, however, is a team. What you don’t get, compared to a developer shop, is a full-fledged team; a team with a product manager, designer, developers, and so on.
You can hire a freelancer from one of the freelance websites too. It’s a similar thing to an offshore firm. Good developers are expensive. You can hire a student or a friend, but the work will be probably much slower and the lack of experience will show.
Technical co-founders are a great option if you’re an established business person with a track record. That’s because to attract top-talent and have them bet their career on you is not easy.
These guys are approached a lot, especially by “idea guys” who offer something along the lines of “I don’t really know what I’m talking about but I just got an idea for the next Facebook. All I need you to do is all of the work in return for five percent of the gazillion dollars it’s going to make.”
Co-founders are paid in equity and can be an incredible asset.
Developer shops are the most expensive option here; they’re also, alongside with technical co-founder, the surest way to build a great product.
Some developer shops are innovative and have top grossing apps under their belt. They provide you with a full fledged team and experience in building and shipping successful products.
Some are useless however and you’ll just pay for terrible work. You must choose wisely.
Look at their reputation, reviews, and awards and most importantly, track record. Talk to their past clients and meet the team. See how invested they feel in your success. Don’t go with the first developer you meet; it’s an important decision to make.
One thing you must realize here is that it’s not about how much you spend but how great of a product are you going to build.
Instagram sold for one billion dollars in less than a year. They spent about $250,000 to build a prototype. Whether the cost was $50,000 or $500,000 makes no difference when compared to the exit value.
What’s important is that they’ve built a successful product. You can save $50,000, but what’s the use if it means building an inferior product that will just net you a loss?
In other words, yes money matters, but product comes first.
“Most people make the mistake of thinking design is what it looks like. People think it’s this veneer — that the designers are handed this box and told, ‘Make it look good!’ That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.” Steve Jobs
It doesn’t matter how great your technology is, if your design sucks, no one will use your app. There’s a lot of misconception around the role of design though.
To make it clear, design is as important as your technology. It’s what users see and interact with. It’s what sells your app and the idea behind it. Ultimately, it’s what makes them sign up and use the app over the long term.
Design plays a key role in solving the user’s problem. If you’re looking to build a profitable app, you will have to nail this aspect of product development as much as the technical one.
When it comes to app design, there are several aspects to it. Those include:
The icon, logo, and copy can cost you anywhere between $500 to $2000 each. For UX and visual design, expect to pay much more. A pro UX design firm can charge you up to $20,000 a project.
Most developer shops will provide you with their own design team. From icon and visual design to UX design, you’ll get it all done.
If you’ll looking to get it done in-house, the rates to hire a designer can vary a lot. Expect to pay at least $50 per hour on the lower end and up to $250 per hour for a senior UX designer.
Also bear in mind that the UX design is an ongoing affair. You should never stop learning, testing, and improving. Icon design, on the other hand, is something that needs to be redone every couple of years.
Let me ruin it for you. “Build it and they will come,” is bullsh*t. This tech industry mantra got popularized during the failed dot-com boom and for some reason, it’s still hanging around. It’s a lie.
You will have to invest in sales and marketing. Why? Because your app, no matter how well executed, can still be a loser. In fact, 59% of apps don’t even make enough money to break even on their development costs.
Around 12% of all app developers earn over $50,000 in annual App Store revenues. The latest data shows that over 94% of all revenues go to one percent of monetized apps.
Data shows that the main difference is that the money losers dedicate zero dollars of total development costs to marketing and spend less than five percent of their time on sales and marketing activities.
In the App Store, to get noticed, you need to hit the charts and to hit the charts, you need to get a lot of users in a short period of time. Without paid marketing, it’s almost impossible.
But don’t expect to just throw money on ads. You will end up losing most of it. App marketing is a science of figuring out the best business model that delivers ROI.
To get there, you want to test multiple channels and compare the data. The best advice I can give you is start early. When you hit the App Store, make sure to have at least hundreds of users waiting in line for the release.
Growing your user-base will cost you both money and time. A lot of it. The cost to figure out the right business model can vary a lot, but you should set at least $35,000 aside for your sales and marketing efforts.
Obviously, there’s more to it. Aside from sales and marketing, you’ll need to pay App Store and Google Play fees, servers and backend support, customer support, accounting and legal costs, office or co-working space, and further development costs.
So, how much should you budget? Again, it all varies. But to put it in perspective, a recent survey of 12 leading app developers by Clutch revealed a wide range of $30,000 to $700,000 to develop a mobile app.
Based on the average number of hours required to build an app, the website calculated $171,450 to be the median cost per app.
According to a 2016 survey of 300 senior mobile practitioners around the world by Enterprise Mobility Exchange, the most common budget size for the next 12-18 months was $250,000–$500,000. But that’s for corporate budgets.
To put more perspective into this, to build an MVP of something as simple as Instagram or WhatsApp can cost you anywhere between $100,000 to $250,000. MVP for an app like Uber would require an investment of at least $1,000,000.
Based on the data above, you’ll need to make your own analysis. To help you out, we created this simple cost estimate tool.
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