The True Cost of Developing an App

“How much is this going to cost me?” is a business owner’s first thought. The true question is: How much is it going to cost you to put up with a chronic problem or hide from innovation?
October 17, 2022
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The True Cost of Developing an App

One of the first questions we hear from visionaries is, “How much will it cost to develop an app?” Behind the concern for an estimate, we get it. Nearly everyone wants to know how it's going to impact their bottom line. Others simply want to know how much to ask for during their series of funding. 

Wishing it was as simple as placing weights on a scale, software design and development estimation is one of the most—if not the most—difficult estimation practices. One of Murphy’s laws applies beautifully here, “Whenever you set out to do something, something else must be done first.” To put it simply, we don't know what we don't know.

Luckily smarter people have developed some great methods for determining the cost of developing a product.  

When you sit down with a digital agency like Ventive, you’ll likely be asked a series of questions. We’ll need to collect as much data about your situation as possible. The kind of app you want to develop and your business strategy are part of the big picture we need to see to determine the app’s potential budget. 

Other factors will also influence the app’s cost. The functions you add and the technology you use will also contribute to the cost of the app, as will considerations like time-to-market and legacy code.  

So let’s talk about the factors that affect the price of app development for three of the most popular kinds of apps that Ventive builds—proof-of-concept apps, apps for the app store, and business apps for digital transformations.

Developing an MVP App

But first.

We’ve written about the minimum viable product (MVP), but we need to underscore how important this first product is. Whether you’re making an app to present to investors or an app for your own business, that first working version of your app will give you the best indication of whether you’re on the right track. 

The MVP tests the feasibility of the product and whether users are going to use it the way you attended, before building all the other nifty features. 

You’ll save tens of thousands of dollars when users tell you that the app’s UX isn’t intuitive or they don’t think your app isn’t useful enough to continue using it. You’ll also know where to direct your budget when users tell you why they can’t stop using a certain feature. Our product owners are focused on getting your design to the MVP stage so we can start testing its viability. 

Resist the temptation to load the MVP up with features and instead focus on what the priorities are for your MVP. You want to be lean and mean in this stage of development. 

How Much Does It Cost to Develop an MVP?

The bell and whistles you see and use daily on products like Facebook and Instagram were not the products seed investors poured money into. Remember the old days when you could only ‘like’ a picture and didn’t need to decide whether you should react with animated emojis? It's kinda like that! 

That stripped-down, basic platform did its job of connecting friends and family around the world. Later as the user base increased to over a billion users, Facebook added fancier features like reels, videos, and more ways to like, dislike, or engage with a post.

For comparison, here’s how much some of the world’s most famous app companies raised in seed funding to develop their proof of concept.

  • Uber - $200,000
  • Instagram- $500,000
  • Tinder - $485,000
  • Postmates - $750,000
  • Snapchat - $485,000

Since their launch, all of these apps have had numerous updates and feature additions. Every subsequent feature, update, or increase in user growth needed more budget to make the jump to the next level. 

Some of the features you might consider “standard” for an app will vary depending on the kind of app you’re developing. That, in turn, will affect the price of app development. 

For example, in a dating app you might expect the following:

  • Chat functionality
  • Email integration
  • Swiping feature
  • Advanced algorithms to match people
  • Extensive UX for optimal user experience
  • Push notifications

Even though there might be a minimum amount of features that users expect, that’s not how we approach building an app. Thinking about features without keeping the problem you’re trying to solve in the front of your mind is dangerous. It can cause you to get distracted by shiny object syndrome. 

Shiny Object Syndrome - a technology or feature sounds so fancy and hip that you have to put it in an application without considering cost or whether you actually need it. 

There are factors that influence the price of an app that goes beyond a feature you want to use.

For example:

  • How fast do you need the app produced?
  • What kind of programming language will it be coded in?
  • Do you just need an MVP for investors?
  • Will you be building a company around the app?
  • Do you have the app’s scope sketched out?
  • Is the code being built from scratch or is there legacy code?
  • Will you be building a native or hybrid app?

At Ventive, we prefer to focus on the core issue first. What problem are you trying to solve? That’s going to determine the feature we use, and then that leads us to the technology.

The MVP is the stripped-down bare-bones solution that directly solves the most pressing problem. It’ll get you to the point where users can give you feedback, investors can see the potential, and stakeholders can understand why you’re investing money in a digital transformation

If your goal is to develop an app to present to investors, your budget will only include everything you need to get to this first step. 

Best guess estimates are really all an app development company can do when they’re trying to determine the features that are absolutely necessary to build an MVP. They won’t know for sure what users want until they deliver the MVP and test it out on the target audience.

Even with a clearly defined Scope it's virtually impossible to nail down an accurate price, and it will continue to grow in complexity as the stakes to developing an app that hasn’t yet been developed increase. As the app market matures, breaking through means doing something novel.

After the MVP has been developed, the next step, and the next pricing option, will depend on your business goals. 

Monetize Your App and Build a Company

The era of 99-cent apps did a number on the true value of developing an app, giving consumers and future entrepreneurs a false idea of the cost to developing an app. Most think of apps as utilitarian objects, like chairs or tables, instead of considering that an app is a company that provides a service. 

It turned app development into a business model where you plug in development dollars and receive value back 99 cents at a time.

If you intend to build a company around your app idea, you must radically rethink how you monetize your app.

Think about Tesla. They’re not simply building cars. In order for the electric car to be successful, the company also needs to set up charging stations, establish a battery supply chain, improve battery technology, update software, develop security protocols, establish hosting services, stay compliant with local laws, and continuously maintain vehicles. 

Tesla is creating an ecosystem around its cars. 

In the same way, your app isn’t a single feature.

You’re also creating a SaaS ecosystem that goes beyond the base-level functionality of the platform itself. There are individual workflows that contribute to the design and development costs. Additionally, the data structure needs to be architected, as well as the protocols, hosting services, compliance, and maintenance costs.

When your app is first launched, you need to bank the subscription fees to improve the app

Since your focus in this instance is building a company, you don’t want to lose users because your app can’t handle the additional traffic. Your goal needs to be on improving and upgrading the initial barebones MVP. The objective here is to create a money engine that can eventually fund itself. Until that day, you’ll be plowing profits back into the product.

In this particular instance, the cost of the app depends on how quickly it’s adapted, how fast your user base grows, and the kind of feedback users give you. 

The Cost of App Development for a Business

Business owners who succeed with their app development plans are the ones who come to the table ready to accomplish a business objective with a set of resources. 

Business objectives will and should change once you start your project. But in order to figure out which business objectives need to be pared back, you need to get your feet wet. That’s when you’ll know the end-end-end game. 

As you walk into the first planning meeting, you might have a giant list of ideas, but as you lay out your resources (time, money, strategic partner), it’s common to see that you can only accomplish a percentage of your business objectives with your available resources. That’s when priorities will shift and you’ll be able to figure out what you really need to do.

Successful business owners strategically partner with Ventive to examine their business objectives and come up with a plan that will get them as close as possible to accomplishing their business objectives with their available resources.

This is also related to scope. Most business-side stakeholders believe they understand scope early into an initiative. In turn, they expect the development or engineering team to estimate the cost and deadlines for the project. The truth is that the scope of an agile project or most modern application builds evolves through a process of discovery, design, development, testing, learning, and then repeating this process.

Effective UX practices peel back the layers on preconceived notions, while the scope is continually influenced by stakeholders with company objectives and constrained budgets. This can create cross-purposes within the UX process. This interplay of roles is largely determinative of the price, along with the decision as to when the app is “good enough” to launch.

We encourage companies to think about the budget this way: If you choose to put off app development, what’s the true cost of not innovating?

Once-giant companies like Sears and Blockbuster have learned (to their detriment) what happens when they resist change. We’ve even seen local companies lose contracts and close after they continue to cling to outdated practices and paper processes. 

If app development will 10x your customers, reduce labor costs by hundreds of hours, or increase sales volume, then the cost of development isn’t simply developing an app. It’s also a piece of digitally transforming your entire business and staying relevant through an ever-changing digital economy.

The best way to think about app development is to carry it as an expense, rather than an investment. It changes the way you think about your app, turning it from a “nice to have” tool into a crucial tool that gives you a significant advantage over your competitors.  In turn, that will save you a lot of headaches and frustration.

Lifetime Cost of an App

When an app development company talks about the cost of an app development project, you’ll see a lot of words that hint at the cost but not the definite cost.

“It could cost $100k.”

“The budget might be around $25k.”

“The price can be as much as $300k.” 

The reason is that software apps are never “done”. That makes estimating the true cost of an app over its lifetime difficult. Bugs, updates, new features, and platform migration are all costs after the product is first launched. Any discussion of cost needs to specify the lifecycle point relevant to that cost. 

The price tags associated with alpha release, beta, full commercialization, maintenance and support, scaled to 10 million users, etc. will all be different and will all be associated with the cost estimate clients want at the beginning of the project. 

Additionally, cost is a function of allocated resources—the bigger your team, the more talent and skills, the more expensive the carrying cost. Even if you don’t have traditional employees, the same costs apply to contractors, agencies, and other arrangements. 

And therein lies the paradox—early cost estimation is a fool’s errand.

With Ventive, you can achieve your business objectives, whether you need a small-scale app maintenance plan or an enterprise-level digital transformation. Schedule an insight session with us today.

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