How Much Does it Cost to Build a Mobile App Today?

A Practical Guide for Startups and Businesses

How Much Does It Really Cost to Build an App?

OK … so what is the bottom line to how much apps typically cost?

Well to answer this question we’re going to take a more practical real life approach to getting to the answer.

Like most you have an idea/concept for your app with features and functions but you are still at the 100,000 foot concept level (50,000 at best). You then approach development companies and ask “how much would an app like this cost?”

Well building an app is a lot like building a custom home. Would you ask an architect, ‘how much would my  home cost?’  Not really. And if you straight up try – they probably couldn’t tell you (not to mention the funny look you’ll get).

Think about it. The cost of a custom home depends on its size, details of the built in amenities, the building materials, where it’s built etc, etc. These factors in the app world that translate to the lower level 10,000 to 20,000 foot requirement definitions, the relative cost of the expertise you might need to hire, the scope of work that will born out of the lower level requirements and so on.

OK so how would you go about finding the price. Well, very much the same way you would go about shopping for a custom home. When looking for a custom home you usually start knowing what your budget is.

Know your budget, drill down your requirements as far as you can take them and then instead of shopping for cost, first shop for a development company and focus on (i) their experience and expertise to execute your project and deliver your app with the least amount of project risk; (ii) has a verifiable established positive reputation (and we are not talking arbitrary and manufactured online reviews); and most importantly (iii) is the best fit for you to work with relative to your needs.

WAIT! What if I’m just starting up?

Yes, we agree all of this article applies mainly to established businesses of all sizes working with budgets. If you are just starting up though, you should still apply much of this approach (above and below) to your application pursuit with one caveat.

When starting up take the time to do the market research ahead of time to determine viability and create a business plan for getting the business up and the app to market. Your plan will be missing the budgetary components, but even so it’s now time to focus on finding a development company. We’ll cover that in the next few sections.

So now with viability determined and the business plan mostly completed, you then have a few options.

Option A: Development company choice aside, if you are not yet funded and working with your own limited budget you can choose to pursue a development company to invest in strategic planning with to get all the application requirements, specifications, development costs, financials and proformas created for your business plan. You will now be fully armed with the requirements, costs and plans in place (along with a personally demonstrated investment to the success of your pursuit) to raise any additional funding and capital needed to develop and go to market. If you are unable to raise enough funding and, your personal investment losses are minimized.

Option B: If are fully funding the startup and venture yourself, you can still choose to invest with multi phased approach above or simply plan to pursue the project as a whole only after you have carefully vetted and selected a company through the process we describe below.

Comparing App Development Cost: Small Shops vs. Agencies vs. Global Consultancies

Some of the largest app-focused firms, owned by holding companies, won’t give you the time of day if your budget is not at least $1,000,000. I’ve heard prospects tell me they were given quotes for $900,000 or more and those were just ballpark estimates provided within a quick, 15-minute discovery call.

A somewhat typical budget here at Dot Com Development for a properly scoped v1.0 startup buildout in 2021 is between $75,000 to $200,000.

For large enterprises with global reach or much more complex systems, the spend could be higher. The longer term total spend per customer will often be higher because we are great at what we do and customers usually stay with us and continue to have us design and develop new features, month after month. As shown above, we’re very affordable and not the highest in the industry by far.

Here are some baseline guidelines you should expect depending on the size and type of developer you are considering:

• Apps built by global consulting firms like the “Big 4,” with lowest risk start at $5,000,000 and go up from there.
• Apps built by agencies like Dot Com Development with low risk, cost between $75,000 to $300,000.
• Apps built by smaller shops, possibly with only 2-3 less experienced and medium to high risk, cost anywhere between $30,000 to $60,000.
• Apps built by freelancers and overseas companies with junior to mid level developers and involve the highest risk, cost anywhere between $5,000 and $30,000.

If you’ve already called around and one of your calls was to a freelancer, a smaller shop, offshore development company, you might be familiar with a quote of about $5K – $50K for your MVP. Sounds like a great deal, but we’ve also talked to our fair share of mobile app product owners and entrepreneurs who’ve gone this route only to be  taken over budget and time with and given an end deliverable that was far less than what they asked for going in.

On top of it, it is not uncommon that you could wind up spending a much more trying to fix a poorly built app rather than trying to cut cost corners and making it awesome from the beginning with a highly trusted trusted and better qualified development partner.

It’s also worth knowing that when you bring a new digital product to market, you only get one shot at it. Introducing a new app to the market that’s not well designed, fully functional, bug free and optimized in every aspect is a sure fire recipe for failure. Any user who experiences the poorly built product is likely to never come back. EVEN WORSE, they may leave a public review discouraging others to not use the app.

We can’t emphasize enough how critical it is to first settle in with a qualified developer you trust before trying to price out your high level concept. We understand money doesn’t grow on tree’s. However,  if you let budget drive your app and development company choice, your users will end up disappointed with teh app and you will end up unsatisfied both with teh app and your developer.

Once you have settled into a development company you trust and have confidence in, you can begin the planning and pricing consultations. Most agencies can and will give you a ballpark range early on to help set your expectations, and an understanding of the cost driving factors (like platforms, features and functions, 3rd party integrations, user generated content, server costs for instance), but in order to develop your specific app for iPhone or Android, you’ll need expert help to dive a bit deeper into your product planning stage to expect a well-defined estimate for your MVP.

For smaller less complex apps, you may get consulting and discovery services for free in order to get to an formal estimate, or for your larger and more complex apps where more formalized and extensive discovery strategic planning is needed, you may need to invest some money with your developer in order to get a formalized estimate.

Building an app is obviously a hefty investment, both in time and money. What determines where your app will fall within this cost range? Read on.

How Much Will Your App Cost? – Consider These Five Factors 

1. Your App Development Priorities: Quality, Cost and Speed 

It’s important that you be honest with yourself and your priorities. A golden rule of software development lies in the graphic below. Take three attributes: Good, Fast, and Cheap. You can pick any two attributes of your project, but you can’t have all three.

Good, Fast, and Cheap. You can pick any two for your project, but you can’t have all three.

Finding a development firm who claims they will  make a great quality app very quickly and with an inexpensive budget is a red flag.

In Software Development, you get what you pay for. If it seems to be good to be true … it probably is.

2. In-house vs Outsourced vs Off Shore Development

IN HOUSE

You should hire an in-house team if you have the budget, time, budget and expertise to assemble and manage them to effectively execute the project. Give this very careful thought. This is usually the most expensive route and requires a lot of attention.

Most business are experts in their business model but struggle with in-house technical teams. Why? Well they know “their business” (products and/or services of their core competencies and niche) but don’t carry the expertise nor the internal structure required for a technology development division. This is not to say that with a good CTO/CIO and COO you can’t successfully have your own in-house team, but you must give it careful thought on how to structure it, hire the right expertise and talent, manage it and execute the projects with cost efficiency and minimal risk.

OUTSOURCED / PARTNER

You should outsource with a reputable and trusted partner when you don’t have the capacity to hire on a full end to end in-house team.  Outsourcing to the right partner who demonstrates both business side and technical side expertise, responsiveness, a collaborative approach, transparency, solid processes, and a good synergy with you and/or your team will be a game changer. The right partner will also not only reduce your technology costs but also prove to be a critical asset in making your digital product the best  it can be.

OFFSHORE/NEARSHORE DEVELOPMENT

You should consider an offshore/nearshore partner when budget is small and/or very tight and speed or even quality is not a primary concern. You will get very best pricing, however buyer beware! As we said earlier … in software development you get what you pay for. Offshoring and nearshoring can be filled with hidden project killing landmines that creates unmanageable problems for the most seasoned product owners and project managers. These landmines include business culture differences, communication gaps due to language barriers, and lower talent and skillsets.

For example, in the U.S. a development engineer is usually considered Senior level after 8 – 10 years and after demonstrating a certain level of skillsets, however in most other countries, Senior level is obtained after 5 or 6 years. No that doesn’t mean they’re better. That means the their experience bar is lower.

3. Waterfall vs. Agile vs. Iterative Development Processes

Waterfall development, agile development and iterative development are the three most prominent methods to app development, but they’re vastly different.

Waterfall is a risk mitigation approach to development that takes a depends heavily on strategic planning by (i) having a clear documentation process laid out up-front before the development process begins and (ii) closely follows that the documentation and process.

With agile development, there’s hardly any documentation before starting development. Developers works in 1- or 2-week sprints and figure out code as they go. Projects can move quicker with experienced teams but does involve more risk in getting to market because you may not get the functionality built right the first time.

Iterative development is what we call a hybrid approach. There is some documentation up-front, like wireframes and mockups for key screens and functionality, but details and certain aspects are left to be figured out by the team during development. While it takes the best of both Waterfall and Agile, it is considered a reduced risk approach to development.

4. Engagement Models: Fixed-Cost or Time-and-Materials (Hourly)

Regardless of the type of development process above, the engagement model should be a primary consideration as well.

The fixed price engagement model is one where the developer offers of guaranteed fixed cost to deliver the solution. Fixed cost engagements fit best for projects with well defined requirements and scope of work, are usually milestone based, scope of work additions can be managed easily through change requests and this type of engagement does an excellent job of mitigating most of your risk to ensure a quality on time delivery.

The Time and Materials (hourly) engagement model is best for loose scope projects where the specifications are constantly changing and evolving and budget is less of a concern. Think of it in terms of the agile process, build it and define it as you go and everything is billed hourly. While it does fit the agile development process very well, it can be a bit riskier since requirements, specs, feedback is always changing the scope of the project.

5. Estimate Creation 

This last factor can have a very large impact on your app’s cost. What’s the process of estimate creation? .. How exactly did the company arrive at its estimate?

The right app development company won’t be cheap, but it’ll be well worth the cost.

Things you want to know include:

• Who made the estimate?
• Did you get to talk to them about the requirements so you are confident they have a thorough understanding of what you are trying to make?
• Have they worked on apps and used similar technologies?
• Does the estimate come with any guarantees/warranties and are they built into the service agreement?

Paying close attention to these 5 factors will help you get a better idea of what your app development budget should look like. You want to assess all of your potential development partners based on these five factors. Some will score better in one area than others.

The good news is, the right app agency can help you plan your product roadmap from market fit to MVP to marketing hype – whether you choose to partner with them for any or all of the above or not. So how much does an app cost? It depends, Reach out to us for a free consult to get the detailed estimate you are looking for.

Dot Com Development is an awarded and trusted partner with the expertise and experience to design, build and deliver your mission critical mobile application solution. Contact us to get started on your mobile application project.

The right team “DOES“ change everything