DailyQueble #2 — a series of articles that focus on startups and product design, published at 9 am on every weekday.
It’s only natural for any startup founder to expect a straightforward answer to the often-asked question, “how much does it cost to build an app,” before getting starting with the app building process. Part of the reason for this is to have a good idea of how much of an investment is actually going to be required to turn an idea into a beautiful, profitable reality. Startup owners may also want to know if it’s worth their effort to proceed with what they have in mind, or if it may be best to rethink their concept to fit what’s realistically affordable. The short answer is that it can cost anywhere from $25,0000 for a simple, one-platform app to around a million bucks for a complex, feature-loaded app. Now, let’s dive a little deeper into the truth behind how much it costs to build a native app.
Factors Affecting Mobile App Design and Development
Costs for app development are going to vary based on several factors. You’ll pay more to hire an agency specializing in mobile app design, but you’ll have instant access to everything you need to get started and all of the talent you need. Freelancers can save you money if you choose wisely, but it’s a more time-consuming process to find and hire freelancers.
Regardless of which option you prefer, you have to make sure anyone you hire to build has the skills to build for your preferred device and operating system or you definitely won’t be seeing much of a return on your investment. There’s also a difference what what you can expect to pay a mobile app developer to create a standalone app and what it will cost to build an app that will require the integration of application programming interfaces (APIs) and a backend server. Keep the following tips and insights in mind when it comes to development cost:
• Complexity, platform, and features will affect costs
• Simple apps are usually less expensive to build than complex ones
• Costs will vary based on who you hire to build your app
• Include expenses for marketing, backend updates, salaries for your team members, fees for agencies or freelancers, and other related expenses when preparing your budget
Where you have an app built will also affect costs. There may be cheaper agencies outside of the United States, but it’s also important to keep quality and your feedback and communication structures in mind when making your choice. Follow this basic thought process when figuring out costs: initial mobile app design and development expenses + the “extras” mentioned above = your estimated costs.
What to Expect When Securing Funding for Your App
If you’re a startup, it’s safe to assume you’ll likely need to partner with some venture capitalists to secure the funding necessary to build your app. Investor and entrepreneur Jason Calacanis suggests that startups should raise $750k in their initial round of funding.
Anything that’s close to a million bucks may seem steep, but your app may not end up costing that much to design initially, although some apps may have lifetime costs in that ballpark. Using $750k as example, here’s how costs might break down:
• Approximately $120,000 for operational expenses (e.g., accounting, legal)
• $35,000 for the salary for the team (assuming four people)
• Additional costs based on anticipated timeline (assuming 4–6 months, the result is costs anywhere from $140k to $210k)
This is just one take on the venture landscape startups should be aware of as they budget for app development. Seed round expectations aren’t always based only on the intended purpose of an application. For instance, Snapchat’s seed round was $485k, yet the seed round for Yo, an app that sends the word “yo” to users’ friends, was $1.5 million.
How About Some Real World Examples as a Guide?
To give you a better idea of what it may cost to build a native app, let’s take a look at some real world examples. Here’s what you can learn from Twitterific, Instagram, and Uber.
Twitter client Twitterific allows users to view and publish real-time tweets. The estimated cost to develop an app like Twitterific, which involved heavy API consumption, is about $250k. The app has had four major releases, which did involve a lot of code. Developers had a short schedule to work within during development. They had to put in a lot of long hours, which affected cost; so consider your time frame when making your budget estimate.
Sometimes budget estimates can be too low. Case in point, Instagram. Initially, the app’s creators started with $500,000. They quickly used up that funding to build a new front-end and backend for the app. And that initial $500k didn’t even include allowances for Android development costs. It still ended up being a success, but development costs were more than what was anticipated.
Some startups will say they want a mobile app design similar to Uber. The truth is that Uber has a heavy server element. Building it required a lot of attention to get everything set-up properly. The founders started with a fairly substantial budget of $1.5 million, which was followed by another higher round of funding. Startups having visions of Uber dancing in their heads are likely to be in for a big surprise with costs. This doesn’t mean isn’t not an achievable goal, just have realistic expectations about what you’re asking for — and how much funding you’ll need to secure — if you want something similar to Uber.
Lessons to be learned here? Don’t base your end-result expectations solely on popular apps, especially since related costs may not be what you assume them to be. Smartphone and tablet apps with either a major backend demands or a complex user interface can range from $250k to $1.5 million. Instead, have clear goals in mind with your own app. It’s fine to use a popular app as a guideline for what you want to achieve, but scale your expectations to what you can realistically afford.
Cost Comparison for Small Shops vs. the Big Guys
The “big guys,” as in larger agencies with a full staff and nearly limitless resources, will probably be out of your price range if you’re a startup founder with a limited budget. It’s not unusual for agencies that tend to focus on larger apps to limit their services to clients that can afford to budget $500,000 for their app — at a minimum. Some initial estimates may even come close to the million-dollar mark. However, if you happen to find a VC willing to hop on board and help you pay for the services available from such firms, then more power to you!
Now, let’s go to the other end of the spectrum. If you go with a smaller shop, the ones usually operated by a handful of people, you can expect to pay anywhere from $50k to $100k for a typical app. Of course, those costs could be more if you have a complex app in mind that’s going to take that handful of people a lot of time and effort to build. But generally there are several potential advantages to working with a smaller shop that could make your investment a cost-effective one, including:
• The possibility of getting your app done faster (it’s not unusual for a small shop to devote all of their time to working on one project at a time)
• The potential to negotiate more with price (bigger firms tend to have price structures that are set in stone)
• More one-on-one interaction that could be valuable for the people on your team who may be doing basic app upkeep tasks at some point
Then there are agencies that fall somewhere in the middle. These are the agencies that have a larger staff, yet they’re more flexible with price ranges. Mid-size agencies typically charge anywhere from $150k to around $500k. The benefit here is that you’ll have access to a larger pool of talent that’s more affordable. Some mid-size agencies will even direct clients to smaller shops for some tasks to help clients save money.
Less Complex Apps Aren’t Always Cheaper to Develop
Just because a mobile app design isn’t going to have a bunch of bells and whistles doesn’t always mean it’s going to be the cheapest option. Some standalone apps can be more challenging to build for than some API apps. It all comes down to what specific features you want in your app. It’s entirely possible that the one or two features you want on your application could be ones that are more difficult for a mobile app designer to create.
Your specific costs will be based on what exactly your app will do. Don’t go by the number of features or how simple your interface will be. There could very well be a lot of work that will have to go into creating an interface that will come across as “simple” to your intended users. For most startups, a good rule of thumb is to budget for, at least, $25,000 to get a quality app. Here’s a general breakdown of estimated app development costs according to the type of application being produced:
• Most standalone apps will cost less than $50,000 to develop
• E-commerce app can range anywhere from $200k to $1,000,000 to build
• Data consumption apps typically run from $50k to $100k to produce
• On-demands apps can cost anywhere from $100k to $1.5 million to build, depending on what the specific on-demand capability will be
• Average costs for two-sided marketplace apps vary just greatly, ranging from $200k to in excess of a million dollars
• Even if you’re not trying to be the next Twitter or Instagram, social networking apps can still cost you anywhere from $150k to $500k to develop
Android vs. Apple Cost Differences
Under certain circumstances, the two top platforms (iOS and Android, both of which are available on nearly every modern smartphone) are about even when it comes to actual building costs. And the so-called “Android tax,” referring to the extra cost to build an app for Android, has actually gone down in recent years. According to one comparison of Apple vs. Android development, it costs about 30 percent more to build for Android. Based on other estimates, however, you can probably expect to invest about 20–30 percent more for Android building over what you would have to budget for to create an Apple-ready application.
Even if these estimates are a little on the high side, the general consensus is that Android is more of an investment in terms of time and money than iOS. These are the factors behind this assertion:
• Most Android projects require more lines of code (extra code is actually good, but it’s going to be more time-consuming for your mobile app developer to handle all of the coding demands)
• Overall, Android development is going to take longer, partly because there are more devices to test for during the development process
• There are still more complex Android requirements that will need to be taken into consideration while building
Regardless of whether the Android tax is that much of a big deal today or not, the recommendation for startups is still to build for iOS first and then put out an Android version of the app later. Most developers also consider it easier to make adjustments to an iOS app since there won’t be as much code to tinker with when doing so.
Okay, Let’s Talk About Those ‘Other’ Costs
If you want to budget for all anticipated app expenses before you get started, take your initial building costs and factor in related expenses. These are the costs beyond what you already have budgeted for things like your mobile app designer, project management, user experience design, and initial development. Just with app promotion, it may cost up to $200,000 in ad expenses to get your app to rank among the top 25 iOS apps. You’ll pay less in other countries outside of the United States, but most startups prefer to include potential U.S. users within their target market. In the grand scheme of things, you’ll also need to plan ahead for costs related to:
• Server-related expenses
• Ongoing app updates
• Website design and upkeep (to promote your startup and your app)
• Marketing and advertising expenses (e.g., paid advertising, online engagement, link building and creation to direct users to your app, set up and maintenance of social media pages, etc.)
• SEO services if you prefer to generate interest in your app without a huge advertising push
Realistically, the answer to “how much does it cost to build an app” will be different for every startup founder. Hopefully, though, you now have a better idea of how to plan and budget for mobile app design and development. Remember, your budget isn’t necessarily going to be right on the mark, but it can still be pretty close to what you’ll need to invest with some careful planning. And if costs do become overwhelming, there’s always the possibility of focusing your efforts on the most desirable features first. You can always use some of the revenue you get after your app is launched to enhance your user experience design later with additional features and capabilities.
Queble is a product design agency that helps startups grow into brands through analytical design.
The problem when it comes to building digital products is that no matter how much money and time you put in, you can never be certain that the design will sell well at the end. At Queble, we aim to solve such problem by building a design just like how you would build a startup.
From MVP to prototype, then commercial ready and beyond, we use iterative testing and feedback collection from real users to deliver a product that your audience desires. We believe creating based upon customer discovery is the best and only way to success.