How to Determine the Cost of Developing an App
“We need to start pushing out efforts for finding the app development costs. I will be pitching to seed investors soon, so we need to budget for it accordingly”.
“I know. But with so many options available, and development costs ranging from $25 to $200, it’s not easy to find the answer.”
Sounds familiar, right? Here at app2dev.com most of our inbound calls are of this very nature, so we decided to write a small guide, that is, this article, to help you crack the process of determining the cost to build an app. You will learn about the options available, a mechanism to determine costs, price ranges for different app categories, and budget allocation for your app development.
Let’s start. There are 3 options available for an entrepreneur to build his/her app.
First, you can search for a technical co-founder, willing to work for free and getting the company equity in return. Usually, this process is the most cumbersome one. As finding the ideal candidate, who believes in your vision and is ready to spend days and nights with you for free, isn’t easy.
Second, one can search for an app development company. This search might be easier as on internet you will find many such options. But selection becomes an issue.
There are few trusted resources like clutch.co; there you can browse through companies in your locality and determine their per hour charges.
Third, you can build a virtual organization by hiring freelance resources. For this to work, you should understand the details and the working of the entire technical and design process. It might be easier for a seasoned professional, but for others, a massive challenge.
For freelancers, you should go to odesk or freelancer to determine the pricing of the individual resource. They have a useful mechanism of rating and gathering client feedback to choose the best talent.
Mechanism to determine App Development Costs
Now coming toward the mechanism to determine app development costs.
- You start by determining how many developers and designers you need for the project.
- Then determine the total man-hours each resource would work on the project.
- Then simply multiply the man-hours with the per hour development cost and this will give you the final answer.
For example, you are building an app similar to WhatsApp. Considering the complexity of the project at hand, you estimate 4 developers and 1 designer working on the app for 200 Hours each. Total man hours for this would equate to 5 X 200 = 1000 Man Hours. Considering the cost of development to be USD 150 per hour for the USA, now you have a cost of 1000 X 150 = USD 150,000.
If this kind of project is outsourced to a cheaper destination with the Per Hour Development Charges of USD 25, then the total cost would come up to 1000 X 25 = USD 25,000.
App Categories and Pricing
To determine the cost to develop your app, the best way is to determine the category it belongs to. The categories help in determining the usual work involved in building a similar app.
Note: The price ranges are based upon our experience building apps for our clients.
Simple Functionality Apps — Without much server programming
Very basic functionalities and are easy to design. For example, if you want to port your blog’s articles into a mobile app.
Price Range: $2,000 — $10,000
Complex Apps — Server Programming
This category includes apps such as E-commerce portals, Game Centers, your own personalized App Store, an app which regularly syncs data from cloud, or payment portal and so forth. These apps are complex and will require regular updates to ensure your app is in peak working condition.
Price Range: $35,000 to $300,000
For those who are wondering why games aren’t classified in the complex app category then here is the reason. Games are difficult to develop than any other app as they require graphics, animations, utilization of Application Programming Interfaces and artwork. Such resources are either built in-house or licensed from 3rd party sources like Unity Assets’ Store.
Price Range: $25,000 to $400,000
Augmented Reality or Virtual Reality Apps
The best example of an augmented reality app is Pokemon Go or AirMeasure. If you want to develop an app that is merely an extension of an existing app, like Retrica, you will be charged less, and as per the features, you like to develop. For a new idea, entirely based on AR, costs will be different. So, for this category, you will find a bigger range.
Price Range: $100,000 to $500,000
NOTE: Depending upon the scale and scope of the work, app development costs will differ across these categories. Above ranges are based on our development experience.
Seed Money Budget Allocation for App development
To determine the budget, assume that the seed rounds will be around USD 500k, giving the team of 3 founders a run for 12 months. Of this amount, USD 24K per month will be going to the salaries of the founders, USD 15K — 20K for operational overheads and marketing. With the assumption that the first of version of the app will be ready in 6 months, this leads to a total app development cost of USD 140k.
Most of the industry experts are also of the opinion that one should try to budget USD 150k — 200k for building the very first version of the app. Note mentioned amounts are for USA based developers, living in North America. Such costs can be drastically reduced with Staff on Demand or building a virtual team.
With open sources platforms and talent pool across the globe, the costs and time to build your app will keep on reducing. This is coupled with an ever-increasing population and the existing population getting access to cheaper and affordable smartphones. So the upside of creating a valuable business is increasing.
It is in indeed is an exciting time for innovators and entrepreneurs to build their next billion or trillion-dollar idea.
Originally Published on App2dev.com/Blog.