April 22nd, 2014

What is the cost of developing a mobile app?

Needs and requirements

What is the cost of building a house?

Just like a house can range from a small hut with a plastic roof to a skyscraper, so can a mobile app and service. The cost ranges from 500 USD with some app wizards online to 10s of millions for apps such as Facebook, Amazon, eBay, etc. Therefore you need to answer the question of what your requirements for a mobile app are before you can get a good sense of the budget. Here I will share some thoughts, facts and examples based on our more than 8 years experience in mobile development.

‎What are the variables?

  • Service Concept‎ Design – Creative agencies can charge millions of dollars to do research, focus groups, come up with unique creative ideas, test the ideas and refine until it’s perfect whereas an entrepreneur might have come up with an amazing idea during a lunch break
  • User Experience and Design – Nike or a major retailer may spend months on developing and testing the use cases, information architecture, wireframes and visuals while a developer with an idea might start with the coding without any prior guidance
  • Complexity – The kind of features, device integration (e.g. camera, video, messaging, network access), back-end requirements (e.g. CMS, E-Commerce, User Database, Analytics, Personalisation) and backend integration (existing systems such as SAP or Oracle ERP, E-Commerce platforms, Payments, Content feeds, User Databases and Social Networks) is required
  • Quality – Nasa or an aircraft maker requires every line of code to be reviewed, tested and optimised 100s of times where a startup might be happy with something that works to a satisfactory level
  • Compliance requirements – Banks and government institutions have stringent compliance requirements that vastly increase the effort and cost
  • Device and OS support – The target devices for the app, e.g. iOS, Android, Windows Phone, tablet or smartphone, versions of the OS and more have a big impact
  • Scalability – Applications with millions of users across multiple countries with teams of 10+ developers may have very different requirements compared to an app launched in one country, in one language and by a single developer
  • Technology – Native, cross platform tools or web app will have different costs for development, licenses and maintenance

A couple of examples from our clients include:

  • DWP (Department of Workers and Pensions) pension forecasting and calculator app cost about 50.000 USD including UX/UI Design, front-end (iOS and Android HTML5 app) development and testing  during a 4 month period from start to launch
  • Warburtons cost approximately 0.5m USD for service concept, UX/UI Design, back-end and front-end (Android tablet) development and testing during a 9-month period from start to launch
  • O2 Priority Moments cost over 4m USD for the initial launch including service concept development, UX/UI design, back-end and front-end (iOS, Android and Mobile Web) development during a 6-month period from start to launch

The Forrester 2014 mobile trends report reaffirmed that “mobile on the cheap is over”, stating that a single transactional application can cost up to $2 million annually and a marketing app up to $500,000. 25-50% of this cost is related to front-end development and the remaining cost is creative, design, back-end development and testing. Half of digital professionals surveyed are spending less than $1 million annually — not nearly enough when 30% or more of the online traffic is from mobile devices.

Which developers are you using?

‎The next factor will depend on who is actually designing, implementing and testing your mobile app. In an ideal world you may have a team of amazing people on a reasonable salary sitting next to you but most organisations don’t have this luxury. The alternatives are:

  • In-house development – salaries range from 10k annually in South East Asia or Africa to 250k USD for a great developer in Silicon Valley or New York
  • Contractors – cost depends entirely on where they are in the world and are usually 50-100% above the average salary
  • Consultant/Agency – rates range from 60 USD to 200 USD or more per hour depending on the resource and experience
  • Offshore development – rates range from 15 USD to 45 USD with average cost savings of 10-30% compared to onshore services although opinions about quality differ widely

For more details on developer rates and qualifications, have a look at this article.

How to make a simple calculation?

The simplest way of getting an overview of the cost of a project is to simply look at the team required to deliver and maintain the apps.

  • 4-8 weeks’ research, concept and design by a team consisting of a project manager, UX specialist, UI designer and solution architect.
  • 8-16 weeks development including weekly iterations of user testing by a team consisting of a project manager, UX specialist and UI designer for ongoing feedback and enhancements, 1-3 developers per platform (iOS, Android, Backend, etc) depending on complexity
  • 6-8 weeks testing and acceptance consisting of a test lead and anywhere from 1-4 testers working in parallel with the development team and when development is being finalised

We are all for MVPs (Minimal Viable Products) but anyone who says you need less than 2 months to finish the project, or can do it significantly cheaper, is cutting corners somewhere.

What is the cost of maintenance once you’ve launched your app?

Apps are not an experiment that you can play around with and just see how the market responds. Once you’ve launched a mobile service you need to maintain it to ensure bugs are fixed, the service is improved based on customer feedback and usage behaviour, as well as upgrading where necessary for OS updates and new devices.

AnyPresence survey stated that “over 80% reported updating their apps at least twice a year and nearly a third were updating at least once a month.”

According to MGI Research, most mobile apps will experience at least four major update cycles stemming from operating system and device updates in the 2012-2014 time frame.

Forrester estimated in 2012 that the average amount spent on a typical customer mobile app ($50,000 to $150,000) turns out to be just 35% of the true two-year cost.

The actual cost will depend on ambition. The minimum requirement based on our experience is 2 updates per year but they can of course be major or minor releases with effort varying from full time team to a one month project each time. After 4 years, most apps need to be rewritten from scratch.

Conclusion
There is no average cost of a mobile development project. The cost will depend entirely on your needs, requirements, conditions and the different variables above. No matter what path you choose, we wish to the best of luck in your future mobile development adventures.

Tags: app development development cost QA testing ux/ui

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