Section 508

June 18th, 2015

Why the cost of developing a mobile app can differ by 1000%

How much will it cost to develop your mobile solution / app?

Vendor A responds 50,000 USD
Vendor B responds 500,000 USD

So who is right? How is it possible that the cost can vary so much for the development of the same mobile service? Which one should I choose?

These are some of the key factors that will impact the budget estimates for developing your mobile solution.

1. Effort estimate
Effort is the amount of hours and days it will take for a team to deliver your solution. The biggest reason that quotes vary so much is the estimation of the effort to define, plan, design, develop and deploy the solution. Bigger or more experienced agencies/developers often go through every detail of the scope and make a resource calculation based on bottom up estimations of every use case. They use experience from development of similar use cases and services to provide pretty accurate estimates and they also include risks of things going wrong. The effort can vary us much as 3-4x in effort from one developer to another based on the methodology used to estimate the effort.

2. Design approach and ambition
Some agencies work on the assumption that any mobile project will require months of work upfront with user research, concept testing, user journey creation, UX design including wireframes and information architecture, visual design including mock-ups and interaction design guidelines and prototypes to test the UX and designs with real users. Others assume that what they get from the customer will be good enough as a guideline, that they can design the app as they go along or that the effort for creating the designs is minimum. The effort and cost can therefore vary from almost nothing to big companies that spend over a million dollars on delivering the best UX/UI design.

3. Change management
The first challenge for any agency is to acquire customers and the second challenge to make sure they make a profit on the customer. Therefore a common method for agencies to win new clients is to underprice projects and do everything to minimise the committed scope. In a second step they then provide change requests so that the customer has to pay extra for the functionality they originally thought was included.

Another common way is to base the estimates on the assumption that there will be changes (additions, redesigns and changes in functionality) based on customer and end-user feedback throughout the project. This allows for fixed price and timelines with an agile scope.

Change requests can often double the cost of a project as 30-40% of the scope changes from the start to the end on average.

4. Rate cards
The price will differ considerably for an agency with a full delivery team in San Francisco, New York or London vs. mixed or fully dedicated teams in Mexico, India, Spain or China. Rates can therefore vary as much as $250 per hour to $10 per hour. You will also find differences in what they charge for. Some agencies include business development, senior directors and account management whereas others include these in the fixed price.

5. Size of the agency
This doesn’t have to be the case but generally mid-size companies with 100s of employees have a higher overhead than a small company with 4-20 people. On the other hand companies of a certain size may also have scale advantages that give them a lower cost.

6. Quality of the developers
The difference in productivity between a great developer and a poor developer is enormous. A task that takes a great developer one day can take a poor developer 1-2 weeks, if they resolve it all. Therefore the number of developers or people you get for the budget is not a good indicator at all. A team of 4 people might actually produce more than a team of 12 people in the same amount of time.

7. Quality of code and ability to hand over code
We’ve reviewed the quality of code for 100s of other developers over the past couple of years. Some is good, but most is unstructured and poorly developed. This is not necessarily due to the quality of the developers but can simply be because they were stressed, there’s no overall technical lead of development or because it’s in their own interest to make it difficult to take over the code. Performing a 3rd party code review or having an internal developer review the code can easily solve this.

So who should you choose as your developer? Pick the one that best fits your needs in terms of budget, quality, timelines, experience, guidance and location.

Did we miss any important reasons for differences in price? What is your experience of choosing developers? How would you advise someone to find the right partner? Tell us what you think!

Tags: development cost insights mobile app development mobile apps

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