Since entering into the mobile application development space ten years ago, I have seen the cost of application development drop drastically! Everybody is developing mobile applications – kids to multi-billion enterprise companies. Startup’s are popping up everywhere. Everyone’s claim to fame is how they can provide a go-to-market solution for a fraction of the cost. There are companies that design software that structure development into building blocks – yes, like Lego’s, and those who develop the old fashion way – code!
After years of consulting, I still get that infamous question, “how much does it cost to build a mobile application?” 5 years ago, I would say, “it depends”, but around $50,000 to over a million dollars depending on the feature list. Today, my answer is the same, “it depends on the requirements”. However, an entry level application could cost as low as $795. A mobile banking app exceeds the million-dollar threshold. Wow! Why has the price dropped so much on the low spectrum? I would argue it is a result of competition and advancement in technology.
For example: AppMachine is one of several companies that provides the technology stack to build native apps for iOS, Android, and Windows. They developed technology building blocks. Read more here. Great! Does that mean I can have an eCommerce mobile application or a mobile banking application developed using the same method? Nope! The discussion is too long for this topic.
Do you have $15,000 or more for mobile application development?
If you have $15,000 or more for mobile application development, you may want to consider hiring an agency. Why? Cost of application development is determined on several factors: features, complexity, and OS platform. A creative agency can create the UI (user interface), UX (user experience). An agency provides custom design services. They can build your brand image and create a user experience far more advanced than using basic boring templates. Most creative agencies do not build the backend servers. However, there are some agencies that provide both UI/UX and development services. So, can I get a mobile application build for $15,000? Sure. Possibly a very simple standalone app that does not require a backend. But realistically, a single application platform starts around $25,000. Complex applications run into six figures, pushing the limit to one million plus. But why? Read on. While examining the cost of application development, don’t forget to budget for updates, version upgrades, maintenance, and possibly application hosting.
Application Consideration Costs: UI/UX, API, Backend
You have an idea. Now you need to understand where the development costs exist. Where do you turn? First consideration. Do you hire an a freelancer from Guru? Do you hire an UI/UX agency? Do you hire a software development who’s only focus is coding? Do you hire a UI/UX + development company? Do you hire an offshore or onshore development company? While seeking an agency or software development company, additional consideration should be taken for API (application programming interface) development. Does the developer have the experience required to build the API? The API is used to communicate with the front end of the application to the backend servers. Do I need an API built for my mobile app or is there an API already built? Standalone mobile applications do not require an API. Costs increase dramatically if an API has to be written. Further considerations are in order for backend development for server side logic, maintains data, and uses mobile services. The mobile backend provides an environment to run application logic and the implementation of APIs. Wow! So much to consider for having an application built.
How much money do I need to raise as a Startup?
According to Jason Calacanis, serial entrepreneur, angel investor, podcaster and writer, “a startup needs to raise $750,000 in seed funding. However, if your focus is hardware, you should raise $1.5M”. The capital raised should be allocated into the follow areas: two application developers, one UI/UX developer, one person to manage all the business aspects of running a business from operations, fundraising, legal, sales, marketing, and customer support. What do I do with the capital now?
In order to determine a company’s burn rate, assuming $120,000 is allocated for legal expenses ($750,000 – $120,000 = $630,000), take the $630,000 divided it by 18 months = $35,000/mo. The $35,000 should be used for salary’s and office space. Average application build time can vary from three to six months depending on complexity. The cost to build your first version can cost between $105,000 to $210,000.
Manu Kumar, entrepreneur, investor, technology-focused micro-VC fund from K9 Ventures believes $500,000 should be “used for building a team and product”. Using the same mathematical equation, the monthly burn rate is $23,333, resulting in product development closer to $90,000 to $140,000. Manu further stressed that these numbers represent “pre-seed” as opposed to “seed” money where the dollar is closer to $2M.
Examples Companies and their Funding from Crunchbase
- Uber raised $200K in seed money in 2009, 2010 $1.5M angel money, 2011 $11M Series A
- Ginger.io raised $1.7M in seed in 2011, 2012 $6.5M Serials A, 2014 $20M Series B
- HealthifyMe raised $6M in Series A 2016
- HubSpot raised 500K in seed money 2006, 2007 Series A $5M, 2008 Series B $12M
- SwiftKey raised $1.2M seed in 2010, 2011 $2.4M in Series A, 2013 $17.5M Series B
Those are a just few companies that raised capital for initial development, but later on raised millions of dollars to finance their growth. Hubspot went public. Uber’s CEO say’s “they are not going public.” Microsoft acquired SwiftKey.
Continuing down the path to determine how much capital an entrepreneur or startup requires to development a mobile application and operating rating cost, let’s look another a well-known app: Twitterific
How much did it cost to develop Twitterific?
Here is the exact summation of the project by Craig Cockenberry, software developer with 30 years of experience, who was on the development team: “We started the iPad development from scratch, but a lot of our underlying code (mostly models) was re-used. The development was done by two experienced iOS developers.
With such a short schedule, we worked some pretty long hours. Let’s be conservative and say it’s 10 hours per day for 6 days a week. That 60 hours for 9 weeks gives us 540 hours. With two developers, that’s pretty close to 1,100 hours. Our rate for clients is $150 per hour giving $165,000 just for new code. Remember also that we were reusing a bunch existing code: I’m going to lowball the value of that code at $35,000 giving a total development cost of $200,000.
Anyone who’s done serious iPhone development can tell you there’s a lot of design work involved with any project. We had two designers working on that aspect of the product. They worked their asses off dealing with completely new interaction mechanics. Don’t forget they didn’t have any hardware to touch, either (LOTS of printouts!) Combined they spent at least 25 hours per week on the project. So 225 hours at $150/hr is about $34,000.
There are also other costs that many developer neglect to take into account: project management, testing, equipment. Again, if we lowball that figure at $16,000 we’re at $250,000. The $250,000 was for both, the iPad and the iPhone, API, and interface. The backend, the server, was not included in the development cost. According to Craig Cockenberry from StackOverflow, “if you want to build backend services for you app, that number is going to grow even more. Everyone seems surprised that Instagram chewed through $500,000 in VC funding to build a new frontend and backend. I’m not.”
Twitterific was initially launched in April 2010. Development costs were higher. More technology companies were coming to market to offer IaaS (infrastructure as a service) that has helped drive down hardware costs. In return, companies can subscribe to these services and pay a fraction of the hardware acquisition costs, thus adding a server component more efficiently. However, adding any backend development to software development will drive up cost significantly.
Typically, during a discovery session with a prospective client, I help point out all the factors associated with mobile application development. There are many examples of startup’s and their funding. Instagram received $500,000 in “seed” funding. However, it is the magic on the backend, a robust backend server that keeps this machine humming. Keep in mind, the $500,000 did not include Android.
Another example of a mobile application that has changed the world is Uber. Uber has changed transportation forever. Now there are copy cats popping up everywhere — Lyft and Dolly are two such examples. Lyft is a knockoff of Uber. Dolly follows the same concept, but will move anything for you. Uber in 2009 raised $200,000 in “seed” money. As the company continues to grow, $3.63B in the first half of 2015, the company realizes their growing pain is in the backend infrastructure. According to Cloud Tech, on May 11, 2016, Uber looks to outsource server infrastructure, “Uber is only looking to shift small parts of its code to the cloud, but the volume of those parts could be massive for a cloud provider, given the scope of Uber’s worldwide operations.” Once again, while considering the cost of application development, the backend weighs heavy on the decision criteria, and that is an important element to keep in mind.
How much capital does an entrepreneur or startup require to build a mobile application — considering a number of factors: application development for a smartphone and tablet, UI/UX, and backend servers? Craig Cockenberry believes “$250,000”. However, a mobile app that is incorporates a complex user interface, requires API development, massive backend infrastructure, could cost upward of $1.5M.
Resources to consider when seeking an application development company
The time has come to have your million-dollar idea developed. Where do you turn? Do you seek a freelancer, contact a small development company, reach out to an agency, or contact a mammoth technology company? From my experience, the mammoth technology companies will not talk to you unless your budget is at least a half-a-million dollars. Clients have provided examples that range more in line with $800,000 after a thirty-minute call.
Evaluating an agency is a good idea. There are some agencies that focus only on UI/UX work. They provide the design element of the user interface and user experience, user flow, to include all the wireframes. Many have relationships with developers who can code the app, build out the backend, provide updates and upgrades, including maintenance. A creative agency with years of experience, could cost you $75,000 to $125,000 depending on the numbers of wireframes and design work.
A very small development company, who prefers only development work, no UI/UX work, but has the experience to integrate the wireframes, coding the front end, and integrating the backend servers, would charge between $90,000 to $180,000. Once again, depending on the complexity and the location of the company. There are development firms all over the country – India, Russia, Greece, etc…Many businesses outsource their development work offshore. Offshore firms charge anywhere from $40/hr to $90/hr. Onshore, in the USA, charge anywhere from $90/hr to $250/hr.
Application development agencies who provides both services, UI/UX and mobile application development, like Koombea, charge between $125,000 to $500,000 based upon the features and complexity of the frontend and backend.
Freelancers are a great resource, especially if you have a small budget. Many freelancers, found on sites like Guru and Fiverr, compete for business against other freelancers. Some of them are located in the USA and others are not. Freelancers provide UI/UX and development services. Some charge by the project, while others charge by the hour. Make sure you do your homework before you hand over your mobile application idea.
Wow! So many options, where do I turn?
Keep in mind that mobile applications that have less complexity, don’t require API integration, or backend servers, will cost a fraction of a complex mobile app. I have seen standalone mobile applications built using AppMachine cost $795 and see apps cost upward to $100,000 with API integration. As you decide on your application “wish” list, the more features you select, the more the application will cost. As a guideline in evaluating the information I provided, I would use fifty percent of the figures represented for a rough estimate. But truly, if you prefer to use a professional agency or development firm, expect to pay a minimum of $25,000.
Android Apps: Expect to pay more!
Pay more for an Android app! Why? Android apps typically cost upward of 2 to 3 times the cost of an iOS app. Bobby Gill, CEO of Blue Label Labs, explains the reason why the development costs are higher, “it is due to the number of devices… overly complex and the tooling is still primitive… Apple provides a very simple MVC framework on Objective-C that is very productive for developers who follow that pattern”. He further notes that “Android suffers from an unholy trinity of software development: heterogeneous hardware (Samsung, HTC, Sony, etc…) unhelpful tooling (Eclipse & Android Studio) and poor development language (JAVA) that makes building an app on Android the digital equivalent of getting a root canal with a rusty skate blade. However, Android platform certainly has its benefits, its open nature makes it possible to build almost anything and have it accessible by the widest audience”.
GeekTime echo’s Bobby Gill thoughts on software development for Android – “Android projects contain 40% more code. In addition, 30% more time is spent in the development, …the emulators are slower… the devices are fragmented, plus the wide variety of screen resolutions and pixel densities”.
Its more than the application cost of consideration
The acquisition cost of bring a mobile application to market extends beyond the hard costs – UI/UX, development, and project management. There will be ongoing updates, upgrades, maintenance, and server costs. You will need to pay salaries, develop a go-to-market strategy including advertising. Recall the estimate that Jason Calacanis cited for startup “seed” money — $750,000. Well, part of the capital investment will be allocated to business costs. Of course, if you are an existing, established business, your fixed costs are already account for. If you are an entrepreneur or in early stage venture, make sure your business plan incorporates all business cost associated in an early stage startup. Yeah, you can find cheap resources on the internet – from freelancers to mammoth enterprise development companies. You can seek an offshore company for cheap development or hire an onshore development firm. You can have an app build for $795 for a standalone app or spend greater than $1M for a robust complex online banking app that requires a serious backend infrastructure. But keep in mind, getting version 1 of your mobile app developed will require continuous enhancements, updates and upgrades. Seeking capital or “seed” money is only the first step of building your dream app.