How Much Does It Cost To Make An App?

By Alex Moazed

How much does it cost to make an app? A very common question!

Over the past 6 years, Applico has built over 300 apps and built thought leadership on the platform, and I’ve learned a lot about how to find the perfect app developer at the right price.

The primary driver of the price of building an app is the cost of labor. For example, hiring offshore developers will be significantly cheaper than hiring domestic developers, and an established firm will cost you more than a freelance hire.

However, the upfront price you’re quoted doesn’t tell you everything. App development is complicated, and there are a lot of variables that go into completing an app successfully.

Because there’s so many different variables, the price for a mobile app could range anywhere from $5,000 to $500,000. However, the price range will typically be somewhere between $100,000 and $300,000, with the entire development process taking 12-20 weeks.

Building an app is obviously a hefty investment, both in time and money. What determines where your app will fall within this cost range? Read on.

How Much Will Your App Cost? Consider These Five Factors 

Here are the five key factors to consider when determining the appropriate mobile app development budget.

1) Your App Development Priorities: Quality, Cost and Speed 

It’s important that you be honest with yourself and your priorities. A golden rule of software development lies in the graphic below. Take three attributes: Good, Fast, and Cheap. You can pick any two attributes of your project, but you can’t have all three.

Good, Fast, and Cheap. You can pick any two for your project, but you can’t have all three.

Finding a development firm who claims they will  make a great quality app very quickly and with an inexpensive budget is a red flag. You get what you pay for. If it seems to be good to be true…it probably is.

Let’s assume you want a quality app, which leaves you to choose between a larger budget with a shorter development timeline or a smaller budget with a longer timeline. My preferred development timeframe is no longer than 12 weeks. Your total timeline will be longer because you also need time up-front for design and product definition.

If you want to use offshore resources and decrease the price, you should assume an additional 6-12 weeks will be added to your development timeline.

2) In-house vs Offshore App Development

You are hiring a developer because they know how to execute and execute well. The only way they will build a core competency in programming software is if they have resources in-house. Unfortunately, it’s pretty easy for a firm to say “Of course! All of our developers are in-house,” when that’s often not the case.

Some firms will say all their resources are on-shore. In reality they may have their design resources locally but their development offshore.

Ask who the specific team members would be on the project, and ask to see what past apps they have worked on. You can also ask to talk to the resources and evaluate their communication skills.

Although offshore development is significantly cheaper, hiring in-house engineers will make a big difference during your design phase. It also will save you time and money down the road by bringing technical knowledge into the product planning.

Some firms will say all their resources are on-shore, when in reality they may have their design resources locally but their development offshore.

This is an easy way for developers to charge on-shore rates for development and get a huge profit margins. By doing appropriate diligence on the actual team members, you can weed these firms out.

A hybrid approach can work in situations where competent, onshore engineering teams can work on the most important parts of a project while using cheaper, third-party resources for the more menial tasks. However, without a true engineering team on-shore, this approach won’t work.

Technical project or product managers alone aren’t sufficient.

3) Waterfall vs Agile Development Processes

Waterfall development and agile development are the two most prominent methods to app development, but they’re vastly different.

Waterfall development depends on having a clear documentation process laid out up-front, before the development process begins, and closely following that process. With agile development, there’s hardly any documentation before starting development. Developers works in 1- or 2-week sprints and figure out code as they go.

Agile development can help you get to market faster.

“Iterative development” is what we call a hybrid approach. There is some documentation up-front, like wireframes and mockups for key screens and functionality, but details and certain aspects are left to be figured out by the team during development.

With waterfall development, there’s little flexibility, but you know exactly what you’re getting and how much it will cost. Plus, with meticulous record-keeping of a structured project, it’s easier to improve the process in the future.

However, waterfall development can be difficult, since it’s difficult to know every single detail and nuance from the very beginning, especially for a larger or more complex project. The timeline here will inevitably be longer.

In general, the industry is moving toward agile development.

The lack of initial structure can often make the project more expensive than initially planned, but it allows for far more flexibility to adjust the product and account for feedback and changes.

With agile development, you can have incremental releases at the end of each development cycle, so you’re more likely to reach your launch date and get to the market faster.

4) Fixed-Fee vs. Time-and-Materials Costs

In a waterfall structure, you can often set up a fixed fee for the work. You spend X on design and documentation and then spend a fixed fee to develop your app for Y. However, it is inevitable that you are going to want to change something. Enter Work Orders.

Your developer will charge you extra for any new work or changes you want done. Are work orders billed at the same rates? How many of your developers projects have work orders? How much is the original contract versus the cost with work orders? These are all questions you want to ask.

The best developers typically prefer to work in agile. The quality and caliber of developers who work in a fixed-fee structure can sometimes be compromised.

In an agile or iterative structure, you can be billed for the amount of work effort performed. The firm will provide you an estimate of the rates that you’ll be billed. If billed hourly, check to see if they have time tracking software and and if you’ll have access to review it. And if it comes to an invoice dispute, see if there is a process in place to handle the situation.

While a fixed-fee structure may seem like it limits your risk the most, I would suggest caution. This is very often not the case.

Your “locked-in” price can be deceiving when you account for the total cost including future work orders and longer time to market. The ultimate goal is to get a great product that will accomplish your business objective.

Remember, the best developers typically prefer to work in agile. The quality and caliber of developers who work in a fixed-fee structure can sometimes be compromised.

5) Estimate Creation 

This last factor can have a very large impact on your app’s cost. What’s the process of estimate creation?

The right app developer won’t be cheap, but it’ll be well worth the cost.

Things you want to know include: Who made the estimate? Does that person have a thorough understanding of what you are trying to make? Have you talked to that person? Have they worked on similar apps and used similar technologies?

If the technologies are foreign to them, it is easy for them to misestimate the time or cost required. Consider how actual costs have compared to initial estimates historically so you can better avoid any misestimation.

To be safe, assume your developer will go 20% over budget. I hate to say it, but that’s the state of the industry.

Paying close attention to these 5 factors will help you get a better idea of what your app development budget should look like.

You want to assess all of your potential development partners based on these five factors. Some will score better in one area than others.

Finally, remember that the sticker price can be misleading, especially with the cheaper, low-end development partners.

The right app development partner won’t be cheap, but it’ll be well worth the cost.

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Filed under: Product Engineering | Topics: app development, mobile apps