Almost every single business decision requires an investment, whether it’s in the form of time, money, or both. App development is no exception and so your decision to develop should be based on two metrics: Total Cost of Ownership (TCO) and Return on Investment (ROI).
In this article, we’ll take a look at the total cost of ownership (TCO) of a modern application. But instead of just giving you a ballpark, we’ll break down the different phases involved in app development and the approximate development cost you’re looking at each step. Doing this will help you make an informed decision and ensure you spend your money in the right places.
We’ve also broken down all the factors that influence your app’s earnings and how you can estimate your app’s ROI before even a single line of code is written. You can read that article here.
Investigating The Cost Of App Development
Starting any type of project has two costs. The first is the explicit cost which is what most people refer to when they are talking about the cost. However, there’s also the opportunity cost. Due to the complexity and subjective nature of opportunity costs, most of our discussion will be limited to explicit costs (upfront costs).
With that said, let’s address the burning question at hand: how much does an application cost to build in 2021?
Depending on the number of features, app architecture, and a host of other variables, a modern application can cost anywhere between $10,000 to over $250,000.
That’s pretty large you’re probably thinking and you’re right, it is. And it has to be because applications can vary wildly in terms of their:
- Resilience and Availability
- Security/Compliance Requirements
Some must have the crème de la crème while others just need a more intuitive business platform for mobile devices.
In addition to this, there is also the question of whether you build the app in-house or hire a development agency. If you go with the former, ask yourself the following questions:
- Will your internal IT team be able to handle the additional workload in addition to their usual workload?
- Do you need any specific technologies (cloud computing, VR/AR, AI, etc) and if so, is your internal team certified to work on these technologies?
- Are the cost savings enough to let go of any additional revenue that the internal team could generate through their usual workloads?
If you decide to hire a development agency, one of the first things you’ll need to decide on the size of the development agency. A bigger agency does not guarantee a better end-product but what they can usually do is take care of more things, leaving you less to worry about. That said, always confirm the scope of their responsibilities and don’t accept anything because it might be implied.
Along the same vein, having a rough idea of the cost of app development will help give you perspective in terms of market ratres and the overall cost of an application. But having a fixed tender would be your best bet to find and identify the total cost of the research and development of the intended application for your business needs, but that comes later.
When you’re shopping for estimates and quotes, you’re likely to be given ballparks ranges. And in order to make an informed decision, you need to understand what you’re paying for and what all is involved in app development. Most app development projects will have different stages for different parts of the project, the following four in most cases:
- Discovery & Pre-Research
- Testing & Deployment
- After-Care Support
Different businesses have different requirements and priorities which means that the development agency may need to focus on one stage more than the others. In essence, this means that there will be different costs involved in each stage based on the complexity.
Note: This is important even if you’re planning on developing the app in-house as most of it still applies there.
The discovery stage is the first step to any app development project and is meant to lay down the foundations.
Perhaps the most underrated phase in every project – the discovery stage takes place before any development begins. In the discovery stage, the development team(s) take their time to consider and outline various requirements of the company, potential development strategies that may be adopted, a rough timeline/roadmap, as well as the costs and potential earnings involved.
There are different tools and methodologies involved in the discovery stage but for most businesses that do not have an existing portfolio of applications, the following will be done:
- Opportunity Analysis.
- Competitive Analysis.
- Industry Analysis.
- User Story Mapping Analysis.
- Functional & Non-Functional Requirements.
- Business Plan Analysis.
Unfortunately, because there is no actual “development” done during this stage, many business owners take this stage lightly and do not spend the time and effort required to establish a comprehensive roadmap, understand costs, and determine potential value and earnings.
In the design stage, the developing agency will consider the requirements identified in the Discovery stage and begin to wireframe UX-based views of the predicted application. The wireframe will show each screen and explain what sort of interactions it will have. This is also known as a concept. Once these screens have been created, a meeting will be held with the client to begin a collaborative design process. This will help identify what the client likes in the designs of each wireframe concept.
Once the design elements have been finalized, the team will go back and develop a working prototype from the wireframes and put it together as a non-public release demo of the application for the client to view live. This will mimic the application as if it was developed. The prototype then goes through rigorous testing by, the development team. If the application replaces a popular/core business aspect, then the prototype may be tested by internal employees as well. This step is called user testing to identify if the prototype is ready to show to the client. Once approved, the development team will hold another meeting with the client to showcase the prototype.
The design stage’s average cost where wireframing & conceptualization occurs can range depending on the project and firm chosen. This section’s average costs are around $5,000 to $15,000, depending on the number of screens that need to be conceptualized. This average cost of $5,000 often encapsulates 11 to 20 screens in an application. The more screens your application needs, the more it will cost during this designing stage.
This stage of the application development project is where the actual development company creates the real application.
Using an assortment of different methodologies going from agile (or DevOps) to waterfall and a hybrid mix of methods, the development processes begin. Once the application is built, the developers will once again test it first, usually in-house, then show it to the client to ensure there are no bugs or glitches by the quality assurance team. In case DevOps was one of the requirements, the proper CI/CD pipelines, feedback loops, automated tests will be designed and added.
Once the client signs off the project, it is then released to the market for public usage. This stage can often cost the most as it requires the most work. Average costs of development are between $5,000 for the most basic application, which ranges up to $250,000 and more. The price is determined by the complexity and technologies used by a firm along with the developing firms’ hourly charge.
After-Care Support Stage
In this stage, app development companies will optimize and support the application they built in case of glitches, crashes, or environment changes. Even if you tested the application for a year straight, there can be small glitches, errors, or malfunctions, especially if there have been updates.
If the initial application was deployed on the cloud, the cloud developers will once again optimize cloud environments, VMs, and services in light of newer usage trends and traffic.
Support teams also provide support for upcoming updates, new systems, environment changes, and new devices. Often the after-care support stage is calculated into the development costs listed above, but most often, the cost of support after deployment is included in the initial cost of development and barring no major changes (such as an overhaul by a different team), support will be provided at no extra charge. But of course, this is subject to the project and development agency’s policies.
Average Costs Of Entire Projects
Depending on the app development project’s complexity and length, it will determine exactly the costs of each project. Now, of course, each development company charges differently across all the different stages of the project. While we showed you each stages average prices above, we also included below the average cost of app development from start to finish being fully developed and including after-development support care:
|Basic App (Core Feature, 1 Platform)
Total Cost: Between $10,000 to $120,000.
Timeline: Between 3-5 Months.
|Full Product (Mid-Level App, 1 Platform)
Total Cost: Between $120,000-$200,000.
Timeline: Between 4-9 Months.
|Large Scale App (High-End Level, 2 Or More Platforms)
Total Cost: Over $230,000+
Timeline: Above 9 Months or more.
Keep in mind the costs are averaged, real figures may be higher or lower depending on the complexity of the project, length of project, company chosen, and other economic factors. To get accurate prices, always ask for fixed tenders for projects to avoid scope creep.
Determining and Balancing Opportunity Costs
Opportunity cost is a complex economic concept that most people tend to ignore but it does give business owners additional insight into the cost and eventually the ROI of the project. In a nutshell, every dollar you spend on one project is a dollar you could’ve spent somewhere else. For instance, the opportunity cost to develop a customer service application could be viewed in terms of the full-time wages of customer sales representatives over a year. Or the cost of a cloud-native application can be viewed against the cost of an on-prem application.
But a more common and realistic example of opportunity cost would be whether to do it in-house or hire a specialized team. And the answer is, in most cases, hiring a specialized team will be cheaper in the long run, especially if the application leverages technologies such as DevOps or cloud computing. Most in-house teams are proficient in traditional, on-prem technologies and do not have the required certifications to plan, build, and test cloud-native applications.
Similarly, the majority of business apps today are use microservices, conversational AI, advanced security protocols, and serverless infrastructures – and these are all things that are only cost-effective as long as they are deployed and optimized by experts.
Building and deploying an application is a big investment and the technical aspects can be overwhelming for non-technical founders, leading them to put it off or delay it. But in this day and age, having an application is becoming more a requirement, similar to how websites were in the early 2010s. In addition to this, an application doesn’t have to be just a business expense. In fact, applications are a stable source of revenue for millions of businesses around the world.