How much does app development cost?
A practical guide that sets the right expectations about the required budget to develop a web application for your business.
How much does it cost to make an app?
What is the fair price for all the features you require? How to make sure you do not overpay for developers? Can you resist the temptation to simply search for the lowest rates? How can you guarantee a successful outcome of your project? All these questions are very valid and truly popular – long story short, you are not alone.

Indeed, there are many variables that affect the price you're quoted. To help you understand how that quote is created in the first place, we will take you through an exercise that helps you get proficient in the app development cost estimation process. This article will empower you to judge the reliability and truthfulness of any app dev cost estimation coming your way.
What factors influence the application development cost?
While there are more factors impacting the final costs than we can possibly name here, we have broken down the most important cost drivers of any app development project. The following factors affect the costs the most:

App Functionality & Architecture. Many things depend on the features the client requires in the final app. The more features it has, the more complex the architecture is. Ergo, the app budget requires to be higher.

Integration. Will an app use third-party solutions for sourcing content, providing payment functionality, sending notifications, emails, etc.? With every integration, costs will increase accordingly.

● Visuals. The complexity of visuals significantly impacts the overall costs. If the product doesn't require numerous complex visuals, then Bootstrap themes and pre-built interface components like Ant Design or Angular Material UI kits can be used. However, if complex designs are required, you should hire UI/UX designers. In this case the costs increase significantly.

● Hardware Features.
Will an app be using features like GPS, NFC, AR, motion co-processor, and other technologies that smartphones or tablet computers come packed with?

Maintenance and improvement. Once the development is finished, the product will certainly require technical support from developers. Depending on how long-term your business objectives for the app are, you might want to keep the original development team to develop new functionality and provide constant improvement.

Discovery Stage. At the beginning of each project, a discovery stage outlining requirements and necessities will take place. Analysts convert all the uncertainties into specifications, and plans. You'll have to pay for the discovery stage too, but a thorough analysis at the first stage saves a lot of costs and efforts along the way.

Team Size. Bigger teams result in higher costs. While it may appear tempting to reject the QA engineer, project manager or the UI/UX designer, all these experts fulfill very specific functions and complete their respective teams. If doing a part of the project yourself or simply cut one function from the team, the entire project may cost significantly more as higher transaction costs arise. The exact team size always depends on the project requirements which are determined during the discovery stage.

Developers' experience. Senior developers are pricier and that's for a good reason: more skilled developers build apps with fewer drawbacks and in less hours.

Data Storage. The data used in your application, may that be videos, photos or documents, needs to be stored accordingly. Cloud services, which provide cloud-based storage solutions, have their own subscription plans: the more you store, the more you pay.

Technology stack. Java developers cost definitely more than PHP developers. Building a mobile app with Google's Flutter is recognizably cheaper than creating two natively developed applications.

Every application is different and solves different business challenges. Apps can be mobile or web-based, one-pager stores, high-load systems and many more. Whatever your business challenge is you desire to solve, at the very beginning you need to determine the technical stack for your application - not just the functionality of the target application.
Calculating the price
The basic formula for calculating the development costs is truly simple: the number of hours that are required for development multiplied with the hourly rate. Sounds simple, right? However, the devil is in the detail.

The main risks for exceeding budgets are within the development time estimation. That is where the discovery stage and extensive professional experience comes into play. By starting each project with an extensive discovery stage, the specific subtasks can be estimated on a granular level, which ultimately leads to a more precise cost estimation.

Besides that, also the hourly rates differ quite a lot as they heavily depend on an expert's competencies. Every app development project requires a few types of professionals with various experience levels:
  • Back-end developers are responsible for building the structure of a software application and its core functionality.
  • Front-end developers implement web designs through coding languages like HTML, CSS, and JavaScript. They are responsible for how your application will work on the client side.
  • QA engineers focus on improving software development processes and preventing bugs in the application. In other words, they make sure the software development team is doing the right things the right way.
  • Project manager plays the lead role in planning, executing, monitoring, controlling, and finalizing app development projects.
  • Designers create the design drafts incorporating user journeys ultimately empowering your users to move through your application.

Combining or discarding some of these roles might seem tempting as not all of them appear to be essential. However, the development of an application is a complex and interdependent process where all components complement each other and the team. That means, it is important to recognize the necessary functions carefully prior to any cost-cutting decisions.

The individual hourly rate depends on many factors: team location, professional expertise and grade, onsite or remote type of work, and many more. Each factor has its own impact on the overall work and result. For instance, onsite developers seem to be easier to control while remote teams might offer a very competitive pricing without compromising stability and quality of code. The mandatory payments include office space rent, local taxes and obligatory insurance make a big contribution to the development cost while not necessarily adding up too much value to the project.
Developer rates by country in 2021. Image by Roonyx
As you can see, the hourly rates vary greatly between the geographic locations. While a junior designer charges $18 per hour in India, the same experience level employee will charge $60 per hour in the US.

While no universal formula exists, we can showcase the budget estimation process based on an example of a marketplace application. By going step by step through a practical, real-world example, you will better understand the mechanisms behind cost estimations.
Making a budget estimate for a marketplace application
Assuming two companies decided to create a marketplace application from scratch. One of them is a startup preparing for the investment round and their goal is to showcase their MVP, attract investors, and raise the required investments. The second one, financed through own capital, focuses on launching the product as soon as possible to start earning customers and generating revenue.

Let's consider what scope both ventures need to manage and how different the development time and budget will be for MVP and ready-to-market version projects. This will help us to understand the weight of each feature in the total budget and to make the decision about what to consider as required functionality for the launch version of the application.

In general, every marketplace has the following modules: user roles, billing, product catalog, user profile, seller profile, product page, cart, admin panel, log-in page, and navigation and layout. Our experience shows us that the more user-demanded features a marketplace offers, the better it is in attracting users. Such features may constitute a comprehensive discount and reward system, extensive payment methods, sophisticated filters, and wish list functions.

The marketplace popularity and positive user experience often depend on the flexibility of the user experience and the variety of payment methods on the platform. As more sophisticated the design gets, as higher should the allocated budget be. The trade-off between budget and user experience is a difficult one to estimate and should only be carried out by experienced project managers.

Sellers look for marketplaces with a rich range of functionalities to promote their products and increase total sales, average sales per customer and total turnover. Providing sellers with the opportunity of using promo codes and discounts along with analytics dashboards to track the success of marketing activities adds to the overall cost of the project.
Budget calculation for marketplace MVP development. Image by Roonyx
Budget calculation for ready-to-market marketplace version development. Image by Roonyx
So, in total the MVP version costs approximately 60K US Dollars while the more advanced ready-to-market version of the marketplace application exceeds 85K US Dollars.
Total cost comparison of the MVP and ready-to-market marketplace versions. Image by Roonyx
Budget highlights for other types of application
If you look at other applications besides a marketplace, we have pulled together the data for different apps with the estimated costs and development times.
Development costs per application category in 2021. Image by Roonyx
Whatever application you need for your business, here at Roonyx, we know all about software development. Contact an industry professional and get ready to take off. We help you to discover your project, estimate your required budget and quickly approach the production phase – together as a team.
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