“How much does it cost?”, “Why app development is so expensive”? 

 

why custom app development is so expensive

 

These questions are one of the most common which people ask me and my team during an initial discussion regarding app development estimation.

Honestly, I hear them all the time. Whether it is during conversations with potential clients or during meetings at international trade shows like TechCrunch in San Francisco or WebSummit in Lisbon, yes all the time. And this is TOTALLY understandable, and fine because business has always been around money. But first, we need to understand what affects the total cost of the application and where the hell are these four/five-digit amounts coming from?!

 

The recent research from GoodFirms shows that the average price of a simple app is between $40,000 to $60,000. 

 

  • User-friendly apps with least-functionality like Tinder or Periscope cost anywhere between $40,000 to $60,000.
  • Medium complexity compelling apps like WhatsApp or QuizUp most likely cost between $61,000 to $69,000.
  • A feature-rich highly complex app like Instagram or Uber ideally costs anywhere between $70,000 to $100,000.

why custom app development is so expensive5

 why custom app development is so expensive4

 

Source: Goodfirms.co

 

Providing an answer requires the preparation of at least a preliminary technical specification - based on which the exact costs of the application will be calculated. What determines the final cost of creating an application and what amount can it reach? And my favorite answer is to compare it to building a house. You probably won't ask an architect: how much does it cost to build a house without having detailed plans or knowing the materials.

 

Creating an app is just like building a house - it is a long and complex process

 

Estimating beforehand the costs of app development could vary with the end result. Why exactly is that? Let’s change the perspective for a moment as it could be easier for you to comprehend and think of an app as a house. There are a lot of things that come to building your dream house, isn’t it? First and foremost, we need to get to know your idea perfectly and have it visualized. Here steps in the architecture part of the journey, you need to hire the best of the best so they can plan it very thoroughly, this way you’ll avoid any unexpected and unnecessary expenses which could cause your project to fail. 

 

Secondly, construction will also take place in several complex stages like:

  • Plot fencing and building foundations
  • Leveling the site and preparing the ground for foundations
  • Construction of foundations
  • Construction of external walls, ceilings and concrete stairs

 

These are only the first tasks that are to lead the building to an open shell. And the next ones should be:

  • Execution of the roof structure, chimney and roof covering
  • Installation of windows and doors. (In this way, the building is brought to a closed shell).
  • Performing the installation
  • An electrical, plumbing and possibly gas installation is being built.
  • Interior finishing and assembly works

As you can see above building a house is a multi-stage and costly process. The more difficult it is to implement an investment, the lower the investor's commitment and knowledge. That is why it is worth preparing for it properly. It is no different when it comes to commissioning an application or an internet platform. Without a precise determination of the components and the desired functions, you will be able to assess neither the time needed nor the materials needed, and consequently the costs themselves. 

 

To sum up basically, it depends on many factors:

  • the target - what kind of people are supposed to use it? Do you want a family-friendly house or a small cottage?
  • the purpose - do you need a garage, a swimming pool or a big backyard? What kind of problems do you want to solve with your app? 
  • the design - by making an appealing app more people are going to be interested in what you have to offer and therefore the app will gain more profit

Let’s go deeper now and focus on app development costs only!

 

What main 4 factors determine the final price of the application?

 

The cost of creating a mobile application, depending on its functions, may therefore vary from several thousand (for applications with basic functions) up to even millions of dollars!

 

#1 The custom app functionalities 

 

When asked what determines the costs of the application, the first immediate answer is its functions. Indeed - it is the options to be available in the app that usually have the greatest impact on the pricing. The more functions and the more complex they are, the higher the costs. It will be particularly expensive to create dedicated, comprehensive applications (for example, for broad management of the company) or equipped with more advanced options. 

You can check out the list below with some functionalities for web, mobile and backend.

But first remember and understand, that the more functionalities a given application has, the higher the price will cost and will require a longer time for the development. 

 

WEB APP Functionalities 

 

Main functionalities (story)

Design - who will be responsible? we/client/other company

CMS

CMS - role management

User account management (sign up/login/edit/restore password)

SSO

Site analytics

Advanced site analytics

Integrations - social media

Mobile friendly

Captcha

Advertising

Files exchange

Integrations - payments

Integrations - other 1

Integrations - other 2

Integrations - delivery

SSL cert

Mailing - transactional mail

Mailing - marketing mail

Mailing - user messages

Search bar

Order placement

Premium user

Exclusive content for registered users/VIP

Cookies policy

Live chat

Additional requirements

 

MOBILE APP Functionalities 

 

Are we doing a mobile app? [Y/N]

Existing app upgrade/new app?

Main functionalities (story)

Android?

iOS?

PWA?

Smartphones?

Tablets?

Other devices (wearables etc.)?

Native/Hybrid?

Design - who will be responsible? we/client/other company

Select language

User account management (sign up/login/edit/restore password)

SSO

Email/SMS verification

Captcha

Are any other functionalities different from the web?

How many screens?

Integrations - payments

Push notifications

Live chat

In-app purchases

Advertising

 

BACKEND Functionalities 

 

Admin dashboard

CRM integration

Invoicing module

Platform analytics

User management

Add/remove administrators/change permissions

Messaging module

Add/remove items

Data exchange center (CSV/XML)

Third parties integrations (Intercom etc.)

 

#2 The application type

 

An additional thing is the type of application. They can be divided by type:

  • Web applications - requiring a permanent connection to the Internet
  • Native applications - working offline (e.g. calendar)
  • Hybrid applications - working both online and offline (usually some options require an Internet connection, some are also active without access to the network).

Platform selection - on which mobile platforms should the application run - Android, iOS, or maybe both? When choosing a contractor, check if the team specializes in creating applications for a given platform, because each system requires the use of different tools and frameworks.

 

why custom app development is so expensive3
Source: https://www.velvetech.com/blog/how-much-mobile-app-cost/

 

Types of applications by a purpose: 

  • E-commerce app
  • Marketplace app 
  • Enterprise app 
  • Data-driven app 
  • Social networking app 
  • Game app

 

#3 The region you hire an app developer from

 

The next thing is that there are also significant cost differences when it comes to regions and countries. See some examples below:

USA: $70 - $ 150 per hour

Europe: $50-100 per hour

Australia: $ 30-70 per hour

South America, Africa, the Middle East, and Central Asia: $30 - $70 per hour

India: $20- $50 per hour

You can ask: why such large price differences between them? Mainly from the quality of delivered apps. The temptation to hire the cheapest developers who set up the app in a fairly short period of time may be counterproductive. If the developed application does not meet the basic standards, it will most likely need to be improved, which will only increase the final production costs.

 

 

Below I listed some cases of apps which we developed and cost so I hope it will be easier for you to understand what the pricing ranges are when it comes to the app development process: 

 

1. A Social networking app 

Project category: web development

Cost: $50k - $199k 

Project length: 1 year and 6 months and still ongoing 

Project summary: 

Railwaymen developed a website for a social networking platform. Working from scratch and with prearranged designs, they built the platform while fulfilling specification and functionality objectives.

 

why custom app development is so expensive8

 

2. Fintech app 

Project category: web development, SaaS MVP for a startup

Cost: $50k - $199k 

Project length: 2years and still ongoing

Project summary:

Railwaymen built an MVP for the B2B market. The team continues to add functionalities to the SaaS product.

 

3. Marketplace app 

Project category: web development, Online Marketplace for Therapists

Cost: $10k - $49k 

Project length: 2 years 

Project summary:

Railwaymen developed a website using Ruby on Rails that allowed users to search for speech pathologists by location. The team regularly provided page outlines, detailing various designs and features. 

Source: our 5 stars reviews on Clutch.co - check them out here!  <https://clutch.co/profile/railwaymen>

 

#4 The App development team structure

 

The issue of costs incurred by the customer for a custom application is very extensive. Each contractor individually prices the work, most often projects are billed hourly. Depending on the scale of a specific application, rates can reach several hundred thousand or even a million dollars (!), such as in the case of Uber.

In fact, knowledge is the most important and low costs do not guarantee success in the mobile application market. An employee's cost does not necessarily correlate with their knowledge and skills, and hourly wages can vary considerably. 

What’s more, solo developers typically don’t build apps, instead, they are built by teams of developers, designers, testers, PM and more engineers. Seriously, apps like Instagram, Airbnb, YouTube and many other giants have a development team of hundreds of thousands of specialists. I know that teams this large aren’t typical but just wanted to emphasize that there is a lot of work that goes into making high-quality app development products and there is a staff of experienced people behind its success. 

 

why custom app development is so expensive1

Project setup - Examples of app development prices at Railwaymen

why custom app development is so expensive10

Example of team members responsibilities and engagement in the app development process

 

Learn more: Software Company Roles: Who is who and why do you need all of them?      

 

What is included in the estimation of the app?

 

When estimating the mobile application, we approach each inquiry individually, taking into account business requirements and customer needs. At Railwaymen we do not operate according to automated patterns, because on both sides of the process we see people, their ideas, business goals and dreams.

Of course, we use procedures that make it easier for us to quickly estimate the cost of implementation - but we always try to select solutions to the needs and possibilities. We talk, listen and carefully analyze every aspect and every assumption of the specification provided by the client. It is a complex process, but it allows us to develop effective methods of cooperation, satisfaction for all parties. 

 

Check our web & mobile app development FAQ here!

 

So what does the client get inside the estimate?

 

#1 Business analysis & research 


The first stage in the process of creating mobile applications is a preliminary business and tech analysis (which we call Discovery Phase). Usually, we start by creating a user persona for your app and competitor analysis. At this point also all the tools and libraries needed for the proper operation are determined. It also involves making the first sketch and design as well as establishing a plan of work on individual elements of the application. 

 

why custom app development is so expensive9

Discovery Phase Process Process at Railwaymen

 

#2 Prototyping/Mockups UX/UI, Product Design

 

Before programmers get down to the actual work, we first need to create a graphic design. Sometimes the graphic design is created before we even estimate the application because it is easier to estimate the amount of time needed to perform a given service based on ready screens. 

The design and appearance of a mobile application are important for users. In addition to the functionality of the application, it is often the graphics and aesthetics that determine its attractiveness, influencing the users' rating and the number of downloads. However, the design is not limited only to creating nice illustrations and colorful icons.

The role of design is also to design the application so that it is functional, useful, transparent and easy to navigate, and as a result, provides the user with a positive experience.

 

why custom app development is so expensive2

UX/UI Product Design Process Scheme at Railwaymen

 

Read more here: Our 5 Steps UX/UI Design Process Explained

 

#3 Development 

This is a set of all proper work to create a good and working program. The manufacturing process and applied quality standards have a significant impact on the total cost of a project. In many cases, this segment is the most expensive and has the highest percentage of the project price.

 

#4 Project Management 

High-quality service without a doubt makes the project implementation process faster, more pleasant and smooth. Assigning tasks, supervising their execution, arranging details and scheduling weekly calls with the client - these are the tasks of the PM who often has to spend many hours on project management.

The cost of coordination is around 10-15% of the budget.

 

#5 Code-review

These are qualitative works aimed primarily at providing software and its code of the highest quality. The "code-review" work simply foresees additional developers to "review" and improve the software. Their work is obviously increasing the final quality of the product, but also additional people in the project, which of course cost.

 

#6 Quality assurance

The newly created mobile application cannot have any errors that would limit its functionality. For this purpose, tests find even the smallest imperfections (called bugs). People who test the application check the correctness of the code and assess the compliance of the assumed functions.

Read more: 8 Benefits that QA Brings to Your Project

 

#7 Implementation in the production environment

Implementation in the environment is simply a production run of the software in the target server infrastructure.

 

#8 Maintenance

There are no perfect applications, so we cannot just leave it alone after publication. We have to be prepared for any bugs or user suggestions that will force us to make urgent changes.

Each software product is a component of the work of many many specialists from various fields of technology and business. The sum of their work and commitment creates a complete and valuable app product. I can even say that it is a rather complicated process in which the design and web-development cycles are repeated. 

 

What about the billing model?

 

In most situations, we choose from the two most common settlement models - Fixed Price or Time and Material (T&M).

As the name suggests, the Fixed Price model will allow you to assume in advance the number of expenses you want to spend on creating the application, based on the prepared technical specification. However, in the event that it is necessary to perform unplanned work, we will be charged for each additional service performed.

In fact, the Time & Material model assumes the settlement of the project based on the team's working time and actually completed tasks. It is a safe solution for both parties, both for the client - who knows what he pays for, while retaining full flexibility in product development and introducing any changes to the project - and for the contractor - who is rewarded for the actual activities and time spent.

 

Summary

 

To sum up, the key to preparing the app development quote is a well-described, detailed technical specification. Inaccurate, general or vaguely described may result in large discrepancies or possible mistakes in the valuation of your project. Therefore, I previously prepared an article with a checklist - what you have to do to start the app development project (you can learn more here), where I suggest how to prepare a brief that will allow us to understand the essence of your project and initially estimate the budget. 

So do you have an idea for a web or mobile application? We specialize in creating both and having more than 100 projects completed in our portfolio. Contact us and tell us about your idea or send us documentation. If you are interested in the estimation of your own application, click the button below, send more data and we will get back to you asap.

 

 Schedule a demo call to get your estimation in no time!

 

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