January 10, 2017
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What is the average mobile app development cost? On the web, this question is posted thousands of times a day, like a mantra; and yet there is rarely an intelligible answer underneath it. Not because everyone’s too ignorant to respond, but for the question’s wording which is just overly vague.

I’ll explain. Imagine trying to calculate the exact price of making a movie. Think of all the variables such estimation would include. The quantity and quality of equipment, the feature length, the props, the decorations, the number of people working on set, the director’s and actor’s talent and fame degree… That’s to name a few.

The same is true for mobile app development – its cost, depending on the level of functionality, design, etc., will vary in each different case. So, instead of throwing hypothetical numbers in your face, we’ll try a different approach to answering this question. In the following article, we’ll focus on the data we know precisely and draw conclusions from it.

Particularly, you’ll read about:

  1. How much did famous companies spend on launching, improving and managing their celebrated apps.
  2. What general rules of app development pricing are there.
  3. How much should new companies raise to have a chance at scoring big, according to industry experts.

By the end of the post, we hope to make the realm of app development clearer for you and, thus, help you figure out the cost of developing a mobile app that meets your demands. So, brew yourself a cup of tea and get ready for some education.

How much do leading companies spend on developing mobile apps?

How much do leading companies spend

Let’s start with something familiar to everybody – Instagram. It’s financing history can be summed up like this: after receiving the initial venture funding of $500,000 in 2010, the App reached 1,75 million users in a year. Then, thanks to obtained popularity and clear potential, it raised another $7 million in investments in 2011 and a third round’s $50 million in 2012. By that point, Instagram was valued at 500 million dollars.

Overall, the company chewed $57,5 millions of funding and turned out to be worth a lot more. In 2012, Instagram’s founder Kevin Systrom sold it to Facebook for 1 billion dollars which made all its investors squeal and dance out of happiness (Well, I assume that’s what they did).

Next up – Uber. It collected $200,000 of seed money and $1,25 million during Angel round of funding. Then, the initial 1.45 million dollars were followed by another 11 investment rounds, which together amounted to $8,71 billion.

Moreover, Uber set the record by raising $3,5 billion in a single round in 2016. That is an unprecedented amount for a U.S. private company, an amount that exceeds Gett’s and Lyft’s (Uber competitors) entire financing combined.

Snap Inc., the creators of Snapchat, another popular photo messaging app, acquired $485,000 in the Seed round. As the product evolved, the company received another $2,6 billion over the course of 8 funding rounds.

So, what do these figures tell us? Mind that the numbers above are true for launching a business from the ground. So, to get yourself started with an app, a backend, and infrastructure you will have to pay somewhere from $485,000 to $1,450,000. The mobile app alone won’t cost that much. About 30-40% of the budget.

What do developers and app development companies say?

What do development companies say

As expected, the numbers differ with each company:

  • According to the report by Kinvey, popular Backend as a Service platform, the average mobile app development cost per app is $270 000.
  • OSXdaily states that it takes $50,000 to $150,000 to develop a decent app, of a functionality better than basic; and cites Obama app as an example. Evidently, it took 500-1000 of man hours at a rate of $100-$150 to bring the ex-President’s app to life.
  • The stats from Otreva, the celebrated app development agency, claims $127,350 as the average mobile app development cost.
  • Finally, Craig Hockenberry, one of Twitterrific developers, famously estimated the price of his app launch at $250,000 for both Iphone and Ipad. He’d also noted, that the stated number did not include a back-end server integration costs.

Alright, so there we have another answer – the average app might cost from $50,000 to $250,000 to launch, and the price will depend primarily on the factors described in the next section.

What to have in mind while estimating mobile app development cost?

  1. What to have in mind while estimating appThe apps with a server built in will always cost more, by a lot. That explains the mind-boggling investments in Uber and Instagram.
  2. Android apps are harder to develop and therefore more costly. Besides that, IOS applications, as Iphones and Ipads they’re developed for, are still prevalent in the US market. As Steve Chaney notes, quite sensibly, it is a right move to develop for IOS first and then think of expansion to Android.
  3. Make sure to include your own salary, marketing expenses and funds for updates when evaluating the overall mobile app development cost. Sometimes, what initially appeared to be an insignificant price gets multiplied by a few times by the date of app’s release.

What are VC’s suggestions?

What are VC’s suggestions

Finally let’s turn to opinions of people of wisdom, the experienced Venture Capitalists. They don’t have magic in their eyes and a mind-clouding enthusiasm of app creators for they have been on the market for a long time; they have won and failed, and seen it all turn around a hundred times – so now they can judge clearly.

Jason Calacanis, a known entrepreneur and Angel Investor, recommends raising $750,000 in the Seed round, which should cover the 18-month runway ($35,000/month); operational, legal fees and capex ($120,000).

As we mentioned before, the cost of a particular app depends solely on its complexity, looks, level of web integration, etc., but, using Jason’s rates, we can get some rough estimates. If your application takes 2-4 month to develop, which is a typical time frame for such tasks, its cost will be anything from $70,000 to $140,000.

According to Fred Willson, another influential investor, he mostly funds products that had either found their market fit, or are about to find it. He points out that, occasionally, even small teams of 2-3 people, working part-time, might get to that point. In such cases, the needed sum for them is $500,000 to $1,500,000, says he, to leave their day jobs confidently and focus on reaching their product potential.

Conclusion

Don’t judge us harshly for not giving you the exact figures. As it follows from the info above, the question “how much does it cost to develop a mobile app?” can only be answered vaguely.

Wrapping up, we’d like to note that you can cut expenses by taking such measures:

  1. Hiring software development companies to create your app. That’s the surest option to get an app finished strictly on schedule, with a top-notch level of quality. It might cost you a sizeable amount to recruit a U.S. agency, but if you opt for an offshore company with a proven record, you’ll pay considerably less.
  2. Hiring freelancers – cheaper than agencies, but can’t guarantee a needed result for you – an advanced live app. Also, since your team will work separately, your project might suffer from lack of organization which often leads to missed deadlines and unexpected costs.
  3. Developing yourself – that’s an option too. If you are skilled enough, have a few developer and designer friends to help out, you might pull it of. However, being a founder, a project manager and a developer simultaneously seems like something only a superhero is capable of. If you manage to succeed at that – accept our true respect and admiration.

If you enjoyed this article, you might also be interested in a free white paper we’re about to release – “Mobile app development or how much for making a dream come true.” It will describe in greater detail the types of apps and laws of their pricing, the ways to go about developing with pros and cons of each of them and much more.

Hit that ‘Get in Touch’ button to leave us your email so we can send you the white paper as soon as it is published.

Meanwhile, feel free to check out our mobile expertise page:

mobile.perfectial.com

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