How much does it cost to create an app? 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 cost – it varies in each different case, depending on the level of functionality, design, etc. 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:
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.
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 about the cost of app development? 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.
As expected, the numbers differ with each company:
Alright, so there we have another answer on “How much does it cost to make an app?” – 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.
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.
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 make an app?” can only be answered vaguely.
Wrapping up, we’d like to note that you can cut expenses by taking such measures:
If you enjoyed this article, you might also be interested in a free white paper – “Mobile app development or how much for making a dream come true.” It describes 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.