How do you estimate the total cost of developing an app? That is the topic we wish to discuss, however, remember that the app is just a tool for your business and development costs alone will not be all the costs associated with your business. The business brings in money not the tool.
So here is the drill…a software partner gives you rough estimations for:
- Wireframes / Graphic design
- Testing (additional 10-20%)
- Project management (additional 10-15%)
Meanwhile you add the costs for marketing and any other expenses that are fully under your control. But is that all? Hardly…
If this is your first project, it’s quite normal in our experience to have some unrealistic expectations. One of your primary tasks as a software owner is to ascertain all costs and risks related to development and deployment, as well as further maintenance of your product. The hidden costs follow you during the whole process, and it’s easy to exceed the scope. Then of course the stress, the hardships of borrowing more money from investors, and in the worst cases put the project on hold or cut the development costs or features. The success of your startup/mobile product will be up in the air.
So what should you make provisions for in your overall budget?
• Involvement of a business analyst and/or technical consultant. Research as for project viability.
• Legal consultations and trademark registration, if needed.
Design / Development
• Server hosting. These costs depend on the complexity and scale needed.
• Changes of requirements in the middle of development are a common but unpleasant fact.
• For legacy software platforms – data migration from the old system or the previous version of software. Integration with other systems. Expenses for storage of the old system’s data.
• Releases of new devices and platform versions in the middle of development – You need to plan for which OSs you will support and know Apple / Google’s planned releases.
• Paid libraries and other software used in your project. (eg. SMS verification, Google Maps API calls or some other pay what you consume API)
Deployment / Maintenance
• Application store fees/ Apple App Store: developer’s account ($99/year) and enterprise account ($299/year for proprietary apps for internal use). Google Play: one-time $25 fee for an account.
• You get only 70% of all revenues brought by your app, be it upfront charge or in-app purchases. The rest is taken by Apple, and Google.
• Content creation and management – continuously providing your users with up-to-date content. Can you manage your content yourself or do you need tech support to do certain changes.
• Future improvements – After the release your app needs to be continuously updated and tested, taking in user feedback, new OS versions, changes in third-party APIs, etc.
• Customer support service. Keeping an app alive in the eyes of the users requires providing quick responses to requests and questions.
• If your network starts rapidly growing users, you’ll need to expand the backend so it can handle the load.
If you can find an IT partner that has worked with a lot of startups, then ask them for their opinion. What are the project dependencies and weaknesses. What would they do? They have been inside a of projects and have seen lot of good and bad decisions. Learn from their experience and truly engage them as a partner.
Mark is the CEO of Futurist Labs. The company guides startups in building their MVP and helps leading brands be more agile in the mobile sphere. Coming from a marketing and entertainment background he consults and mentors on strategy for many new ventures.