Ah, the age-old question: how much should an app or any other type of custom software cost?
I wish I could give you a straightforward answer—an app costs $35,000 to develop—any app. But I'm sure you know things don’t work that way.
The budget for developing custom software can vary A LOT. Depending on what you need, the price quotation may have 4, 5, or more digits.
So, while I can’t tell you in this post how much your app will actually cost, I can help you understand what really goes into creating an app and how these things affect your overall cost.
Plus, I can let you in on a few insider secrets about how to get the most out of every dollar you spend on custom software development.
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What Affects the Cost of Custom Software Development and How Prices Are Calculated
To get a better understanding of how the cost of custom software is calculated, let’s take a look at what impacts it.
Research and Validation
Many people don’t understand the value of doing adequate research and validating their idea before they spend a dime on development. They think, “I don’t have time for research. Someone’s going to steal my idea if I don’t start building right now.”
Stop and think about it, though. Wouldn’t it be a better idea to invest a little time and money now to determine whether there’s truly a need for the app versus spending a lot on a product that misses the mark?
Would you rather spend $100,000 on a guess or $10,000 on research and validation to prove your app has (or doesn’t have) a future? If you are able to validate your idea has legs, the knowledge you will have gained with that $10,000 could save you tens of thousands throughout the development process.
Design
Design is another thing that is often undervalued. Creating simple, visually appealing, and user-friendly designs is becoming more and more important. Your users won’t have the patience to figure out how to use your app. It has to be easy. And, believe it or not, easy is often difficult to design. Hiding the complexity of an app to ensure it’s user friendly can take time and many iterations to get right.
Keep in mind, though, that done right, the money you spend on a high-quality design will pay off in the form of more—and more satisfied—users.
Development
Before you approach a developer, you’ll want to do some homework. Developers will need a certain amount of information to provide a reliable ballpark estimate for building your app. Be leery of a developer that provides an exact dollar amount, unless it’s a really small project.
Designing and building apps is not a science. It’s more like building a house. There are lots of variables and decisions to be made throughout the process. And those decisions can have a significant effect on the overall cost.
So, if a developer tells you your app will cost $X, they probably haven’t been developing apps very long, don’t really understand the process, and aren't using Agile/Scrum methodologies. And while you may think knowing the cost upfront sounds great, what likely won’t be great are the process and the end result.
A better bet for you is to be forthright and tell the developer what your budget is. Armed with your budget and the information you got from your research and validation, they can then design and build an app you can actually afford. It may not have every feature you can imagine, but that’s ok. You won’t want every feature anyway.
Depending on the idea, you may not even need a fully functional app at first. It may make more sense for you to start with a low-cost prototype to see how users respond to it.
We advise our clients to start with a minimum viable product (MVP) and build from there. Starting simple will allow you to spend your money wisely on features your users are passionate about, rather than implementing features they don’t end up using.
Legal/Regulatory
This is an area you won’t want to neglect.
Two of the more obvious instances that will likely require legal consultation are:
- When your app requires you to pay royalties for music, licensing fees, or graphics.
- When your app is medical-related and captures patient information, meaning you will be subject to HIPAA and/or other laws. This requires your hosting environment to conform to certain rules and regulations. Not only will the hosting environment likely cost more, but you will have to pay to have a third party certify that it meets the standard of the law.
And don’t forget about all the legal documents you need to have in place to protect your business. You may need an attorney’s help drafting the terms of use, privacy policy, and/or software license agreement for your app.
Sales and Customer Support
People often put off thinking about non-technical things like sales and customer support until after the app is built. If, instead, you think about these things up front, it could save you money down the road.
Things like:
- If you’re going to sell your app directly, will you hire a sales force or will you be selling the app in your free time?
- If you want to sell your app online, you’ll need to determine if you need to build in payment processing.
- Are there things that can be built into the app to facilitate sales—upgrades, sharing from within the app, etc.?
- What type of support do you want to offer users? Help text? Online chat? Something else? There are tools available for support, but most have a monthly charge associated with them.
Marketing
"If you build it, they will come." That might have worked for ghosts in a movie, but it doesn't with software.
You’ll need to have a plan in place for acquiring business, which may include some or all of the following:
- Branding
- Website
- Blog
- E-newsletter
- Social media
- Conferences or trade shows, including a booth, marketing materials, and devices to show how your application works
- Pay-per-click advertising
Enhancements and Technical Support
Lastly, you’ll want to make sure you budget for the support required to keep the product up and running, as well as the enhancements required to keep the product relevant in the future.
These things are easily overlooked, but critical to your ongoing success.
What Can You Do to Keep Your Software Development Budget Predictable and Under Control
You can’t change market rates, and it’s never a good idea to opt for the cheapest provider. Similarly, you shouldn’t start cutting features willy nilly from your app just to lower the budget.
But there are a few things you can do to make sure that you don’t run over budget and that you invest in what matters to your bottom line.
Have a Clear Understanding of What You’re Looking to Build (and Communicate This Clearly to Your Development Partner)
It’s typically not necessary for you to have a detailed scope of work documented and ready to hand over to a developer.
But having a good handle on the following things will help the developer work with you to outline the scope of work and provide you with a quality solution that achieves your goals.
- Problem/Opportunity – What problem are you trying to solve or what opportunity would you like to take advantage of?
- Goals – What are you trying to achieve?
- Features – What high-level features need to be included?
- Expectations of the Developer – Do you expect them to do exactly what you say (contractor) or to collaborate with you and guide you to the best solution (consultant)?
- Budget – How much can you invest in, or how much value do you expect to realize from the solution?
- Timeline – Is there anything driving a specific timeline for delivery (e.g., a trade show or conference, seasonality, etc.)?
- Priorities – What’s the most critical constraint—time, money, or scope?
- Definition of Success – What would a successful project look like?
Understand the Value a Custom Solution Brings to Your Business—and Build Your Budget Around That
You could use a templated online calculator to figure out how much your software might cost. But the accuracy of those calculators is questionable, at best.
Remember that this is custom software we’re talking about. So the pricing will be custom as well. Ideally, you’re able to lay out the value the application will bring to your business and set an initial and ongoing budget based on that.
If you’re not sure what the value is, ask yourself these questions:
- Is this a short-term or a long-term problem?
- How much money will I save by solving this problem?
- How much revenue will I generate by solving this problem?
- Will investing in a custom solution create enough value to make it worthwhile?
Be Upfront about Your Budget with Your Development Partner
Before you ask—no, you don’t have to share your budget—most people don’t even know theirs at the beginning stages. That said, if you know your budget, even a wide range, there is real value in sharing it.
Being upfront about your budget is important because it demonstrates that you’ve thought through the value of a solution and have the funds to execute it. You want your relationship with your developer to be based on mutual trust. Reputable developers will not take advantage of your honesty. They will use the information to craft the best solution they can within the given constraints.
On a more practical level, it may help you to know that developers generally don’t charge for the time they spend putting together new project proposals. So, if you have a budget of $20,000 for something that would clearly cost 5 or 10 times that, it doesn’t make good business sense for them to invest a significant amount of time to draft a proposal only to find out it exceeds your budget.
On the flip side, you don’t have to waste your time waiting on them for a proposal that won’t meet your needs. You can move on to your next option much more quickly.
Will developers use your whole budget? Yes, it’s very likely they will.
However, that should be perfectly acceptable as long as they provide adequate value in doing so. Using your budget as wisely as possible is what you’re after. Prioritizing the development of features based on value, starting with the highest value first, will help ensure you get the most bang for your buck.
The wonderful world of software development is foreign terrain for many people, and it can be scary to think about spending tens of thousands of dollars (or more) on what feels like a hope and a prayer. It doesn’t have to be, though. Finding the right development partner is key. So, make sure to ask questions—lots of them.
The Bottom Line
As you can see, there’s a lot more that goes into the cost of an app than just paying a developer to write the code. To increase your odds of success, you’ll want to consider all the aspects outlined above upfront.
While it can sound overwhelming, arming yourself with this knowledge will help limit the surprises you encounter along the way and increase your odds of success, as well as the “bang” for each buck you spend.