The most intuitive factor that influences app development costs is developers’ hourly rate. Why is … [+]
According to a survey conducted by Clutch, the median app development cost ranges between $40,000 and up to $730,000. There are several factors that explain this wide range. Understanding why you’re quoted 100X instead of 10X or X is important for making educated hiring decisions based on your challenges, needs and expectations. Here are 3 of the biggest factors that influence the quality and cost of your startup app.
1. Clear Expectations
An app development project typically starts with a planning phase. This research, discovery and scope definition phase serves to define project requirements and expected outcome. Skipping this stage will most certainly lead to delays and increased costs later on.
No matter how complicated an app is, a good development team can turn a well-researched idea and business plan into an intuitive and functional application. The first factor that will increase app development costs and hinder app quality is failing to do your homework as an entrepreneur to provide the team with a clear answer to at least these six questions:
- What are the key features of the product?
- What problem(s) will the app solve?
- Who are you building it for?
- Who are your competitors (include links)?
- How will you differentiate your solution from those competitors?
- How did you define the features and validate the customer?
According to the same survey, the planning phase can take over 350 hours of research. To significantly reduce this number, you need more than an answer to the six questions above. What you need is app wireframes and a detailed product development scope.
Wireframes are an effective app idea validation tool. Instead of creating them just to facilitate presenting your plan to your developers, use them as a way to learn more about the customer, gather feedback and make cheap mistakes before product development.
2. Hourly Rate And Project Complexity
The most intuitive factor that influences app development costs is developers’ hourly rate. Why is it that one team estimates a project for X while another estimates the same project for 100X? To answer this question, we have to dig deeper than use developers’ location as the biggest indicator of development costs.
A few months ago, an entrepreneur asked for my opinion on an app development plan and quote he got from a company he liked and was impressed by their significantly lower estimate despite the team’s average hourly rate. I quickly realized that this company specializes in building WordPress sites and offered to build the entrepreneur’s Fintech startup on this content management system. Essentially, this entrepreneur was going to accept building an investment platform on a blogging site.
The location of service providers is one of many predictors of development costs. Complexity of app features, user experience and interface, back-end infrastructure and third-party API integrations, development approach, and number of developed platforms are a few other reasons why some teams estimate development for X while others require 100X.
Your job as an entrepreneur is to find the right team for the job not only based on their estimations but most importantly, on their understanding of project requirements and ability to exceed expectations for that particular job. Accepting the lowest or highest bid is OK as long as it is the right team for the job.
3. Frequent Changes To The Scope
As noted earlier, project planning and scope definition can take hundreds of hours. The main goal from this phase is to create a clear roadmap by proactively addressing expected risks and challenges to ensure successful development and delivery.
In many cases, half-way through development, entrepreneurs find an important addition or change based on customer insights. At this point, making those changes can significantly increase time and costs since the team will have to go back to the drawing board and may need to rebuild certain aspects of the solution.
This is not to say that you should settle on building a product people said they don’t need. Instead, reduce development scope to smaller and quicker releases for faster testing and iterations when needed.
In conclusion, to control costs and ensure product quality, start by setting clear expectations based on rigorous research and customer development. Second, when evaluating candidates, pay attention to the relationship between hourly rate, background of the team and your idea. Finally, avoid unexpected costs and delays by releasing and testing new versions quickly.