A marketer with focus on growth and passionate about products, Gabriel worked as Digital Marketing Strategist in London until 2015, where he also launched Startcelerate, an investment platform for startups and IT companies. Since 2016, he is CEO @Tapptitude, the Full-stack Mobile Product Agency.
How much money you need to build, launch and manage a mobile product for 1 year.
We get a lot of requests from startup founders asking how much a mobile app like Uber or Whatsapp or Instagram would cost to develop. We can’t really shoot a number at that level of understanding usually. Even if we’d give them a price estimate, that would be the wrong number to focus on, as the real cost to develop, launch and manage a mobile product is about more than the initial product development and way higher than the cost of having the app built.
In the following article, I talk about the not-so-obvious costs of creating a mobile app and then keeping it alive in the market for 1 year.
The typical components of a mobile product
Before product launch
- Research and Customer Development
- Product Definition (including UX and UI design)
- Product development (iOS app, Android app, Backend – API, Web Admin)
After product launch
- 1 year Product Maintenance
- Product Landing Page
- Go-to-Market and 1 year of Marketing
The Cost of a Mobile Product – An Example for launching a mobile MVP
Let’s say we want to launch a relatively small app on iOS and Android. It would also have a backend with some APIs and a web component, where the admins would manage users, access analytics and do some simple setups.
This is a rather typical project, both in size and product components and can be seen as a good proxy for such a demonstration.
There are some things we need to do before coding anything, in a phase that we call Problem Discovery & Product Definition. They need to give solid answers to a few core questions:
+ Is there a real need for our solution?
+ Can we create better (or more) value than the current solutions in the market?
+ Do we know how the solution will propose its value to its audience? (ie: What product are we actually going to build?)
Step 1: Research and Customer Development
Proper market research costs and it’s never a good idea to start a new product without clearly understanding what problem we want to solve, who’s got that need, who else is tackling the same JTBD (Jobs To Be Done) for your audience and how you can create a differentiating value with your product. To clarify all these bits takes time and sometimes straight away money, which can be considerable amounts.
Even if we do all this stuff ourselves, there are still costs associated with them. It’s opportunity costs at least if nothing else. We estimate here at least a couple of thousands of dollars.
Step 2: Product Definition with Wireframing
Hopefully, after we’ve done the market research we found an interesting need and an underserved market. We also started writing down what the solution might be for such a need, documented the product functionality that will create value for the user and drafted our first version of the Lean Canvas.
But there is a critical thing that we need to do in order to make our idea really visible and allow others to understand better what we want to build: creating the wireframes for the core flows and functionality of the app. Such wireframes can be done very roughly, like some sketches on a piece of paper or we can go in more detail and closer to the design stage. Once we layout the flows of the app as wireframed screens, we can easily make product decisions and see both the technology and the UX implications of the product. These wireframes are our first product in fact and the ancestors of the final product (like in an evolutionary tale).
Here at Tapptitude, we focus a lot on wireframing before the actual product development, as it is a faster and cheaper space to decide what the actual product will be and make sure that both us as a product agency and the client have the right expectations about the product.
After the wireframes are agreed, we go into creating the UI design, taking the product closer to its final visual style and adding that specific brand personality and the user experience we want to it. After we have the app screens designed, we usually create an interactive prototype of the mobile app, so that we have a clear feel of how the user will experience the product.
If we also want logo creation and a proper visual branding project, this budget can easily jump with a few other thousands USD. When the focus is rather on validating the MVP, we usually include a simple identity pack in the design (covering the logo and app store icon).
Cost: around $4000
So, even before we got into app development, we’ve accumulated around $6000. But keep in mind: this sum can be a lot higher, especially if we spend a lot of time into market research or when the product we envision is big and complex or need high-class visual identity solutions.
Step 3: Product Development
Once we have the product discovery done, therefore we know what MVP we want to launch, and we can clearly see the flows and product style in the interactive prototype, we can finally move to the production stage.
Here, we do things from bottom-up: the allocated development team would analyse the product documentation (we usually create user stories-based documentation) and interactive prototype and do the development estimate, feature by feature. We end up with a document where we know how much time we estimate on each area of functionality, therefore, the final estimate for the product development in terms of time. Apply for the rate card, and we also have the budget needed to develop the full-stack mobile product.
For our example, let’s say we have the following estimates:
iOS app – $15.000
We’d need 10 to 12 weeks to code the entire native iOS app, for a resulting budget of around $15.000. We use the latest version of Swift for coding native apps on iOS. Testing is also budgeted here and some product management is always part of the work flow.
Android app – $15.000
For the Android version of the app, we’d pretty much spend the same amount of time as on iOS, therefore another 10 to 12 weeks and a budget of $15.000. When developing both apps in parallel, we usually start with one then allow one or two sprints before starting the other, as some changes can still appear during development and we don’t want to replicate them on the other platform.
Backend, APIs and Web Admin – around $10.000
For the web admin we will use HTML 5/ CSS 3/ JS and Angular JS + Bootstrap as frameworks, while for the backend we will go with the js stack: node.js for the API and Mongo as the database. We also use AWS with Heroku.
Total cost of product = $40.000
Step 4: MVP post-launch budgets
1 year maintenance & continuous support – around $32.000
In our experience, a year of product maintenance, covering all the product components, can rarely go under 80% of the initial cost of the product. Realistically, we’d need to budget about 100% of that initial cost.
Landing page – $1.000
We typically need at least a simple web page where we can showcase our mobile product, showing our audience the benefits we’ve worked hard to build and trying to convince the users to download and use the app. Even if we use a ready-made CMS like WordPress, we still get to a few hundred dollars in cost for design and some front-end implementation.
Go-to-market and 1 year of marketing – $31.000
It’s really difficult to put a number in this box, as things can vary a lot, based on the business model, competition, market category, user acquisition cost and cost of talent etc. But in our experience, the safe bet would be to secure a budget between 80% to 100% of the product development cost in order to launch the product and move towards product-market fit. Hopefully, our product will have a viral mechanism and great engagement, and these will lower our user acquisition cost, but there still needs to be some go to market and user growth budget.
To sum it up:
> Product Definition Phase = $6000
> Product Development = $40.000
> Maintenance & Product Updates 1 year = $32.000
> GTM & 1 year Marketing = $32.000
Total Budget for 1 year = $110.000
Turning a mobile product into a sustainable business is harder, longer and a lot more costly than it would seem initially. And as you can see, the cost of the initial product development is only around 37% of the total budget you need for your product for 1 year. So, simply put, the total budget for keeping a mobile product in the market for 1 year is around 3 times the typical development cost for the product itself.