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A Quick Guide to Estimate Your App Development Costs

Kunal Vaja

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Startups or enterprises have app development on their project lists. On average, a user spends more than hours on their smartphone.
So, it does make sense! The issue begins when startups want to calculate app development costs.
There are too many variables to consider, making the entire process complex. For example, you must consider the cost of hiring developers, infrastructure, setup, and more. 
You may spend more if you don’t get the app development cost right. This is detrimental to your business and can impact your ROI.

So estimation becomes essential, especially if you want to leverage the billion-dollar app market. The total revenue for the app market is growing at a CAGR of 8.83% and is expected to reach $673.80 billion by 2027.

Leveraging the full potential of your digital product and improving revenues in such a competitive market needs strategic app development.
Your strategy must include budget estimations, and a template is essential. 
It allows you to break down the entire cost estimation and efficiently estimate costs.

This article helps you with templates for app development cost estimation factors contributing to total app development expenses.

Statistics

  • Global mobile app market is projected to reach $756 billion by 2027.
  • Application Development Software segment is expected to reach $218.80 billion by 2027.
  • Average smartphone user uses 10 apps per day and 30 apps per month.
  • 70% of all US digital media time is spent on mobile apps.
  • 21% of Millennials open an app 50+ times per day.
  • Apple App Store has 1.96 million apps available.
  • Google Play Store has 2.87 million apps available.
App development cost

How much does it cost to create an app?

Depending on different factors, and region app development costs can range between $20,000 to $250,000 and beyond.

Some factors are app Complexity, features, development approach, and more. 
To estimate app development costs, you need to familiarize yourself with these factors. While you need to conduct a thorough analysis, a template can help streamline the information.
This article will provide the template you need for your app development cost estimation. 
Once you know the factors, estimation becomes easy with the following formula:

[Design Hours + Development Time + Infrastructure Used ] * Developer’s Hourly Rates 

But first, let’s look at some templates you can leverage for your app development cost estimations. 

Best Templates for Estimating App Development Costs

Before you look for a cost estimation template, you need to analyze your project requirements.
Gather all the important outlines of the problems your solution will solve and its positioning in the market.
Further, information on the target audience and functional and non-functional requirements must be gathered before finding a template. 
Once you have gathered all the important information on the problems and solutions you want to develop, it’s time to decide the Scope of Work(SOW).

Get Your SOW Right!

A project scope outlines the development process for your application. It includes project timelines, deliverables, milestones, and reports.

Break down the process into smaller tasks to create a structured outline. 
Often known as the Work Breakdown Structure (WBS), this outline offers a visual deconstruction of your project.

It includes a list of activities, dependencies, priorities, and duration. Now, it’s time to place the data into a template and estimate the cost.

Template 1: Top-Down Software Development Cost Estimation Template. 

Source 

The top-down template encapsulates all the phases, features, and deliverables according to your project requirements.
Leverage the historical data from time tracking logs and make estimations for each resource. 

Add specific roles for your SDLC at each stage to the list and calculate their average hourly rates.

Multiply this with the estimated number of hours to get a rough estimate. 
You need to understand that these estimations are based on generalized assumptions. So, it does not reflect the exact timelines and expenses your project may incur.
If you already have enough historical data from past software projects, these rough estimations can be refined for your pitch against stakeholders. 

Template 2- Button-Up Software Development

This template allows you to estimate costs more accurately than the top-down approach. Create a project schedule by breaking the phases into tasks.
Specify dependencies for each task and ensure tasks are assigned to a single person. 
Ensure that, on average, one team member does not spend more than 60-80 hours on one task.
Further, review the historical information on previous projects. Predict the time range for each task, considering the best case, the worst case, and a realistic scenario.

Template 3- Best, Worst, and Realistic(BWR) Template

Go through the project schedule and reassess the data. Make sure there are no assignment overlaps and that all the risks are accounted for while making the schedule. 
Next, add the hourly rates for each role you defined and calculate the cost estimations.
Ensure you consider everything from the best scenario, like project completion within time, to the worst-case scenario, extended delays. 
These are the three templates that you can use. However, there is no limit to the type of templates you can use for your app development cost estimations. 
However, observing each template closely, you will find some similarities. For example, each template has specific roles and defined tasks.
This means breaking the entire process into smaller chunks of tasks. Let’s understand more about this breakdown. 

App Development Costs: A Breakdown

Mobile app development costs can be complex to estimate, especially without a structured plan that is fulfilled with a template.
But the real estimation process begins now. To simplify the process, you can break down the entire process into three significant steps. 

Step 1- Initial Development Costs

Initial development costs for creating an application can vary depending on its complexity.
You also have to include features, the platform on which you want to deploy, and hiring expenses.
Most significantly, the initial costs account for planning, wireframing, and prototyping activities. 
This means you must first consider the cost of market surveys and research behind feature ideation.
It would also help if you considered the cost of creating prototypes and a wireframe for the entire development process. 

Step 2- Ongoing Maintenance And Updates

Another critical aspect of the breakdown is the cost of maintenance and updates.

The application development process is not limited to the launch of the product. It is a continuous process where you have to work on each update and maintain performance.

This process of constantly monitoring and maintaining performance requires higher costs.
You have to have higher resources to monitor the app’s performance. Plus, you also have to conduct debugging, which will need more resources, leading to higher costs. 

Step 3- Additional Costs That Aren't Always Considered

There are implicit costs that a company can incur without direct transactions, which are often ignored.

For example, you invest in a tech stack to develop an application, but the same tech needs to be updated after a few years.

So, upgrade and migration costs may not be considered initially while planning. Similarly, many practical costs may not be considered initially but eventually need to be paid. 

Once you have a comprehensive cost breakdown, you will have a basic idea of the total expense.
Yet, many factors need to be considered before finalizing the budget for your app development project. 

7 Factors That Influence App Development Costs

Mobile app development costs are many, and to get an accurate estimation, you need to understand the impact of different factors.

These factors include app complexity, development methods, and deployment platforms. 

App Development Method 

If you are developing an application for your business, there are two major approaches- 
  • Either you develop an application from scratch in a conventional approach
  • You can also use a drag-and-drop platform to develop an app.

You can leverage different software development models, such as agile, waterfall, and others, for a traditional approach.

On the contrary, no-code or low-code platforms help you avoid the hassles of hiring development teams and creating an app from scratch. 

Conventional Mobile App Development Approach 

This app development method follows a linear process from concept inception to app deployment.
The conventional approach begins with requirements gathering, identifying the features, and designing prototypes and wireframes. 

Based on the wireframes, developers build code and integrate backend systems. A team of testers, QA, and developers conducts in-depth testing to ensure app functionality.

After comprehensive testing, the app is deployed on a pre-defined platform.
Post-deployment monitoring and maintenance work from the team ensures consistent system performance. 
Major costing factors for the conventional development approach include, 
  • Labor costs due to coding complexity
  • Longer time-to-market
  • Custom feature development costs
  • Scalability costs

No Code Platforms 

These platforms offer tools and features that enable developers with more technical knowledge to develop applications.

Unlike the conventional approach, no-code platforms reduce businesses’ initial setup costs. 
Plus, you don’t need an extensive team to develop the app. It provides drag-and-drop features for small business owners to build apps quickly. 
These platforms help small businesses with smaller budgets to build applications.
However, if you need extensive customizations with the no-code applications, you may have to pay for add-ons. 

Low-Code Platforms 

While the conventional approach helps you develop apps from scratch with coding, no-code platforms offer drag-and-drop features.
Low-code platforms bring together both traditional and no-code approaches. 
Yes, you have the visual development capabilities for businesses fused with the coding capabilities.
This supports faster development cycles, ensuring lower time to market and cost efficiency.

However, like no-code platforms, customization is a significant challenge for low-code development. 

Pro Tip: Comparing all three development methods, you will discover that no-code and low-code approaches are cost-effective.

However, considering the cost of customizations, the conventional approach makes more sense.

Custom App Cost by Its Complexity

Average app development costs for a simple application can range between $4500 and $65000.
On the other hand, an app with medium-level complexity can cost anywhere between $55000 and $130000 and beyond.
The point here is to change costs based on the level of app complexity. For example, if your app is complex, the price can increase to $350,000.
Some of the significant app complexity factors to consider are, 

1. Complexity and Scope of the App

Complexity and the number of features you want to include directly influence the development cost.
Your application may require multiple user roles with different permissions, registering forms and databases with real-time data processing.
Such a wide range of features and their development complexity can affect the total cost. 

2. Industry-Specific Requirements

Different industries have specific needs that impact the cost of app development.

For example, if you are building a healthcare app, you must ensure compliance with protocols like HIPAA or GDPR. 

Similarly, you need to consider the cost of developing systems according to domain-specific needs. This can include the cost of procuring machines, designing processes, and more. 

3. Licensing and Third-Party Integrations

Licensing fees and integration with third-party services also account for a significant part of the app’s cost.
Many regions have specific licensing fees for businesses in specific industries. You also need to consider the cost of integrating third-party services like AI, ML, and others. 
The cost of integrating such advanced technologies into your app will require resources and expertise, costing you more. 

4. Backend Infrastructure

The backend infrastructure is the backbone of app functionality and reliability.
For instance, if you are creating an application like Instagram, you will need reliable and robust infrastructure.
Handling millions of interactions on a daily basis will require not just storage capacity but high-end data processing. 

The cost of high-end computing power and storage with cloud services can be higher. So, you need to ensure you add these costs while planning the app development budget. 

5. Security and Data Protection

Security and data protection costs add to your existing app development cost.
It includes the cost of creating secure infrastructure, authentication mechanisms, encryptions, and more. You may have to form a security team requiring extensive hiring, leading to extra costs. 

Platform-Based App Development Costs

What platform you choose to deploy your application can determine the cost.

For example if you are developing a native app for iOS, it’s cost will be different from Android application. 

iOS Development Costs 

Developing apps specifically for iOS requires solutions compatible with Apple’s ecosystem. This includes iPhones, iMacs, iPads, tvOS, and more apps.

Apple has stringent quality guidelines for its platform, so developing an app for the iOS platform can be more expensive due to high quality and security requirements. 

The average cost for iOS app development ranges between $55,000 and $300,000, depending on the app’s complexity and requirements.

Android App Cost

Android app development must cater to a broader range of devices with varying screen sizes, resolutions, and hardware.

Again, Google has its own set of guidelines for developers to follow if they want to publish an application on the Play Store.

So, you need to invest in quality Android development, ensuring compliance with Google’s requirements. 
This fragmentation requires extensive testing and optimization, which can increase development costs.
On average, building an Android app can cost between $50,000 and $300,000.

Cross-Platform 

Cross-platform development involves creating apps that run on both iOS and Android using frameworks like React Native or Flutter.

While this approach can reduce development time and costs, it may compromise performance and functionality. 

The cost for cross-platform apps generally falls between $40,000 and $150,000, offering savings compared to developing separate native apps for each platform.

Mobile Devices Supported

Ensuring compatibility of your application across devices can be costly. Take the latest flip smartphones from Samsung.

These phones have two screens, and when users switch from the outer screen to the inside screen, the app experience needs to be consistent.

Developing such capabilities can cost you higher because you need to have specialized team work on the responsive design.

Similarly there are many other features that you need to work on ensuring a uniform experience across the devices supported.

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Type of Teams You Hire!

If you are looking to develop an application for your business there are different types of team you have to spend on.

For example you can either choose an in-house development team or outsource the entire development.

If you hire an in-house team there will be cost related to recruitments, perks, bonuses, insurance and more. 

Here is a comparison between in-house and outsourcing your mobile app development 

Development Team Size and Location 

Mobile app development costs can heavily depend on what team size and type of talent you need for your project.
Each member of the team, whether a developer, designer, project manager, QA, or solution architect, contributes to the total cost. 
Here is a rough estimate of the team members’ cost contribution. 
Ultimately, how big a team you need will determine the app development cost. A bigger team means higher costs.
Another crucial aspect that you need to keep in mind is the cost variations due to the location of developers and designers. 
If you hire a team from a nearby location, chances are your control on the project outcome can be better, but it will cost more. Again, it depends on the location-specific rates of developers. 
Here are the rates for developers across locations. 

Pricing Models

App development costs can depend on service providers’ different pricing models.
For example, an app development company can offer multiple pricing models based on engagement approaches like 
  • Fixed Price Model- In this model the budget and scope of the project is fixed with an agreed timeline for delivery. Everything from development approach, total team members and other aspects of development is fixed. 
  • Hourly/Monthly Pricing- You can hire developers and other team members individually on an hourly, monthly, or annual basis. The best part is the flexibility of hiring talent as and when required. 
  • Dedicated Team-  You pay for an entire team without the hassle of recruiting each member and looking after their remunerations. The entire team management, project delivery and performance maintenance is on the app development company. 
These are some of the factors that you can consider to plan the app development budget.

However if your estimation exceeds the pre-planned budget, you can follow specific best practices to optimize costs. 

How Can You Reduce Your Mobile App Development Costs?

Creating a mobile app can be a significant investment, but there are several strategies to help reduce your costs without sacrificing quality. Here are some key areas to focus on:

1. Prioritize Features Early On

Defining your app’s core features from the beginning is crucial. This means identifying which features are essential for your app’s functionality and which ones can be added later as updates.
Focusing on the critical components first can avoid unnecessary expenses and streamline the development process. 

Often, an MVP approach can be very cost-effective, allowing you to launch a functional version of your app and gather user feedback before investing in additional features.

2. Involve Quality Assurance Early On

Quality Assurance (QA) should not be an afterthought. Involving QA during the initial stages of your project helps detect issues early, reducing the cost of fixing bugs later.

Early testing and continuous QA processes ensure a more stable product and save time and money in the long run by preventing expensive post-launch patches and updates.

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3. Plan for the Future

When planning your app, think about future needs and scalability.
Ensuring that your app’s architecture can accommodate new features and increased user loads will save you from costly redesigns or redevelopment.

Opting for scalable solutions initially makes future expansions smoother and more cost-efficient.

4. Cross-Platform (or Hybrid or Multi-Platform)

Developing cross-platform apps can be more economical than creating separate versions for iOS and Android.

Technologies like React Native or Native allow you to build apps that work on multiple platforms from a single codebase, reducing development time and costs.

5. Mobile Devices Supported

Consider the range of devices your app will support. While targeting the latest models is tempting, supporting a wider range of devices can broaden your user base.
However, it also means more extensive testing and potential compatibility issues, so strike a balance that makes the most sense for your app’s audience.

Conclusion 

Estimating the app development costs can be a challenging task if you don’t have a structured approach.
Leveraging a template, you can create a well-defined costing structure, allowing you to estimate the development cost accurately.
However, you need to take into account different factors like app complexity, team size, location of developers, and many more. 
While considering these factors help you estimate the cost, optimizing it requires implementation of best practices.

This is where an experienced app development company like Zennaxx can help. Get an estimate of your app development project now without any hassle. 

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Kunal Vaja
Founder & CEO, Zennaxx
Kunal Vaja is founder of Zennaxx, a prominent software and mobile app development company. With 10+ years of IT consulting experience, he specializes in mobile app and software development, UI UX design, and DirectX. Kunal is dedicated to assisting businesses in turning their concepts into successful software, websites, or mobile apps that foster innovation and deliver tangible value for clients.
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