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app development costs

September 25, 2012

Planning your development costs
byStijn SchuermansinBusiness

The bar for successful apps is high: if you want your app to stick out among a million others, it needs to be well designed, user friendly and working flawlessly, all of this comes with significant development costs. In this article, we give an indication of the types of costs you need to take into account when planning your app.

Costs can differ wildly depending on your platform and type of app. A mobile game with 3D graphics will have a radically different cost structure than a weather app. The range goes from $5,000 for very simple apps to hundreds of thousands for extensive apps. Often cited, Twitterific estimated their development costs as high as $250,000 back in 2010. Use common sense when thinking about your costs, be realistic and plan for cost overruns.

Here are some costs you need to take into account.

Toolsin Development Costs

Computer cost, developer registration fees and tools licenses.

UX design

Storyboards, user interaction and graphic design typically make up 25% of total app cost. Also think about audio and special effects, especially for games.

Development & Debugging

The bulk of app production costs (upwards of 55%).. Practically speaking, the cost of person-hours devoted to the project.

We researched average and “identified average” pay rates for different types of developers on oDesk, which claims to be the largest outsourcing hub connecting freelance developers with clients. We found that highly qualified developers demand on average $30/hr for iOS, $27.50/hr for BlackBerry and Windows Phone, $26/hr for Java, and $24.70/hr for mobile web development. Note that these figures are averages across several countries and rates can vary significantly by country. iOS skills generally attract higher hourly rates, while mobile web skills, being more abundant, are valued at lower rates.

QA & testing

Making a flawless app requires testing it under realistic conditions. Apart from testing man-hours, costs here can include devices to test on, testing services and usability testing.

Back-end and operations

Back-end costs vary depending on the application’s requirements – from lightweight (user management services on Appcelerator, Spire.io or Parse.com) to heavy (applications written from scratch on Amazon Web Services (AWS) or Google App Engine). Hosting and service costs for connected apps can be very significant long term and may even limit revenue model choices.

Maintenance

Typically 10% of the initial app cost, on an annual basis.

Marketing

We estimate that marketing costs average 10% of app production expenses, although it can easily scale to half of the production costs for larger software operations. In practice, marketing costs differ based on the developer segment – hobbyists and explorers will use Facebook as the lowest hanging fruit, whereas professional app developers will use more sophisticated and premium channels such as professional PR services and incentivised downloads.

Project management

Account for some overhead to manage your team. This is especially relevant when outsourcing parts of the design, development and testing process.

Localization

When bringing your app to foreign markets, translation can be an important cost. Localization is an ongoing process, so plan extra costs with each update to your app.

A handy cost breakdown tool

Bringing all of the above together, we’ve compile a convenient cost breakdown tool, which you are free to copy and adjust to your situation. For each cost, we suggest you think about whether this cost is a one-off, a recurring cost or an up-front cost with ongoing maintenance later on.

BudgetBusiness modelsCostsSalary

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