What are the factors that determine the price of an app or software?

One of the first questions when developing software is usually: what is it going to cost me? The answer to that question depends on many factors ofcourse, mainly coherent to the complexity of the app or software. The costs for developing an app or software are for the biggest part made up of working hours. In this article we’ll show you how those hours are spend and what different kind of apps will roughly cost.

Factors that effect the amount of working hours

For a start, we’ll sum up the different factors influencing the amount of working hours:

  • Preparation
  • Structure of the software or app
  • Complexity of the functionalities
  • Complexity of the design
  • Testing

Other costs

  • Implementation
  • Choosen platform(s) and administration
  • Freelancer vs. big software developer
  • The location of the developer
  • Maintenance

Examples of total development costs for famous apps


Preparation

During the preparation fase, the development team will set up a planning. Also the app is being thought out and functionalities are being prioritised and judged. This process will obviously cost more hours as the complexity of the app increases.

Structure of the software application

Software communicates in different ways with API’s (application programming interfaces). Think of iDeal and Google Maps for instance. The more interactions take place in an app, the more hours are spend building it. Software that uses user management also needs support and maintenance. Changing a password or scanning a QR code requires the development of an administration panel, also known as the backend. These are all structural elements that can increase the costs of the software.

Complexity of the functionalities

The more functionalities an app has, the more expensive it will be. Makes sense, because it will take more working hours to build. Are you working on a tight budget? Prioritise your most essential functionalities and consider skipping the others (partly). Are you dealing with a bigger budget? Then you’ll be able to make your list of essential functionalities a little longer, but try to keep it realistic. If you’re trying to overdo it, you’ll risk making your scope too big and making you costs too high. This also increases the chances of failing the entire project.

Complexity of the design

No rocket science here either: a more complex design will cost you more money. The number of working hours simply increases. If you want to keep your costs low, go for a simple design. In need of detailed symbols and animations? Be prepared to pay for it.

Testing

Testing your software has to be done thoroughly. You don’t want to be launching software that is full of bugs. There’s only one first impression to make, so you want to check each part of your software multiple times. It will cost you a lot of time to relaunch an app through the Appstore if it turns out to be needing adjustments. Make sure you’ll get your app tested by beta-users and give them time to fully experience your software. Their feedback is really valuable!

Through our experience in software development, we’ve created an infographic on the allocation of working hours in percentages:


Implementation

The costs for placing an app on IOS are €99 year, compared to a €25 single payment on Android. Is the app going to be used within an organisation, then an enterprise distribution license has to be payed for of €299 a year. IOS is updated frequently, so apps for this platform also need frequent maintenance. This will therefor lead to extra development costs.

Chosen platform(s) and administration

In the past, apps that were native to a single platform usually functioned better than cross-platform- or hybrid apps. Nowadays that’s not always the case. At 7Lab, we work with NativeScript, making the difference between platforms nearly non-existent. Costs for native apps tend to bea bit higher. Also keep in mind that developing an app for Android usually takes twice the amount of time of making one for IOS.

Freelancer vs. big software developer

Choosing a freelancer might seem like a smart choice. They usually work at lower costs than a bigger software development company. Choosing a bigger software development company comes with a lot of advantages though. We’ll list the most important ones for you:

  • With a software developer, you’ll build up a reliable and long-term relationship.
  • You can count on their service, something that’s not so obvious when working with a freelancer. Bigger software companies are easily available by telephone and can by visited on location. A freelancer will have less time for you once the project has been finished and he/she will have moved on to the next job.
  • High liability levels are normal for bigger companies.
  • The quality of the final product is usually better when you work with a renowned software developer. This is due to the fact that they work in teams that keep eachother on their toes and that work with code quality scans.
  • Software companies use specialists. 7Lab uses a Scrum Master and an IT-Accelerator for instance. The Scrum Master facilitates and coaches the team. Potential blockages are taken care of and he/she is also the contact point for the customer considering non-development issues. The IT-Accelerator helps the Product Owner set up guidelines for the backlog. Furthermore he/she helps prioritising and translating the business requirements into technical solutions.

The location of the developer

The hourly rate of a developer can differ hugely per continent. In India the hourly rate is around €25. In Europe it’s more likely to be around €110. Northern America is the most expensive continent with rates around €150 an hour. Building an app in India seems like a cheap option, but in reality that is usually not the case. Because of poor communications, projects might need a lot of rework, increasing the costs and the risk of total failure. The advantage of a developer closer to home is the direct- and personal contact you can maintain. This makes for a quicker and more convenient workflow.

Maintenance

Please bear in mind that maintaining your software could cost up to 10% of the developments costs on a yearly basis. An app of €25.000 can set you back another yearly €2500 for instance. The costs of hosting your software vary between €75 and €250 per month.


Examples of total development costs for famous apps

According to research by Otreva (2019), the average app costs around €100.000 to develop. This amount of money will give you a complex app though. An MVP (Minimum Viable Product) version of an app usually starts around €15.000. Once you’ve put the app on the market, you can verify the product and receive feedback. Are the functionalities in accordance to the needs of the users and is the number of users increasing fast enough? On the basis of these questions you can redirect, adjust and add functionalities to the app or software.

Costs of developing famous apps:

  • Buienalarm is an example of an app without too many functionalities. This app serves a clear need: the prediction of rain at a certain time on a specific location. The first version of the app (MVP) has cost around €10.000 – €20.000 to be developed.
  • Apps with user authentication usually cost a lot more. That is due to the extra functionalities that come with such an app. Push notifications or inviting friends through email are examples of those functionalities. An example of such an app is Google Drive. This app has cost around €200.000 to build.
  • The first version of Instagram has cost the company around €450.000. That amount only included the IOS version of the app. This is a huge amount of money, but considering its current number of users (one billion!) it has been a worthy investment.
  • Whatsapp has around the same amount of users as Instagram. The initial app was build by the cost of around €150.000. Whatsapp used the demand for cheap international communication as their business model. The initial investment in the app has easily been justified by its current billion dollar profit.

Hopefully we’ve clarified the costs of building an app or software somewhat. Do you want to build an app or software for you company and are you curious about the costs? Please contact Bas and he’ll help you out.

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