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How much does it cost to build an MVP?

Max Babych
Max Babych
0 | 197 | 5 minutes
MVPStartup tips

    The main thing about creating an MVP is that just having a groundbreaking idea is not enough to ensure success. It is also important to know that the cost of doing this may be less than you would expect.

    We want to share with you what is important and what is not when it comes to building a startup and to also outline the estimated costs.

    Budget planning for an MVP

    Why is it so difficult?

    Budget planning is always tricky for multiple reasons.   On the one hand, the technical requirements, which are impossible to estimate for a non-technical founder and then there is the need to ensure all pain points are solved through the user journey of the applications. How can you avoid the common mistakes at this stage?

    Budget is not only about development

    It’s not only the development stage that costs money when creating an MVP, you also need to factor in sales and marketing3l channels, including testing out any possible solutions. We like to follow Occam’s razor principle, which suggests cutting off everything that is superfluous and focusing only on the necessary.

    Quality > quantity

    It is important to avoid saving money on development at the expense of quality. Often entrepreneurs think large numbers of features mean a better product. This is okay when there is a huge product that needs to cover all the needs of the customer but for an MVP it is important to focus on high quality, even if that means a more limited experience.

    Don’t spend more than is necessary

    The cost of developing an MVP app depends on the type you choose to create. Sometimes deep and comprehensive research is enough to raise enough funding for the project, other times you need paper-made wireframes or even clickable prototypes, etc. There are 3 main points to remember:

    • A Minimum Viable Product should be the basic concept of your product.
    • It should not include superfluous features.
    • It should have a clear and attractive design.The budget of an MVP includes

    MVP development cost

    What determines the cost?

    There are a few key factors that determine your MVP app cost. Many founders assume the cost depends on the types of technology used, but this is not true. Your product development budget is only a part of the whole project and it is equally important that the project is delivered on time and the idea behind the project is strong.

    Choose executors wisely

    In order to create an awesome product, choosing developers wisely matters. Let’s take a look at some of the options you have when it comes to working with your developers:

    Freelance development

    It is a quick, cheap and easy way to start a project. There are many freelance platforms to help you find developers that can fit your needs. Good places to start are Freelancer.com, upwork.com, fiverr.com and so on.

    The main problem with using freelance developers is their lack of obligation to the project. When something goes wrong they can easily just leave. It also means you have to become a project manager and all coordination and communication are your own responsibility. It can be quite tricky to manage and if you are going to use freelancers we suggest you at least use people who are local.

    For a typical project you would need to hire a full-time team. A full-stack developer costs around $6000 per month, who would work with you for the duration of the project. A designer costs around $5000 per month, who is only needed at the beginning. A tester costs around $2500 per month, who is required right to the end. How much would this cost? Up to $13,000 per month. Below is a chart outlining the current salaries of freelancers across the world.The average freelance developers cost by country

    In-house development

    In-house development provides you with transparent relations and clear communication. Your team is fully involved in the project and although the quality is still your responsibility your developers are more motivated on the success of the company. An internal team is also much easier to coordinate.

    The main disadvantage of this option is the significantly higher costs, which can be a problem when you are starting out and do not have a large budget. When you are employing full-time developers you are required to pay holiday costs and hiring costs as well as many other expenses. Make sure your project requires this level of spending at the MVP stage.

    How much would it cost? Let’s take the same team. A full-stack developer costs an average of $9,200 per month. A designer costs $3,600 per month. A tester costs $4,100 per month and a project manager costs $7,500 per month. So, it would take up to $25,000 per month. Below is a chart outlining the current salaries of developers across the world.The average in-house developers cost by country

    Local development agency

    This is also a pretty expensive option but does include launched business and development processes. With this option you would get a dedicated development team, a project manager and a tester with the level of involvement being legally documented. The agency rates vary from  $100 – $250 per hour, per person. That means the same team would cost you at least $400 per hour.

    A good option to find a well-known local agency is Clutch.co or GoodFirms.com. These sites show ratings and feedback from previous customers to help you choose a proficient and reliable team.

    However, you need to ask yourself whether you are ready to pay up to $64,000 per month to test your business hypotheses. If the answer is yes, this is a good option.

    Outsource app development

    Outsourcing is quite a popular option for many startups. You can hire a  local agency for a cheaper price.

    There are two main challenges when outsourcing your app development including: trust and involvement. However, both of these are easy to overcome by ensuring e that you have thoroughly researched potential agencies before hiring them. You can do this by checking reviews, company websites and looking at past case studies.

    How much does it cost to build MVP when outsourcing? Let’s take Ukrainian outsourcers as an example. There average price is $30 per hour, so a four-person team would cost $120 per hour. That means you would have to pay up to $19,000 per month to build an MVP.Global outsource rates (per hour)

    Actual MVP cost development

    Summary price

    In general, the cost of producing an MVP includes design, coding, project management and testing. Sometimes we would need to add maintenance. Let’s take a look at the potential costs:

    • To make a prototype UX/UI, validate an idea and pitch this to investors would cost you between $5,000 – $10,000.
    • To develop an MVP app would cost you between $15,000 – $50,000, depending on the complexity of the project.
    • To develop your landing page and promote your project would cost you on average $2,000.

     Some famous examples

    The time to develop an MVP

    Development time is proportional to budget and time is not on your side. The faster you can adapt to changes the more likely you are to succeed and beat your competitors. Aim to keep the time between updates as short as possible.  Developers usually have 1-2 week iterations, giving them enough time to update and test out the new features

    For more information on this topic, check out “Time to launch MVP: guidance to start without pitfalls“.

    Posted by

    July 7, 2019
    Max Babych
    Max Babych
    CEO, Founder

    I am serial entrepreneur and IT professional. Launched 4 own products and more than 20 products for customers in SaaS and Marketplace industry

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