Why Is App Development So Expensive?
Updated: Apr 9, 2020
I get this question a lot, and it often comes from prospects that have shopped around for app development and have been quoted in the six or even seven figures. That's crazy. Why is app development so expensive? Luckily for them we charge a fraction of what most development agencies ask.
The easiest explanation is that apps are cheap; it's the engineering and design talent that's expensive. If you look in the App Store, you'll see over a million different apps. These were all built by independent developers, yet the bulk of these apps will never earn a penny.
Using Hundreds of Developers
A different set of apps serves as the foundations of million- and billion-dollar businesses. Solo developers typically don't build these apps; instead they're built by teams of developers and designers. These teams range in size from nimble three-person teams to large enterprise organizations that employ hundreds of engineers.
Seriously: hundreds of engineers. Facebook, Google, Twitter, FitBit and many other tech giants have teams numbering over 100 people, often all working on a single mobile app.
Teams this large aren't typical, but it is important to understand that there is a lot of work that goes into making products that on the surface, may seem simple.
You might be thinking, "OK, but my project doesn't need hundreds of engineers." It's true that most projects don't need hundreds of engineers, but most products do need at least a small team of experienced engineers, designers and product people to produce an end product that is competitive and that will generate true business results. It's common to have between three and ten people working on a single platform (iOS/Android) app.
The typical timeline for an initial project is often four to six months. Much like building a ship, you'll end up doing architecture, schematics, design, building and launching.
Doing the Math
At this point, the math is pretty simple. Labor costs are the No. 1 driver of the cost of your final product. Look up the salaries of top developers and designers in your region, and you'll likely uncover an annual range of anywhere from $60-150K for most of the roles. Multiply your average salary by team size to determine your annualized product design and development costs.
Your annualized costs are often a good reflection of the true costs of building a product. Even if the initial version of the product takes three months and not six months, it's common for product teams to continue to improve the product and further drive revenue and key metrics for the core business.
Driving core metrics of the business is the reason why the companies have the larger product and engineering teams. An improvement of one-tenth of 1 percent is still a million dollars in the upside. Larger businesses are simultaneously driving multiple new product feature initiatives that each aim to impact business's bottom line.
Deciding Whether to Build or Buy
At this point, you have an annualized expected cost, and you may be thinking, "Should I try to hire the people and build this myself or look for a services team?" Great question. This often comes down to a question of timing and core competencies. For companies that consider themselves to be technically savvy, it may make sense to try to build the technology in-house. The biggest challenge we've seen with an in-house strategy is hiring and staffing the appropriate level of engineers and designers to the effort.
For companies that aren't technically savvy, there's a second challenge, and that's retaining talent once you've found it. Non-tech companies often experience high turnover when it comes to tech initiatives. This is often due to the fact that the culture and speed of a non-technology company may inhibit tech organizations from getting things done quickly.
We've seen our new clients that reach out ask us to maintain their existing app as the development team they last worked with didn't want to continue making minor updates as it wasn't worth their time. In many cases, we have clients that are non tech savvy and we walk them through the entire software development cycle from design to development then onwards to marketing.
Looking for the Best of Both Worlds?
If you want to have your cake and eat it too, there are always options. Many entrepreneurs can be successful by using our E8 Labs team to do the heavy lifting then the business building afterwards. We'll build the platform then help you strategize and implement a go-to-market strategy. The last thing you want to do is trade on quality of the product by thinking you'll save money by working with an offshore team. I've seen it all. I get about 2-3 new clients monthly expressing their frustration about working with a development team that was cheap only to have spent thousands of dollars only to start back at square 1.
At the end of the day, I've found that it’s about moving the needle for your business, and finding a team that can deliver is the most important part of growing your business for the mobile generation.
If you're ready to start discussing your big idea and moving into a strategy session to discuss features, functionality contact us. We're a low cost software development agency found in San Jose, CA.