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How Much Does an App Cost?

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Table of Contents
Cost Structure of Launching an App ……………………..……………………………………………………………….………..………..………..………..………………………………..…………………………………………………………………………. 1

Cost of App Development ……………………..……………………………………………………………..……………………………..………..………..………………..………………………………………………………………………………………………… 3

What Kind of Functionality? ………………………………….………………………………..………..…………………..…………..………..………..….…………………………………..………..……………………………………………………………………… 4

Cost of Features ………………………………….…………………………………………………..………………………………………..………..………..……………………………..………………………………..………………..………………………………………… 5

Web Apps ………………..………………………………..………………..…………………..………………………………..…………………..………..………..……..…………………..………………………………..………………..…………………..……………………….. 6

Who To Hire? ………………………………….………………………………………………………………………………………………..………..………..…………………..………………………..……………………………………………………………………………… 7

How To Hire? ………………………………….………………………..…………………….………….………………………………………..………..………..……………………..…………………..………………………………………………………………………………. 8

Which OS To Start With? ………………………………….………………………………………………………………………..………..………..………………………….…….………………..………………………………..………………………………..……… 10

Cost of Design ………………………………….…………………………………………………………………………………………..………..………..……………………………….……………………………………………………………………………………………… 11

Who And Where To Hire? ………………………………….………………………..……………….………………….………..………..………..……….……………..………………………………………………………………………………………………………. 13

Marketing ………………………………….………………………………………….………………..………..…………………………..………..………..………..……………………………………..…………………………………………………………………………………. 14

Startup Costs ………………………..……………………………………………..……………………………………………..……..………..………..……………………………………………………………………..……………………………………………..……………… 16

Case Studies ………………………..……………………………………………..…………………………………………………..………..………..…………………………….…….………..………………………………………..……………………………………………..… 17

Game Plan ………………………..……………………………………………..…………………………………………………..………..………..……………………………………………………………..……………………………………………..………………………….. 18

Putting It All Together ………………………..……………………………………………..……………………..………..………..………..………..……………………………………………………………………..……………………………………………..…………. 20

References ………………………..……………………………………………..…………………………………………….…..………..………..…….……………………………………………..……………………………………………..……………………………………….. 21

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Cost Structure of Launching an App

Total Costs

App Development Design Startup Costs

Front End UX/UI Marketing

Back End Visual Design Support

Testing Copywriting Office etc.

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Code
“The cost of hiring someone bad is so much greater than missing out on
someone good.” Joe Kraus, Google Ventures
Cost of App Development
Apps are booming. With almost 2 Billion smartphone users in 2014, app startups are among the fastest growing companies. There have been top headlines filled with multi-billion dollar
acquisitions or acquisition offers for the likes of Instagram ($1 bn), Snapchat ($6 bn offer) and WhatsApp ($20 bn). In 2013 mobile apps generated $27 bn in revenues. And this is just the
mobile side of it. Web apps have been booming for a while. For example SaaS applications are estimated to generate over $20 bn in revenues p.a.
Naturally, many of the top brands are under pressure to get into the mobile space fast and some of the most ambitious serial and aspiring entrepreneurs are hoping to take advantage of
this major technological shift, defining a new era much like pc’s defined the era of Apple, Microsoft, Oracle and internet defined the era of Google, Facebook and Amazon.

What are the economics of getting your foot in? This white paper aims to provide some insights to get you started.

What Kind of App?


Building an app is like building a car, you can’t say how much it costs unless you have specs. The car can be a $1000 Tata, 70k Audi or a 100k Truck. It’s the same with apps:

Native Apps Web Apps Cross-Platform /Hybrid Responsive/Mobile Website


!
A native mobile app is a Smartphone
!
Web apps are basically websites that, in
!
Cross platform or hybrid apps are like
!
This is not really a category, but deserves a
application that is coded in the same many ways, look and feel like native native apps, they run on the device but are mention as they provide a cost efficient way
programming language as the platform for applications. written with web technologies (HTML5, CSS to test your market and validate ideas, or
which the app is designed, such as and JavaScript). This enables access to build an MVP and make it more accessible
Unlike regular websites which have to
Objective C for iOS and Java for Android device capabilities that are not accessible on mobile.
communicate with a server every time a
operating systems. in mobile web applications, such as the
user does an action or regular apps that are Using responsive CSS frameworks such as
accelerometer, camera and local storage.
Native apps provide fast performance and a installed on your device, a web app runs in Bootstrap you can build a web app or
high degree of reliability. They also have your browser and requires no installation. The main benefit of hybrid apps is that, website that renders reasonably on
access to a phone’s various devices, such as Probably the best example of a web app is instead of developing separate native apps, different clients. Users will use the same
its camera and address book. In addition, Gmail. the code components can be reused across app / website but the design will resize for
users can even use some apps without an mobile operating systems (iOS, Android, the screen size (iPhone, iPad) they’re using.
A mobile web app uses technologies such
Internet connection. Windows) reducing significantly the
as JavaScript or HTML5 and is designed to You may want to develop a native app or
development costs.
However, this type of app is more expensive run within a mobile device’s web browser. mobile web app later on but responsive
to develop because it is tied to one type of Such apps can be designed to run However the app design can be design allows you to get an app out the
operating system, forcing the company that reasonably well via almost any smart problematic since different platforms have door rapidly.
creates the app to make duplicate versions mobile web browser and are delivered fully different UI and UX conventions. For
that work on other platforms. Most video on the fly - via internet, requiring no example designing an app for the iPhone is
games are native mobile apps. installation. different to designing one for Android.

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What Kind of Functionality?

In general mobile apps can be broken into four major groups, depending on the amount of work involved in developing them.

Simple Apps Database/API Apps Multi-Featured/Enterprise Apps Games


!
A simple app with only 3 or 4 screens,
!
If your app requires information to be
!
An app that is your startup/business. Users
!
The range in complexity of game apps is
serves one basic function and doesn't store stored on the user's device or on a remote can access their information using your app huge, starting with something as simple as
any data about your user or about the server then the infrastructure will be a bit on any device or web-browser. The app a PONG type functionality all the way up to
previous uses of the app. more complex. may offer several key features and a 3D physics engine that does high speed
completely bespoke user interface design, air racing.
Examples include Timer, Task-list, Recipe If you want to allow users to save lists,
tailored to users needs.
Book etc. register and sign in, sync their data In addition to building a functional app, to
between multiple devices or you have a The timeframe and price can range based succeed, games require high quality user
huge amount of content to utilize, your app on the scope of the project - the app can be experience, storyboards and mechanics
falls in this category. anything like Evernote, Basecamp or that hook the user.
Facebook.
Development gets more complex based on Price and time ranges vary accordingly.
whether you want your data to be housed
“native” (built into the app) or
“dynamic” (built into online web services).

$20,000 - $40,000 $70,000 - $100,000 $120,000+ $150,000 - $250,000+

2-4 Weeks 2-3 Months 3-6 Months Varies

Developing an app can be a daunting process. There are lots of decisions to be made and each one can have a dramatic impact on the overall cost of the finished app and its chances of
success. Simple apps can take as little as one week to complete. Large, and complex enterprise projects can take several months to a year. It’s up to you to determine whether speed-to-
market is a priority. If so, your costs will be affected as you will be better off with more people working on your project, in which case, you’re looking for an experienced dev shop.

What can help is having a clear idea of functionality beforehand so you can move forward fast - this usually requires some market research and customer discovery.
The above are ranges you would normally get from hired professionals or dev shops. Other aspects, discussed in the following section can determine your price more precisely.

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Cost of Features (Estimated Range)

These figures are estimates and feature


selection is just an example. The final cost
Email Login Social Login Social Integration
will depend on who you work with and
other things.
!
One of the benefits of having an email login
!
Login with Facebook, Twitter or Google.
!
Allow users to post on their social media
The figures reflect what a pro or a dev shop is that unlike social logins, it allows you to This also gives access to social profiles and directly from the app. Instagram leveraged
would charge providing standard rates in establish a communication with users via an the networks of your users' friends. this feature to build a viral growth,
most of the Western world. You can email newsletter which in general converts piggybacking off Facebook and Twitter.
outsource some work at a cheaper cost, but better than social media.
only if you can control the quality.
Learn more about this in the next chapters.
$2000 - $2500 $3000 - $4000 $1000 - $3000

Game Center Rating System User Profiles In-App Purchases


! ! !
If you’re building a social app or would like
!
Charge users for additional features,
If you're developing a game and would like Does your app require a rating system. This
to register it with Apple's Game Center. This can help to validate your content and make to incorporate community aspects you downloads and services from within the
lets users play and share games with the experience moreinteractive Eg. star might want to allow users to create their app using In-App Purchases.
friends, track progress, use leaderboards ratings, thumbs up vs. thumbs down, own user profiles.
etc. comments, reviews etc.

$6000 - $8000 $6500 - $8500 $5000 - $8000 $3000 - $7000

Geo-Location Sync Data Across Devices Native iPad Support Custom Icon Design
!
Locate or collect data about the users
!
Allow users to sync data on all their devices
!
It's tempting to think that iPads are just big
!
A beautiful design makes your app stand
g e o g ra p h i c l o c at i o n t o m a ke t h e i r (iPhone, iPad, Mac) This means they can iPhones. While this can be true at a code out. Depending on the designer this can
experience more relevant to them and be conveniently access different data on other level it can be a mistake on a UI level. range anywhere up to $1500 if you decide
able to track their live whereabouts. platforms if you have already developed an Bigger screens require different layouts and to go with a pro.
interface for these too. UI needs to be changed to suit this.

$7000 - $9000 $7000 - $9000 +30% $1000 - $2000

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Web Apps
Web apps are not real applications; they are really websites that, in many ways, look and feel like native applications. But they are not implemented as such. They are run by a browser.
Users first access them as they would access any web page: they navigate to a special URL and then have the option of “installing” them on their home screen by creating a bookmark to
that page. In many ways, web apps can be a good choice over native if you are trying to cut costs.
For example, in 2011 Financial Times withdrew their native app from Apple’s App Store to circumvent subscription fees and maintain closer connection with their subscribers. Instead of the
native app, they came out with an iPhone web app (app.ft.com). Their web app is, in a lot of ways, hard to distinguish from a native app. For instance, there are no visible browser buttons or
bars, even though it runs in Safari (when accessed from an iPhone). Users can swipe horizontally to move on to new sections of the app. And, due to browser caching, it’s even possible to
read the newspaper offline.

Web App vs. Native

App Features Cost Visibility User Experience


!
While Web technology is catching up
! !
App discovery is a huge problem right now.
!
Native Apps deliver faster & smoother apps.
This is the big one. Costs are affected by
quickly, it still lags behind Native Apps, two factors:  How many platforms and form If visibility in the search engines is an The native mobile app will provide a mobile
when it comes to mobile. HTML5 now gives factors you decide to support: iOS, increasingly important part of your strategy centric experience for your existing and
you access to the Accelerometer, GPS and Android, Blackberry, Windows, Tizen, to grow your business, then a web app is most loyal customers, while your responsive
even the Compass, but basics like Camera Tablets, Phablets AND the programming critical in helping grow traffic to your website can help provide an optimized
access are missing from Safari on iOS. talent and work required to support those. website. A mobile app lives in a closed experience to new and old visitors
Features we take for granted like custom Developers familiar with web technologies environment and cannot be indexed by the browsing your website or discovering it for
keyboards are also not available. are more abundant, easier and cheaper to search engines, which requires driving the very first time.
hire than experienced Native developers. traffic to this app through alternate
Here is a list of what is supported on
methods.
various browsers.

When it comes to deciding whether to build a native app or a web app, the most appropriate choice really depends on your end goals.
 Average Cost of Web App
If you are developing an interactive game, an app is probably going to be your best option. But if your goal is to offer a mobile-friendly
solution to the widest possible audience then a web app is probably the way to go. In some cases you may decide you need both a mobile
website and a mobile app, but it’s pretty safe to say that it rarely makes sense to build an app without already having a mobile web app in
!
In general web apps are cheaper. Most
place. companies offer to build them up to 40%
cheaper than mobile apps, including most
features.

$100,000 - $200,000

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Who To Hire?
Hourly rates for software developers can vary quite a bit. From $300/day for a freelance developer, up to $1000/day for a well-established development company with a large portfolio.
However, price is not always a reliable indicator of quality. Paying someone inexperienced but cheaper may prove to be expensive in the end, the work may take longer and potentially
lower quality may damage your ability to make money. Hiring a more expensive development shop with a complete team may appear a more secure choice, however there many
companies who will simply over-charge you or won’t care too much if you’re a small start-up client.

Offshore Teams Freelancer Technical Co-Founder Dev Shop


!
If you are tight on budget you can hire an
!
In general this is a very broad category, you
!
If you have a friend who is a developer and
!
A developer shop will provide you with a
offshore team in countries such as India, can hire a freelancer, a student or get a you both decide to found a startup, team - that’s not just a couple of developers
Russia or South America. The average wage friend on board to help you out. congrats! You just created an ideal team. If but a much bigger team that makes
there is cheaper and freelancer platforms you don’t, be prepared to go the extra mile. everything operate.
For students, expect them to work much
make it easy to find the relevant people.
slower than a shop, and remember it’s best Firstly, developers get these offers all the In addition to developers, a team will
The price will be cheap, however the eye to search for teams that have a designer time and there is much disrespect in places almost always include one or more
for design will be very different than and a developer - both skills are very like Silicon Valley, NY or London towards so designers and a product manager. The
something coming out of New York or San different: design is creative and called “idea guys” (“Hey, I have a billion stereotype is that designers and product
Francisco and the code can range anywhere development analytical. dollar idea for Facebook killer, if you do all managers are easier to find, but when it
from OK to horrific. the work I can give you 10%”) comes to high-quality talent, finding good
Local freelancers will cost you more. For
people on the creative side can be just as
Good developers are not a commodity and example, if you hire a front-end developer Ideas in the modern startup world literally
difficult.
the demand is high. If you go down this and a back-end developer both working 40 mean sh*t. Youtube started as a dating site,
route make sure you have someone on the hours a week, and a designer working 20 Paypal as a security company and Flickr as a A dev shop has the advantage of having a
team that can assess the work of your hours a week, all at $50-100 per hour, the gaming company - it’s the execution that set process in place and they tend to have a
offshore firm. They can be best utilized in total 1 week of work will end up between matters. Expecting someone to believe that lot of experience. Search for one with a
combination with an in-house team who can $5000 - $10,000. On average, expect 10+ merely your fantasy will make them a billion great portfolio composed of more than just
manage the quality well, otherwise you're weeks. d o l l a r s c a n b e p e rc e i v e d a s a b i t simple apps. Also if you’re a startup, make
taking a high risk hiring someone who will disrespectful, especially if all you’ve done to sure they have worked with startups before,
A tech-savvy friend may do this kind of
just take advantage of you. date is nothing except think up the “idea”. as hiring someone who only works for big
work for cheap or even for free. However, it
old (and easy to rip off) companies can turn
You also run the risk of problems such as might be incredibly difficult to find However, you have a good chance if you
expensive.
getting a bug 3 months later (all software someone willing to ignore the tens of prove you can execute (or you have an
gets bugs) and your developers may be too thousands of dollars they could be making extensive history in execution). So build Expect to pay $100-$200k, with $50k being
busy with new clients. for a single app working for someone else. mockups, talk to investors, interview the low end, all the way up to $300-$500k
customers etc. This and equal equity stake for top industry names. The mid-range of
This is a good option to roll out an MVP, Note: if you are unfamiliar with the process
will get you potential co-founders. $100-150k is a reasonable number for
raise funds and then rewrite from scratch. of programming, you may have a difficult
something great.
time properly assessing the quality of a
developer.
!
$10,000 - $40,000 $50,000 - $100,000 Equity $150,000 - $250,000+

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How To Hire?
Developer Developer Shop
!
Use Your Personal Network
!
The Company
If you've never worked with someone, it can be difficult to examine how reliable, competent Is it a real company or a bunch individuals and freelancers working together? Another good
and professional they are. While you may not know the developer yourself, you can always starting point, is to find out whether they have either won awards or received press in tech-
ask for referrals and find out about quality people from your friends. related news sites or blogs.
Consult Programmer Friends The Team
If you have programmer friends (or you've found someone in your network who can help) You are looking for a complete team with an impressive background. Aside from
ask them to provide a qualified opinion and help you hire the right person. That is, let them developers, expect product managers, UX designers, creative direction, quality testing etc.
review the candidate’s portfolio, background and quality of code. If you can, bring them into
Assess Their Portfolio
the interview and let them ask questions.
How many smartphone apps have they developed that are actually shipping in the app
Look at Their Portfolio stores? How many of their apps have reached the #1 spot, received industry award
Any decent programmer should have at least a basic portfolio of past work. Look at their recognition, or reached over 1M downloads? Do they have experience with complex apps
Github account, see if they are active on StackOverflow and whether they are a good or have they mostly worked only simple projects. Do they have experience with startups?
problem solver and communicator. Review their blogs and ask for referrals from past clients.
Check Client References
Do They Like Programming? Look for developers who will readily extend client contact information so that you can get
You may come across a CS grad, who got into this industry because of his/her parents and real feedback on their company.
isn’t really into it (with an “it pays the bills” attitude). Someone who loves programming will
Be Clear About the Scope of Your Project
have a number of their own hobby projects to show. They might be participating in open
In general you should start with a clearly defined minimum feature set and have done some
source projects and have their own blogs. Look for creators, not just the ones who did the
sort of non-tech validation (mockups, market research, customer interviews.) Have a clear
courses and got the grades.
vision of what you need to build, so you can resist the temptation to increase the scope.
Find Someone You Can Get Along With
UX/UI Design
A decent programmer you get along with, is much better than a brilliant programmer you
A good dev shop must also have great UX design skills. When looking at their portfolio,
can’t stand. The decent programmer can always learn through experience and research,
keep an eye out for beautiful looking apps with excellent user interfaces. 60% of your
whereas the brilliant programmer probably can’t change his personality enough to suit
application is about how a user interacts with it.
working with you.
Testing and Quality Assurance
Ask For Sample Code
Do they do test-driven development? Who does QA (quality assurance)? Have they included
It may not entirely show the skill but it will definitely filter out the worst candidates and in
QA in the estimate? Do their app developers test on actual devices? Which devices? How
some cases you may get an idea of how they approach problem solving. A simple Fizz Buzz
many? Which OS versions and languages?
test should be a decent starting point. According to Jeff Atwood, founder of developer
community StackOverflow, this should take a couple of minutes to solve. He says you would The Final Deliverable
be surprised “that the majority of CS graduates can’t do it”. He also states he experienced What is the deliverable? Is source code included? Who owns it?
many self-proclaimed senior programmers who would take more than 10-15 minutes to Get a Fixed Price
write a solution. Every dev shop will resist you on this, saying the product scope will change. But, it’s the only
way to make sure you don’t end up using your whole budget.

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Which OS To Start With?
iOS Android Windows, BlackBerry etc.
!
Today, the vast majority of startups develop for iOS first, the
!
Android is growing fast. Today over 80% of the market share
!
Windows and BlackBerry command the least of the
key reason is revenue: out of $27 bn in app revenues across belongs to Android. Unlike Apple who maintain a singular marketshare, both in size and revenues. However some
all platforms, Apple accounts for $18 bn. Most startups work approach, Android is licensed to most hardware positive developments have taken place recently.
under a tight budget - the development, design, and manufacturers. This allows a huge market reach, but causes
Contrary to popular belief, the Windows Phone ecosystem
marketing required in a roll out is expensive. the headache of fragmentation - as the app should suit
is very much alive and growing. Powerful cloud integrations
many different screen sizes and Android versions.
In the USA and the EU, it’s not unusual for an iPhone with some other Microsoft products, such as Office,
developer to charge well over $100/hour to do contract iOS The cost of development is comparable to iOS. Most OneDrive, XBox and Windows are fueling the growth.
development, but realistically the hourly range is anywhere developers range between $50/hour to $250/hour,
BlackBerry on the other hand provides access to some of
from $50/hour to $250/hour, with experience and name depending on skill and location.
the wealthiest user demographics. Many businessmen,
recognition usually setting the price.
While iOS leads in terms of revenues, the average Android financiers and investment bankers still use BlackBerry.
With thousands of apps submitted to iTunes weekly, most revenue is growing relatively fast. Aside from market size
Both platforms are trying hard to attract developers, it's
startups need to validate fast. And if there is an investor on and positive revenue growth, publishing an app on Google
quite possible you may get some sort of financial help if you
board, the pressure can multiply. So revenue counts. Play is easy. Google Play also provides a robust search
go with one of them first. For example BlackBerry offers
capability, making it easier for users to discover your app.
iOS is most popular in the western world, where Apple $10,000 in guaranteed app income for certified BlackBerry
commands the majority of the affluent market share. If your app is for masses or your target markets are Asia, 10 apps and Microsoft is literally paying developers to build
South America or Eastern Europe, Android might be a good Windows apps.
first choice.

Pros Pros Pros


Higher Revenue & Retention Rate: Over 5x the revenue per Huge Market: If you’re building the next WhatsApp Small Market: Smaller market means less competition.
download than Android. iOS users are also more loyal Android is perfect to start on. Having a user-base of over 1 Windows also offers high revenue per download.
delivering higher lifetime value of the customer (LTV) billion is reason enough on its own.
Financial Support: Both BlackBerry and Windows offer
financial support to attract developers.

Cons Cons Cons


Lack of Customization and Strict Policies: Apple holds a Fragmentation: Android phones come in all shapes, sizes Well, Small Market: It can be an advantage, but depending
high degree of control over the marketplace, this can be and OS versions. This can be a bit of a nightmare. on your need for a user-base it most likely won’t.
quite frustrating to some developers.
Device Quality: A multitude of devices are constantly Uncertain Future: It’s difficult to predict if RIM/Microsoft will
coming out, and most manufacturers don’t have a high succeed in the app marketplace battle. Currently they are
reputation when it comes to reliably releasing good both losing.
products.

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Design
“You've baked a really lovely cake, but then you've used dog sh*t for frosting.”
Steve Jobs
Cost of Design

For years the importance of great design in software development was underestimated and misunderstood. However, this started to change and with the astonishing success of Apple,
good design started to gain the prominence it deserves. After all, design is how users interact with apps, and what makes them buy and stay. With millions of apps, user experience is often
a core ingredient of the difference between highly successful and mediocre apps.
Steve Jobs sums it up perfectly: “Most people make the mistake of thinking design is what it looks like. People think it’s this veneer — that the designers are handed this box and told, ‘Make it
look good!’ That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.”

What Kind of Design?

Visual Design UX Design Icon, Logo Design Copywriting


!
One hallmark of good design is having a
!
“Does this website give me value? Is it easy
!
Icon design is a craft that requires an
!
The best user experiences have copy that
strong visual appearance. to use? Is it pleasant to use?” These are the incredible amount of skills. It ’s no excites and compels, making the user feel
questions that run through the minds of coincidence that the best and most popular comfortable and secure about the design.
As Dieter Rams outlines in his legendary
visitors as they interact with products, and a p p s f re q u e n t l y h a v e s t r i k i n g a n d
principles of good design: The aesthetic Copywriting skills include identifying the
they form the basis of their decisions on memorable icons. It might seem like just a
quality of a product is integral to its style of voice and tone that matches the
whether to become regular users. User colorful tile, but a good icon is a critical
usefulness because products we use every organization's brand, creating persuasive
experience design is all about striving to piece of an app's design that has a huge
day affect our person and our well-being. copy that motivates users to explore the
make them answer “Yes” to all of those effect on how people think about and
But only well-executed objects can be d e s i g n , a n d c l ea r l y s t at i n g b e n e fi t
questions. interact with what's inside. Moreover it
beautiful. statements, to help the user understand the
helps your app stand out on the AppStore.
UX Designers study the behaviour of users value of using the new capabilities and
Visual design skills include page layout,
and use the data to build engaging and functions.
form design, color selection etc.
habit forming experiences.

$5000+ $5000 - $20,000 $1000 - $2500 $500 - $1500

These are rates for an initial prototype provided you hire a pro. The rates can vary from $50/hour on the lower end and up to $250/hour for a senior UX designer.
Most dev shops will have their own designers and the work will be included in the price. If you’re building a team from scratch, the pricing may differ depending on the scope of work. 

The UX design is an ongoing affair. You should never stop learning about your users' behaviour and always keep improving it. It takes numerous iterations to get close to perfection.

Your visual brand and icon design is work that only needs to be redone once every 1-2 years.

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Who And Where To Hire?

If you have no background in design, hiring a designer can be a daunting and frustrating process. You can review portfolios, interview candidates, and persuade a designer that your team
is worth joining. But before all that, there’s a fundamental question you need to answer: What kind of designer are you looking for?

What is More Important, UX or Visual Design?

Luckily, it’s common to find UX designers who are good at both visual design (how it looks) and UX design (how it works). Both skill sets are required to build great products, and both are
core to how customers understand and perceive the product. In general you should:

Focus on visual design if your product: Focus on UX design if your product:


• Must be more delightful than competitors (e.g., games) • Has many features but needs to feel simple
• Needs to appear credible, well built, and high quality (e.g., finance) • Supports complex tasks and flows and is used every day
• Creates a space people aspire to be a part of (e.g., communities) • Is mobile-based (and can lean on a mobile platform’s visual style)

Core UX Designer Competencies (No one will master all, but look for relevance)
Core Skills Research, Information Architecture (content structure principles), Interaction Design, Interface Design, Product Design

Business Skills Project Management, Time Management, Basic Copywriting

Technical Skills Understanding of Programming Principles, GUI Development Principles, Tools and Techniques, Knowledge of New Tech

Usability Skills Knowledge of Usability Testing Principles, Basic Cognitive Psychology Knowledge

Communication Skills Persuasive Writing, Visual Communication, Public Speaking and Presenting

Personal and Interpersonal Interviewing, Mediation, Team Work, Passion, Empathy, Analytical Thinking

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Startup Costs
“Writing code? That’s the easy part. Getting your application in the hands of users, now
that’s the hard stuff.” Jeff Atwood (StackOverflow)
Marketing
As you can see, costs for building an app can climb up. But coding the app is only one part of the execution - without traction, the app is just a statistic. According to latest stats, the cost to
acquire a loyal user, or one that opens an app three times, grew from $1.30 in 2012 to $1.62 in 2013, with the latest numbers from the end of last year at around $1.80. That is for users
who only open an app at least 3 times. Add an average retention rate of only 4% over 12 months for most apps, and you may end up with costs anywhere from $20 - $40 per user.
Spending on marketing too soon is also a number 1 reason why startups fail, according to a Startup Genome report. It is therefore important you set aside a budget to test various tactics in
order to find which is the most profitable, instead of setting the bar high and overspending too soon.

Why Marketing Matters? How To Market Your App?


!
Start Before Development
While marketing is important, even a huge budget can prove to be inefficient. The best
59% of apps don’t even make enough money to break even on their startups are almost $0 marketing machines. Groupon, Instagram, WhatsApp, AirBnB all have
59% development costs a growth mechanism built in their product. For example Instagram’s growth can be
attributed to cross-posting, Groupon’s to social buying, a Craig’s list cross posting hack of
early AirBnB etc. Think about how you can make your product social by design, but most
importantly, put extra time into designing a great user experience.

12% 12% of “Top Earners” earn $50,000+ in revenue from the App Store Start Small
For example, if you're going to use Google Adwords, you should plan on segmenting a
budget of $1,000 into a few smaller tests. Once you figure out what works (this could take
months) you can then put together a more structured budget as you understand potential
results.
52% of app developers/startups have set aside $0 for marketing,
$0 despite 91% believing marketing is important A good idea might be to start with a reasonable monthly budget of $250 - $1000 and slowly
expand to a $1000 - $10,000 range.
Test, Refine, Repeat
Don’t expect to have all the data and costs ready when you start. Nobody knows. Instead run
small tests, learn from them and modify your hypotheses for the next round of tests. You will
$30k “Top Earners” have a marketing budget of at least $30,000 on average
get closer to an ideal strategy with every iteration.
Do It Yourself
Don’t hire a marketing agency, at least not too soon, and certainly avoid PR firms like a
plague. As a founder you need to interact with the market and learn from customers
52% of app developers/startups dedicate less than 5% of their time to
5% marketing
yourself.
Work on Retention
With most startups failing in this field (95% of apps get deleted after only user once), you
should work on maximizing your on-boarding and retention strategy to drive your marketing
costs. There’s a whole science behind building habit forming user experiences and pleasing
14% “Top Earners” dedicate as much as 14% of their total time to marketing users to the point that they will never want to leave.

May, 2012

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Startup Costs
Launching Servers & Backend Support Customer Service Office
! ! ! !
A fee of $99 is required to launch an If your app relies on a web server to The best online sites also have the best You can start from home or a bedroom,
app in the App Store and $25 for store your users' data then you should customer service. In fact, customer alternatively you may already have an
Google Play. expect to pay around $200/month for service may help you grow faster than a office you can use. You may have to
server support and maintenance. sleek design or adword marketing. accommodate a growing team too.

This cost can severely increase if you In early days, founders should serve the The problem with working from home
are storing large amounts of files such customers to learn about issues and is that the environment has tendencies
as photos and especially videos. how users use the app etc. to make us less focused. Great options
are co-working spaces, where you can
Later you will need some sort of
be around startups and just hire a desk
ticketing system like Zendesk and an
at a fair cost.
employee (can be remote work).

$25 / $99 $500 - $1000+ / month $500+ $500 - $1000

Accounting + Incorporation Development Miscellaneous


! ! !
If you are a business then you should Yes, this doesn’t stop. There are bugs to You might need: equipment, HTML
be taxed. An incorporation of a limited fix, improvements to make and so on. newsletter design, business cards,
liability company can be done online tickets to attend meetups and
You may find a co-founder or keep
for less than $500. conferences, travel budgets to pitch
working with with whoever you started
investors and see clients etc.
You can hire a remote accountant at a your work with. Expect this to cost
similar cost, who will review your anywhere between $5000 to $10,000 if You can always bootstrap and you
papers a couple of times a year. Or you your app is also a core of your shouldn’t overspend here - a beautiful
can simply use free accounting business/startup. business card does not make or break
software like wave. a business.

$500-$1000 $50,000 - $100,000 $5000 - $10,000

15.
Putting It All Together
“The three great essentials to achieve anything worthwhile are, first, hard work; second,
stick-to-itiveness; third, common sense.” Thomas Edison
Case Studies
Twitter Instagram WhatsApp
!
Henrik Werdelin, who helped build companies like
! !
“Instagram is slightly more complicated to build than Twitter "Real-time communication support can be more difficult
Tradable, Barkbox, FancyHands, Basno and Path, says because you need a wider range of skills to handle image- than other apps that provide e-commerce or news,”
recreating Twitter isn’t necessarily difficult, but the layered filtering for iOS and heavy backend image loads. However, according to Ryan Matzner, the Director of Strategy at
features will take time to get right. It can take 10 hours in a you could still build an Instagram-like product Fueled, a mobile development company based in New York
$160 Ruby on Rails course plus free Heroku. inexpensively, in the $100,000 to $300,000 range over a and London.
Still, a product is nothing without scalability. “You can’t just three-to-six-month period,” says Werdelin.
To put out an MVP of WhatsApp with basic functionality
build a product today, you need to build a venture. And that something that verifies phone numbers, perhaps with a
involves processes, structures, feedback loops, analytics and Twilio integration — and includes a payment management
a community.” Therefore, if you want to bring an MVP to system would cost about $120,000. Follow that up with
market, Werdelin approximates that you’ll need $50,000 to a n o t h e r $ 1 2 0 , 0 0 0 ro u n d f o r d e s i g n , a d d i t i o n a l
$250,000, depending on the skill sets of the developers and development and branding. And then another $25,000 to
designers you hire. fix the remaining bugs and add stability.

$50,000 to $250,000 $100,000 to $300,000 $256,000

Über Shopify iOS


! ! !
According to DJ Saul of iStrategy Labs, a DC-based digital
According to Artem Fishman a VP of Engineering at Huge, a According to Sam Mathews, the founder of product studio
full-service digital agency on its early rounds, a minimum Neverbland, to build a replica of the e-commerce platform agency, he’d want a 20-person team working more than one
viable product for Uber cost about $1 to $1.5 million to Shopify, it would cost between $250,000 and $300,000 with year to deploy Angry Birds and at an average salary of
develop. highly-skilled designers, developers and product people. $110,000 for a total budget of $2.2 million plus overhead.

It becomes increasingly difficult when you’re trying to scale These costs don’t take into account the many relevant “First, you have to take into account the time to develop a
your business from an engineering perspective while systems within Shopify’s business such as maintaining its brand identity including the logo, color palette and
focusing on market penetration. API, the infrastructure and server space needed to support typography,” says Saul. “There’s the ever-important UX, both
its 50,000+ shops and designing and developing all of the for the app itself and especially for the game. You need
beautiful templates that help make Shopify so successful. experienced game designers and engineers who can
develop cross platform. Then factor in building for Android
and you have a multiplying effect on costs!”

$1,000,000+ $250,000 to $300,000 $2,200,000

TNW: How much does it cost to build the world’s hottest startups?

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Game Plan
Truthfully, you couldn’t rebuild Twitter, Instagram or Facebook today for a billion dollars. But you could potentially spend a few million on an exact replica that no one will ever use. As an
aspiring entrepreneur you want to build something remarkable, captivating and new; something with better features, different features or fewer features. That’s what the next Jack Dorsey,
David Karp, Kevin Systrom and Mark Zuckerberg would do.
It’s also important to note that neither of the above founders have started with millions of users, they have built an MVP, proved it with a few hundred and slowly scaled, fueling the further
development requirements by rounds of financing. If you’re a startup, it is therefore sensible to break the process into 3 phases:

Private Alpha Public Beta Full Release

Your initial test with 100 people Finding a Product/Market Fit Scale

$50,000 - $100,000 $100,000 - $150,000 $150,000 - $250,000

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Putting It All Together

If you’re beginning a serious startup, you will likely want to raise money too. To estimate funds required you need to prepare a cash-flow forecast, to show what your expectations are and
provide a benchmark for both yourself and your investors. In general your development expenses will be high early on and slowly decrease over time, while marketing, support etc. will
start on the lower end and slowly grow higher. The revenue estimate depends on what the size of your market is. Here is an expenses example for a bootstrapped app:

Month 1 2 3 4 5 6 7 8 9 10 11 12 Total

EXPENSES

Development $40,000 $40,000 $40,000 $40,000 $10,000 $10,000 $10,000 $10,000 $15,000 $15,000 $15,000 $15,000 $260,000

Design $5,000 $5,000 $5,000 $5,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $28,000

Marketing $1,000 $1,000 $2,000 $2,000 $3,000 $3,000 $4,000 $4,000 $5,000 $5,000 $6,000 $6,000 $42,000

Office + Misc. $500 $500 $500 $500 $1,000 $1,000 $1,000 $1,000 $1,500 $1,500 $1,500 $1,500 $12,000

Support $0 $0 $250 $250 $500 $500 $500 $500 $1,000 $1,000 $1,000 $1,000 $6,500

TOTAL $46,500 $46,500 $47,750 $47,750 $15,500 $15,500 $16,500 $16,500 $23.500 $23.500 $24,500 $24.500 $348,500

Your 12 month running costs

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For more information about this whitepaper contact Appster

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References

Cost of App Development Which OS?


Socialhunt: Types of Mobile Apps n4bb.com: 5 Reasons To Develop For BlackBerry
! PluralSight: Why You Should Develop Windows Phone Apps
VentureBeat: Why Developers Should Build On iOS Before Heading To Android
Cost of App Development p.2
Mediabistro: How Much Does It Cost To Make An iPhone App TechCocktail: iOS vs. Android: App Development and Consumer Experience Comparison

IdeaToAppster: How Much Does It Cost To Make An App !


BlueCloudSolutions: How Much Does It Cost To Develop An App Cost of Design
! SmashingMag: What Is User Experience Design? Overview, Tools And Resources
UIE: Assessing Your Team's UX Skills
Cost of Features
Otreva: App Cost Calculator !
PickCrew: How Much To Make An App How to Hire Designers?
IdeaToAppster: How Much Does It Cost To Make An App FastCoDesign: From Google Ventures: How To Hire The Best Designer For Your Team
KatanaCode: How Much to Develop An iPhone App UX Matters: Essential and Desirable Skills for a UX Designer
! !
Web Apps Marketing
Nielsen Norman Group: Mobile: Native Apps, Web Apps, and Hybrid Apps TechCrunch: App Marketing Cost Hit Record High
iTexico: Web App vs. Native App, should you go native? App Promo: The Necessity ofMobile AppMarketing
! Fundable: How Much Should I Budget For Startup Marketing?
!
Who to Hire?
Fueled: How Much Does It Cost To Develop An App Startup Costs
Quora: How Much Does It Cost To Make An App FastCompany: True Costs of Launching an App
! !
How to Hire? Case Studies
CodingHorror: How To Hire Programmers TNW: How much does it cost to build the world’s hottest startups?
Forbes: How To Hire Programmer, If You Don't Know How To Code
oDesk: Hire App Developer
CodingHorror: Why Can't Programmers Program
Entrepreneur: 7 Steps to Hiring the Perfect Mobile App Developer
Arctouch: Developers For Hire
Forbes: Building Your Vision: What to Consider Before Hiring a Dev Shop

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Appster is the fastest growing web & mobile app development company in Australia serving clients internationally from Australia to North
America and Europe. Our focus is on business ROI first, whilst delivering outstanding functionality and design. This is why we’ve had dozens of
top 100 apps, developed multi-million dollar startups and worked with everyone from BRW Young rich members, to Billion dollar company
founders. We develop apps using the SCRUM framework, leading to an AGILE and LEAN development experience. We specialise in working
with disruptive ‘game changer’ ideas and large enterprises looking to innovate their business models with mobile-first technology.

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