Market research says it takes anywhere from $100k to $500k to build a custom business application. While costs can certainly hit the higher end of that mark and beyond, especially when you need to regularly evolve what you’ve created, you don’t need to spend half a million dollars to build something great. This post distills the real cost of building an application, what goes into it, and what you should expect based on your budget.
Your custom application design and development process should be treated like product creation.
Businesses of all types are being forced to face their digital presence and how their customers interact with them especially now that nearly half of these interactions happen via mobile. Many are attempting to design and build better tools for their users, but how much does it actually cost to build an application?
That’s a question we hear almost daily, for good reason. It’s not just startups that are concerned with this question, it’s also enterprise level and midmarket businesses. No matter which industry you’re in, you can now expect your organization to thrive or die based on the success of your digital strategy. It doesn’t matter how great the service or product, half the battle is in how frictionless the delivery to your customers. Most people know this to be true yet they don’t take the time to actually understand the problem.
People are often so concerned with getting their applications out in the real world right away that they want to roll up their sleeves and get the dirty work done in an instant. But that’s just not how equations are solved. The better, smarter, and more affordable route is to study the problem (solving for the thing you’re trying to build), leaning into the entire development process (including the inactive parts where you’re stuck in a room answering lots of questions), and eventually getting a great product for your budget and your effort.
Bottom line: If two organizations are pursuing the same software goal, the better researched company is going to have better software. Period.
Okay, got it, can we talk pricing now?
Let’s get straight to it. A simple Google search will retrieve a spectrum of costs with the average falling between $100,000 and $500,000. Some estimates exceed the $1M mark. This wide range is not only ambiguous, it relies on so many factors including how you build the application, who you work with to build it, and the number of features you plan to incorporate based on the scope of what you’re trying to accomplish. In our experience we’ve found that you can get a minimum viable product (MVP) or minimal viable experience (MVE) version of your application that addresses most customers’ core goals for an average of around $150,000.
While that’s still a big number, there are some truly valuable items you get before you even hit that amount. For one, by the time you reach the $50,000 mark you already have a blueprint, know what the application is going to look like, validated the business model with internal and end user research, and know what it’s going to take to get to market. It’s at this point that you really understand the problem you’re solving for and can make the decision as to the best way to move forward based on your budget and timeline. For enterprise level, it may already be time to think about high fidelity prototypes that can be used in marketing materials to test with prospective customers.
Bottom line: With a lean UX and agile development method you get a higher degree of success sooner with the software.
Quality vs. quantity
When you start thinking about the actual cost of creating an application, this age-old mantra couldn’t be more relevant. Can you create an application with dozens of features right off the bat? Absolutely. Is it a smart idea to do this without having put in the research, testing, and user validation required to discover the features that will be most effective for your users? Not at all.
While you don’t need to spend a fortune to create a quality application, you do need a realistic budget that aligns with your expectations. When you work with a design-led and research-driven organization you’ll already have an edge over your competitors. Everything that you create will be backed by real-world research including prototyping, user testing and validation, and meaningful analytics, along with other ROI calculations and KPIs that align to your business objectives. It’s these elements combined that eventually become the lifeblood of your application.
Bottom line: Determining which data points are meaningful and getting real-world feedback from both stakeholders and end users will help you build a quality application for all of your users rather than adding numerous features that only some users might find handy.
What your initial investment should include
Understanding what you’re getting for your budget is a big part of the equation, and there are important questions you’ll want to ask up front. The team that you hire to create your custom business application should work closely with you in the beginning through a series of discovery workshops where they’ll gain understanding and help define what it is you’re hoping to build. Members of this team should include designers, business analysts, information architects, solution architects, and software developers. These people will all work together in constant collaboration and communication to ensure that every aspect of the process is aligned with your overarching business goals.
Once your team has worked with you to nail down your idea, the research, strategy, roadmap, and planning phase really begins. Data points that include market research and user/stakeholder interviews, along with field studies, are compiled and referenced to create a customized map that guides the rest of the application development journey.
Bottom line: Your custom application design and development process should be treated like product creation. Your team should thoroughly understand you and your MVP.
Creating a piece of software to successfully meet the needs of both your business and your users, whether a native application, a web-based or mobile platform, requires approaching it as a product and not a project. This can be an expensive endeavor, but costs can be reduced by focusing on what’s necessary and investing your money in up-front design, research, and testing. Or to put it another way, it will stop you from wasting money building products that aren’t fully realized and your customers probably don’t want anyway.
While a six-figure budget is not a hard-and-fast number, it’s a good benchmark for most organizations to look at and decide whether they have the capacity and appetite to start designing and developing fully featured digital tools. It does cost money to move forward unless we’re just looking at minor issues like bug fixes. If our clients want to be done once they’ve reached the minimum viable product (MVP), that’s entirely up to them. But what we typically find is that most people want to continue the journey to optimize their application based on the research and experience they’ve gathered after it’s been out in the wild.