Hidden costs of building an App
Ever since the garage and basement success stories have become famous — be it Google, Facebook, Uber, WhatsApp, AirBNB and numerous others — everyone aspires to build the next mobile app or software product that will become next Uber.
I bet if you are reading this, you already have an idea to build new app and become successful entrepreneur. And I can also tell you that if the idea is pursued and executed well then it has good chance of becoming successful as well.
We get often calls from aspiring tech-entrepreneurs about building new apps or new products. Being in a software development firm, we see trends in common thinking and misconceptions that buyers have about app development. Here I would like to list down what are some hidden costs that people are unaware of.
- App (Product) can be built in 6-months: This is the most common misconception that anything can be built in 6-months. To buyer, 6-months sounds like a lot of time that you can build another Google or Facebook app. Go to — https://www.goodfirms.co/resources/mobile-app-development-cost- and see for yourself what people are literally thinking of building in this timeline. This is also being estimated by companies who have 4+ star rating on Goodfirms.
- App (Product) can be built in 10–20 K USD budget: This is another big misconception that this budget can get you app built and set you on a path to success. You can again visit the same site — https://www.goodfirms.co/resources/mobile-app-development-cost — and see average budget to build apps like Tinder in 40K, WhatsApp in 60–70K and Uber less than 100K. That sounds so wonderful; but think yourself if a flagship product of a company that targets market capital of 1B can be built in less than 100K.
- Mobile App is like a website: It is so unfortunate that market has driven the value of mobile app to be like a website. What a website was in 2000–2010 is what Mobile App is now in 2020. Principally and from end user point of view I agree; but technically the costs of building and maintaining mobile apps are much higher than it is for website. Though availability of new tools will make this cheaper — but it will not benefit the product developers. It may benefit businesses who want to build something for use and throw purpose.
- Single Developer can build the App (Product): This is just like assuming that a handyman can build your house. Sure he can — but would you want to leave in it — rather - when you are building Hotel, would you hire the handyman? There are contractors/consultants — who will agree and charge to build anything by themselves. While I can’t doubt anyone’s capability; everyone has strengths and weaknesses and this should be considered.
Costs you assume:
These are the common costs that buyers are normally aware of:
- Development Costs — fees paid to programmers to do their magic
- Publishing Costs — Apple or Android fees to publish the mobile app
Costs you may have researched about:
These are the costs that buyers do not know yet but understand that they could occur:
- UI/UX design — a professional graphics designer needs to design the app/product interface
- Hosting — Product needs back-end database and API. It needs to be hosted somewhere — and in 2020 — it is cloud.
- Maintenance — ongoing bug fixing and keeping the product up and running needs technical team.
Hidden Costs that you may not have thought about
Now here is list of many other items that one needs to take care of before your product can be launched.
- Product Name — Domain Reservation & Social Media registration — this can be as little as 20$/year if your domain is already available. Otherwise you may have to spend Thousands or Millions via domain auction. Try looking for your name at https://knowem.com before you spend too much money on marketing.
- Logo Design — You want to do this before you start building product. You can get away with fiverr for cheaper logos or go to professionals and spends 100s. Do not spend 1000s on this unless you have a venture backing.
- Website/Landing Page — Design/Development/Hosting — This is also must if you are serious for your app. For low costs, go with wordpress.com or wix.com and make sure you have blog on it.
- Email Hosting — For the product domain name or for your business, you definitely need to host emails. GoDaddy offers via Office 365 and Google also offers with gmail. A serious investor should never contact development companies and other vendors via free e-mail accounts. It comes off like bit unprofessional.
- Legal Costs — Now, this may get bit scary. If you are building a product, you want to own rights to your Intellectual Property. You also want mutual non-confidentiality agreement with your vendors. If you are DIY (Do It Yourself) then look up legalzoom.com, otherwise find a lawyer via visiting few chamber of commerce meetings in your local city.
During the development, the software development house may throw some costs at you that you were not aware of before starting.
- Cloud Hosting Costs — Some of the development houses will ask you to pay for hosting services before they start the development.
- 3rd party license costs — Your app may require third party services like Google Maps integration or Twilio Text messaging service and so on. Some of these cost good money too.
- Device costs — If your product idea requires special hardware or special devices like Beacon, IoT, Medical devices then developers will ask to procure these hardware as well.
Many of above costs will not be recurring costs and they will convert into post-development costs. Though watch out for development house to disable all services they were using during development, otherwise your auto-pay for cloud services will keep paying.
This is the step when you are ready to go live. That means you need users to use the app. Do not distance yourself from development team. You need them until you are sure that you are either too successful or its a total failure. 😿
- Digital Marketing — This is big topic but your users need to see your product and try it out. You need to reach them.
- Explainer Videos — Create videos to post online how to use your app or product.
- Finding Pilot Users — this is the toughest part and varies from product to product.
- this list does not end here…
As you can see there are many costs (not just money, but time) to make a product and put it in user’s hand. Development costs are just fraction of it. So if you have 100K budget and you keep 50K for development that is understandable. But do not spend 100% of your budget on development only. There are many products that are built and eating dust somewhere in the cloud. Because they never reached the end user...