The first step to creating your mobile app production budget is to define and quantify the mobile app development costs. As with any other product, these costs can be divided into two categories: fixed costs and variable costs. Fixed costs almost never change over a given time period and are the same no matter how much or how little product development is done. The cost of leasing office space for the period of mobile app development or purchasing the MacBooks you’ll use for development are two examples of fixed costs.
Variable costs vary with the workload. In development, an important variable expense is the cost of the outside app developer, which can vary from $70 to as much as $300 an hour and depends on the complexity of your project. You can hire or contract with a developer and subsequently discover that your great new tech monkey doesn’t actually have the skills, qualifications, or experience needed to complete the job the way you expected. Or it happens that the developer makes a mistake planning the project, and it takes 250 hours of work rather than the projected 200 hours. This is why it’s reasonable to inflate your calculated mobile app development costs by 20 percent, especially if you hire outside developers. It is not a big difference, but if you find you have to increase expenditures, it won’t be an unpleasant surprise and you’ll already have the budget approval.
The table below summarizes all the potential material and non-material costs that you will need in order to develop an app. Material costs include things like rent, developer’s fees, education, and equipment. Non-monetary costs include your own time, the risk of failure, and “opportunity cost” (lost time that could have been used to develop other mobile apps or pursue other projects). Estimating these costs is challenging, but some attempt is better than none.
|Mobile App Development Component||Monetary Costs||Non-monetary Costs|
|Equipment (Mac, PC, servers, networks)||± $3,000 (Macbooks and accessories)|
|Software (applications for development and testing, etc.)|
|Registration for Apple developers||$99 or $299|
|Independently developed mobile apps, rates for the contract (per project or hourly rates)||250 hours x $50/hour = $2,500 (lost opportunity)|
|Education/programming courses||$450 with Xcelme or other courses||8 weeks (3 hours a day) x $50/hour = $1,200|
|Office space||None — home office|
|A website with product description||$2,000|
|Alternative costs of developing other mobile apps||No apps were projected|
|Other (printing, mailing, domain registration, books on app development, etc.)||$250|
Calculate the most realistic numbers you can for each column. Undoubtedly, it’s challenging to be absolutely accurate, but having real figures in front of you is priceless. I included some of the costs that you may incur in the table, but you should fill it out with your own figures, depending on your circumstances and the specifics of your project.
As you can see, spending $7,000 is very likely for your first mobile app – although, if you already have the right equipment, you can spend $3,000 less. If you’re new to mobile app development and you’re going to make an app yourself, online programming courses can vary from $97 per class to $500 for the entire course.
If you conduct a deeper analysis of your non-monetary expenses, the total could increase to as much as $20,000. You should ask yourself the following question: will the profits from this mobile app repay all your expenditures, including your time, effort, production costs, app publishing, and marketing? Sure, you can pay $1,000 to a freelance app developer for an app sketch, but this is unlikely to bring you the success you envision.
Now that we’ve dug into some details of mobile app development costs, what do you think? Got any ideas?