How does the price of an app or software come about?

Factors affecting working hours

To start with, we briefly list the factors that affect the number of working hours:

• Preparation
• Structure of the software application
• Complexity of functionalities
• Complexity of design
• Testing

Other costs

• Implementation
• The chosen platforms
• ZZP'er vs larger software developer
• The developer's location
• Maintenance

Examples of development costs of well-known apps

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Preparation

During the preparatory phase, a schedule is drawn up with the development team. In addition, the app is further thought out, and functionalities are prioritised and estimated. This process will obviously take more hours as the complexity of the app increases.

Structure of the software application

Software communicates with APIs (application programming interfaces) in various ways. Think of iDeal and Google Maps, for example. The more of this type of interaction there is in an app, the more hours go into building it. Software that uses user management also needs support and maintenance. Changing a password or scanning a QR code requires the development of an administration panel, aka the backend. These are all structural elements that add to the cost of software.

Complexity of functionalities

The more features, the more expensive an app becomes. Logical, as more hours go into it. Do you have a limited budget? Then first list for yourself which functions are absolutely essential and consider eliminating (part of) the rest. Are you dealing with an ample budget? Then you can make the list of essential functions a bit longer, but again, try not to cram too many functions into one application. If you don't, you risk making your scope too big and running into higher costs. This also increases the chance that your project will fail.

Complexity of design

Again, the obvious: a complex design is going to cost you more money. Simply because more hours go into it. So if you want to keep the budget down, opt for a simple design. If you want detailed symbolism and animations, for example, you will have to dig deeper.

Testing

Software testing should be thorough. You don't want to launch a software that is full of bugs. You can only make one first impression, so you want to go through every aspect of your software several times. Should you find out too late that your app contains bugs, it could cost you a lot of extra time if you have to get it through the app store's approval process again. Also, be sure to have the app tested by beta users, and give them plenty of time to experience the app. Their feedback is very valuable!

Based on our experience, we have clarified the distribution of the budget. It is as follows:

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Implementation

The cost of installing an app for IOS is €99 per year, compared to €25 one-off for Android. If it is an app that will be used within your own organisation, an enterprise distribution licence still needs to be taken out. This costs around €299 per year. IOS is updated very regularly, so apps for this platform also need to be updated. Of course, this updating also involves additional development costs.

Chosen platforms and administration

Apps made specifically for one platform generally worked better than cross-platform or hybrid apps in the past. Nowadays, this need not be the case. At SevenLab, we work with NativeScript, among others, which makes this difference between platforms negligible. However, the costs are often higher for apps made specifically for a platform, also known as native apps. Keep in mind that developing an app for Android will generally take twice as much time as an app for IOS.

ZZP'er vs larger software developer

Choosing a ZZP'er may seem obvious at first as an app can often be made cheaper by a ZZP'er than by a software company. However, choosing a software developer has very many advantages over an app developed by a ZZP'er. We list the most important ones:

• With a software developer, you enter into a reliable and long-term relationship.
• You can count on service, something that is less obvious with a self-employed person. For instance, a software company is usually easily accessible and can also be visited on location. A ZZP'er will have little time left for you once he/she has moved on to the next job.
• Liability is better with a software developer, you will often be insured.
• The quality of the final product is often better when you work with a reputable software developer. This is because they work together in a team that keeps each other on their toes and because code quality scans are often used.
• Software companies use specialists. At SevenLab, for instance, they use a Scrum Master and a IT Accelerator. The Scrum Master facilitates and coaches the team. In doing so, he/she tries to resolve any blockages and is also the customer's point of contact for non-development problems. The IT Accelerator helps the Product Owner set guidelines for the backlog. He/she also helps prioritise and translate business requirements into technical solutions.

The developer's location

The hourly rate of a developer can vary enormously from one part of the world to another. For example, the hourly wage in India is around €25. In Europe, it is usually around €110 per hour. North America takes the crown with prices often exceeding €150 per hour. So getting an app developed in India can seem like a cheap choice. In practice, it often turns out differently. Poor communication often requires rework, increasing costs and the risk of failure. The advantage of having a developer close to home is that you can maintain direct and personal contact, allowing you to work faster and more efficiently.

Maintenance

Keep in mind that software maintenance can be 10% of the development cost on an annual basis. So if you have an app developed for €25,000, you will also spend around €2,500 per year on maintenance. The cost of hosting (keeping the software in the air) is between €75 and €250 per month.

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Examples of development costs of well-known apps

According to research by US-based Otreva (2019), it currently costs an average of €100,000 to develop an app. For that amount, however, you have a fairly comprehensive app. An MVP, Minimum Viable Product, is the minimal version of a fully functioning product. Such an MVP version starts at around €15,000. Once you put this in the market, you can verify the product and receive feedback on it. Are the functionalities as the target audience wants to see them and is the number of users growing fast enough? Based on questions like these, you can make adjustments and add functionalities.

Development costs of well-known apps:

• Buienalarm is an example of an app without too many features. The app fills a clear need: predicting rain at a specific time in a specific location. A first version of the app (MVP) cost between €10,000 and €20,000 to develop.
• Apps that use user authentication usually already cost a lot more. This is because these also involve additional functionalities, such as receiving push messages or inviting friends via email. An example of such an app is Google Drive, which cost around €200,000 to make.
• The first version of Instagram cost the company some €450,000. By the way, that was only for the IOS version. This is a lot of money, but considering the number of current users (one billion!) of Instagram, it was obviously well worth the investment.
• Whatsapp, like Instagram, has about one billion users. Whatsapp has managed to reach this gigantic number with an app that cost about €150,000. The company has cleverly capitalised on the demand for a cheap alternative for international communication. The investment in the app is easily justified by the current billions in sales.

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Hopefully, you now have a clearer idea of the cost of an app or software. Would you like to have software developed yourself or do you have any questions? Wondering what developing your app or software idea would cost? Then take contact on with Bas!