How much do I need to cover MVP costs and test my business idea?
Will it be $15,000? $50,000? $250,000?
A short answer: an average-complexity MVP is possible within 4 – 6 months or 950 – 2,500 working hours. Based on the average Central/Eastern European hourly rate ($50), MVP costs will range between $47,500 and $125,000.
You are good at what you do. And you love doing it. You enjoy your life.
But one day, you wake up and realize…
The right moment has arrived for you to decide—right now. No more delay!
You have an idea and want to bring it to fruition. You want to attract many clients and earn the money you deserve. You are completely energized!
You know all the inspiring stories about startups like Facebook, Uber, Instagram, etc.
They followed these recommendations to become successful:
- Reliable people proficient at implementing their ideas.
- Determined startup founders able to solve the most burning problems of prospective customers in their businesses.
- Saved a fortune at the beginning by keeping costs for MVP development low.
Follow their steps: the right partners, a solution to solve your customers’ pain points, and reliable people able to implement your ideas.
What Must You Decide before Calculating the Costs to Build an MVP?
Before we discuss the crucial steps to success, let’s answer these questions.
1. What is an MVP?
2. Why do you need to begin your startup with it?
The basic definition provided by Eric Ries, the author of Lean Startup, states the following:
“The minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
Therefore, MVP proves the saying: Start Small, Win Big in Business. MVP development gives an opportunity to:
- test ideas and users’ behavior before creating a full version of an application
- react quickly to unexpected changes based on user feedback
In our previous post, we discussed in detail the idea of MVP for startups.
Now let us focus on MVP price.
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How Much Does an MVP Cost? Comparing Freelancer vs. Company
MVP pricing varies significantly based on the following:
1. opting for a freelancer or a company
2. determining the scope of work necessary to complete MVP (design, features, API development)
3. choosing web or mobile app first
Being energized by possible success, you should carefully consider each aspect mentioned above. These aspects are crucial for your business and launching your MVP.
Comparing Freelancer vs. Company
There are many platforms where you can find inexpensive specialists. Consider these popular platforms, Upwork and Clutch. You can find either local freelancers or remote experts ready to build an MVP for you. They offer a wide range of skills and expertise.
Be wise in choosing. You can easily double-check proficiency by just giving some test tasks. The main advantage of using freelancers is that such specialists usually cost less. On average, freelance developers’ hourly rates range from $10 – $120 (Asia vs. North America) and increase.
Let’s consider Eastern Europe. It is in the middle range, between Asia and North America. For freelancers, the average Eastern European hourly rate will be $25.
The number of working hours also varies. Let’s assume that one month has 20 working days. Every workday has eight working hours.
Key development activities on an average MVP project require 4 – 6 months of extensive works on design, development, and testing. Let’s assume there is a simple project.
The approximate distribution of specialists’ efforts based on our experience will be the following:
Software developer – working full time and being responsible for both front and back end plus deployments;
UX designer – 100% full-time for one month (at least);
QA specialist – 50% part-time (during the entire project).
A software developer costs ~ $4,000 (mid-range hourly rate for freelancers in Eastern Europe, one month of full-time work). A UX designer costs ~$4,000. And a QA specialist to thoroughly test the app ~$2,000.
Thus, hiring a freelance team for one month costs approximately:
$4,000 + $4,000 + $2,000 = $10,000. For the further months, it will be ~ $6,000.
Multiply these costs by the time. Approximately costs of the entire project will start at ~$25,000.
Of course, the amount depends on whether you work with local freelancers or remotely (hourly rates might differ; the sum will vary). The scope will increase if the software requires a complex UX or logic.
You should also include the indirect costs of managing and coordinating your team.
The biggest disadvantage of working with freelancers is increased risk. If they get sick or go on vacation, it will be very difficult-to-almost impossible to find an immediate replacement for that person.
Commitment can become an issue soon. Freelancers remain individuals that are focused on their immediate tasks. Hence, they lack vision and team spirit. Freelancers might get bored with their current tasks or are snowed under by requests. They can stop answering the phone or replying to emails and texts. You have no way to reach them. So, if you decide to work with a freelancer, it is safer to work with a local one.
Are you considering MVP development with a company? MVP pricing greatly depends on whether you work with a local agency or nearshore/offshore outsourcing. Remember, if you choose wisely, along with the price, you get assurances that the development process is well established.
You can trust the team at that company. They have the skills, knowledge, and resources to meet and/or exceed your expectations.
There is no need to manage different individuals on your own. You have the whole team managed by a dedicated project manager, and you can count on this person to keep their promises. They also keep team spirit high. You get an MVP done properly and within the agreed time frame.
The company can better manage the balance and add experts on a project, e.g., add back-end and front-end developers instead of hiring a full-stack developer. In case a team member gets sick or quits, the service provider looks for a replacement.
The most popular and reliable IT resource is Clutch. Clutch reliably provides transparent information and checks every review clients leave about the companies that provide IT services.
Depending on the region, the hourly rate ranges from $100 – $250 per specialist (North America) or $45 – $55 (Central/Eastern Europe). Based on the teams spending the same 22 workdays, 8 working hours, the average estimates for MVP development using a local agency will be between $75,000 – $120,000. Average MVP costs using outsourcing MVP development services will be between $35,000 – $75,000.
Please note that the price and quality varies on both the chosen and amount of time you are ready to invest into team management. This is where nearshoring/offshoring provides a plausible balance.
What Aspects Affect the Price?
Launching an MVP is similar to pushing a car: going from zero to some movement is the hardest part. Even if it seems like a slight movement. Big goals are great, but not when starting out. Therefore, defining and prioritizing the actual scope of work for the first MVP launch is important.
For an MVP, a simple, good-looking design with some basic, key features to get user feedback keeps costs low. The price for the design part depends on the design’s complexity. Being attractive and elaborate doesn’t come cheap. Testing is also important to ensure the app runs smoothly. And, of course, the app needs to be deployed. To make this happen, project management and business analysis are integral parts of a successful MVP development.
Take online food delivery services as an example. How much does an MVP of a food delivery service cost?
Let’s consider the high-level requirements of a food delivery app.
Nowadays, a food delivery app is quite popular. As a rule, a food delivery business requires both iOS and Android native applications, plus a website.
The basic feature list looks like this:
Web or Mobile? What Comes First?
Choosing a target platform is a challenge for most startups. Web or mobile app… what should come first?
It depends on two things: budget range and desired feature list.
On the one hand, the total price is lower when you launch a website or a Web app. You do not need to choose between an iOS or Android app first. Also, evidence confirms that most of the traffic comes from mobile websites:
On the other hand, we all know that mobile apps are faster. Mobile app users can enjoy an offline mode if there is no Internet connection. Therefore, a mobile app can be your next step after your startup gets traction.
Thus, both mobile apps and web apps are equally good. The only limitation might be MVP development costs. When choosing mobile app development, you need to keep in mind that costs will be doubled compared to a Web-first approach to produce source code for both iOS and Android platforms.
Do You Need a Promotional Website?
Yes, you do. No excuses.
Start with a website. Announce your presence, and invest money in marketing to inform people about your product. In parallel, develop an app. Users will use the app only after they find information about you on your website or via other social media streams. They will not open your app if there is no info about you on the web. They want to make sure they will benefit from your offer.
What Steps Does MVP Development Include?
Below is a usual process for successful MVP development based on the same example of a food delivery app:
1. Discovery & Mapping: $3,600 – $4,400
The project manager discusses the project goals and requirements with you, the product owner. The project manager and business analyst suggest an implementation path. The team estimates how much the project will cost and supplies a detailed plan.
2. Design: $8,550 – $10,450
The dedicated UX/UI designer prepares wireframes that reflect the entire user path. Wireframes contain all essential visual elements, helping detect inconsistencies in UX.
The designer also provides a logo, color scheme, guidelines, and more—whatever you need. After you approve deliverables, the designer starts working on app screens.
3. Development: $29,250 – $37,750
The development team works on the source code of the future MVP. The team ensures that project requirements are respected. Depending on your goals, developers build a Web app, a native, or a cross-platform mobile app.
The team also works on the software back end, an API, and an administration panel when required.
4. Testing, stabilization, and software launch: $17,550 – $21,450
QA engineers test the source code. They send source code back for improvement if any bugs or flaws are discovered. After the source code has been tested, it is deployed and launched. The team publishes the app in the stores or makes the web app available for end users.
5. Project management: $4,410 – $ 5,390
Project management is a part of all ongoing processes, saving you time on team coordination. The project manager stays in constant touch with the product owner.
The project manager provides timely updates on the project status. They answer any related questions, consult on the risks and benefits of applied solutions, and more.
6. Post-launch guarantee period: free
After the MVP has been launched, the development team stays in touch with the product owner. Some flaws become visible only after actual users start using the app. The development team eliminates bugs in produced source code during the guarantee period.
7. Maintenance: $7,920 – $9,680
Project maintenance makes 10% – 15% of initial development costs annually. Product owners should not skip it when they want to provide a quality solution.
The maintenance team monitors software security, provides necessary server updates, optimizes the consumption of resources, and so on—everything needed for 24/7 software availability.
8. Scaling: depends on requirements
Scaling is an unpredictable project part. The scope of scaling work depends on user load and its growth rates.
Hence, the development team starts with a comprehensive audit of the system and product owner’s requirements. It decides on the scope of work on the audit’s results.
Please note that the number of hours is approximate. Hours might fluctuate based on exact requirements. Be prepared for flexible pricing.
Another important point: should startups apply for Agile software development? Yes, they should. Agile startup development allows to boost software development. Different team members can work at the same time. Startups see the results soon and can make changes if needed.
As a result of Agile development, the product owner can test the development team’s efforts after each iteration. Sustainable software development is possible.
How Much Does it Cost to Build an MVP? (Examples)
The old article by The Next Web is aimed at helping future startups figure out how to calculate MVP costs. For it, journalists interviewed top managers of several software development companies, incubators, and design agencies. In short, an MVP price for hot startups is high—$220,000 and upwards. Numbers skyrocket to seven-digit sums when a business initially targets many users. It seems to be expensive for startups with no support from big businesses.
Is there good news? Yes, there is. Software outsourcing helps substantially decrease MVP development costs.
Let’s take the same math to calculate how much MVP development would have cost startups if they had launched anew in 2023, opting for outsourcing software development.
Let’s consider MVPs of five popular products from different industries:
- DuoLingo – a popular e-learning solution focused on only two languages. It has a large feature list and a variety of exercises.
- Snapchat – this messenger allows users to send pictures and videos using funny AR filters. The content disappears after five seconds.
- Amazon – the tech giant was once an online bookstore that offered its customers a vast book selection and fast delivery.
- Spotify – the app started with the idea of letting users listen to music via online streaming. Users benefited from a vast library—all legally.
- Shopify – this platform was built because its founders lacked a packaged solution for their snowboard store. Two years later, they made their platform available for other businesses.
How to calculate MVP when you know the estimated number of hours? Multiply scope times the average hourly rate, as above.
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Top Five Tips to Cut Expenditures and Timeline
Many startups have a tight timeline and budget.
The faster and cheaper the startup presents its product to the market, the better.
The difference between the higher and lower ranges can be the dividing line where a startup succeeds or fails. Time and money saved can be reinvested in missing features or product pivots.
Below are five tips to help startups launch faster and for less.
1. Choose the basic design
Branded, distinctive design is possible in several iterations. It requires investments in a time of highly skilled professionals. This high-cost investment might not pay off. Instead, many startups opt for a basic design, ensuring they launch sooner. They can polish the design later when app users start paying for the service.
2. Launch using third-party modules
Developers integrate pre-prepared modules for required functionality instead of coding it from scratch. It ensures the same or higher source code quality in less time. For example, a Startup Booster Toolkit saves up on coding functionality every MVP contains.
Of note: using certain modules might add future costs, one-time or subscription payments.
3. Focus on core functionality
Simplicity is the only option to keep MVP price low and launch fast. An MVP contains only functionality needed for users to solve their one problem. Everything else can be added later.
How do you decide which functionality is important? Ask yourself this question: “If I throw away this feature, will people still buy from me?”
If the answer is no, save this functionality to the nice-to-have list and return to it later.
Not sure? Ask users this question.
4. Keep the number of users in mind
For many startups, back-end development was the point where MVP costs skyrocketed. Still, the back end can be simple when few users are expected. This way, startups do not pay for resources and source code they do not need to launch. Unless exponential growth is expected straight away, a startup can save substantially on back-end development and maintenance.
Therefore, startups must be realistic about their possible user base.
5. Choose an experienced outsourcing development team
An expert team can ask for a higher hourly rate compared to less experienced developers from the same location. But a team of skilled professionals can launch faster, with fewer working hours. Total expenditures are lower. No hidden costs and no false promises.
Be wise: do not accept the cheapest estimate even if the managers agree on all your conditions. The delivery timeline can be extended afterward once you have signed on the dotted line.
An experienced outsourcing team saves you both time and resources needed to interview, hire, and onboard in-house employees. Plus, an established, productive workflow shortens the delivery timeline.
Final Thoughts on MVP Costs
Make sure your product solves a problem your target audience faces.
You should create an MVP first to test user interest. When you make a preliminary analysis and consider what should be developed first, it will be easier to manage expenses and be successful with the first launch.
Again, how much does an MVP cost? MVP app costs vary from $25,000 for a team of freelancers who reside in a cost-effective location to $75,000 for a local agency. They can easily increase to $220,000 and more when the scope of work on back-end development is big. Costs surge happens when a startup expects a heavy user load. For example, when a large number of users will download, share, stream, or store audio or video content.
Startups can save on MVP development. This is possible by:
- focusing on the core functionality
- starting with a basic design
- using third-party modules
The development team makes a difference in a project. An experienced team helps startups launch fast, on time, and within budget.