How Much Does It Cost To Build An MVP?
Content:
  • 1. 📱 A Few Words About the MVP Concept Itself
  • 2. 📊 What Do MVP Costs Depend On?
  • 3. 💸 How Much It Costs to Build an MVP: Estimate Examples
  • 4. 💡 Takeaways
  • If you try to google “MVP development costs” and read a few articles on this topic you’ll eventually be even more confused than before doing your little research.

    For example, you may stumble upon such fabulous insights as:

    • MVP costs may start from as low as $500. Spoiler: impossible.
    • MVP software costs may be as high as $1.5 million. Spoiler: if it costs $1.5 million, it’s likely not an MVP. Unless you’re building a spaceship to Mars.
    • A Prototype is a type of an MVP. Spoiler: it’s absolutely different concepts.

    Of course, everything is possible in this world. We can remember the story when the U.S. Transportation Security Administration paid $1.4 million for a randomizer app. In fact, such an app can be created by an average developer in just 10 minutes. So should we write that “randomizer app development can cost as high as $1.4 million”? It turns out that it can. But it will cost hundreds of times cheaper under normal circumstances.

    money-return
    Don't overpay for what can be done cheaper (image by Justas Galaburda)

    Therefore, in this article, we’ll provide you with realistic insights on how much it costs to build an MVP. Spoiler: these are $15,000-$50,000 on average.

    However, before we break down the costs and what affects them, let’s spend a minute to recall what the MVP is and is not.

    Note: if you’re already a walking encyclopedia of Minimum Viable Products, jump right to the MVP costs part.



    📱 A Few Words About the MVP Concept Itself

    The MVP concept was introduced by Frank Robinson in 2001. However, it became widely popular thanks to Eric Ries and Steve Blank.

    An MVP (a.k.a. Minimum Viable Product) is a version of your Product that has a minimum necessary set of features to solve the initial problem, satisfy early customers and collect feedback from them for further development.

    MVP development has a few noticeable advantages over other approaches to product development. What are they?

    Reasons to start with an MVP
    1. Test Your Concept. You never can tell for sure if your idea is a hero or a zero without giving it to your end-users and collecting their feedback. An MVP gives a distinct answer whether you’ve correctly chosen a problem and a solution to it.
    2. Collect Feedback. Using the MVP model you can further develop your product based not on your theories and assumptions but on direct feedback from your end-users.
    3. Don’t Waste Resources. An MVP should be as simple as it’s possible to solve the problem for early users (the part of your audience that has the most obvious need to deal with this issue). Thus, you don’t spend time and money on building a product that no one needs.
    4. Reduced Time to Market. Since it takes less time to build and launch an MVP, Startups can get their advantage in reaching the market faster than their competitors.
    5. Raise Funding. A functional MVP is much more than a bare idea. A viable product (even if it’s minimum) can be sold to end-users, presented to investors during pitches or used for crowdfunding activities.
    Read Also 7 Reasons Why You Need an MVP for Your Startup

    The concept itself is also the answer to why MVP software costs almost for sure will be neither $500 nor $1,000,000. Five hundred is usually not enough to build a working MVP that matches UI/UX requirements, users’ expectations and can efficiently solve the problem. And $1 million is usually too much for a Product that should have only core features.

    Also, as we’ve mentioned at the very beginning of the article, sometimes the MVP concept is confused with a PoC (Proof-of-Concept) or a Prototype. However, these are 3 different concepts that describe separate stages of the product development:

    ⚙️ PoC 🎨 Prototype 📱 MVP
    A small project to prove that your idea is implementable from the technical perspective. It also helps to pick the best tech stack for the development. Yet, the PoC isn’t publicly released or shown to end-users. A visual clickable model of your product that includes main user flows. It’s tested among your target users to see how they interact with your product and collect their feedback. However, it’s just a UI prototype so it doesn’t actually solve the problem. A minimum viable version of your Product that is actually released and working. It does solve the problem of your audience and is also used to collect feedback for further development.

    As you can see, among these 3 concepts only an MVP is a fully-functional version of your Product that can be released. A PoC and a Prototype are used at the Pre-Release stage to test your Product from technical and UI/UX perspectives.

    You can read our deeper PoC vs Prototype vs MVP comparison by checking the link below!

    Read Also PoC vs MVP vs Prototype: When to Use Each

    Yet, this article is about MVP software costs so let’s get back to our initial topic.



    📊 What Do MVP Costs Depend On?

    Every team or expert will give you different estimates when it comes to MVP development costs. Even if you describe your project the same way, up to the letter. This happens because MVP software costs depend on a range of variable factors. The most important of them are:

    • Scope of work
    • Type of team
    • Hourly rate
    • Type of contract

    Let’s take a closer look at them!



    Scope of work 💼

    The most obvious and substantial factor that affects costs to create an MVP is the scope of work. In other words, what features and functionality you’d like to see in your mobile or web application.

    Except for a number of features, developers may also take into account сomplexity of implementation or need to use a specific technology, framework, etc.

    scope-of-work
    The scope of work may include not only feature development but also other product building activities (image by catalyst)

    The scope of work may also include other tasks that don’t relate to the coding process itself but are part of other stages in product development. For example, it may be wireframing, prototyping and other activities that are usually performed during the Project Discovery stage.

    Read Also Project Discovery: What is it and Why Do You Need it?

    How is feature development (or any other activities) estimated?

    1. Developers estimate how much time it’s going to take (in hours).
    2. This time is multiplied by their hourly rate.
    3. Bingo! You have your estimate of how much it costs to build an MVP.
    Read Also How to Estimate Software Development Time Accurately?



    Type of Team: In-House vs Outsourced 👩‍💻

    The 2 main options to choose from are in-house development and outsourcing.

    In-house development is all about having your own full-time team that is located in your office and directly managed by you. Moreover, you hire them not for a specific project but for your company in general. This puts you in “employer-employee” rather than a “client-contractor” relationship. It usually comes together with additional expenses.

    team
    Make sure you pick the right team (image by Farhan Fauzan)

    Outsourcing is usually a cheaper option since you hire an already settled team from abroad. Moreover, you also save time on building such a team from scratch on your own.

    For Startups that are built around a Mobile or Web app and depend a lot on it, having an own In-House team is essential. However, outsourcing is quite a good interim solution for MVP development while you’re creating your In-House team. For this process, you may even outsource a CTO!

    Read Also Why, How & When to Outsource a CTO?

    So let’s see how the type of your team can affect how much it costs to build an MVP:

    🏠 In-house team expenses 🌎 Outsourced team expenses
    Salary

    Taxes

    Paid leave and sick leave

    Office rent

    Insurance

    Tech equipment

    Cost of third-party services needed for development
    Hourly rate of your team

    Cost of third-party services needed for development

    What about freelancers? We haven’t mentioned them because they also fall under the same category as remote teams. Thus, the factors that define MVP costs when working with a freelancer are his/her hourly rate and expenses related to third-party services.

    Read Also Full-time Developer vs Freelancer vs Software Development Company

    We’ve been talking a lot about the hourly rate which is a key in defining how much it costs to build an MVP with an outsourced team or freelancer. However, the hourly rate is highly variable and may go from $15 to $150 per hour or even more. Why? Let’s find out!



    Hourly Rate 🕰

    The main advantage of the hourly rate is that you only pay for what you get. But what makes the rates so different? The question has 2 answers - location and experience/expertise.

    🌍 Location

    It may seem a bit weird but hourly rates depend even more on the location of developers rather than on their experience or other factors. Why? Because $20 in Canada, Ukraine and the Philippines is a different sum of money in terms of your purchasing power.

    So a developer from Ukraine with a $40/hour rate can feel pretty confident since his monthly salary is going to be about 7.5 times higher than a minimum monthly salary within the country. At the same time, his colleague from California will be just $200 above the minimum monthly salary and to have a 7.5 times difference his hourly rate should be at least $50/hour (which is plus almost $6,900 to your monthly expenses).

    dev-rates
    Average hourly rates in different countries (image by EasternPeak)

    To put it short and simple, working with an American developer for 1 month may cost as much as working with a Ukrainian developer for over half a year.

    Average hourly rates for different regions look like this:

    • North America - $100-$180
    • South America - $30-$50
    • Western Europe - $110-$200
    • Eastern Europe - $25-$50
    • Africa - $20-$40
    • Australia - $100-$180
    • Asia - $15-$40



    🧠 Experience & Expertise

    These factors will also define the hourly rate of your offshore team. Based on their experience, developers can be divided into 3 big groups:

    • Junior (0-1 years of experience).
    • Middle (1-3+ years of experience) - the best option in terms of a quality-cost ratio.
    • Senior (5+ years of experience).

    The rate may also go up a bit if you need specific expertise.



    Type of Contract 📑

    Finally, the type of contract with your remote team also may affect your MVP costs.

    Most likely that cooperation with your remote team will be based on Time & Materials Contract. What does it mean? It means that you pay only the actual cost of the work, measured in hours. Such a model has its own advantages:

    • First, it makes your project development more flexible since it’s possible to agree on any changes even after development has started.
    • Second, it actually keeps MVP software costs as low as possible. You pay only for what has been done and relying on a previously agreed hourly rate.
    contract
    Type of contract can affect your overall MVP development costs (image by Kemal Sanli)

    An alternative option is a Fixed Price Contract. As you may guess from its name, this contract type is based on rigid MVP costs that agreed beforehand and can’t be changed later. Thus, the parties should also agree on an exact scope of work and each other’s responsibilities. This makes any further adjustments difficult to implement.

    Moreover, such contracts often include a 15-40% buffer that presupposes some risks. In practice, it means that you’ll probably overpay.

    Read Also Time and Materials vs Fixed Price Contracts



    💸 How Much It Costs to Build an MVP: Estimate Examples

    As we’ve said at the very beginning of the article, the average cost to develop an MVP is $15,000-$50,000. To make these calculations we reviewed the costs of already finished projects by the Stormotion team and our estimates. To turn hours into $ we took an average rate for professional dev agencies from Eastern Europe which is ~$40/hour.

    For our other articles, we’ve also prepared estimates for the FrontEnd part of mobile apps. Also, these estimates were made for MVP Projects that are supposed to be built with React Native, a framework for mobile cross-platform app development.

    Take a look:

    Click on the type of app to check related articles.

    Front-End Part of MVPs Estimated in Hours
    Using React Native
    📱 App Type ⏳ Approximate Hours 💵Approximate costs
    🧘‍♀️ Yoga app like Asana Rebel 442-544 $17,680-$21,760
    🚴‍♂️ Workout Streaming App like Peloton 658-846 $26,320-$33,840
    🛒 Marketplace Mobile app 770-978 $30,800-$39,120
    🗺 Travel app 644-796 $25,760-$31,840
    🚘 Car Insurance App 356-448 $14,240-$17,920
    🎶 Social Music Video App like TikTok 600-752 $24,000-$30,080
    🥦 Diet/Nutrition App 470-580 $18,800-$23,200
    🧹 App for Cleaning Business 384-502 $15,360-$20,080
    🚙 Car Rental App like Hertz 456-552 $18,240-$22,080
    👨‍🍳 Cooking/Recipe app 360 $14,400
    🏅 Loyalty App 560 $22,400
    🌤 Weather App 131-158 $5240- $6320
    🏃‍♂️ Fitness app Like Fitbit 790 $31,600
    🏠 Real Estate App like Zillow 648 $25,920
    🧘‍♂️ Meditation App Like Headspace or Calm 490-688 $19,600-$27,520
    🎉 Mobile App for Event or Conference 435 $17,400
    💳 Bitcoin Wallet App 560 $22,400


    💡 Takeaways

    As you could see, an MVP for your Startup or Business project is likely going to cost between $15,000 and $50,000, closer to $30,000. Of course, the MVP costs may also be either higher or lower, depending on the scope of work, team and contract type, etc.

    In our opinion, the optimal model to start with is: cooperation with an outsourced software agency from Eastern Europe (due to its optimal price-quality ratio) based on Time & Materials Contract.

    Need a more accurate estimate of your MVP? Drop us a line and we’ll prepare one particularly for your project!

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