How Much Does It Cost To Build An MVP: MVP Costs Explained
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 cost may start at as low as $500. Spoiler: impossible.
- MVP software costs may be as high as $1.5 million. Spoiler: if a minimum viable product costs $1.5 million, it’s likely not an MVP, unless you’re building a spaceship to Mars.
- A Prototype is a type of MVP. Spoiler: it’s two absolutely different concepts.
Of course, everything is possible in this world. We can look back at 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. However, it will cost hundreds of times cheaper under more “normal circumstances.”
Therefore, in this article, we’ll provide you with realistic insights on how much it costs to build an MVP. Despite it's usually considered a "first version" of the app, an MVP pricing is not that different from a usual mobile app cost. Spoiler: they are between $15,000-$50,000 on average.
However, before we break down the MVP development cost and what affects it, let’s spend a minute to recall what a Minimum Viable Product 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 Product 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 user feedback for further development.
The concept is often referred to as the first version of your Web or Mobile App. And it's true since usually you don't move to the next software development stage until you prove your idea.
MVPs can be used by both a Startup and a Business — the type of company doesn't play a big role here.
MVP development has a few noticeable advantages over other approaches to product development. What are they?
- Test Your Concept. You can never tell for sure if your idea is a hero or a zero without giving it to your potential end-users and collecting their feedback. The response you get to an MVP can give you a distinct answer whether you’ve correctly chosen a problem and a solution to it.
- Collect Feedback. Using the MVP model, you can further develop your product based not just on your theories and assumptions, but also on direct feedback from your end-users.
- Don’t Waste Resources. An MVP should be as simple as 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 won’t have to spend time and money on creating a product that no one will need or want.
- Reduced Time to Market. Since it takes less time to build and launch an MVP, a Startup or a Company can get its advantage by reaching the market faster than its competitors.
- 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. Thus, a good MVP can even expand your budget, not cut it.
The concept itself is also why MVP software costs will be (almost for sure) 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. $1 million is usually too much for a Product that should only have 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 process:
|⚙️ PoC||🎨 Prototype||📱 MVP|
|A small project to prove that your idea can be implemented from the technical perspective. It also helps to pick the best tech stack for the development. However, 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, so you can 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, out of these 3 concepts, only an MVP is a fully-functional version of your actual Product that can be released. A PoC and a Prototype are used at the Pre-Release stage to test your Product from the technical and UI/UX perspectives.
You can read our deeper PoC vs Prototype vs MVP comparison by clicking on the link below!
However, this article is about the cost of MVP, so let’s get back to our initial topic.
📊 What Does the MVP Cost 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, the estimates will still be different. This happens because MVP software costs depend on a range of variable factors. The most important of them include:
- The scope of design and development tasks
- Needed technology stack
- Type of development team
- Hourly payment rate of your development company
- Type of contract
Let’s take a closer look at them!
Scope of work 💼
One of the most substantial factors that affect MVP costs 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 the сomplexity of implementation or rge need to use a specific technology, framework, etc, into account.
The workload may also include other tasks that don’t relate to the coding process itself but are part of other stages of product development. For example, that may include wireframing, prototyping and other activities that are usually performed during the Project Discovery stage.
How is feature development (or any other activity) estimated?
- Developers estimate how much time it’s going to take (in hours).
- This time is multiplied by their payment rate per hour.
- Bingo! You have your estimate of how much it will cost to create an MVP.
Type of Development Team: In-House vs Outsourced 👩💻
The 2 main options you can 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, the whole idea is that you don’t just hire them for specific projects but for your company in general. This puts you in “employer-employee” rather than a “client-contractor” relationship; however, that usually comes together with additional expenses.
Outsourcing is usually a cheaper option since you hire an already settled team from abroad. Moreover, you also save time by not having to build such a team from scratch on your own.
For a Startup that is built around a Mobile or Web app and depends a lot on it, having an own In-House team may be essential. However, outsourcing is quite a good interim solution for MVP development while you’re creating your In-House team. For this kind of process, you may even consider outsourcing 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|
Paid leave and sick leave
Cost of third-party services needed for the development
|Hourly rate of your team
Cost of third-party services needed for the 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 freelancers are their hourly rate and expenses related to third-party services.
So far, we’ve talked a lot about the hourly rate which is key to defining how much it costs to build an MVP with an outsourced team or freelancer. However, the hourly rate is highly variable and can go from anywhere around $15 per hour to $150 per hour or even more. Why? Let’s find out!
The Hourly Rate 🕰
The main advantage of this approach is that you only pay for what you get. However, what makes the rates so different? The question has 2 answers - location and experience/expertise.
It may seem a bit weird but hourly rates depend even more on the location of the developers you choose 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 their monthly salary is going to be about 7.5 times higher than the minimum monthly salary within the country. At the same time, their colleague from California will be just $200 above the minimum monthly salary. For them to have a salary difference of 7.5 times, their hourly rate would have to be at least $50/hour (which would be an additional $6,900 to your monthly expenses). But normally, the rate would be higher.
To put it short and simply, working with an American developer for 1 month may cost the same 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
Thus, you may not always consider developers from your country only. In some cases, it may be more reasonable to find an overseas development company to deal with your project and deliver a successful MVP for a lower price.
🧠 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 year 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. Of course, that's not a fixed division as every company may have its own system to define the experience of developers.
Type of Contract 📑
Finally, the type of contract with your remote team also may affect your MVP cost.
It's like likely that cooperation with your remote team will be based on a a Time & Materials Contract. What does that mean? It means that you only pay 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 the development has started. For example, if you want to add or remove some features, change the technology stack, or make any other changes to your project.
- Second, it actually keeps MVP software costs as low as possible. You only pay for what has been done and rely on a previously agreed hourly rate.
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 were agreed upon beforehand and can’t be changed later. Thus, both parties should also agree on an exact scope of work and each other’s responsibilities. This makes any further changes or adjustments difficult to implement.
It may seem that this approach helps to cut the MVP price, protect the budget from any unforeseen changes, and make the mobile app development more predictable. While it's true for some cases, such contracts often include a 15-40% buffer that presupposes some risks. In practice, it means that you’ll probably overpay, hitting the higher project price than expected.
💸 How Much Does an MVP Cost: Estimate Examples
As we said at the very beginning of the article, the average costs of MVP development lie around $15,000-$50,000. To make these calculations, we reviewed the costs of already finished projects by the Stormotion team, as well as our general estimates. To turn hours into $, we took the average rate for professional dev agencies from Eastern Europe which is ~$40/hour.
For our other articles, we also prepared estimates for the FrontEnd part of mobile applications — an approximate price of an app. 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.
|📱 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|
As you could see, an MVP for your Startup or Business is likely going to cost between $15,000 and $50,000 - probably somewhere around $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.
Whether you're a Startup or a Business, the MVP may help you test your idea first before implementing too many features or overextending your budget.
In our opinion, the most optimal model to start with is cooperation with an outsourced software agency from Eastern Europe (due to its optimal price-quality ratio) with a Time & Materials Contract. However, the choice is always up to you - noone know your specific case better than you.
Need a more accurate estimate of your MVP? Drop us a line and we’ll prepare one particularly for your project!