How much does it cost to build an MVP? - A Detailed Discussion

1. Reduces Business Risk

It is obvious that the level of commitment required to develop an MVP will be significantly less than that of developing a fully-fledged application. This saves both the time and resources of your company.

2. You Enter the Market Quickly

Imagine you’re competing with a bunch of companies to introduce a new product into the market. Instead of decorating your product in its most in-demand hours, strike the iron when it’s hot. Call it the early bird benefits or the first mover’s advantage - the bang for the buck is real.

3. Get the Customer’s Feedback During Development

Post-MVP phase is the perfect time to listen to the user’s opinion on how they feel about the product. As the product lacks the core functionality pre-MVP stage which would inevitably confuse the users. And it is too late to make any changes once the final product is completed.

4. Is Cost Effective

Last but definitely not least, MVP app development wouldn’t cost an arm and a leg to your business. It is a safer approach towards spending your business’ resources. The thrill of taking risks can wait till your next Vegas trip. (;

(a) Proof of Concept

A PoC defines the necessary concepts and technologies to get the investors’ attention by clearing out the “can this idea work?” concerns. However, it does not have enough functionality to be launched in front of its intended audience.

(b) Prototype

These take things a step further, with a prototype, you’ve got a working model to showcase in front of your users. It contains the primary user flows which provide the users with an initial feel for the product/software being developed. However, it is more or less just a UI model without any practical implementation.

(c) Minimum Viable Product

This is the first fully operational iteration of the product since the start of the project cycle. It has the complete operational flow and the core functionalities that the product will be based around. Additionally, the fact that it is not a final product works in your favor. As you get to capitalize on your users’ feedback and develop a solution accordingly.

(a) Complexity of the Project

The scope and complexity of an MVP is the primary factor that decides its development cost, as factors like the number of features, the layers in the application, and the overall functionality significantly impact the time and effort required during the development process. Typically the complexity of the MVPs is classified into three categories, much like the classification of the final product itself. Let’s discuss them briefly -

1. Simple MVPs: These models typically work around extremely straightforward functionalities, with a handful of features, and a minimalistic UI. The MVP development cost in this scenario is the cheapest, with some common examples being - task management tools, calculators, or weather apps.
2. Intermediate MVPs: These solutions have a relatively complex architecture compared to the previously discussed MVP. These intermediate models have a high number of functionalities with the involvement of some external APIs as well, stacking up the complexity levels. Examples include - social media platforms, ecommerce platforms with external payment APIs, team collaboration tools, etc.
3. Advanced MVPs: These products are built around complicated use cases that require sophisticated functionality along with advanced decision-making capabilities. Meaning they take a higher level of time and effort to be developed. Advanced MVPs include products that require real-time analysis that update the users almost instantaneously about a certain situation. For example - ride-booking apps, last-minute delivery applications, or enterprise applications. 

(b) Cross-Platform Compatibility

The trick while dealing with the compatibility factor across different platforms is to strike a balance between the performance and cost-effectiveness of the project. There are a couple of ways in which the application design affects the MVP development cost - 

1. Hybrid Applications: If you’re on a limited budget and you cannot afford to develop MVPs optimized for every single platform separately, then the hybrid approach is going to be your savior. However, you need to keep in mind that you cannot include platform-specific features and functionalities in this application format, meaning, it will follow a general user interface. Which might not be that appealing to some users.
2. Native Applications: These applications are individually built for every single platform that your product will be used on. Meaning developers can add platform-specific features to these solutions and make the user experience extra engaging. However, these applications need separate code bases which means a single MVP might not be enough for these applications. And more MVPs obviously mean more bucks.  

The bottom line remains that, if you have the budget, or, if you are planning to target users from a specific platform, you should go for native application-based MVPs. Alternatively, if your products need to cater to users from all the platforms but you don't have the funding to make optimized solutions for each platform, then, hybrid applications-focused MVPs should be a no-brainer.

(c) Payment Method

The agreed mode of payment has a significant impact on the overall cost of the MVP development process as well. There are two primary modes of payment, let’s discuss them one by one to get a broader perspective on the concept -

1. Hourly Payments: In this method, the service providers are paid in accordance with the number of hours they spend developing your project every day/week. A major flaw in this approach is the fact that for a business with a non-technical background, it will be really difficult to understand whether the time required to finish a certain milestone is justified or not. The development team can easily come up with an excuse to justify the inflated hours on a specific task and there wouldn’t be any cross argument from the client’s side.

2. Fixed Pricing: In-case of the fixed price model, the cost of the entire project is predetermined after a thorough discussion of the complete project scope. So the risk of inflated hours and slacking during work gets eliminated. In fact, it works to the client's advantage, as the service providers are receiving the same amount no matter how long they spend on the project, they would be determined to finish the project as efficiently as possible to maximize their profits.

(d) Location of Service Providers

When you are outsourcing a team of developers it is very important to keep in mind which part of the world they belong to, because this will reflect in the quality of the overall MVP development process. Confused about how’s that gonna work out? Let’s discuss this concept in a jiffy. There are mainly two classifications of service providers based on their geographic location - 

1. Onshore Service Providers: these service providers belong to the same country as yours, meaning they share the same time zone & geographic area. However, since they belong to the same country and are experts in their respective development skills, it is quite expected of them to charge exceptionally high amounts for their services.

2. Offshore Service Providers: typically belong to a part of the world with highly qualified developers but with lower labor costs, making it a perfect hub for your software development needs. The time zones may vary, but offshore developers have adapted to this work culture and are promptly available during the client’s working hours.

“But what was all that discussion about the quality of the final product?”. Think of it this way - consider that you hired two service providers one from your country and another from an offshore country with lower labor costs. Now you paid both of them the same amount of money for developing identical projects. The offshore service provider will automatically prioritize your project more than your onshore service provider, as it is a high-value project from their perspective. This means, even though you are paying the same amount to both parties you will receive a significantly better quality of service from the offshore service providers.

1. Marketing & Promotion

Have you ever noticed how tech companies tease their upcoming products months before they are released? In several cases this starts right after the proof of concept is approved, businesses do this to build anticipation among the users and to analyze the market's initial opinion. But for now, let’s just plan the marketing and promotion after the MVP development is over. Because, let’s be honest, if your company isn’t a household name like Apple & Tesla, it’s better to have a product ready for the users so that they can try it out right then and there.

The best way to let the intended users know about your product without skyrocketing the expenses post the MVP app development boils down to two methods - 

1. Inbound Marketing: The idea here is to produce relevant and informative content wrapped around the MVP in order to attract the right users. It is a highly dependable process as the people approaching via this route are mostly interested in the product you are offering.
2. Outbound Marketing: This is a different approach from the one previously discussed. Here you actively reach out to the people who can be a potential customer for your product. The conversion rates in this case is lower as you cannot be sure about whether the users are looking for a product to begin with or not. However, the outreach in this method is significantly higher. PS: you have to be conscious while using this method because it is very easy to overcommit in the wrong direction here.

2. Maintenance

One of the biggest mistakes businesses make post the MVP development process is to ignore the maintenance and improvement opportunities of the product. It is important to keep your application flawless & up-to-date in order to attract new users and retain the existing ones. It is hard to predict the exact cost of maintaining an MVP as it depends on several factors including - complexity, future scalability scope, external integrations and other factors.

3. Further Development

Knowing that MVP is just the first operational model of your entire project, it is important to factor in the follow up expenses on top of the initial MVP development cost. It will be difficult to give users an exact number on how much the development of an MVP will cost when compared to the entire software. However, considering the fact that an MVP has the core functionality and the basic features under control, we can expect the MVP to cost anywhere between 30-40% of the entire project development cost.

(a) Facebook

The MVP called ‘TheFacebook’ which was launched all the way back in 2004 by Mark Zuckerberg and some of his college buddies was nowhere close to the way it looks today. The initial model had only a small percentage of the features that Facebook has today, and was supposed to serve only to the users with a Harvard University email. But with the rapid growth in the number of organic users the application was quickly accessible to everyone who was interested to sign up. From then Facebook has been constantly optimizing its functionality and features to reach its current position, and they are continuously working towards improving the UI to provide the users with a better experience.

(b) Uber

In 2009, two friends Travis Kalanick and Garrett Camp took their “black car ride” concept and launched an iPhone exclusive MVP application called “UberCab”. Uber is a classic example of a minimum viable product app that gained popularity without any fancy features, all it did was take a genuine issue and built a viable solution for it. It initially had just the core features of establishing a line of contact between the cab driver and the customer, along with a credit card based payment method. It quickly became popular with the number of downloads reaching new heights everyday, this allowed them to take their services which were initially available only in San Francisco to a global scale. 

(c) Twitter

In 2006, the board members of Odeo along with Jack Dorsey decided to launch an MVP that allowed an individual to communicate to a small group of people via an SMS service. For the first 6 months, the application was named as ‘twttr.com' due to several reasons, which they later changed to ‘twitter.com’. The MVP development process was initially focused on serving the users within Odeo but was quickly made available to users outside the company. What started from the first official tweet that was published on the application by Dorsey himself, saying - "just setting up my twttr", has now reached an average of 450 million active monthly users.

(d) Instagram

Instagram is the perfect example of an MVP model that found its way to success by prioritizing the user needs. The initial MVP that was launched in 2010 known as “Burbn” was an application that allowed users to check into places kinda like what Foursquare was already offering back then. Initially, Burbn struggled to gain the interest of the masses because some of their features were “too complicated” for the user base, however, their image sharing option was an absolute hit. So, the founders decided to focus on that single feature and dropped down all the other complicated functionalities. They even renamed the application to “Instagram”, and the rest is history. Instagram now has approximately 1.2 billion active users all over the world!