Small Planet

Blog Post

How much does it cost to make an app?

It depends, but making a good one usually takes real money.

Gavin Fraser

Gavin Fraser

Chief Executive Officer

One of the great things about managing business development at Small Planet is responding to the steady stream of inbounds from big companies, small companies, startups, and just regular folks who want to make apps. We get inquiries in all shapes and sizes, and end up having conversations with all sorts of interesting people with compelling ideas. It’s fun, and it keeps things fresh.

Over 94% (that’s a real number!) of these inbounds do not lead to projects, with us or anybody else, and the reason in most cases is pretty clear—making a good mobile application usually costs real money. Especially if the app is critical to the success of a brand, business model, campaign, or enterprise.

We’ve designed, built, and launched over 80 iOS and Android apps for clients in the last eight years. We’ve had 25 Category #1s on the App Store, across all types of applications. We’ve done work with many different types of clients, and across many different verticals, in service of all sorts of different business objectives. We have a body of knowledge and a track record of success—we’ve seen and done a lot in this space. That’s my way of saying that this discussion is informed by a ton of real world experience.

Well, good for you, but how much does it cost?

Even “simple” apps, and we hear that term used a lot, can quickly become six figure projects. Our typical client projects run well into the six figures—a $450K cross-platform (iOS/Android) application is not unusual at all, and that’s for the initial version-1.0 launch.  Apps that require the creation of backend systems to do things like manage user accounts and process payments, or require a CMS to  populate new content, may cost significantly more.

“Our typical client projects run well into the six figures—a $450K cross-platform application is not unusual at all, and that’s for the initial version-1.0 launch.”

Now, if you’re talking games, which we love to make, you’re talking about a whole new level—potentially many months of work and very significant budgets. According to a recent report from SuperData Research and Unity, the mobile games market generated over $40 billion in revenue in 2016, up 18% over 2015. Adding to the lure, a quality mobile game can be made for as little as $500,000, analysts say, although marketing costs are climbing. You heard right, “as little as” $500K.

There are always going to be smash hits out there that were made on a shoestring budget. But they’re usually games, and they’re definitely the rare exception. There isn’t a whole lot of relevance to the kinds of apps and businesses that our clients are trying to build.

How do you figure?

While no two mobile applications are the same, the good ones all benefit from a number of things done thoughtfully, whether they are being made for the consumer market or for the enterprise:

  • Strategy and Concepting
  • UX and Design
  • Development
  • Testing

It is not unusual for Strategy, Concepting, UX, and Design to take up just as much time as Development, even for clients that have a clear vision of what they want. For many pieces of work it is the concepting, experience design, and interface design that require the most time and energy. So while many folks are out there looking for a “developer” for their app, I think that language often sells short a major piece of the work at hand.

“I’m looking for a strategy, design, and development partner” would be more accurate.

In 2016 our average client project lasted 26 weeks from kickoff through version 1.0 submission to the App Store and Google Play. The mobile applications we made during the year were for a diverse set of clients and spanned all sorts of categories: Internet of Things, real estate, entertainment, commerce, lifestyle, health and fitness, games and more. No two projects were alike, but on average it took 26 weeks for that first iOS and Android version of the app to get done.

Most every project we did was cross-platform, which in our world means mobile apps delivered for both iOS and Android.  Sometimes we leverage tools like Unity and code once, and sometimes we code natively for each platform – that decision is influenced by a number of factors and does influence project cost.

For typical projects projects at Small Planet, a team usually looks like this:

  • Producer (project planning, project management, client and team communications)
  • UX Lead/Strategist
  • Graphic Designer
  • Developer 1
  • Developer 2

Larger projects require more hands on deck, or individuals with specific skill sets, but this is a decent representation of a team that can produce great work.

We pay our staff fairly. We are not an offshore company, or a company that cobbles together a network of freelancers and contractors. We do all of our work with our staff here under one roof in Brooklyn, NY, so our cost structure may be higher than many other parts of the world. I’m quite sure, however, it’s pretty typical for the US. And I’m tempted to mention how our staff works like a well-oiled machine, having delivered together for years. We are super-efficient and move very swiftly.

Payroll/benefits costs alone for a small team like the one above run us about $12K/week. So payroll alone can easily get over $300K to cover the hours put in by this team on a 26 week assignment. Add overhead like rent, communications, equipment, insurance, etc. and a $400K+ app happens really fast.

Can you go out and do it yourself offshore or with your own freelance team and do it for less? Yeah, probably, if you can find people that you trust and are available and work really well together. Doing it this way is a lot more risky if you care about excellent work and time to market. And I bet it still won’t be cheap, not at all. Quality freelance talent costs real money as well. Offshore? Maybe, we don’t have a lot of experience there, but we also haven’t heard any real success stories either. I’m sure there are many folks that have taken that approach successfully—we just don’t know a lot of them.

What happens after launch?

All this is about getting an app out the door. In many respects launching an app is like having a baby—it isn’t over, it’s just getting started. Marketing and user acquisition costs may be significant, and delivering updates with new functionality or features may be just like starting a new project, and require significant budget. Or not! A lot of all that depends on what kind of app you have on your hands.

 

Gavin Fraser is Small Planet’s Chief Executive Officer. Follow him on Twitter @gavinmfraser.