A founder has an idea. A founder builds the solution. A founder tries to sell it.
Only a few buy the solution. The founder runs out of money.
The product dies.
Time and Money—two finite sources that decide whether the business will make or break in today’s competitive arena. One of the conundrums and reasons for startup failure that we discussed in our blog—A Step-by-Step Guide to Build a Minimum Viable Product (MVP)—is cash overrun (cited by 29% of startups).
Just a great idea is not always enough! To achieve optimal results, your budget and MVP must be planned together, else the fate of your product will be the same as that of Flud: RSS-based news reader or social magazine.
- Tough competition from already existing similar products (Flipboard & Pulse)
- Lack of initial testing
- Running out of cash
Definitely, the cost to build an MVP is much less than the cost of Product Development, however, the most important question to ask is: How much does an MVP cost?
MVP Cost is an important factor that must be considered before embarking upon an MVP Development journey. To know how much it costs to build an MVP, we must first consider the main factors that determine the MVP pricing.
1. Planning an Initial Budget to Build an MVP
There are different ways to build an MVP for your startup – hiring freelancers, managing the development on your own, or hiring a software development company. However, every option requires an investment of time and money.
While hiring a good company with an experienced team of developers, the quote can range between $5,000 and $50,000. The price range varies as per your requirements and budget. All you need is to choose the right MVP developer to bring in agility with the MVP Development services. Usually, a mobile app or website development company tends to give valuable feedback and details on the New Product Development process.
2. MVP Cost of Design
The cost depends on the complexity of the design. The best approach to evaluate the cost of an MVP design is to estimate the User Interface (UI) to be used. Remember that the initial design has a separate cost.
To ensure an engaging User Experience (UX), the User Interface (UI) should be simple, easy to understand and navigate, and must keep the users engaged.
Main Components that Decide the MVP Cost Structure of UX
Preparation plays a crucial role in deciding the cost of design. If you want to save time and money, it’s good to plan before you set up a meeting with the company that you’ve hired for the design and Development Process. Once the preparation is done, you begin making the wireframe and mockups to ensure that things are on track.
The wireframe is a kind of skeleton for your app/website. It can be drawn rough, or even on a paper layout of navigation, screens, and elements in your app. It outlines the features and the complete idea of your app or Website. Tools such as Bootstrap can be used to create a wireframe. With available templates, you’ll be able to build a rough layout within hours, and for free.
On average, a wireframe may take 10–30 hours to develop. It may cost you nothing if you do it on your own. However, if you ask any software company for designing a wireframe, then $500 and above would be the estimated MVP cost, depending on the website or app engagement.
A mockup is an important aspect of design and present projects based on ideas to the clients for a better understanding. If presented well, a good mockup can help you succeed.
“Mock-ups incite criticism from users because they are low-cost (can be made of cardboard) and low-fidelity. If a user is presented with an early version of a system that has required substantial work, he/she is likely to be more reluctant (as well as able) to criticise it.” – The Glossary of Human-Computer Interaction
It is expected that an estimation of a landing page mockup costs approximately $500. Add another $50-$70 for every additional screen. Based on these prices, you can calculate an estimate for your own. This is how UX Design agencies usually charge for their services.
However, if you are familiar with mobile app prototyping tools like Adobe Photoshop and Adobe Experience Design (Adobe XD), building a simple mockup will be easy. These well-known tools are very helpful and can help you save your money since Photoshop will cost you $10-$20, while Adobe XD is totally free for starters.
(iv) Interactions Within the Page
It’s not just about creating simple mockups, there is another way to improve interaction within the page. The interactive mockup is a good chance for you to enhance customer engagement. Customers or investors would prefer an interactive solution to a static image.
Tools such as Axure RP and InVision, are your best supporters to build an MVP platform. The MVP cost of Interactive mockups is a little more as compared to the standard mockup. All you need is your regular mockups and a subscription to one of these prototyping tools. Alternatively, you can outsource this work to a designer, and they will charge anywhere in the range of $100–$500, depending upon skill and expertise.
How Net Solutions Built an On-Demand Mobile App Prototype for Frictionless Payment
An Ed Tech Startup approached Net Solutions for a mobile app development project that would address some pertinent questions related to the education sector–aligning the right tutors for the student community and providing frictionless payment interaction between tutors and students.
The Challenge: Creating a mobile app prototype(s) that would fulfill the expectations of the tutor-student community using this app.
Net Solutions built two interactive mobile app product prototypes for the tutor-student community–Teacher Application and Student Application–using the following mobile app prototyping tools:
- For high-fidelity prototype, we used InVision
- For low-fidelity prototype, we used Axure RP
What was the result? Read the case study to know more.
3. Number of Features and their Complexity Decide MVP Pricing
The next factor in MVP cost is the need to prioritize and list the number of important features for every phase of a users’ journey. The user journey has three important parts — the user, user actions, and the action taken by you.
“In this age of information abundance and overload, those who get ahead will be the folks who figure out what to leave out, so they can concentrate on what’s important to them.” – Austin Kleon, a Renowned Novelist
There are a number of ways that define the number of features you can add in your MVP:
(i) Blue Ocean Strategy
‘Blue Ocean Strategy’ – a simple but effective framework to come up with a successful MVP Development.
Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant.
The business you are focusing on is represented by a blue line, which is to be compared with the key players in a similar industry as shown by the red line in the graph.
The x-axis lists the key competing factors of the business that you are targeting, and the y-axis assesses the quality offered for each of them.
The more your blue line (Strategic Canvas) is different from the red one (those of the competitors), the more your business is close to a Blue Ocean Shift.
(ii) MoSCoW Method
We have discussed this method in our blog: How Agile Estimation Techniques Pave the Way for Successful Product Development.
- Must-haves: includes the items with the highest business value and the ones that demand the lowest effort
- Should-haves: includes the items that are of higher priority and will need some effort to be delivered
- Could-haves: includes all the backlog items that might be desirable in terms of scope, but are of lower business value
- Won’t-haves: includes those items that are agreed upon to be moved to later releases
While building an MVP, list all the “nice-to-have” features for your startup. Have this list ready to prioritize and ask questions to yourself like:
- What do you want your users to achieve with the product?
- What features need to be included in order to make the product more attractive and efficient in its final version?
Before your team of developers starts working on the MVP, it’s crucial to organize categories like ‘must-have,’ ‘nice-to-have’, and ‘don’t care’ and come up with an MVP cost of including these features. Then ask the developer to work accordingly. This will lessen the chances of failure.
4. Users’ Understanding
One of the main principles of any business is to understand the users well. Product Development and customer development should go hand-in-hand. Both are very important and neither can be ignored. By testing your product, you get a clear understanding of what your users want and how well your product aligns with the market demand before it gets too late.
“Beautiful Product Development in an ugly market segment simply makes no sense.” – Dan Adams
Choosing customer segments intelligently allows tailoring the marketing mix to more focused customer needs. Geoffery Moore, in his book, Crossing The Chasm, presents the Innovation Adoption Lifecycle, in which he explains the importance of targeting the market while building and selling an MVP to gain consistent feedback. This, in turn, can help in Product Development.
Apart from the market demand, the MVP pricing depends upon the business and functional requirements. If we take the example of an eCommerce website, the possible MVP options could be:
- The first version of the MVP is simple, where users navigate as per categories of the product such as apparel, appliances, healthcare products, etc.
- The second version might be more complex – collect data related to customer preference and make recommendations accordingly.
- The third version will be even more complex, keeping the business perspective in mind, which is more expensive to develop.
The type of product to be built is also a key factor to consider when determining the MVP cost. For example, gaming apps need lots of graphics and other built-in mobile mechanisms, whereas a business app deals with content, database management systems, and high-security features.
5. Technology Stack for MVP Development
Organize and identify the estimated technology stack for your MVP. Whether you are a techie or a novice, you can always ask for recommendations, and see what your development team suggests.
While planning MVP for a startup, you can consider a few tailored solutions that can be easily coordinated.
- Ruby on Rails for your backend because it’s 30–40% faster to develop with Ruby on Rails compared to similar technologies.
- Reactive Native, a cross-platform app development framework, for Android and iOS apps as about 90% of code can be reused with it.
However, if you want to avoid future challenges, take suggestions on whether you should use a native or hybrid solution.
Rails and React Native are definitely not the only frameworks out there. While you’re doing your due diligence, it’s worth considering other options too. Choosing the right tech stack ensures optimum project quality and its future growth to create a good impression on the target audience.
6. Time Required to Build an MVP
The time taken to complete the first version of an MVP should not exceed more than 2 weeks, which covers features like Ecosystem Map, Stakeholder Map, Persona, Empathy Map, User Journey Map, and Prioritised MVP Backlog.
The cost ranges from $15 to $75 per hour. The early budget varies a lot and relies on the company’s hourly rate and the number of developers associated with the project.
For example, a company works for 2 months with 8 developers at a cost of $20/hour, and another company works for 4 months with 4 developers at a cost of $20/hour, which one is better?
The answer is, of course, the former, because manual power was increased and the time taken to develop your product was decreased. This helps with faster time to market and a better ROI.
The average asking price to build an MVP starts at $10000. But it depends on the complexity of the project. Each project has its own specifications, which further influence the timeline and budget of MVP Development.
The Benefits of Shorter MVP Development Time
- It leads to lower MVP Development costs.
- The faster you release the product to your target audience, the quicker the feedback will be. This enables you to make improvements and changes to your product and release software with an updated version in a short time span.
- It reduces the risk of your idea being stolen.
The road to having an MVP that functions beautifully is not an easy one.
To turn your ideas into reality and get onto your target audiences’ radar, you need to formulate a business hypothesis, identify the main functions, and pick a good software development company for your project.