MVP Development, Product Development

How Much Does MVP Development Cost in 2021 - Learn To Calculate

How Much Does MVP Development Cost in 2021 - Learn To Calculate

There are several questions around MVP development but the one that is usually surrounded by a lot of mystery is - ‘how much does it cost to build an MVP?’

Many come up with an idea that they wish could reach fruition and turn into digital product reality. Only a few succeed. Despite knowing that the best approach to build the product is through MVP, most aren’t able to move beyond the initial thoughts and end up doing nothing with the idea. And one thing that holds them back is the uncertainty about how much it would cost them to let their idea initially take off the ground. 

If you also have an app idea but are holding yourself back from going ahead with the development because you’re not sure how much it would cost you to build the first version of the product, this write-up is for you. 

You can find everything from understanding the concept of MVP to its importance in cost reduction to factors affecting the cost to the actual costs of development and how you can calculate it yourself. So, let’s dive into it. 

What Is An MVP?

MVP stands for Minimum Viable Product. In layman’s terms, an MVP is the simplest or the most basic version of a product but has all the core features to please the early adopters. In more technical terms, Techopedia defines MVP as the most pared-down version of a product that can still be released. A typical MVP has these features:

  • It should have the core features that make the product stand out and will be used by the early adopters

  • It should be built such that it validates the product idea

  • It should be able to help you get started with the product’s monetization strategy

  • It should have the prioritized product features that are necessary for the core action for your product. 

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In a nutshell, a minimum viable product is the first version of the product where you are offering the basic features of the product. This prototype of the product is launched initially to get validation on the idea before moving ahead. It helps you supercharge your digital products with user feedback and iterations, making the product better continuously. 

How MVP Development Saves Cost

Most of the product startups go with MVP development in the initial phase. The main reason is cost reduction. This approach is gaining fast popularity owing to the countless benefits that it can offer. There are several ways in which an MVP can help startups save costs. Find out how:

    • Slashed Development Costs: The entire development costs are cut down by a big margin when you go for MVP development instead of developing a full-blown product

    • Faster Release Cuts Costs: And MVP can be developed in four sprints or two months’ time. This helps in saving costs related to developers’ salary, team costs, and much more as you need to pay for a smaller duration. 

    • Saves High Initial Input: Building a full-fledged cost requires a huge investment and it might be too risky for any startup to invest this sum. 

    • Minimizes And Mitigates Risks: Putting all eggs in one basket means higher risk. With MVP development, you mitigate the risk of startup product failure. 

    • Paves Way To Attract Investors: Most startups require investors to launch their products. However, with just a product idea, it isn’t easy to attract investors. An MVP gives you the prototype to entice investors with. 

    • Prevents From Investing Entire Sums In Products With no Market Need: Almost 42% of startups and small businesses fail as they have no market need. With an MVP, you can test first before launching the full product. 

    • Provides Feedback For Constant Improvement: With an MVP, you test the prototype with early adopters and move ahead based on the feedback received. This saves costs in building a product that everyone loves. 

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Factors Influencing Costs In MVP Development

There are different costs that are included in the development of any MVP or any digital product for that matter. Most of the costs involved in an MVP development are similar to product development. But you do save on other costs that are required for finishing the product. So, let’s find out what all costs are included in MVP development. 

Development Team

The bigger the team the higher would be the MVP development cost. Moreover, there is a higher cost involved in building an in-house team compared to outsourcing the team. The MVP costs depend on the number of developers you have onboard in the team. Moreover, the designers, testers, and other experts add to the cost. 

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Technology Stack

One of the biggest costs comes when you are planning for the MVP’s technology stack. Most new ideas require the latest technology expert. You need to analyze what technology stack you need to make the calculation. These include everything from the programming language you choose, the frameworks for coding front-end and back-end, and any new technology you want to add to improve its features and performance. 

Development Approach

The first factor that determines the MVP cost is the approach that one takes for their MVP development. One can get their minimum viable product built by in-house teams. Hiring in-house talent means setting up a complete team, tech infrastructure, and several other costs. Outsourcing MVP development, on the other hand, means  getting complete developmengt done by an external team. You save on all these costs. 

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Designing Costs

While most MVPs are sans any major finished design, the UI still needs to be impeccable. For this, one needs to have a designing team that can design each screen of the MVP. They take care of the navigation, button placements, and other things to ensure a seamless user experience while using the minimum viable product. This makes up for one of the major costs in MVP development. This may include the following:

  • Wireframing: This is the main skeleton of the MVP and has a wireframe of the pages, how they are linked, their formatting, etc. 

  • Product Design Mockup: A mockup is an important part of the MVP design process where one can see the design undertakings of the idea. 

  • Pages Interaction: This is where the designers think about the interaction between pages and the navigation to reach each one. 

Features of The MVP

The next factor included in MVP development cost calculation is the features that you are planning to include in it. This is where you need to prioritize the features based on the urgency in product development. This can be done by defining the user flow and the impact that the feature would have in this flow. While some features might be basic, others might require the latest technology which might add to the cost. 

For example, the MVP for a simple e-commerce app might require features like a payment option, add to cart, etc. On the other hand, a more complex app might require more features with advanced tech like AI, ML, and many more. Make sure that the MVP only has the most essential features for the core offering to cut down the costs. 

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Product Complexity

This one goes without saying. The complexity of the product is directly proportional to the cost of its MVP development. If you have a simple app that requires just one screen with some basic features, it would cost way less. At the same time, if you are building a more complex app with multiple offerings, the development costs would rise. 

Time To Build

The longer an MVP takes to build, the higher would be its cost. A basic MVP takes around four sprints or eight weeks or two months to develop. However, there may be some MVPs that might require longer to build. You need to find and hire a dedicated team that will build the MVP faster to reduce costs. 

Cost Of MVP Development: Five Ways

We just discussed the main factors that determine the costs of building a minimum viable product. Now, let us discuss the different approaches that any startup or other business would take in building the MVP. Here are the three approaches that any company would take to build their product. 

To make it simple for you to calculate the costs, let’s understand this better with an example. Here, we are building a simple MVP for a product. Let’s say it has the following requirements;

MVP development team size: 1 junior developer, 1 mid-level developer, 1 designer, 1 QA engineer, and a Project manager

Time taken for MVP development: Four sprints = eight weeks = 320 hours

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#1. In-House Team For MVP

When building an MVP in-house, there are a number of costs that are included in the development. These include the costs of the salary that you pay the developers, the IT infrastructure setup, hardware & software costs, technology training, paid benefits, and overhead costs. Additionally, if you are setting up a team of full-time in-house developers, you need to pay them perks to retain them. 

If calculated properly for an in-house team setting, the cost comes out around $178,770. You can check out the costs in the table below. 

Variable Cost of In-House Development In The US (320 hours) 
Cost per Hire $4,200
Overall Team Salary $160,000 
IT Expenses $20
IT System Mac: $1,800 
Technology Training $1,000
Paid Benefits $6,500
Software License  $250 per person
Overhead $5,000
Total Cost $178,770

 

#2. Outsourcing MVP Development

The next way to get an MVP developed is by outsourcing it to an offshore product devg8velopment company. The company provides end-to-end product development but you can also hire one for just building a product. Outsourcing MVP development has been a proven way for many companies to launch their MVP faster. The major components of costs of outsourcing MVP development are the developer or team’s per hour salary, hiring cost, and some miscellaneous costs.

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If calculated for the same number of developers and the hours worked, outsourcing cost comes around $38,100. 

Variable Cost Of Outsourcing Development To India  (320 hours)
Cost per Hire $1,000
Overall Team Salary $37,100 
IT Expenses $0
IT System $0
Technology Training $0
Paid Benefits $0
Software License  $0
Overhead $0
Total Cost $38,100

 

#3. Hiring Freelancers For MVP Development

The next feasible option that many startups or other companies adopt to build their minimum viable product is to hire freelancers. Platforms like Freelancer, Remote, Upwork, etc., offer great opportunities for businesses to meet some awesome freelancers. 

An average software developer’s hourly rate as per a Codementor study in 2021 comes around $60 per hour. The average rate of a freelance graphic designer as per Upwork comes around $25 per hour.  A QA testing specialist is also required for the MVP development. This comes to be around $20 per hour as per Clockify.me. 

So the cost of hiring freelancers for building an MVP would be around $33,600. 

The principal issue here is their commitment and dedication to your project. Most freelancers work on several projects at once and might not be able to deliver the same quality of work as an in-house developer or remote developers or dedicated team would. Moreover, you are obliged to handle all the coordination or need to appoint someone to do that on your behalf.

#4. Setting Up Remote MVP Development Teams

The next way many businesses get their minimum viable product built is by hiring a dedicated remote team. This means that they get in touch with an offshore product development company and hire a dedicated team from them. They also get a project manager as the point of contact who ensures the MVP development goes as planned. 

This would cost almost similar to outsourcing MVP development. The only difference would be that you have dedicated developers working on your project and you can also control what work they do and when. This would cost similar and come around $38,100. 

#5. Hiring Local Teams

For companies that do not have space to set up an in-house team yet want to enjoy the perks of being in close contact with their team, hiring local teams could be a great option. One can get in touch with a local software development company to build their MVP. In such a case, while you save on costs like the infrastructure or the hardware/software, the developer’s cost could go anywhere between $100-$200 per hour. 

Let’s take the average cost to be around $150 per hour and Considering the team member, your total might come anywhere around $192,000 for the MVP development. 

cost Summary

  1. The cost of setting up an in-house development team comes out around $178,770.
  2. The cost of outsourcing MVP Development comes around $38,100.
  3. The cost of hiring freelancers for building an MVP would be around $33,600. 
  4. The cost of setting up an external remote team is similar to outsourcing and is somewhere around $38,000. 
  5. The cost of hiring a local team for MVP development is higher and comes to be around $192,000. 

 

Post Launch Costs Of MVP Development

MVP development is a continuous cycle of build, measure, learn. That means, your MVP development doesn’t stop at the first prototype that you have built. So, the costs also can not be limited to the development alone. The costs should also include the costs invested after the MVP is launched in the market. Here is everything that is included in post-launch costs. 

mvp process

Marketing

One of the main costs that come post the launch of the MVP is the cost of marketing the product prototype. For this reason, most startups partner with a marketing partner to get their marketing done. The marketing cost includes all the costs associated with marketing and advertising your product prototype. These include stuff like:

  • Social media marketing
  • Search engine marketing
  • Paid campaigns
  • Marketing at events
  • Paid promotions among influencers
Also Read: Complete Guide To Inbound Marketing & Marketing Automation

 

Maintenance

Just launching an MVP is not enough, there is a dire need to maintain it and provide essential support in case of any issue. This cost comes around 20% of the initial budget for the MVP development. One needs to take care that whatever the cost they have invested in building the MVP, an additional 20% of that amount should be there for maintaining the MVP as well. 

Apart from that, there are various other costs like that of the server, APIs, software licenses, etc., that need to be kept in mind after the launch. Depending on the complexity of the MVP product, these costs may fluctuate. 

Sales

Identifying the right sales funnel is an important part of the post MVP launch. While one needs to find the right sales channel and pay for the launch, there is a need to find the right platform to launch. This launch also costs money. 

Analytics

One also needs to put a team of analysts and other experts to measure the success of the prototype you’ve built. They collect feedback from the innovators and the early adopters and analyze the same to chart out the changes required and the features to be added in the next version of the product. 

How To Calculate The Costs

When it comes to calculating the costs associated with MVP development, there are some things that one needs to consider. If you also wish to calculate your MVP costs, here is a step-by-step process to help you get started. 

Analyze The Product

The first thing anyone needs to do is to analyze the product and its requirements. There are different products that will cost differently when launched as an MVP. certain products might require more features in the very first version while others may work with a single page screen and limited features. 

The complexity of the app, the advancement in technology, the screen in the first version, landing pages, and other things are what need to be analyzed in this step. 

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Creating a wireframe or a rough sketch of the MVP can help with analyzing the costs in this step. Make sure you have all the features, technology requirements, and other things listed down to analyze the costs. 

Analyze The Team Requirements

In this step, you need to analyze the team members you require for your MVP development. Depending on your product requirements and the complexity and the current team’s capability, pend down the members you will need. Most startup founders require a completely new team for their MVP development. This means they will need technology experts, a full-stack or backend or frontend developer, a project manager, and a quality assurance engineer. 

Find Out The Developer Salary

Once you have listed all the requirements and know which experts are required in your team, the next step is to check out the developers around you and the salary they charge. In addition to that, there are several platforms like Freelancer, Upwork, etc., where you can hire remote developers for your MVP. Here, you can assess the costs that they charge per hour. This will help you understand the actual charge that will come over your head for building the MVP. 

Assess The Hours Required For MVP Development

In order to calculate the MVP development cost, you need to know how many hours will it take to build the MVP. A basic MVP will require around 240-400 hours to develop. When calculated in months, it can take between two months and six months to build. 

Multiply The Team’s Per Hour Cost With Hours

The final step to calculate the cost of MVP development is to multiply the price per hour of the team with the number of hours required to build it. This will help in analyzing the overall cost of building the MVP. 

Apart from this, if you build an in-house team to get your minimum viable product, it will have several additional costs like the infrastructure cost, team expansion, overhead, paid benefits, hardware/software costs, and much more. 

Outsourcing MVP Development Saves Costs

MVP is the way most companies take to save costs and build a product that is based on feedback and iterations. However, one of the most cost-effective ways for any business to build its MVP is through outsourcing. 

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Outsourcing MVP development has assisted several startups to get started without investing too many resources. Slack, GitHub, Whatsapp, Groove, SeatGeek, are some of the popular examples of brands that outsourced their MVP. By outsourcing MVP development, businesses can not just get their MVP built at a lower cost but also bring talent from across the globe into their team to build a prototype that would be loved by all. 

At Classic Informatics, we have assisted several startups, enterprises, small & medium businesses, and product companies to launch their MVP in a short period of time and with limited costs. If you are also looking for a partner to build the early stages of your product, we are the product development company you can rely on. In addition to offering MVP development services, we also assist businesses of all sizes to scale their products. We can be your partner from the early stages and provide constant technical support as you scale your MVP into a successful product.  

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Topics : MVP Development, Product Development



Swati Sharma

Written by Swati Sharma

Swati Sharma, a writer by day and an avid reader by night, works with Classic Informatics, a leading web development company in India. Owing to her passion for her profession, she loves to stay updated about the current & emerging trends in the IT industry.

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