Starting a business is never easy, and it’s even harder when you’re pitching a business idea with no tangible product. While having a prototype or working product is the best way to sell your vision, creating one takes valuable time.
With time being the most limited resource, an effective way to approach it is to build a Minimum Viable Product (MVP). The MVP not only helps explain your thought process to investors and prospective customers, but also shapes your product’s journey.
Now that you have a brilliant idea and a solid plan for its implementation, the last thing you want is to hit a roadblock imposed by a tight budget.
So the question is, what is the ideal budget for building an MVP?
In this article, we have uncovered the answers to the following crucial questions about MVP budget:
What is an MVP and why does your business need it?
What factors influence the cost of MVP application?
How to calculate the cost of building a Minimum Viable Product?
Keep reading to find out!
First things first, let’s clarify what MVP is and why it’s essential to your development strategy.
What is MVP – Minimum Viable Product?
MVP, or minimum viable product, is a strategy used in product development that has revolutionised the way companies approach the idea of launching new products.
The concept essentially involves creating a basic version of your product with only its essential features, and then launching it into the market to gather feedback from users. This allows companies to test their ideas without wasting resources on creating a fully-fledged product that may fail to gain traction.
By starting with a minimum viable product and building from there, entrepreneurs can save time and money while also ensuring they create something that their customers will love. It’s an exciting and dynamic approach that has helped many companies achieve greater success in launching the MVP.
Purpose of an MVP – Why do you need to build an MVP?
The purpose of an MVP creation is to gather feedback, validate your assumptions, and ultimately build something that your customers actually need.
By releasing a basic version of your product or service, you can see how people react to it, what they like and dislike, and what changes or improvements they suggest. This is incredibly valuable information that can help you improve the product idea and create a better final product.
So, if you’re thinking about launching a new product or service, consider starting with an MVP to make sure you’re on the right track.
How do you budget an MVP product?
When it comes to budgeting a minimum viable product (MVP), it’s important to take a few key factors into consideration.
– Start by identifying the core features that are essential to the MVP. This will help you prioritise your spending and ensure that you’re allocating your resources in the most effective way possible.
Think about the development time of MVP and how quickly you need to get it to market, as this can impact your budget as well.
Remember that your MVP is not intended to be a finished product, so focus on building a solid foundation with the key features first and worry about the bells and whistles later.
By following these guidelines and making thoughtful decisions about your spending, you can successfully budget for a powerful and effective MVP.
Why do you need to plan your MVP budget?
When it comes to creating your MVP software, you might be tempted to jump right in without worrying too much about your budget.
However, taking the time to plan out your expenses can actually save your lot of time, money, and heartache in the long run. That’s because building MVP can be a complex process, and unexpected roadblocks and expenses can pop up at any time.
By planning your budget carefully, you’ll be able to anticipate any issues that may arise and ensure that you have the resources you need to overcome them. Additionally, having a well-planned budget in place can help you prioritise your expenses and make sure that you’re investing your money in the areas that will have the greatest impact on your product’s success.
So, before you dive headfirst into the MVP development process, take the time to carefully consider your budget – it’s an investment that will pay off in the long run.
“An MVP is a down payment on a larger vision.” — Johnny Holland
5 Factors that Decide the Cost to Build a Minimum Viable Product development
1. Type of Application
When building an MVP, it’s important to consider the complexity of your application, as it is one of the factors that greatly influences the cost. A simpler product usually equates to lower development cost, while a more complicated one can be quite expensive.
Before budget framing, we recommend listing all the required MVP features and categorising them based on priority. Grouping the features into must-have, could-have, not-to-have, and good-to-have categories can be very helpful. Additionally, you should further categorise the must-have features based on the user’s input, action, and activities.
This way, you’ll be able to plan your development process more effectively and ensure that your MVP turns out to be both functional and cost-effective.
2. Determining the design for your MVP
The success of your application hinges largely on its design. That means putting serious thought into the UI/UX, wireframes, and the skill set of your design team. In fact, the cost of development will rely heavily on this feature.
To truly establish your brand identity early on, start with a robust UI/UX design. But keep in mind, the wireframe is the backbone of your application, whether you’re in the MVP stage or finished product. So it’s critical to structure the application meticulously, and seamlessly depict its development journey.
3. Choice of Development team
There are four main types of development teams: in-house, freelancers, local, and outsourced. Each type offers unique characteristics and considering what each can add to your project can help you find the right fit for your team.
3.1. In-house Team for MVP Development
Are you thinking of developing an MVP in-house? Great idea! But before you begin, it’s important to understand the expenses involved. This includes covering developer salaries, IT infrastructure setup fees, software and hardware costs, technology training, employee benefits, and overheads.
It can be a wise choice to hire a freelancer for minimum viable product app development in order to save money. However, concerns about their level of expertise and communication can be challenging.
If you’re wondering about the cost of hiring a full-stack developer, it can fall around $5,000 – $7000 per month. They will be focused on your project until completion.
When you start a project, it’s important to engage an experienced designer right away. This professional will typically cost around $4,000 per month. Additionally, you’ll also need a tester to ensure quality, and that could cost you around $2,500 per month.
On average, a freelancer will charge between $4,000 and $15,000 to create MVP software. The final quality and success of your project is influenced by their knowledge, experience, and dedication.
3.3. Local Teams
If you’re unable to establish an in-house team, hiring a local crew can be an alternative way to stay in close contact. A local minimum viable product app development company can provide you with the benefits of proximity and accessibility.
However, while you save on expenses, it’s still more expensive than outsourcing work to offshore app development teams. Wondering how much does it cost to hire local team to make an mvp?
On average, hiring a developer locally can cost between $150 and $200 per hour. If you hire a team of five members at $150 per hour to develop the MVP, the estimated cost ranges between $160,000 and $180,000.
3.4. Outsourcing MVP development
MVP outsourcing is a highly viable option that many companies prefer for building their Minimum Viable Product. In fact, 78% of business owners report being happy with their outsourced partners in this area. That’s hardly a surprise, given that $75.2 billion was spent on outsourcing security in 2021.
When it comes to MVP outsourcing, businesses often turn to offshore product development firms that can assemble a dedicated team for the job. These teams are led by a project manager who acts as the point of contact to ensure the MVP project moves forward as scheduled. It’s a highly effective strategy that’s worth considering!
4. Hourly rate
Using an hourly rate system allows you to pay for only what you need – so you’re getting what you pay for!
The cost varies based on two factors: your developer’s location and qualifications. This way, you can ensure you’re getting the best value for your investment.
5. Tech stack required
If you’re embarking on the journey of software development, one of the most important decisions you’ll need to make is choosing the right tech stack for your Minimum Viable Product (MVP).
With so many programming languages, databases, frameworks, and tools available, selecting the most appropriate combination can be daunting. However, by carefully weighing the complexity of your project, you can narrow down your options and make informed decisions.
Whatever you choose, the key is to strike a balance between your needs and the abilities of your team, ensuring a successful, seamless launch for your MVP.
Post Development Factors that Affect MVP App Development Costs
Turning your viable product into a marketable one demands essential post-launch expenditure. Here are the three main costs that you must consider to achieve great outcomes:
Marketing: The average cost of a successful marketing campaign stands around $10,000. You may want to explore partnering with a reliable marketing firm that can help spread word about your product through various platforms like social media promotions, sponsored ads or corporate events – which will depend on what kind of approach you choose for advertising.
Sales: To make the most of your products, it’s important to craft a persuasive sales pitch that resonates with customers. In order to create an effective Minimum Viable Product for marketing purposes, you may need a budget between $5-10K to maximise return on investment.
Maintenance: Maintenance can account for almost 20% of your initial MVP development budget. This includes server, integration, and API costs to improve your interactions. Depending on your team’s location and the complexity of your app, maintenance costs can vary. It’s essential to factor in these costs to ensure the longevity and success of your app.
How to calculate an MVP development cost
Now that we’ve dug into the reasons behind the cost of MVP development, it’s time to answer the million-dollar question: How much it cost to build an MVP?
The answer lies in a seemingly simple, yet magically accurate formula:
MVP development cost = rate * development time
But it’s not just about plugging numbers into an equation. Let’s explore how rates and development time can affect the cost of your MVP.
Rate: As mentioned earlier, the rate variable sums up the charges given by the developers who are working on building your MVP. It’s important to keep track of these costs so you can ensure that your project stays within budget.
Development Time: When it comes to the development time, it all depends on the factors discussed earlier; the ones that determine the cost of creating the MVP. The exciting part is that you have direct control over the development time variable. That means that unlike external rates, you have full authority to shape and reform the cost factors as you please.
In other words, you’re the boss of your MVP’s development time.
Now you must be wondering how to keep the cost of your minimum viable product (MVP) under control. Well, the good news is that there are ways to reduce the costs and we’re here to help.
Here you go!
How to reduce the cost to build an MVP
1. Start with the most important and influential features first
To create an MVP, you must do more than simply rely on intuition.
Instead, follow these crucial steps:
Start by forming a product hypothesis, then validate it by interviewing your target customers. This step will help you understand your users’ needs and gauge how well your product aligns with market demand.
Based on the feedback collected, organise and prioritise features in two categories: “must-haves” and “nice-to-haves”. Finally, ask yourself questions such as:
§ What is the end goal you have for your product’s users?
§ What specific features can you include in the final version of the product to make it more appealing and efficient for our customers?
§ What are the features that set you apart and make you the best choice for your customers?
2. Choose cross-platform development
If you’re planning to launch a mobile application then consider cross-platform development. It’s a great way to cut down on overall costs, and here’s why.
In native app development, developers have to write two separate codebases for each platform, iOS or Android. That process increases both development and maintenance costs. But in cross-platform development, they only build one app that runs on both platforms, reducing costs and resources.
Initially, business owners were hesitant about this option since cross-platform apps used to deliver poor performance and user experience. However, technological innovation has made it possible to create single apps running on different platforms faster and with less effort. And if you need to make changes to your app, you only need to modify one codebase.
For example, Flutter is one of the available frameworks that enable software companies to build versatile apps with ease.
3. Choose the right project management approach
To ensure a smooth development process and keep MVP development costs under control, it’s crucial to choose the right project management approach. While there are a number of methodologies commonly used, like Agile and Waterfall, they have distinct pros and cons.
Waterfall, for instance, can cause an increased time-to-market, involve higher amounts of risk and uncertainty, and can’t accommodate changing requirements during the life cycle.
On the other hand, Agile is an iterative approach that includes several smaller cycles, known as Sprints. This allows you to offer project flexibility, reduce costs and time of development, and focus on getting a return on investment faster. With Agile, you’ll be well-equipped to tackle any project with ease and efficiency.
4. Implement continuous integration and continuous deployment
If you’re looking for a tip to reduce software development costs and cut back on time spent on MVP development, try leveraging a powerful CI/CD pipeline.
So, here’s how it works: CI/CD automates the process of building, deploying, and testing an app. This means that by using the pipeline, software developers can detect and fix bugs almost immediately! And because every change in the code goes through an automated testing process, you’re guaranteed a higher quality product.
That’s not all. Service providers who harness the power of CI/CD can accelerate product updates and improve their time-to-market. By assembling builds through automated tests, they’ll be deployed to production with ease. The best part? This approach is super cost-effective.
In short, with a reliable CI/CD pipeline, you’ll be able to improve product development process, cut down expenses, and achieve a higher quality product in no time!
5. Start testing as early as possible
To ensure that your product is not glitchy when launched, start testing it early in the software development process. This will help you avoid accumulating bugs along the way, leading to increased cost of the MVP, longer project delays, and additional expenses.
You can involve quality assurance (QA) specialists at the early stages of your MVP development to implement regular tests throughout the development lifecycle and catch issues before moving on to other parts of the project.
With early testing and QA involvement, you can significantly reduce the risk of encountering obstacles down the road and save extra hours of rework.
6. Find Reliable MVP development company
Having a professional IT team is like having a trustworthy backbone when building an MVP app. Their skills ensure a flawless application, and faster development comes hand in hand. With such a solid foundation in place, the possibilities for your app are endless.
Top 3 MVP examples that prove even a small budget can deliver great results
Uber is an entrepreneurial inspiration worldwide. Originating in San Francisco in 2010 as a basic iPhone app, it has now proliferated to more than 60 countries across the globe. The company provides jobs for over 22,000 people and generates over ten figures in revenue.
Whenever you hear the word “Uber,” you associate it with innovation, aggregation, and cutting-edge product concepts.
The company began as “UberCab” in 2009 and was introduced as a simple mobile interface for the founders and their close friends, who could now connect with a new level of efficiency and convenience.
Back in 2007, San Francisco residents Brian Chesky and Joe Gebbia were struggling to make ends meet. Facing financial difficulties, they decided to leverage the upcoming 2008 Industrial Design Society of America Conference to earn some cash.
With all local hotels booked, they couldn’t accommodate all of the conference attendees.In an inventive solution, the duo bought an air mattress and set up an AirBed&Breakfast service in their own home. They snapped some pictures of their prototype, and the mission to accommodate guests began.
Today, Airbnb has more than 12,700 employees and pulled in over 2 billion dollars in 2019. But it all started with two friends trying to make rent. While the hotel industry may not be thrilled with Airbnb’s business model, it’s undeniable that this 2008 start-up has found solid ground in the world of accommodation.
Snapchat revolutionised social media in 2011 by introducing a visual-based experience. The brainchild of founder Reggie Brown, the app began as Picaboo – an iOS app that enabled users to send time-limited photos to one another. Brown and his team tested different assumptions through MVP to create an innovative concept- self-destructing videos which later became popular as Stories.
Snapchat quickly gained popularity and was the first to garner 1,000 users in just six months. Today, the app boasts over 186 million smartphone users who have downloaded it, and Snap Inc. enjoys an annual income of $1.18 billion. With its unique take on social media, Snapchat has become a trailblazer of sorts in the industry.
Encouraged by these MVP examples? Let’s Create an MVP Minimum Viable Product for your Startup
Looking to launch an MVP? Start by analyzing these excellent examples of successful MVP to inspire you. But first, be clear about the problem your product is trying to solve – just like Airbnb did.
Once you have clarity on the problem, it’s time to focus on the key features that will make your product stand out. Working with creative and talented developers from Revival Pixel, you can create an innovative product that maximises these benefits.
Ready to take the next step? Contact Us today to know more about our MVP development services.