Most startup founders and business owners know the golden rule: it makes much more sense to first create a minimum viable product (MVP) than to invest in full-scale development straight away.
The MVP usually includes only core functionality. It is used to test-run the product, analyze how it's received, and make conclusions regarding how to proceed with the project. Although MVP development implies delivering just the pilot version that's shown to real users, the process requires a lot of effort, time, and resources.
Yet the question of "how much does an MVP cost" often leaves heads spinning as there's such a drastically different gap in the given project estimates. Is there an average price range, and what affects MVP pricing? Are there ways to cut costs? Let's go over the main points one by one.
Bringing a minimum viable product to life with limited functionality will cost you less than developing an all-encompassing solution fitted with all the features. Nevertheless, the required resources still infer a sizable contribution.
It doesn't matter if you're an established business or are still going through the startup funding process. Running a project on a budget and spending money wisely are key success factors.
Of course, having a decent and glitch-free MVP is the primary step before you proceed to scaling the startup or project. Hence, you can't compromise quality. But the problem is that if you don't plan the MVP cost ahead, you can get carried away and quickly go over the budget limit (and financial risks are always painstaking).
Let's put it this way, imagine that you're planning a small reception. You have an approximate guest list, a theme, a couple of venues to choose from, and a few ideas about the main course and decor. How easy would it be to spend twice as much as you really need? Even small events can cost a fortune if you start adding on fire shows, videographers, cover bands, truffles, and oysters, right? The same thing may happen with your MVP.
You can start rolling down Budget Drain Avenue if you:
- can't define your MVP and the user problem it must solve;
- struggle to shortlist the must-have feature set;
- excessively spend on hiring (or hire the wrong people altogether);
- can't properly manage the project and constantly change things around;
- invest even more resources to speed up the processes (or if you have to make up for the bottlenecks or do-overs).
This is something most companies (especially startups) can't afford to happen. Mainly because running out of money is the first and most common reason for startup failure, according to the latest statistics.
The only way to go here is to place limits, stretch a dollar, and do your best to stick to a budget and plan. Is everything you want to build necessary at the MVP step? Are the people you're hiring affordable for the project? Are you approaching the project optimally in terms of tech? These are just some of the basic questions.
So, how much does it cost to build an MVP? We can give a very rough estimate: $50,000 - $75,000 USD. Each project is unique, so the total will depend on:
- what product you're planning to create (to provide a few examples, a simple solution can cost up to $50,000, a mobile app may total up to around $70,000 or more based on complexity, whereas the marketplace development cost or that of a very large and complicated MVP can be more than $100,000);
- how tech-based the MVP is (are you creating a unique custom solution?);
- which timeframes you have (usually it goes like this: the faster you want things done, the more expensive it gets);
- which steps you include and consider a part of MVP creation (do project discovery and post-launch expenses count?);
- and numerous other factors we'll dwell on next.
As you might have guessed, plenty of things affect how much an MVP will cost you.
Let's suppose you know what you want to build. You start to "guesstimate" how much money you'll need if you hire a few developers in-house full-time and then reach out to several outsourcing providers for a project quote to compare. Chances are high that even given the exact same project description, various people will come back to you with different estimates.
Why does that happen? Well, because many variables will determine the overall MVP pricing as you make preliminary calculations for your specific project. But if you'd like to get a quick estimate of your project, you can use the MVP cost calculator.
Let's take a closer look at each of these points, explaining how they can affect the overall MVP development cost.
Idea Validation and Planning
We'd like to note that building a minimum viable product is often combined with several steps that can be attributed to the pre-MVP development process. Initiation, idea validation, proof of concept (POC), and the project discovery phase usually go before MVP development (which, in turn, involves the creation of a functioning version of the product even if it has limited features).
This non-development business-crucial step implies the input of multiple specialists and requires time. You can cut costs by eliminating this phase altogether or may not include it in the overall MVP development project estimate, counting discovery separately.
Prototyping is all about creating wireframes and designs to visualize the future product. It is usually included both in the MVP development process and the cost estimates.
UX/UI designers work on wireframes, mockups, user flows, and the finished product look. If the prototypes are clickable, you'll have the chance to click through the elements, "feel" the interface, and see how users will interact with the solution. Using interactive models is an outstanding opportunity to test your product before assigning tasks to developers.
However, because usability is crucial, this step can also gobble up a lot of time on design alterations, influencing the MVP development cost. The scope is versatile, but it'll be hard for developers to carry on with their part if there are no clean-cut designs.
Platform and Technology Stack
What are you building? Is it a web application or a mobile app? Is it a software-as-a-service solution, a game, or something else? This will affect your platform choice.
Put simply, the more complex your solution will be in terms of tech, the more resources you'll need for its development. Therefore, the tech stack you settle on for the project will also influence the MVP pricing. Choosing in favor of some frameworks or programming languages can cost you extra if they're:
- more in demand;
- challenging to code on;
- or have fewer specialists in general.
To give you a rough estimate from our experience, globally, a developer coding on a more popular framework like React Native may have an average hourly rate of $50 USD, whereas one for blockchain or crypto technologies can come at over $100 USD per hour and up.
To determine which path will help get your MVP running faster yet not limit its scaling capabilities after the MVP launch, you'll need to consider many options, such as low code vs traditional development. Perhaps, if you're planning to build a mobile application, your project can benefit from cross-platform app development frameworks like React Native instead of coding separate solutions for iOS and Android.
Of course, choosing an optimal technology stack may be a tough call for a non-techie founder, so it makes sense to find someone to consult you.
Number of Features and How Complex They Are
The minimum viable product is called "minimum" for a reason: you shortlist the must-have features that should be present in the solution for its first launch. It is wise to work on feature prioritization and emphasize those features that answer to the users' needs and show your product's uniqueness, saving the rest for post-launch.
You can easily end up having a massive list of features (some of which can definitely be eliminated at the MVP stage). But even in cases when the features are chosen wisely, the overall MVP cost can go up if you have to develop many of them, especially if they are intricate and require a lot of time and skill to create (like with cybersecurity matters during fintech app development).
The overall MVP cost will also vary depending on how many developers you need and how you'll hire them (that is if you go for in-house vs. outsourcing software development).
- In-house Teams
The first scenario implies the hassle of finding and hiring developers to join your team's staff full-time. It has pros and cons but requires a lot of time for recruitment.
Moreover, there are numerous challenges in hiring developers for startups. For instance, oftentimes startups don't have the budget to spare for high salaries or the social perks that established enterprises provide their employees. Plus, in-house also means paying for sick leaves, time off, software and hardware, office space, taxes, and other things. Furthermore, project coordination and management are on you.
To give a rough estimate, given all the factors mentioned above, an in-house team in the USA with 4 specialists can cost you over $50,000 USD per month.
- Working with Freelancers
The non-in-house options will also differ based on the chosen collaboration path. Frankly, you can even take on individual contractors via freelance web developer sites as the cheapest alternative. Yet this isn't always the most reasonable decision as freelancers might not be available to the extent you need and may flee the project.
- Partnering with an IT Outsourcing Company
For many, reaching out to an IT outsourcing company is an outstanding alternative. There's more than one outsourcing model to choose from, for instance, signing a dedicated development team.
What does outsourcing MVP development services for early-stage startups allow for?
- saving time on recruitment;
- accelerating time to market;
- visibly cutting costs;
- obtaining a well-versed team of experienced developers from the provider's talent pool;
- sharing management and coordination responsibilities.
Most commonly, you issue payouts for sprints or for the completed work depending on the hourly rates multiplied by the number of hours. To compare, typically, an MVP will cost you less than $30,000-$50,000 USD per month if you go for an outsourcing team in Eastern Europe with 5-6 experienced specialists (an analogous team in the USA will cost over $70,000 per month).
How Experienced the Specialists Are and Their Location
Even the hiring model can't give you a solid answer on how much you'll need to spend. Obviously, the more experience the developers have, the higher their rates are. A Junior specialist working for less than a year will cost less than a Middle one with 1–3 years or a Senior with 5+ years.
But even different Senior Developers coding in the same programming languages can have an hourly rate ranging from $25 to $150 USD or higher. Why is there such a visible price rift?
Their location also plays a vital role in influencing the rate. For example, referring to Clutch as a source, a developer from the USA can have an average hourly rate of $75-$150 USD, one from Eastern Europe may be available for $40-$60 USD, while one from Asia can work for $20-$40 USD per hour.
Therefore, to cut costs, it may be reasonable to consider developers from other overseas countries. The same applies to remote IT outsourcing firms, as long as you take outsourcing vendor evaluation seriously.
Many projects require integration with third-party tools, extensions, and plugins. This is done as an alternative to building your own analogous custom solutions. For instance, you can use:
- an external payment gateway like Stripe, PayPal, or Braintree;
- a chatbot;
- marketing tools, startup analytics solutions (such as Mixpanel or Amplitude);
- among other things.
Of course, third-party integrations come at a price. Sometimes you pay once for installation, while other plugins are subscription-based. Whatever the case, you'll also need a developer to link the solutions up, handle all the settings, and check for compatibility issues.
Obviously, the third-party integration costs for an MVP project can drastically differ based on your chosen solutions, their quantity, pricing terms, etc.
This may be quite self-explanatory, but if you have very short project timeframes and want the MVP launched as fast as possible, the MVP price will go up too. The shorter the deadline you want to meet, the more workforce will be needed. Hence, as the team size (or the expertise level of the specialists you include on the team) grows, so does the price.
MVP Post-Launch Work
Your work doesn't stop when the MVP is launched; you'll still be investing in it. In fact, this is when you enter a new round of tasks that include:
- attracting real users and investors;
- collecting and analyzing feedback for MVP testing;
- studying data and product performance metrics;
- fixing bugs and flaws;
- prioritizing which features to build next or how to mold the product if it needs changes.
What else will you be spending money on? On marketing, improving your sales funnel, and other things. As a rule, post-launch expenses are also not included in the initial MVP development cost estimate.
Overall, it can take 2 to 6 months to build an MVP. But what does an MVP development timeline look like? Let's try to quickly summarize the milestones and phases, noting the approximate pricing to define how much does an MVP cost.
The Discovery Phase
As shortly mentioned earlier, the discovery stage may not be included in MVP development and can be calculated separately.
What happens during discovery? You and the team:
- do research and browse competitors' solutions;
- find the target audience;
- analyze the user needs, pain points, and market state;
- determine the idea feasibility (POC);
- list the goals, aims, and the value the product will bring;
- try to figure out how to build the product;
- weigh the tech stack options and required features for the launch;
- attempt to understand how much does it cost to build an MVP;
- among other things.
In any scenario, the cost of this pre-MVP development stage may vary. Frankly, you can spend only several days on discovery. But this step may take several weeks if you have a large and complex project. For example, the project discovery phase that takes 10 to 15 business days can cost you about $6,000-$10,000 USD if the team includes a full-time Senior Developer, a part-time Project Manager, and a part-time UX/UI Designer.
The UX/UI part usually takes at least 2 weeks on average and includes:
- mapping the user journey;
- determining user flow;
- creating wireframes, mockups, prototypes, and MVP designs.
If the work of a UX/UI designer at this step takes around 10 business days, it may cost about $2,500-$7,500 USD. Of course, this number can go up depending on the scope, design complexity, and the number of input hours.
MVP Development, Testing, and Product Launch
This is the largest milestone of building an MVP. Usually, this part of the cost evaluation can be calculated in sprints (which we'll talk about more later on in the article). Alternatively, you can calculate the estimate based on how many hours are needed on this or that feature multiplied by the hourly rates of the specialists.
Giving a budget estimate for this step is really tough as it will ultimately depend on the number of specialists you have on the team and their rates. Loosely speaking, an outsourced development team from Eastern Europe with 4 specialists (1 part-time Project Manager, 1 full-time Senior Developer and 1 full-time Middle Developer who'll be working on the solution's code, and 1 part-time Quality Assurance Engineer who'll be responsible for handling the solution's QA testing and allocating flaws) can cost around $24,000 USD per month.
Maintaining your product when the MVP is launched will require resources too. You'll continue pouring investment into:
- keeping the solution running;
- occasionally fixing bugs and handling security matters;
- paying for the servers, APIs, etc.;
- developing the features that were second or third in the priorities list, which you planned to create after the MVP launch.
On average, we're talking about at least one-fifth of your MVP budget to do this.
Marketing is one more point to note. You'll most likely need to invest in paid advertising, spend money on startup tools for marketing, promote your product on social media, and strengthen your online presence. This can cost you $5,000 USD or more per month based on what you'll decide to do.
You'll also continue to find product-market fit, so you'll have to spend resources on perfecting your sales funnel. This may come at $5,000-$10,000 USD per month.
How does Upsilon work on creating MVPs, and how do we estimate the MVP cost?
The Discovery Phase
There are cases when our clients decide not to go through project discovery or come to us with the results they've already obtained when conducting this step on their own.
If not, as a rule, Upsilon offers the project discovery phase as a separate service that's not included in the MVP development work scope nor the cost. This way we remove discovery from the first invoice, that is a client issues a separate payment for discovery.
After this stage is complete, Upsilon puts together a more specific and accurate MVP development project estimation based on the findings made as a result of the discovery phase.
Upsilon approaches MVP development and the corresponding cost estimates in sprints. Each sprint usually takes 2 weeks (or 10 business days) and includes grouped tasks and features the team will bring to life in a given time period.
The MVP development cost is thus estimated depending on the team size and web development team structure multiplied by the hourly rate of the specialists who'll be working on the project during the 2-week sprint.
Of course, the team size also influences the overall MVP price and how quickly it gets developed. As such, the composition of a team per sprint can look like this:
- a small team: 1 Senior Developer (full-time), 1 Middle Developer (full-time), 1 UX/UI Designer (part-time), 1 Quality Assurance Engineer (part-time), and 1 Project Manager (part-time);
- a mid-sized team: 1 Senior Developer (full-time), 3 Middle Developers (full-time), 1 UX/UI Designer (full-time), 1 Quality Assurance Engineer (full-time), and 1 Project Manager (full-time).
You're probably wondering how many sprints it takes to develop an MVP. We can definitely state that one 2-week sprint won't be enough for the MVP launch. On average, we can say that it's 6 sprints (which is 3 months in equivalent). By the way, post-launch work can also be put into sprints.
Seeing your product come to life is very satisfactory. But it's vital to ensure that it happens within your budget limit. Otherwise, it'll be challenging to accumulate your excessive spending.
Therefore, calculating the MVP cost in advance is crucial. As you've learned, multiple things can affect the final price, including how complicated your solution is, the chosen technology stack, who you hire, and many other factors. That's why it's not that simple to estimate the outcome, but it may fall somewhere between $48,000 - $75,000 USD and take 2 to 6 months. Upsilon's dedicated team pricing is based on sprints and the final cost will depend on the number of sprints.
If you're still wondering "How much does it cost to build an MVP?" and would like to get a more accurate project estimation, don't hesitate to contact Upsilon to discuss your needs and get a consultation with our experts!