Understanding the hidden costs of application development

Understanding the hidden costs of application development

Developing a cutting-edge application can be costly and might become even more expensive if you do not consider the hidden financial needs. That is why so many start-ups and companies cannot stay ahead of the competition — they drown in budget overruns and delays caused by inadequate financial planning.

If you plan to create your own application and are concerned about the costs, this article will serve as your app development cost calculator. Here, you will find a breakdown of the not-so-obvious expenses you will have to incur to deliver the best product.

The costs you should look out for:

App store costs.

This one seems like no big deal, as the price for getting into the app store is relatively low. For example, Apple charges $99 per year, which comes with benefits like tools and beta releases. For companies that want to distribute the application explicitly among their employees, the fee is $299 per year. The transaction fee for the Apple store is 15%.

On the other hand, Google Play market charges a one-time fee of $25. Paid applications get charged a 30% transaction fee, while transactions from subscriptions start at 30% during the first year on the market and then decrease to 15%.

These numbers seem insignificant for innovative tech companies. However, there is a twist. You need to go through the approval stage to get onto those platforms. If your product does not meet the platform’s requirements, you would need to make some changes in coding or design, and these modifications might be expensive.

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Testing costs

The application should be tested across different devices, operating systems, and screen resolutions. Failure to do so may lead to unexpected issues and poor performance, which can result in negative feedback, decreased user engagement, and additional costs to fix.

Recommended Reading: SaaS: What is Software as a Service

Marketing costs

No matter how excellent and innovative your application is, it is still not enough to become famous. You need a lot of well-executed marketing to build brand awareness, attract customers, and boost your revenue. Effective marketing entails social media campaigns, email marketing, content marketing, and paid advertising.

Maintenance costs

As of late 2023, there were around 2.4 million apps in Google Play, most of which were abandoned, according to statistics. Why is that? The thing is, app development does not stop with the product’s release. It continues and requires constant user feedback monitoring, identifying new bugs and issues, and implementing necessary changes to enhance the user experience. Additionally, updating with emerging technologies and trends is essential to stay ahead of the competition and ensure the app remains relevant and valuable to its users. All of this, of course, costs money. Annually, the maintenance stage will cost you 20% of your whole budget dedicated to app development.

Third-party providers

Building an application from scratch is almost impossible, so you must use third-party providers. They offer payment processing, customer support, data analytics, cloud services, and many others. The costs seem insignificant initially, but as your application and user base grow, so will the resources you need to allocate for this service.

Third-party providers

Recommended Reading: Customer Self-Service Portal: Best Practices and More

Cost-effective tips for your application development

Now that you know about the pitfalls of app development, here are some strategies that will help you deliver the best product without extra expenses:

  1. Build an MVP first — MVP stands for the Minimum Viable Product. It is a simplified version of the app with all the necessary features. Launching the MVP can demonstrate how well the product performs on the market and whether you can proceed with other advanced features.
  2. Use simple UI/UX design — Simple design appeals to the users who will want to use your application more. Complex and sophisticated design, on the other hand, can throw them off. Luckily, the most effective design strategy is also cost-effective, as straightforward design takes less time and resources.
  3. Native vs. hybrid — Native applications are constrained to one platform, such as Apple or Android, while hybrid apps are cross-platform. Your choice between these two models can affect your expenses: generally, native applications are more expensive.
  4. Outsourcing — Outsourcing can reduce the cost of hiring full-time developers and provide access to a broader talent pool and specialized skills. Additionally, outsourcing can help streamline the development process and minimize delays, resulting in a faster time-to-market and improved cost-effectiveness.

Wrapping up

Developing an app can be challenging, with various intricate aspects to consider. One of the most crucial aspects that can catch you off guard is the financial side of the development process. But fear not — with meticulous planning and in-depth research, you can easily prepare for even the worst-case scenarios. Take proactive steps — analyze the needed costs, create a budget that considers fixed and variable expenses, monitor your spending, and create a high-quality product everyone loves!

Recommended Reading: Robotic Process Automation (RPA)

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