How To Calculate What Your App Should Really Cost To Build

How To Calculate What Your App Should Really Cost To Build

developing-apps

It was 2:25am when I went online and saw that recently an App which had made its foray into the Indian market, collapsed faster than a building after an earthquake. The App, who we do not wish to mention due to indefinite legal causes, was a case history in bungled finances and finally market strain and ultimately failure. Let us not be fooled to think otherwise.

In a time when the online app industry has boomed to a net worth to over 100 billion USD, companies are failing every hour.

Statistically it can be observed or exponentially observed that a start up is created every hour but about the same number closes every hour. How ironic is that? Is it really even growing? Statistics don’t lie. But they can confuse. But let us not digress from the point. Let’s get back to the core of the problem. Finances. Money. Moolah. Bread. Known by many slangs, it is the backbone of every entrepreneurial venture as without capital, well you technically just have an idea. Nothing else!

Before an App goes live, a lot of money is required to start a company up and get it running, to ensure its sustainment till a break-even point. How is this money raised? By bank loans, start-up investors and in some rare extreme cases, the owners just pool in the money.  But how much is required and why its required is an important aspect because of the very fact, people need to know where the money is going. When applying for a grant or loan, a detailed budget is provided to show that their money is being only for the constructive purpose of building the company and not personal gains. But another problem envisioned is the UNDERBUDGETING problem, which is rather a financial-model mistake that is made by a lot of people. Hence the cost estimation process must be met with care and proper planning. But ignoring all this, let’s just focus on the App building cost and its estimation and how not to go wrong there.

Because in the department of App building costs, ‘The Standish Group’ says that in a cumulative study, about 30% of projects are within the confines of their budget, but the remaining 70% are nowhere near it. Shocking!

standish-group-research

So here is a way to calculate how much it will really cost to build an App.

RESEARCH AND CONSULTATION:

Sounds very boring if you ask me. And it could be, but this is important so I suggest you bear with me. Before even beginning to compile the budget costs and tallies, firstly you must find a contractor. A contractor will be your official middleman in contracting materials and labor to get the job done. They take in everything you have to say and they start their research. They are consultants of sorts. But that’s just a pretty word for a broker with a computer. They’ll estimate the entire cost of the business and overheads and present the final budget. Don’t be fooled by contractors who say “We can work under the budget too”, for this is a lie and you inadvertently end up spending the quoted amount, if not more. Erroneous work can burn a sizeable hole in your pockets if you are not careful. Another solution would be to save yourself some money and just do all this work yourself with the help of a few analysts and financial model simulators.

UI/UX FRAMEWORK:

The User Interface and User Software framework is another important facet in your budgeting of a mobile app. In the beginning you must be sure to consult with the right people and get your software working and interface details pretty clear. Without sizeable knowledge you could get foresighted and become under budgeted midway which could cause your App to fail before the halfway mark itself. Or worst case, you get ripped off completely. With the development of a stage to study this process, you will need to invest money in study and detailing of the process. Design of interactions of the screens and screen mapping which comes under UX and also detailing the logo, colour, font, background, templates etc which comes under UI, a sizeable chunk of your budget is under the scanner. Your UX developer can budget this stage for you and he can also do the budget control for the UI.

PRE-PLANNING:

This is not a precaution stage of sorts. This is the stage where teams are designed to calculate the corporate, software and fiscal quotations of the App. Here, it is planned on how much is spent how fast on what. The marketing for the App on cyber space, the money spent to maintain a team of employees to manage the App at all times, how much money is spent on taxes and corporate development as well as overall investment into the App. How many servers, computers, traffic insight through the App and how to maintain it and at what cost. All this sounds very scary when jumbled into this jargon but it is all necessary. Hence you must have a dedicated team behind you.

OVERHEADS:

Overheads is an industry based term but finds it way here too. It is basically a summarized cost estimation of the expenses on goods and commodities that don’t affect general outcome. During the planning and development stage, apart from salaried employees, sustenance is also calculated (Such as food, water etc) as it could be a noticeable amount when you calculate on the background of 1:100.

In a nutshell, I can summarize it in a more simpler fashion. Running and building an App need not be difficult as long as you take into account every penny spent and how many more pennies are going to be spent. With a few financial advisors and analysts, you budget the entire process by understanding the key points behind it, which is what goes into making an App. If you truly understand the direction and amount of work that must be put in to create an App, the cost estimation becomes easier.

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