How much can you spend on MVP?

You've got a strong idea of a product that will win the affection and love of users, you've casually vetted it against the market and now want to build MVP. One of the crucial steps at the beginning of your SaaS journey is to allocate your budget wisely and not throw money on MVP that may or may not gain traction.

Although it may seem that building a prototype should be quite inexpensive, in practice, the price of the prototype can reach $50k. Everything depends on your involvement, concept, stack, and expectations for your MVP (i.e. something quick and dirty that you plan to scrap regardless, or something you want to grow on) 

How to make the right decision, and is there a way to save money and effort? How to properly allocate funds at the initial stage and be viable over a long time?

MVP: how much should you spend on it?

The journey starts not with the MVP. Before building anything, you should try to find real customers and get some kind of commitment: a letter of intent is okay, a contract is better, and actual payment is best. 

Then comes MVP. Build the MVP based on what those customers are paying for. This is your only way to test the product, collect feedback from early customers and understand how to build it further. From real user feedback, you'll ALWAYS learn that you need to add or change so much to have a viable product. 

The role of your MVP is crucial, but you can only ever spend half of what you set aside for tech on the initial product. 

Why? 

In around 90% of the cases I've seen, the initial product will not be able to attract enough paying customers to pay for further development, and you need at least the same amount to get your product to some sort of product-market fit. That means if through seed funding or from your own investment you have 50k, you should understand how to build something viable for 25k.

Another thing to keep in mind is other expenses on the business development side - just building a product isn't enough, you have to start marketing efforts from day one.

Investors and co-founders 

Telling investors that all the money will go towards the initial MVP likely won't help you get funds. Investors know that startups live or die from the ability to learn and iterate. There is no such thing as getting it right the first time, building a software product, and thousands of users will be signing up. 

If you think of getting another person on board as a co-founder there are some difficulties: 

• It may be challenging to find the right fit for you depending on your organization's history. If you pick the wrong CTO, it may adversely affect your startup based on inaccurate or irrelevant advice.
• More management does not necessarily lead to better results — otherwise, it can bring conflicts. From the moment you involve a co-founder you cannot decide on everything independently, you will have to compromise.

In most cases, a technical co-founder or CTO is not a must-have. What you really need is a technical lead who is an experienced doer.

As an option, you may consider getting in a consultant or informed advisor who can lead a more junior role or team within your company.

Conclusion 

When it comes to allocating budgets, estimating costs, deciding on MVP and product features, there is no one-size-fits-all solution. 

Spending a lot of money in the very beginning doesn't guarantee you better results and traction. There are SaaS platforms that built their MVP in a weekend for under $1k, and now they're earning more than companies who have spent $1 million on their MVP. 

Wherever you're starting, success or failure hinges on something other than your MVP budget. The tech side is essential, but it needs to go hand-in-hand with the actual market need.