How much should an MVP cost? And what should I expect for my money? Don’t leave it to chance.

The cost of an MVP can vary depending on a number of factors, including the complexity of the product and the experience of the development team. Here’s how to nail down a price and get what you need.

What is a Minimum Viable Product?

Before we get into costs, let’s have a look at what an MVP actually is. Essentially, a Minimum Viable Product (MVP) is product designed to test an idea in the market. Although it won’t have all the functions and features of the final version, an MVP is fully operational. This means users can access your product and service and you’ll gain feedback that you can use to iterate and improve your product before launching the final version.

Examples of companies that began successfully with an MVP that you’ve no doubt heard of include Airbnb, Twitter, Instagram, Uber, Dropbox and Amazon.

Why develop an MVP?

An MVP is a great way to validate a business idea without excessive upfront expenditure. With an MVP, you’ll:

• Discover early on if your idea is going to succeed or not. Instead of spending enormous amounts of time and money on a product that may not be an attractive commercial proposition, an MVP allows you to minimise your outlay but still gain a clear picture of how the market will react.
• Get to market quicker. An MVP will get you to market as quickly as possible, reducing the risk of someone else beating you to it.
• Receive genuine feedback from real users. With an MVP, you’ll be able to observe real behaviour with your product or service, which is much more valuable than just hearing opinions.
• Incorporate this feedback along the way. You’ll quickly learn the strengths and weaknesses of your offering, what needs to be changed, and what features you should add and, therefore, improve your product as you go.
• Make it easier and faster to secure funding. If you’ve got a viable product with proven interest to present to potential investors, your likelihood of securing funding will increase. This was the case for the Airbnb founders who, after successfully testing out their idea using their own apartment and a basic website, were able to secure $20,000 in funding, and then a subsequent $600,000 in seed funding when things started to take off.

So, how much does it cost to develop an MVP?

If you’ve started looking into MVPs and making enquiries, you’ve probably noticed that you’re getting a lot of different prices. What’s the reason for this enormous range of estimates and what should you reasonably expect? The truth is, there isn’t a clearcut answer. There are multiple factors that will determine how much developing an MVP will cost, even if you’re asking different people for the exact same thing. Here are the key things to keep in mind:

1. Are you developing an MVP or are you actually developing a prototype or proof of concept??An MVP is working product that you can take to market and test in actual use. A prototype on the other hand is a draft which simulates how the product will work, showing the features and flow, whereas a proof of concept is a preliminary description and trial of an idea. Prototypes and PoCs are much cheaper to develop, however you won’t receive the genuine customer feedback that makes an MVP so worthwhile.
2. Who is developing your app??The team you choose to develop your MVP will significantly affect the cost of your project. Generally, when it comes to MVPs you have four options:

• An in-house team. Working with an in-house team means you can handpick your team with the exact expertise you need. Things move quickly and you’ll be able to keep a much closer eye on everything. This approach does attract high costs, however, because you’ll need to pay salaries and related entitlements, as well as other costs including insurance, software licences, equipment and miscellaneous IT expenses. There’s also a very big downside. If any of your key developers leave, they’ll potentially walk out the door with your IP, and may leave the project in limbo while new people try to pick up the thread.
• Freelancers. Freelancers will typically be a cheaper option – depending on the hourly rate they charge – and give you a lot of control, however they come with many risks attached. For example, you risk working with someone without the expertise you need, quality may be low, if something happens to your freelancer the work will stop, and you may find the budget increases along the way.
• Outsourcing off-shore. The price of outsourcing offshore will vary based on where your team is located, however it is likely to be the most cost-effective option. You may also save yourself time since you won’t have to build your own team from scratch. The downsides are time differences and language barriers, which can quickly become very frustrating.
• Outsourcing locally. Whilst this isn’t the cheapest option, it gives you the benefit of proximity and no language barriers. Research shows that this is often the quickest way to get what you need, so while the upfront costs are higher, over time the greater efficiency can save a lot of money.

A good development team will have the expertise and experience to successfully develop an MVP. They’ll help you make complex decisions, avoid pitfalls and will ensure workflow runs smoothly, saving you both time and money.

1. What tech are you using??The technology stack you decide on can have a huge impact on the cost of your MVP. It’s important to choose the right technology based on the complexity of your project and the things you need for it to function effectively. The best and most experienced developers will choose technologies that require fewer resources to create a stable and secure solution that works across all platforms and browsers. The right technology stack will be efficient and cost-effective, and will therefore keep costs down while speeding up your development time. It will also build in scalability which is vitally important to keep costs under control as your business grows.
2. What type of contract are you agreeing to??The type of contract you sign will also affect your price. While fixed price contracts are an option, they are not as commonly used because it makes it difficult to make changes during development. It’s also worth noting that fixed price contracts incorporate a margin so you might end up overpaying. The drawcard, however, is that the price is guaranteed. The more common option is a time and material contract which is a more flexible arrangement operating on a payment per hour policy. With a time and material contract, you can change your requirements, specs and features along the way and will pay for work done on an hourly basis.
3. What is the scope of your project??The scope of your project is also going to have a significant impact on its cost. This includes the functionality and features you need your product to have, which will affect the required resources and time it takes to build.

Tips for nailing down a price for your MVP

To make sure you’re not just another one of the many startups that fail due to running out of money, you need to really nail down what you’re developing and what it’s going to cost before you begin. Our top tips to achieve this are:

• Work out what you’re really trying to do.?An MVP isn’t supposed to be an all bells and whistles product. It is an early version of your offering that really focuses on the core value you want to offer customers. Accordingly, your MVP needs to prioritise the features that will allow you to deliver your core offering and meet your business’s vision, and you can worry about the rest later. Being strategic in your decision-making at this point is crucial. These decisions should be informed by things like user research, market analysis and competitor analysis. Look at the problems your target audience has and how your product or service can help solve these problems. Consider whether there are similar offerings already on the market, and how yours will differ from the competition. An example of a successful MVP that was informed by market analysis is Amazon. After launching Amazon as an MVP, Jeff Bezos quickly learnt from analysing his market that books were what he needed to focus on.
• Prioritise. Determine which features you absolutely must include, and which ones you don’t. One way to do this is to implement the MoSCoW method a four-step approach to prioritising project requirements by working through your must-haves, should-haves, could-haves and won’t-haves.
• Factor in design costs.?Your UI/UX and wireframes will be crucial for your app’s success. These things will substantially affect the cost and, accordingly, need to be carefully planned out before you begin.
• Include after-development costs.?Don’t forget to take into account the things that will cost you money after development is completed. This includes marketing, sales, maintenance and the costs of scaling your offering.
• Choose the right team.?Partner with an experienced and reliable team who are familiar with MVP development and have worked on successful projects in the past. Such a team will be able to help navigate you through the development of your MVP with best practices, therefore reducing time and costs and avoiding pitfalls.

The bottom line

While the range is likely to vary greatly based on all the factors listed above, based on our years of experience, we can come up with a costing fairly quickly once we have a conversation with you.

If you’re planning an MVP to launch your startup and you’re ready to get started, get in touch with GistLens today. We have extensive expertise and experience developing successful MVPs and can help you develop a scalable MVP that meets your needs and validates your business idea, while sustaining many iterations of improvement both on the back and front end.?Why not?book a call ?today.