Top 8 Factors That Go into Pricing an App

by | Mar 19, 2019

The cost of pretty much every good or service, from makeup to groceries to phone bills, varies depending on the company, location, resources used, labor used, retailer, etc. And the same goes for app development.

It’s impossible to apply a blanket cost estimate to any type of software or mobile development because there are so many factors involved. Features, data, and even how the project is managed can all affect the price, along with dozens of other variables. But a few key factors are the most common reasons for differences between project estimates for mobile development, eight of which we’ve outlined below.

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Factor #1: Location of Your Developer

You’ve probably heard that large, multinational companies outsource jobs and labor to other countries, but this isn’t just happening with products like iPhones and fast fashion. Software and mobile development can be outsourced to developers or agencies in other countries, such as India, Ukraine, and the Philippines, or development can be done onshore in your local country or regionally by in-house developers or a local agency.

Offshoring mobile development can be beneficial as it’s usually the most cost-effective. Offshoring is also great for companies who handle many projects at the same time and don’t have the capacity to dedicate that many employees to participate in or direct a development project. However, offshore development companies might not have the latest technology and innovations in the software development realm, so they may not create the best possible mobile app for you. It can also be difficult to communicate with offshore companies due to language barriers and time zone differences, making it hard to coordinate and potentially causing serious problems. In contrast, it is often easier to evaluate the capabilities of an onshore developer or agency before going into a project, either through interviewing candidates or referrals. Also, onshore developers and agencies tend to be more familiar with the systems your company works with, making it easier to communicate about goals and get daily updates about the project. Of course, the downside to onshore mobile development is that it often costs more.

 

Factor #2: Amount of Data on Your App

A straightforward factor affecting the cost of any app development project is how much data the app uses. The more data an app uses, the more it will cost to develop and host. For example, a video-streaming app, such as the Netflix or YouTube app, uses a lot of data to work properly and play a video seamlessly, making it more costly to develop, host and maintain. Other apps that use a lot of data are social media apps like Facebook and Instagram. In comparison, apps that don’t use a lot of data include the Calendar app, Notes, and of all things, the Phone app. Other apps that don’t use much data but aren’t automatically included on your phone include the weather app from The Weather Channel, and apps that you don’t use as often as you use social media, such as Goodreads, Poshmark, and Shopkick. Any app you use more often will suck away more data and battery, but apps you don’t rely on for constant messaging or streaming services tend to use less data overall. When deciding on the goal of your app, think about whether the features included would potentially use a lot of data and factor that into development cost estimates.

 

Factor #3: Integrations with Other Pieces of Software

If you have existing custom software for your company, you’ll want to consider how your mobile app will be interacting and transferring data with that software. This will impact pricing. If you are a SaaS business, designing a mobile version of your software can be a great benefit to your company and a great accompaniment to your desktop or web software, but it can also add to the cost of your mobile development project. Application programming interface integration, or API integration, adds to the complexity of your app and the level of effort to build it. Therefore, even with experienced developers working on your project, this will increase the overall cost of your mobile app. However, don’t let this scare you as apps with API integration are often some of the most popular apps. Out of the most popular iPhone apps of 2018, the top 10 include YouTube, Facebook, Google Maps, and Netflix, all designed originally for desktop that have since benefitted from a mobile version of their service.

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Factor #4: Features in Your App

The number and complexity of features in your app will impact the overall cost of development. Both the amount of features and the complexity of them factor into the time required (i.e. the more time and effort required to build your app, the more costly it will be).

The word “features” is a broad term but can be used to describe any action a user can take in an app. While there are many features that could be discussed, we’ve highlighted a few common ones that can increase the cost of app development.

 

User Authentication

User authentication is whenever a user has to prove their identity to access an app or an account within an app. Authentication is usually done with passwords but can also be processed with security questions, thumbprint identification, or even facial identification. By adding a layer of security to an app, user authentication is the first step towards making an app more complex and costly to produce. The more extensive and innovative the identification process is, the more expensive it will be (i.e. thumbprints and facial). Also note that once you add user authentication to an app, users tend to expect other features to be included, such as syncing data and accounts on multiple devices and push notifications.

 

Use of Phone Hardware

We might take it for granted but one of the best features of mobile apps are their ability to sync with and utilize other aspects of our smartphone. Being able to use your phone camera within an app is the most common use of this (and the cheapest), but apps can also utilize phone hardware such as GPS and location tracking, step counting, motion detecting, etc. Adding features that utilize phone hardware can add to development costs, but with advances in technology, some are fairly easy and inexpensive to add in.

 

E-Commerce Transactions

More and more people are choosing to shop from their mobile phones using apps rather than mobile websites. Since conversion rates from mobile apps are 3x higher than on mobile websites, it can be beneficial to add an e-commerce element to your app for selling goods and products. Mobile apps tend to be safer than mobile sites, especially in public areas or on-the-go. However, since you want to be precise and detailed when developing this feature due to the sensitive nature of personal data, developers need to focus on creating a robust system to protect user accounts and payment information, all while having a good user experience. Because of this, e-commerce can be a bit costly to add in, but it’s worth it to make sure it is designed and developed correctly.

 

Social Media Integration

By incorporating social media integration into your app, you are essentially allowing the app to push and pull data between itself and a social media platform. You can see this, for example, on a news app that has an integrated button allowing you to share an article to your Facebook wall or Twitter feed. With social integration, some aspects are easier to develop and incorporate than others. Things like posting content generally tends to be easier than sharing invites. Some social networks are also easier to integrate into an app than others. If you are going to integrate social media into your app, select the methods and social channels that will most benefit your app, even if they are not necessarily the cheapest.

 

Factor #5: Complexity of User Experience

User experience is one of the key features that make an app. If your audience doesn’t have a good experience, they aren’t going to use your app, so having a good user experience is a key part of any app development project. But the complexity of that user experience is different for every app and this will determine part of the cost of an app.

A great example of having a complex user experience is whether you want users to have different experiences on the app based on data they have inputted. For this we can look at Netflix again. Every Netflix user has their own account and Netflix recommends TV shows and movies to the user based on demographic information they’ve inputted and previous interactions with the app. This gives every user a different experience, making it a pretty complex app.

For a non-complex app, you can look as an app such as a bus schedule app. Most large cities have apps that tell you how long it will be for a certain bus to arrive at your stop. But since every user at your stop is looking for the same information, the user experience is the same for everyone. This doesn’t take away from the functionality or overall rating of the app but it makes the user experience less complex and therefore easier to develop. And overall, this less complex development will cost less.

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Factor #6: Project Management

Even if you are building a mobile app without coding, how you manage your mobile app development project greatly alters the cost. Think of a different type of project, building a house, as an analogy. If you are paying a full-service building company to build the entire housesource all labor, gather supplies, design, and manage the entire projectit is going to cost a lot more due to overhead charges. The same goes for mobile app development. When you pay a development agency to take care of everything for you, it’ll be more expensive. In contrast, when you hire a developer directly, it will be less costly because you and your company will serve as the project management for the entire process. This will cost less as far as the dollar amount you pay, but also note that this will take more of your time and energy, so the cost-benefit analysis would need to be done to calculate the true cost of managing your own mobile development project.

 

Factor #7: Which Platforms Your App Will Deploy To

Many people tend to be an “Apple person” or a “Android person,” but everyone wants access to the same apps from their mobile phone. Since there are several different app platforms, it can be hard to decide about what platform to build your app for. In the global mobile operating system market, Android is more widely used with 74.15% market share versus 23.28% from iOS, but there are some large places where iOS is more popular, such as the United States. Ideally, you’ll want to develop for both Apple and Android, but deploying an app to two different platforms will add to the cost of development. By deploying to two platforms, a developer is essentially building two apps for one company, requiring a lot more work and a deeper knowledge of development (some developers specialize in one or the other).

We should also include web apps as a development option. While native apps are apps downloaded from the app store and developed for a specific mobile platform, web apps are accessed through the internet browser on your mobile phone or desktop. Web apps have the benefit of being fairly responsive and easy to update, as well as being less costly to develop. However, web apps don’t work without internet access, tend to work more slowly, and don’t have the same level of security as a native app.

Overall, what platform you develop your app for should depend on your budget and what platforms your customers and clients tend to utilize.

 

Factor #8: Maintenance Plan

Developing an app is a great first step, but as with all technology it needs to be maintained. Hosting and maintenance of an app can be done in several different ways. First, you can maintain the app yourself with an in-house developer or another employee versed in the mobile development process. Second, you can hire a freelance developer to maintain the app for you. And third, you can hire an outside agency to manage the app, taking care of all bugs and updating that needs to be done without worrying you at all. In-house maintenance will usually be the cheapest of these options, but could be challenging and time-consuming  because you and your company are the ones to deal with any problems or updating that needs to be done with the app. An outside software development company, likely the one you had develop the app, will deal with all hosting and maintenance for you, which will incur cost but also enable your team to focus on other tasks. Maintenance plans can vary in cost based on the complexity of the tech stack used to build your app, integrations and how much your developer’s time costs.

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Conclusion

When building a mobile app, there are many factors to consider: what kind of app you want, what features you want it to include, and how you want it to function. This, and more, can affect the overall cost of developing and maintaining the app. And in turn, this can affect any potential cost you want to transfer to consumers by requiring payment to download the app. Multiple studies in the past few years show that the cost of a mobile app can vary greatly, meaning that as a non-developer, you won’t be able to get a clear estimate yourself. We recommend talking with a developer, agency, or other app developing company, each of whom will be able to give you an understand of the work needed to build and host your app. From there, you can really begin to understand what budget to designate for your new app.

Mobile app development might seem daunting and potentially expensive, but there are many resources and platforms out there to help any organization build the perfect mobile app to fit into their budget. Hatch Apps is a service-enabled platform with a mission to bring transparency, speed and price stability to the software development industry. We work hand-in-hand with customers to deploy custom software, leveraging pre-built components and building more for less. Make sure to book a conversation with a member of our team to learn about how app development can fit in your business strategy and company budget.

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