How Much Does Building an MVP Cost?
Want to know how much does an MVP cost?
This is a complex question that we will answer here.
I remember listening to a guy who was handling growth at Square (founded in 2009, with a current valuation of $5B as a public company). He was so detailed about how their potential customers should come to them, through which channels and how they would use the product, and why would they bring more clients – I was astonished.
I was listening to him and thinking, “This dude went really deep!” It was clear to me that the company grew fast due to this detailed planning and perfect execution.
So before spending a dime on building a product, startup founders and company managers responsible for side projects should go deep, to test the waters. This process relates to any type of product – hardware, software, website, mobile app, chatbot, anything.
There are several steps to it:
- Defining a market niche and your ideal customers.
- Identifying the problem your potential clients have.
- Validating your assumptions with potential clients.
- Outlining the solution based on validated assumptions (a software product, mobile app, or a website).
- Defining and building a minimum viable product (MVP).
- Launching an MVP and validating it by testing it with early clients.
- Adjusting the product based on the customers’ feedback and launching it.
- Scaling the product while keep collecting customers’ feedback and improving the product while maintaining the post-launch costs.
I assume you know how to deal with the first four steps using different tools and methodologies (and if not – let me know, I’ll write about them, too), so let’s focus on step #5 – how to develop a minimum viable product – and go really deep. Also, this will help you understand your MVP cost.
How to create a minimum viable product
Even though it’s just a step in the process, this step has its own steps too. Here they are:
- Define your MVP.
- Find a top-level dev team who has built similar products before.
- Prepare the specifications.
- Finalize the scope and MVP development costs with your dev team.
- Build and launch your MVP.
You might think that’s a lot to deal with, and you’re right. However, if you do it right from the start, it will change your life and the course of your company’s growth for the better.
The main reason startups fail isn’t because of the high competition or a high level of uncertainty – they fail simply because they don’t do the homework and build products very few people need.
There is no magic, just a set of actions you should complete when developing a product. Some steps could be flexible and different, but for most businesses, these are the basic ones. Let’s go through them one by one.
Define your MVP
As Wikipedia says, an MVP is:
A product with just enough features to gather validated learning about the product and its continued development. Gathering insights from an MVP is often less expensive than developing a product with more features, which increase costs and risk if the product fails, for example, due to incorrect assumptions. The term was coined and defined by Frank Robinson, and popularized by Steve Blank, and Eric Ries. It may also involve carrying out market analysis beforehand.
This is a very generic definition, as you can see. It’s made that way so it will fit anything. An MVP could be just a landing page for one company, but it might not be enough for another.
For example, for DevTeamSpace, it was exactly one landing page with a specific text explaining our unique approach to solving our potential clients’ problems.
It was enough to validate business assumptions and get our first clients. Once we got a client, a big part of the product was introduced by our unique product development process, not the software product itself.
For another product, let’s say for a mobile app whose intent is to measure blood pressure, heartbeat, sleep cycles, etc., and provide some healthcare recommendations, a landing page wouldn’t be enough.
It would certainly be enough to validate some assumptions and get some people in the door, but you wouldn’t be able to serve them without somehow allowing them to measure certain health parameters via their own phones.
That means that this MVP should be in the form of a mobile app with the most important features.
See it? It really depends on what your MVP should be, and that’s why it’s so important to define what it is. If you only need a landing page to start serving clients – great. You almost don’t need to spend any resources to get started!
It’s good if you can put your MVP definition on half a page. I gave a good example of a product definition in one of our previous articles here
Find a top-level dev team who has built similar products before
For example, you want to launch a mobile app and you have defined your MVP as a mobile app with a certain minimal set of the most important features. Now it’s time to hire developers who will bring your MVP live.
Simply put, it’s hard to find expert developers who have built similar custom projects before and are great at communicating with clients. And most people try to save money by going with a general dev services provider, crossing their fingers, and praying that everything will be fine.
Very often, it’s not going to be fine. If your dev team doesn’t have the relevant expertise, they will either screw up your project, delay it, or leave a ton of bugs in it, or will do everything well, but spend much more of your resources and time.
However, one of the benefits of launching an MVP is launching it fast, so you can validate your product assumptions with real clients and adjust if necessary.
Obviously, an expert dev team with relevant experience will build it as quickly as possible and with the highest quality, not because they are awesome, but because they have built something similar before.
Yes, this dev team might quote a higher MVP development cost than a general dev shop, but if you don’t do it right from the start, it can cost you much more money and time down the road. Often people end up shutting down their products completely because of the mistakes they have made at the MVP level.
Btw, if you don’t know where to start looking for a top dev team with relevant experience, ask us about the community of top dev teams at DevTeamSpace by submitting your project.
Prepare the specifications
This is such an important topic that I have already published an article about it – 6 Tips on How to Write a Good Project Specification (with Examples). Here I will only say briefly that if you spend just a bit more time on specifications at the start, it can drastically increase your chances of success.
As Abraham Lincoln said:
Give me six hours to chop down a tree and I will spend the first four sharpening the axe.
Finalize the scope and MVP cost with your dev team
Once you have the specs ready, ask your dev team to prepare a detailed MVP cost estimate and a timeline. You need this not only to understand an initial MVP development budget, but to make sure that you and your dev team are on the same page, and it’s clear to both of you that how your MVP will become a reality and how soon.
Here is what the scope of a typical MVP development price breakdown will look like:
And here is what the timeline could look like:
About the price of MVP development. There is no average cost to develop a minimum viable product. Very often, people shop around and ask:
“how much does MVP cost to develop?”
As you can imagine, the most popular answer they hear is:
“Oh, MVP price depends on your product features.”
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Tough, there is a difference in MVP development pricing. You can pay on a time and material basis (hourly rates, no solid deadlines or final scope), or lock the price. The latest one is reasonable – you know that you will not spend any more than that.
However, it will also mean that the scope is locked and you can’t adjust it during the process. It works well when you know exactly what should be done, but it doesn’t work when you have uncertainties.
I recommend you lock in MVP costs and define the scope as clearly as you can. It will minimize the risks and increase your chance of a successful MVP launch.
Build and launch your MVP
Now, once the MVP is defined, you’ve found the best dev partner you can, and the scope is clear, you are ready to start. There are several things to pay attention to:
- Oversee the process, but don’t micromanage.
- Make sure you keep track of any roadblocks and avoid any delays in the process by providing all necessary information to your development team during the dev process.
Some clients want to text/talk directly to developers every day, or like two times per week, each time for 1-2 hours. This doesn’t make any sense. Firstly, you disrupt the process with your talks. and the devs spend less time programming. Secondly, you end up paying for talks, not the actual work.
To solve this, at DevTeamSpace we provide every client with short daily updates on a special dashboard and over email. These updates are written by developers and automatically sent to the client at the same time each day. Updates contain information on what has been done during the day, what roadblocks appeared (if any), the overall project progress, and whether we are still on track to meet the deadline.
As for the roadblocks – simply make sure you watch for them, and when something is needed from your side, provide it to your dev team asap. I mean really ASAP, within 1 or 2 hours, so you don’t interrupt the dev process. If there is a roadblock on the dev team side, don’t wait until they will figure things out on their own.
Offer them your help in the form of a conference call and discuss the problem and potential solutions. This is called teamwork and usually allows you to resolve any roadblocks really fast.
Once everything is ready, make sure you test everything before the launch. Don’t leave anything to chance. Ask your devs to test it, and relentlessly test everything yourself. It doesn’t mean you’re doing their job, it actually means you’re doing your job as the product owner.
Once everything is nailed, launch it, but don’t rush. You should add a couple of days more testing rather than launch an MVP with major bugs.
Now you are ready; now you have a plan to act on and build an outstanding MVP for your product and know your MVP cost. The system described above is equal for startup founders and for product managers in large companies. Your only job is to execute it well.
Tips and traps while estimating the Minimum Viable Product development phase
We talked about the general process to estimate the MVP development phase when creating a new product. Let’s also talk about a few tips can traps, which are as follows:
1. Differentiate between a start-up and an enterprise when planning an MVP
You might have reviewed several examples of successful MVPs. Very often, one comes across examples of MVPs in companies like Airbnb, Dropbox, Uber, etc. Will it work if you try to estimate your MVP development process in your enterprise based on the examples of start-ups? It might not work!
It’s a different ballgame to create an MVP for an enterprise! An enterprise already has several lines of business (LOBs) and products. It already has many customers, and the MVP shouldn’t disrupt the core business.
An enterprise leader needs to factor in scalability early enough during the MVP development phase. The MVP should be robust enough so that the enterprise keeps its reputation intact. The Enterprise should continue to support its existing customers.
Therefore, it must plan the aspects like people, processes, tools, and infrastructure
Enterprises need to mitigate risks, and they need to manage the MVP app development process effectively. The estimation for an enterprise MVP must reflect that.
2. Adjust your estimation process according to the type of MVP
You launch an MVP to get feedback from potential customers about your future product. If you are a founder or co-founder of a start-up, you typically have many aspects to consider when developing an MVP. The following are a few examples:
- How to identify the target audience?
- How to provide the right user experience to the early adopters of your product?
- What can you do to increase the penetration of the MVP in your target market?
- How to get more user feedback about the MVP from the target users?
Notice how the above questions don’t concern themselves with software development at all. That shouldn’t surprise you. When you try to sell something to potential users, you try to demonstrate value. What matters is the value proposition and not the software product.
Accordingly, MVP is about the validation of your product ideas. Do you plan to build something with the highest degree of sophistication at the MVP development stage? Then your focus might shift far away from validating the viability of your product ideas, which often makes start-ups fail.
The key is to choose the right kind of MVP. MVPs can be of the following types:
- Concierge MVP;
- “Wizard of Oz” MVP;
- Landing Page MVP;
- Email MVP.
These types have notably different approaches. E.g., the “Concierge MVP” doesn’t even involve building a software product at the MVP stage. Effort estimates vary significantly depending on the type of MVP you choose.
3. Ask what constitutes value to end-users in an MVP version of a new product
What constitutes value to end-users at the MVP stage? How will you measure it, and which metrics will you use? As Eric Ries demonstrates in his path-breaking book “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses”, successful companies focus on their customers.
The estimation for your MVP will depend significantly on how you define the value to customers. E.g., you might need to ask yourself the following questions:
- “Did I zero in on the core functionality and core features? Did I base my decisions on an analysis of the market needs and the pain points of users? Or, did I just create a laundry list of features?”
- “Do the proposed Android and iOS apps really need the social media integration at the MVP stage?”
- “Does my MVP include the creation of a realistic user flow?”
- “Did my MVP focus only on attracting first-time users, or does it also focus on the retention of users?”
Identifying what constitutes value and focusing the MVP development effort on that help. Estimating the MVP development phase can act as a mirror, which can show up excesses that shouldn’t be there in the MVP.
4. Decide on the MVP tech stack
In this context, the key operative words are “MVP technology stack”. The “Agile” software development methodology involves iterations.
You should offer a functional product when you offer an MVP, however, you can assign a lower priority to some non-functional features (NFRSs). E.g., you can always improve the scalability, performance, etc. in a future iteration.
As a senior leader in charge of launching an MVP, you should know how to make the best use of this elbow room! Let’s consider the example of mobile app development.
Native mobile apps offer the best user experience, performance, and security. You develop a native Android app using languages like Java or Kotlin. Native iOS development involves programming languages like Swift or Objective-C. These languages work with the Android operating system (OS) optimally.
Native apps can make the best use of the device-specific hardware and features, therefore, users find them the most suitable.
However, native mobile app development involves creating completely separate apps for Android and iOS. This requires a longer timeframe. You need two development teams, which increases the development costs.
On the other hand, you can use a modern mobile framework like React Native. You will create one codebase. Your app can run on both Android and iOS.
Remember that such an app can’t fully match the user experience, performance, and security of native apps. However, React Native delivers a near-native user experience.
Can you develop the MVP app using React Native and undertake native app development for the final product? This way you keep your development costs down for the MVP development phase. You are delivering a functional product too. Improve the user experience, performance, and security in the final product by offering native apps.
5. Use cloud computing platforms smartly for MVP development
You will likely use a cloud computing platform to develop an MVP. Remember that cloud computing platforms can help you to control costs, however, it’s not always that straightforward.
Take the example of Amazon Web Services (AWS). AWS provides detailed pricing plans. However, while creating a cost model, you might find it hard to create a realistic estimate for the cloud computing resources that you need.
Make sure that you have a competent architect and project manager in your team with relevant experience.
If you do not find the required software development talent in your in-house development team, partner with a reputed software development company. DevTeam.Space can also help you here via its field-expert software developers’ community.
Write to us your initial project specifications via this quick form, and one of our account managers will get back to you for more details.
Here are a few articles that might also interest you:
Top 10 Expert Web Consultant Developers to Hire in 2021
JDBC vs. Hibernate: Which to Choose? – DevTeam.Space
Functional vs Non-Functional Requirements – DevTeam.Space
Functional Specifications Templates to Download – DevTeam.Space
Frequently Asked Questions on MVP cost
MVP is short for Minimum Viable Product.
An MVP is extremely useful in maximizing your development resources as it allows a basic product to be built which is then refined according to customer feedback. This represents the best ROI for any software developer.
The answer to this question will really depend on the complexity of your software development project. To get an accurate quote, send your project specifications to DevTeam.Space.