Big companies can't risk going with a freelancer (who might go out of business or be booked when they need updates) so they put out an RFP to software firms.
A month or so of upfront design (wireframes, screen design, user stories). Another couple of weeks of iterations to get signed off by the branding/marketing group.
The development will need a team, four developers is about right (we need to get this app out fast in the ever-changing mobile landscape). We'll need a manager at half time and a team lead to handle client meetings. Throw in a dedicated test engineer (so many phones to test on these days...) and a month for formal test plans and execution (did we mention this app might be audited? test plan is 500 pages).
Make sure it is localized as well - we are a global company with global customers, all of whom we value. We also don't want to be sued, so we'll need a EULA screen that the user must accept. And a help page. And a way to register on our site.
Oh yeah, the way our budgets work, we've only got one shot at getting money for this app - can't do a minimal release and update it after it's in the store.
Conversative costs for an app in the OP's "BMW Tier":
One month upfront design at $100/hr (1 designer, 1 dev): ~$30k
Three months of development at $100/hr (4 dev, 1 test): ~$250k
Three months for PM at $150/hr (0.5 PM): ~$40k
One month formal resting at $100/hr (1 test): ~$15k
Monthly maintenance/update 20hr/month (1 dev): ~$25k
Total: Over $350,000 for the version 1.0 of your mobile app (on a single platform)
You sound like you're disagreeing with the OP, but the article explicitly calls out a $400K+ category of app development if you "do everything right". I think you're on the same page as the author here.
The Bugatti Veyron SS costs approximately $2.7M. That's about the top of the price range for new-production road cars. Owning and operating a world-class race car costs more and tends to be budgeted as a lifecycle rather than a one-time purchase.
I'm sure someone else can come up with witty analogies for apps, but I think the model holds. Outsourcing the development of an app costs as much as a car, for some value of car. You get what you pay for, and the things that cost a lot at the high end aren't immediately obvious to people not in the business.
I second this estimate, though we do it at half this cost as our developers are in India. Typical enterprise applications require 3+ years of maintenance & enhancements that would work out much more than just getting the app out of the door. Also most enterprise applications would require a travel component as requirements gathering and field testing has to be done on premise. Add to this cost of equipment that is required for development and testing. And yes, freelancers cannot be trusted with enterprise development as long term support infrastructure is required.
> freelancers cannot be trusted with enterprise development as long term support infrastructure is required.
How is a company that has employees any better? What are you going to do, lock the original devs in the dungeon so they can't leave?
The reality is that getting the same set of eyeballs that did the first job counts as the kind of special expertise that only comes with a premium. Either the devs are being paid to watch Law and Order seasons for three months in-between your maintenance cycle, which is its own special kind of premium rate. Or, you have to outbid the project they've moved onto, plus any contractual penalties they might incur for moving off the new project, plus the Fred Brooks Tax for playing musical chairs with developers.
A company is a going concern which can provide legally tenable support guarantees irrespective of individual developers which is not possible for a freelancer. Project Management and enterprise processes are precisely there for this purpose. With a freelancer, you have no such guarantee. With enterprise outsourcing, cost is inflated, but business continuity is taken care. Reason why Bank of America would not look out for the next door freelancer while developing their mobile app. There is a reason for organizational forms to exist :)
> which can provide legally tenable support guarantees irrespective of individual developers
There is very little in software that is irrespective of individual developers, least of all support guarantees. It in fact hinges entirely on the current and former individual developers, and the quality of whatever notes or documentation were left behind. The mere fact that two parties negotiate that software should be performant and bug-free, does not make it so by force of will.
As for business continuity, most "app" companies have been around for 1-3 years, whereas the developers that comprise them usually have a decade or two at writing software professionally on the resume. There are more established "consulting" companies that pre-date iOS, but I'll let you in on a secret--they farm work out to freelancers. It's entirely a question of how many middlemen you want between you and the person ultimately responsible for getting the work done.
I don't know where you got the notion that software is just creative art form of its individual developers. In that case, software would have been a guild activity and the industry will not exist. Software has certain creative elements, but there is also ample engineering and planning involved. Don't fall prey to hubris of lone-wolves of yesteryear - the software universe is manned by millions of faceless workers who create, design, engineer, plan and produce complex software. It is not one or two individual developers who matter, it is the team. This is coming from a Software Architect who has designed and implemented dozens of complex projects with large teams. Nothing would be farther from the truth if I said, the success of my projects were solely because of me or two three lone wolf programmers! Software as an industry depends on the notion that the process of developing software is controllable and replicable. If you do not get that notion, then you can as well dream industrial revolution did not happen and software universe do not exist.
That's a lot of bloat for a single-platform, first version app. A designer + developer duo can put a nice polished app out in a month or two, and could cost way under $100/hr. You certainly don't need a team of four + a PM. The process you're thinking of fits the "I want the best" price range (1 month testing?).
Way under seems like a bit of a stretch. The average developer salary is $92,000 per year, which works out to around $45/hr if we assume a standard work week. The rule of thumb is that you need double or even triple of what you are paying your employees in order to be able to afford to employ them. Even if you are the business owner and employee, you still need to recoup the costs of running the business for yourself so the math remains the same. It seems the bare minimum you could charge for the average developer is $90/hr, which is just shy of the $100/hr. quoted. Above average developers will require much more per hour.
You could, perhaps, charge way less if you hired below average developers, but that seems to fall under the first category and not the one the parent is referencing. This, of course, assumes that you are operating in the USA. Numbers may differ in less costly parts of the world.
I feel it still sets a decent baseline for the purposes of discussion. We will never be able to accurately model every last developer's situation.
Though entry-level developers are even more costly to employ. They require more training, more time to solve problems that are old-hat to experienced developers, etc. You still need to bill them out at, say, $100/hr. with the expectation that for every productive hour, they have an unproductive hour that isn't billable.
Hi, I am from another country. When you say that the average developer salaray is $92000 does that include all costs associated with that employment? Including insurance and possible taxes?
I am just trying to compare.
EDIT: I don't mean _all_ costs (not like desk and computer) but salary + benefits + insurance + pension + taxes.
$92,000 is what the employee gets paid by the company. It would include any costs incurred by the employee (income tax, transportation costs, etc.), but would not include things like benefits, insurance, etc. that are paid for by the employer. That is, in part, why you need, at least, twice the rate of your employee in order to be able to afford them.
Oops, I missed the part about not being able to use freelancers. $50-$60/hr is a common rate for freelance developers. There also excellent devs that don't live in countries as expensive as the US.
This is a recipe for disaster. I have been full-time freelance for the last 4 years, and scaling into a full-service consultancy with all the accoutrements (like an office for my employees), and I can tell you that $100/hr is really a bare minimum for meaningful profit margins on developers. I have a few contracts under that (for various reasons), and with the new hires I'm contemplating, I am going to have to raise their rates or drop off and replace them with better paying clients.
As a freelancer, you might be able to get away with $70-$80/hr minimum, but $100 minimum still is easily within a reasonable price range.
I would expect a fair market rate for great developers to be something more like $150-$200/hr. Unfortunately, I have a hard enough time getting clients around here at $100, but in order to really have the business firing on all cylinders, I would need to be charging $150+ for each developer hour.
The margins at $100 and below are barely enough to make payroll; there is almost nothing left to pay for things like significant marketing or PR, investment in equipment or facilities, loose time to spend on internal projects or internal maintenance, etc.
I think the point was, that even if you are a freelance - you still have employ yourself, with all the overhead that implies: running costs, pension, vacation, accounting etc.
So basically most above-average developers in US (and areas with similar wages / living expenses) would charge at least $100 per hours.
Your point about developers in countries with lower living expenses than the US is valid. But that would also depend on the customer being in said country.
Where the developer lives has nothing to do with what they cost (at least it shouldn't). Cost is a function of value. So if you get a really cheap developer then either you've found someone who has no idea what their market rate is (what else are they ignorant about? Anything that will hurt your product?) or they're just not as good as someone more expensive (the majority of the cases, though people don't want to believe this. They want to think they've found "a deal").
So let's assume these guys are on staff working at market rates for experienced pros in a major metro area. Say salaries of $90k per year (realistically they cost much more and we'll get to that)
They each then make $7500 a month...multiply by 2 (2 guys working for a month) = $15k. 2 Months = $30k.
Either way we're still in Hyundai Accent to Honda Accord range there, and the hourly rate is a bit over $40/hr (or $80/hr for both guys).
So you are right that it can be done for under $100 per hour. But it still costs about a car.
More realistically,
If you estimate it out the right way, benefits and all included, you start to climb up the hourly rate scale very quickly. And the cars you can buy with that money get a hell of a lot nicer.
A good rule of thumb is that you assume skilled experienced labor wants to bring home about $100k. A good conservative estimate of what it costs to employee somebody at $100k is about $200k (benefits, overhead admin expenses, etc.). And if you follow that, we end up with about $100/hr per person pretty quickly.
You are assuming that your single developer is capable of everything, and has time for everything - writing mobile code, writing backend code, DB, DB optimization, profiling of all the code, setting up analytics, documentation, etc etc etc.
If you can find a guy like that, and if he can write maintainable code, all "way under" $100/hr minus designer's salary, you've struck gold. People like that are extremely rare.
I really doubt a v1 of an app would have much if any "optimization", profiling, analytics, or documentation.
I would argue that the majority of the easy apps are done. Anything more complicated than a fart app will require profiling and optimization. It's easy to forget that iOS and Android are embedded systems with a finite amount of resources.
Well, you get what you pay for. That's the difference between some random dude and a pro. I deliver my v1.0 products optimized and documented. Analytics is pretty much a requirement these days, executives absolutely need to know how their app performs.
The article didn't appear to be speaking to a "big company". Those people already know the cost makeup of getting their $300k+ app done.
I think this article was speaking more to the smaller business that has no experience in app development but wants to take a plunge into the market. I deal with these smaller businesses here and there. They're often very unrealistic when contemplating the costs associated with app development. They're thinking $500, like that ad they took out in the local paper and they're often shocked when I let them know that their product vision is a couple of orders of magnitude different than their budget.
This article would probably be one I'd point them to in order to help them understand the investment that they're making, since it is an investment.
I was once contacted by a company who wanted to purchase my code to use for their app for their company. It wasn't a flashy app, but had a few time-consuming, and at the time, unique features. I gave my starting point - $10k. I expected them to come back to negotiate, but I think they were taken aback at the price I quoted and decided to go another way. I suspected they instead outsourced it or developed it in house. Several months after that (likely over a year) I checked the App Store for their company name, and they still did not have an app. Whenever I remember that episode, I wonder if they ever realized that the deal I offered them was actually reasonable.
It's not just a matter of convincing them what the market rate for software is. It's convincing them that it's worth that rate to them.
If I had a nickel for every time I was approached by someone with a spec that exceeded their purchasing authority (usually by an order of magnitude), I would be a very rich man. There are a lot of mondays out there where some manager says "We need an app, here's $10k signing authority, go figure it out" and what they do is e-mail 3 developers for quotes.
Each developer looks to the right, looks to the left, and sees competition, so there's social proof that there's money in the deal. Exactly one sales rep has a brain in his head, and uses the situation to score a meeting with an actual decisionmaker to talk about a totally different project that might be worth paying actual money for. Everybody else just expenses a few lunches and enjoys pretending that meetings are work.
But despite all the social proof, there's usually no real desire (within several multiples of required effort, anyway) to actually produce anything. It's just some lower manager read in a magazine article somewhere that they need an app, and they have the authority to use the corporate letterhead and book conference rooms, and nothing better to book meetings about.
Someone offered to buy an entire app from me, a paid iOS app that was making stable income and has a proven codebase. I quoted 80k (or was it 100k) and the enquirer was shocked, replying that he was assuming a 10k price tag. And he is a CTO of a startup.
There needs to be a clear distinction between pricing for an existing app vs pricing for building one from scratch. If the former this will be priced based on revenue, potential revenue and how much the owner wants to keep it. If building from scratch then the cost has to be based more towards developer/admin hours.
So given your app existed then potentially $10k could be a great price no matter how many hours you put into it if; you not particularly fussed about keeping it from an enjoyment sense, it makes sub $1000 per year in revenue and you don't see yourself creating significant future revenue from it.
All submissions but one are darwinapps.com. The exception is vladlokshin.com.
Nice marketing.
I'm not against self-promotion, but it makes me wary when someone uses their account solely for that purpose. I'd prefer that people contribute to the community instead of just submitting links they stand to gain from.
Good call. I need to forward vladlokshin.com to DarwinApps.com
If you wrote a blog post about apps pricing & expectations, ran an app dev shop, and frequented HN, wouldn't that be only logical to do if you posted something?
Nice detective skills, but I'm not hiding anything.
No kidding. I'm really glad you posted--my company is (by my estimation) a couple of years behind yours, and I think we can learn a lot from the way you guys are doing things, so thanks!
You'd probably be surprised at how new/young we are, but I appreciate the unintentional compliment :)
In reality, we've been doing this outside of our 9-5s for a couple of years (with the majority of the "we" coming together while trying to build a few internal projects).
Most of our dev team has been full-time for a bit over 1 year now.
Start-ups are rough and when you're bootstrapping through consulting, some months are great, and some months are rough. I kept my full-time to feed in money during the bad months to keep the machine growing at times that I knew it was in the right direction. I had that job up until a little over a month ago.
The full-time job was actually great (consulting at the US HQ of a top-tier German car company, ironically enough) but I'm awful at working for someone else, there was too much talent and goodness brewing behind the DarwinApps team, and I was clearly the bottleneck. It's not easy doing something like this while you have a 9-5, but if you're young and single, it's doable. I'm not saying it's not doable otherwise, just speaking from what I know.
We are by no means a success just yet, but most of the core team is finally in one of two offices, working on the same problems full-time. It's a beautiful thing, but it's by no means a success just yet.
That being said, a lot of awesome people helped me with advice along the way. I'd love to help if you have any specific questions, think I could answer them, and if you think it would help progress your company in the right direction. Feel free to email me: Vlad (at) DarwinApps.com
Submissions isn't a good metric. patio11 is one of the most respected members of the community, and 11 of his 17 submissions are articles he wrote: http://news.ycombinator.com/submitted?id=patio11
Totally fair. I'm usually too slow to get new content posted up, as someone else on HN usually gets there before me, so it's my own for submissions. That may continue.
I try to be active enough in commentary, but I could definitely improve there. Totally noted.
This blog goes back to the complicated issue of people who don't understand software needing to buy software. The part that this analogy misses is that a $400k app is not necessarily going to be better than the $4k one, or even very different.
The interplay between costs, quality, tradeoffs, choices, project management, etc is way too complicated for someone without some experience in the process to "get."
"Websites" were the first piece of bespoke "software" that every company needed. The "how much does a website cost" was a question that "websites-for-companies" people still don't really know how to answer. Clients are still bewildered by quotes orders of magnitude appart.
I wonder if the intelligence level here is growing though. An experienced business owner (say, a 15 year veteran) by this stage will probably have paid for (or at least been involved in) a handful of such projects.
I'm pretty sure the winner would be the IRS's modernization program, which was to write new software to process tax returns. It began over 16 years ago and has consumed over $12 billion (just for the software development portion).
$4 billion was spent on the first attempt at writing this software before they gave up in 1997 with no usable product. That's a $4 billion "app" nobody ever used.
It's been a few years since I read about it so things may have changed, but last read was they spent another $8 billion in the 2000s trying again, this time outsourcing the development to consulting firms with thousands of developers. And around 2005/2006 had yet to produce a system the IRS could use, forcing them to continue processing tax returns with paper and antiquated systems.
The estimated payroll costs for Windows Vista are estimated to be 10B. Now consider the costs for every Windows version released since 1985, and include R&D/marketing expenses.
But that's an operating system, not an application. You've got to give credit to the IRS spending more on one application than Microsoft spent on their OS.
OSes are not particularly complicated. I could imagine that tax laws require a lot more code (and tests) than dragging some windows around and scheduling processes. (Neither are easy, of course.)
That "one application" was software+hardware tasked with managing millions of hand-written paper forms. The electronic version of tax filing was far cheaper, and launched successfully.
You're getting a lot of replies that aren't mobile apps, but just software products in general.
In terms of mobile apps my money (hah!) is on one of the many medical apps that are in development - we're talking about apps intended for use by medical professionals in actual medical institutions.
Not only are they extremely costly to develop (someone's got to pay the army of consultants, after all), they face incredibly costly certification processes before they can see any actual users.
You're right. We're an app dev company, and we're in the process of developing a medical app for a client. The FDA approval process makes it very time consuming.
Actually, thinking in terms of largest total return for a project (ROI is infinite if your I is 0).. I can't think of too many projects that have had larger returns.
Probably the iPhone? Maybe some Cars (camry? Model T?) Maybe some really big mining/oil operations? What else is in the same league?
Depends on your definition of "App". The article is concentrating on mobile application, which is probably the definition you are using.
Regardless, I don't have an opinion on the most expensive mobile app, but your question made me think of a recent bit of news where the US military spent over 1 Billion dollars on an ERP system and the project is being scrapped. Ouch.
I would guess Facebook because they would be changing it on a daily basis to keep it consistent with their web version, and adding dedicated functionality unique to the mobile platform.
Here's a competitor for that title, the NHS National Program for IT. The plan was to build a patient records system to run in every hospital in the UK. It was billed as the biggest IT project ever.
And its still counting. I have a friend working in IT in the NHS and they are still spending money hand over fist on transforming digital records. Basically, nobody wants to be accused of putting tax money before accuracy of patient records which essentially means blank cheque and unbounded scope.
"I want something that works on anything" -- '97 Subaru Outback Wagon. Hauls the kids, handles rough roads well, gets through snow, reasonably easy to work on, easy parts availability, predictable maintenance schedule. ~$3-6000 used on Craigslist.
I'm not a developer. I've been considering paying someone to develop an iOS app for an upcoming project I've been working on which is based around subscription to a magazine-like service. The application would need to:
* Be built around the Newsstand APIs to display text content
* Allow in-app subscription with a free trial
* Display text content with appealing and highly readable typography
That's pretty much it. Is the $1-$5k range reasonable for an app like this? From my perspective, it would be about as simple as an application could be (displaying simple pushed text content) but I realize that as a non-developer I'm not really qualified to make that call.
As a freelance iOS developer, there're a lot of price-defining parts missing. However, I'm sure it's not possible for $1. I might take on such a project for $4-5k, but I'd insist on locking down the scope and charge you extra for anything after basics. I'm living in relatively low cost country mind you..
Thanks for taking the time to help me, those points will make it easier for me to put together a proposal when I start approaching developers.
I realize your time is valuable so feel free to leave it at that if you like. Having said that:
What kind of CMS backend is typical for newsstand apps? Are there any free or low cost solutions?
Are there some standard libraries for covering subscriptions and payments for these kinds of apps, or is it typical for these to be scratch-built per app? Is this typically a major feature in terms of development time?
After reading your questions, I'm confident my app will be on the simpler end of things--black on white, static text-only content with some limited hypertext, small content packages--but I recognize this doesn't necessarily mean a simple application.
To be honest, all I really need is the ability to deliver simple PDFs, have them display nicely, and charge a subscription for it. From outside of the app development ecosystem, I naively anticipated this would be fairly simple, but as I learn more this seems less and less true.
Making a mockup (preview screens) helps to put all your thoughts together. Your future developer will appreciate that. Paper&pencil is good, mockups by Balsamiq/mockupbird/etc allows to add some interaction.
Mockups will allow you to realise what exactly has to happen between the screens. Maybe you'll want more functionality after that, maybe you'll see that parts of it are not necessary.
I saw a webapp targeted for mobile apps content delivery on HN some time ago. Google should find it. It may be faster/cheaper to build a custom solution for simple delivery. But extending it may cost a lot and reusing out-of-box solution may be cheaper in the long run. I'm not familiar with NewsStand API so I can't comment more in this front.
I've been 'struggling' with this lately. I have app dev experience but not really anything to show in public so I have been offering to do apps at $2k-ish as a portfolio building exercise. Maybe I anchored it too low or this is just how it is, but I received a fair few messages asking if I'd go sub $1000 or work on a pay-if-we-like-it/if we make money basis.
You are going to have very painful projects at that price range. The customers will be entirely out of touch with reality, if they think below $1000 is "fair" for an app (or really any kind of custom software). Expect such projects to drag on and on, and be very sure to get at least some payment upfront, as these kinds of customers also tend to forget or be "too busy" to pay their bills.
Also, stay far, far away from the pay-if-we-like-it, pay-if-we-make-money schemes.
Unless you are desperate for the cash can't you do some simple but nice utilities to put in the app store as your portfolio. If they are good enough to charge for you might get a trickle of revenue and if not you still have the portfolio.
You also get to choose what you demonstrate rather than what a client wants you to do and you won't be stuck implementing someone else's design mistakes and putting them in your portfolio.
If company building app for 2000 and it's not one page. Company should recognize it will be piece of junk.2000 it's just 20 hours of work. What you can build in 3 day?
When dev guy building his portfolio that mean this guy doesn't have experience. So he will make 1000 bugs. And it's normal later he will be good (maybe).
So question is are do you ready to pay money to teach someone? Or you just need good app
The point is that "app" means application. "What does an application cost?" - well, is it a CLI that prints the current time in the terminal? Or is it Microsoft Word?
You can get a fully functional well polished fart button app for both iOS and Android made for less than $4k, but I doubt you could make something like the Facebook app on even one platform for $400k.
That would defeat the whole point of the analogy which is to compare to something familiar. Nobody is familiar with buying "custom cars"
Custom houses is something that people are familiar with. It's an incredibly stressful and unpredictable undertaking for most people. But compared to custom software, its nothing. A custom house might cost 20% more than what was expected. It might take twice as long. Software might cost 2000% more than expected and the end result might be nothing like what the buyer though they were going to get.
OR, you could just get off your ass and build it yourself ... monetary cost: $0, time cost: 6 months, benefit: you now have an extra skillset and the ability to execute your ideas
Building a car by oneself is unrealistic, building an app is completely feasible.
Big companies can't risk going with a freelancer (who might go out of business or be booked when they need updates) so they put out an RFP to software firms.
A month or so of upfront design (wireframes, screen design, user stories). Another couple of weeks of iterations to get signed off by the branding/marketing group.
The development will need a team, four developers is about right (we need to get this app out fast in the ever-changing mobile landscape). We'll need a manager at half time and a team lead to handle client meetings. Throw in a dedicated test engineer (so many phones to test on these days...) and a month for formal test plans and execution (did we mention this app might be audited? test plan is 500 pages).
Make sure it is localized as well - we are a global company with global customers, all of whom we value. We also don't want to be sued, so we'll need a EULA screen that the user must accept. And a help page. And a way to register on our site.
Oh yeah, the way our budgets work, we've only got one shot at getting money for this app - can't do a minimal release and update it after it's in the store.
Conversative costs for an app in the OP's "BMW Tier":
Apps ain't cheap.