How Much Does It Cost to Build an MVP?

HomeChef, a meal-kit startup, spent over a year creating an AI-powered app. The product was indeed cool. Users can customize any recipe with sophisticated features.

But when the app was launched, no one noticed its coolness. At that time, competitors like HelloFresh had already wowed customers with a simpler product. HomeChef closed within a year.

Over 80% of startups face the same fate as HomeChef. Why? Because they pour all of their energy into creating a fully developed product without testing the waters.

The only solution to the problem? An MVP (minimum viable product). It helps you ensure that your app can make it to the real world.

But an MVP for a startup, while being less costly than a finished product, isn’t cheap either. Let’s learn about the actual cost of building it.

Why Is It Crucial to Plan Your MVP Budget?

MVP for startups isn’t optional. It’s critical for success. Below are the key reasons to plan your MVP budget.

Ensures Project Success

A well-planned budget prevents MVP development from going out of control. Startups can avoid financial stress. The chances of project failure also reduce.

Well-Defined Financial Strategy

A clear budget provides a strategic financial blueprint for the development process. It promotes optimal resource allocation. This, in turn, leads to project success.

Serves as an Unexpected Expense Reserve

Budget planning for an MVP for a startup acts as a safety net for sudden expenses. It allows the business to prepare well in advance for financial challenges. Thus, you can handle unexpected problems with agility.

Smart Spending Choices

A clear budget for MVP helps startups make strategic decisions. This is so crucial because startups need to be careful about where they spend money. With budget planning, they can spend money on things like critical product features that offer value to customers. This ensures that the funds are directed towards vital development tasks only.

Reflects the Underlying Purpose of the Product

Planning a budget for an MVP in startups promotes spending only on things that increase the product’s value. It makes the final piece align better with the customer’s needs. In doing so, a thoughtful budget reflects the true product purpose and vision.

What Affects the Cost of an MVP for a Startup?

Many factors directly impact the MVP cost. Below is a detailed explanation of all of them.

Product Type and Complexity

Your product type and complexity are key cost drivers. A simple mobile app with basic features will cost less than an advanced web portal.

For example, a simple mobile app MVP’s cost commonly begins from $60,000. It can go as far as $100,000. This is for an app with basic functions like profile management and user registration. If you plan to launch a slightly sophisticated mobile app MVP with features like in-app purchases, the cost is likely to begin from $100,000.

A simple web portal’s cost, on the other hand, will be no less than $80,000. At the higher end, an MVP development service can charge $120,000 for building it. A more complex web portal with features like data analytics will cost more. Most services will quote a price of no less than $120,000 to begin development.

MVPs for SaaS apps are even more advanced than mobile apps and web portals. This is due to the inherent need for complex features in them. A simple app begins at around $100,000. This is because of features like subscription handling and user management. For a complex app, MVP development companies charge at least  $250,000.

MVP Design

One of the areas where most of the MVP cost goes is UI/UX design. However, it’s crucial to spend here because it is closely tied to your MVP’s success. Below are all the key elements that affect an MVP’s design cost.

a. Work Scope

More features and detailed functions in an MVP increase the design time and cost. The number of screens and user flows impacts the UI/UX design. Extensive user interactions cost more.

b. Design Team Expertise

• An MVP app development company with experienced designers will charge more. But the outcome they deliver is of higher quality. Experienced UI/UUX designers offer valuable insights that result in a better outcome.
• A team with multiple designers and UI/UX specialists will charge more than a smaller team.

c. Tools and Software

• High-quality design tools increase the cost. But they are crucial to creating detailed prototypes and wireframes.
• Some design software has a licensing fee. They increase the total cost.

d. Iteration and Testing

• Various rounds of usability testing with real users raise the cost of a startup’s MVP. Again, this is a critical step to find and address usability issues. It leads to the creation of a user-friendly MVP.
• A design team that refines the design continuously based on user feedback will charge more. Each cycle of refinement will require more time and effort. This increases the overall cost.

Rough Estimation of an MVP’s Design Cost

a.Basic MVP Design: $8,000 to $18,000

• It is ideal for simple MVPs with basic user flows and a few features.

b. Standard MVP Design: $18,000 to $38,000

• This is suited for medium-sized projects. The MVPs are moderately complex and have more user interactions.

c. Advanced MVP Design: $38,000 to $52,000

• It is best for complex projects. These MVPs have numerous features and a nuanced user flow. They have a highly refined design.

94% of first impressions are design-related, and they directly affect user trust.
-ResearchGate

Technology Used

The technology that you use impacts the cost of MVP development. It’s crucial to choose the relevant tech stack to build effectively and quickly. Below are the factors that govern your choice.

a. Available Talent and Community Support

Choosing a widely used tech stack reduces the cost. This is because you already use it in your design. So, the chances of finding skilled developers easily are higher.

The cost will also reduce if you use a tech stack with active community support. These technologies are always getting updates. This increases their effectiveness without you spending more.

b. Maintenance and Scalability of the Tech Stack

A tech stack that only supports existing functions isn’t good for long-term MVP development. This is because if your product’s usage grows, you cannot enhance it with additional features.

The best solution for this issue is to use open-source frameworks. They have active support. These tools also get frequent updates. So, maintenance is easy.

Contrarily, if you use a niche-specific tech stack, the cost can dramatically increase. This is because with the development progress, maintenance becomes tough.

c. Cost of the Chosen Tech Stack

Not all tech stacks cost the same. An MVP for a startup made using an expensive tech stack will increase the cost. The table below gives an overview of the cost of different technologies.

Development Team

There are mainly two types of development teams that most startups choose between. These are their local or in-house team and the outsourced team.

In-House Team

Pros

• With in-house development, you get full control over MVP development.
• Communication across teams is smoother. This leads to an effective development process.
• In-house development boosts security. The data is kept within your premises. So, it shields confidential information and IP.

Cons

• An in-house team demands much on various fronts. You need to hire skilled staff and pay them regular salaries. Money is also spent on technology training. You also need to allocate a budget for IT infrastructure.
• Creating and maintaining a talented team and IT setup is time and cost-consuming.
• In-house developers may have limited expertise. This makes the development process challenging.
• Resource constraints within the organization extend the MVP development timeline.

Outsourcing MVP development

Pros

• When you outsource to an MVP development service, you avoid various expenses. This is because you pay only for the exact hours of development. You don’t have to bear the overhead expenses of managing an in-house team.
• Outsourcing lets you tap into the expertise of skilled developers. It increases the chances of your MVP’s success.
• Outsourcing allows you to work with highly experienced developers. Working with them boosts the speed of development. It results in a faster time-to-market.

Cons

• An external team might face communication issues. This can be due to a timezone difference or language and cultural barriers.
• With outsourcing, you need to give up control over some development tasks. This can make a few startups anxious.
• Outsourcing requires you to share your sensitive data with the external team. To prevent data theft, you must have a strong legal agreement.

In-House vs. Outsourcing: Which Is More Cost-Effective

Outsourcing MVP development is way more affordable than hiring an in-house team. It eliminates factors that increase costs. These include salaries, benefits, infrastructure price, software licenses, and continuous maintenance. Not only that, but it lets you leverage the skills of a global pool of talented developers. This, combined with a lower price, makes outsourcing better from a cost point of view.

How to Reduce the Cost of MVP Development?

Startups, SMEs, and enterprises can use several strategies to reduce MVP development costs and still get the best product-market fit. We have explained general tactics and those that companies of different sizes can use.

 1. Prioritize Core Features

Focusing on features that fully validate the idea of your product is important. Over-engineering leads to the inclusion of features that steer the offering away from fixing the primary problem of your target users.

 Tip

Frameworks like Kano, Value vs. Effort, RICE, and MoSCoW will help you select core features properly.

 2. Build Cross-Platform MVPs

A cross-platform app need a single code. Then, it is deployable on varied platforms. A cross-platform MVP using frameworks like React Native or Flutter is way cheaper than separate native apps for iOS and Android.

 Tip

Use a single development team with experience in iOS and Android deployment via Flutter or React Native.

3. Use Open-Source Tools and Templates

Open-source libraries, frameworks, and tools are free to use. They don’t require a licensing fee and help reduce development cost. The pre-built frameworks also enable developers to quicken the MVP development process.

 Tip

GitHub, GitLab, and DEV Community are great places to discover open-source tools and libraries.

 4. Outsource to Regions with Low Labour Costs

Software development rates in regions, like Asia, Eastern and Western Europe, and Africa are 30 to 50% cheaper than in other places. So, outsourcing MVP development to an experienced team in such regions helps lower costs.

 Tip

Use platforms like Clutch, GoodFirms, or Toptal to vet outsourcing agencies.

 5. Start Testing Early

Test your MVP as soon as possible. It reduces the risk of launching an error-prone app. Gather user feedback and validate core features to prevent confusion concerning your product’s use.

Tip

Use lightweight testing methods like smoke tests and feature flags to detect issues early.

 6. Understand the Needs of Your Users

Invest time and funds in understanding your users’ needs. Through surveys, interviews, and feedback forms you find out what should be included that will drive real value to your users and reduce wasted effort. Since B2B MVPs need deeper feature sets and performance, knowing what users want is crucial.

 Tip

Use tools like Typeform or Maze for fast user research without hiring research teams.

 7. Hire a Dedicated Team or Agency

A specialized development agency gives you skilled talent that is more cost-effective than an in-house team. This team is also ideal for long-term iterations and support. An offshore development team provides deep visibility into the project. This is because they have project managers and project management tools that are aware of what is happening.

 Tip

Ensure that the agency uses transparent project management tools.

 8. SMEs Should Adopt Reusable Tools

Reusable interface elements, API services, and authentication modules reduce time and cost for developing MVP. It allows SMEs to launch MVP quickly with minimal expenses.

 Tip

Use component libraries like Material UI or Tailwind UI, and services like Firebase Authentication and Stripe APIs to plug and play key features.

 9. Combine In-House Team with Outsourced Development

Your in-house product management team can handle the vision, roadmap, and feature prioritization. Combine this with the outsourced team, which allows you to only pay for deliverables or hours used. There is no need to worry about ongoing salaries, benefits, or overhead.

 Tip

Assign your internal PM to own sprint planning and daily standups.

 10. Enterprises Should Roll Out MVPs in Phases

To do away with full-scale launch expenses, enterprises should consider phased roll-outs. It’s easy to spend upfront on infrastructure, support staff, and full marketing campaigns. Phased roll-outs eliminate costly features that are of no use to the end user. Phased roll-outs enable you to use only on what’s most important and improve budget forecasting.

 Tip

The roll-out should have stages like internal testing, private beta, limited public release, and general launch and KPIs for each.

Common Hidden MVP Expenses

Most founders overlook the following expenses when budgeting for MVP.

Launching an MVP That Fuels Long-Term Growth

An MVP for a startup is critical to achieving long-term growth. However, the cost can quickly add up. The only solution is to focus on the most crucial things related to it. These are the product features and hiring the right development service. Launching a highly sophisticated product doesn’t guarantee success. Contrarily, a simple product but one that is closely aligned with your customer’s needs can propel your business to new heights. Enjoy the journey of creating an effective MVP and use the insights in this post to guide you along the way.

Frequently Asked Questions

1. How many hours does it take to build an MVP?

The time depends mainly on the MVP’s complexity. A simple one with a few features does not take more than a few weeks to complete. An advanced MVP will take at least 3 months to build.

2. How to build an MVP quickly?

Research your target customers. Create a product vision and set a budget. Select a definite timeline to create the MVP. As soon as you release it, get feedback from early users. Use it to enhance the product.

3. What is the difference between an MVP and a prototype?

A prototype is an initial product model. It is used to test and enhance the product’s functions. An MVP is a product version with specific features. They allow early buyers to properly use the product and offer feedback.

4. What is an MVP budget?

An MVP’s budget is the cost of everything involved in making it. It consists of design, coding, project management, and testing. If an MVP requires maintenance, the budget also includes that cost.