The Restaurant-Goer’s Guide to Software Development Cost

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Aik Arutunian

05 Dec 2016 - 4 min read

In a previous article, we explained the step-by-step process of app development cost estimation. It seems, however, that there are misconceptions of what goes into the software development cost. Here, we’ll use a quirky metaphor to do a cost breakdown.

The whole is more than just the sum of its parts. Like when you go to a restaurant, you know that the food it serves will cost significantly more than if you bought the ingredients and then made the food yourself. That’s because:

  • You don’t have to buy the ingredients yourself.
  • You don’t have to prepare the food yourself.
  • You may not have the recipe or the special techniques or equipment to make it.
  • You don’t have to set the table and do the washing up. All you do is eat, pay, and leave.

In order to make the whole thing work for restaurants, you pay for:

  • The food.
  • The equipment from dishes and silverware to pots and pans, furniture, etc.
  • The rent for the place, the utilities, the insurance, etc.
  • Salaries – for the chefs, the waitresses, and back office positions.

Sandwiches don’t scale well.

It’s essentially the same with app development. The cost of the app commissioned for development includes things like:

  • The inner technologies, usage royalties.
  • The hardware and software essential for development.
  • Facility costs – rent, utilities, insurance essential to all businesses with offices.
  • The salaries of designers, developers, sales staff and business managers.

There is, however, one supremely vital difference between what you get from restaurants and software developers.

What is that difference?

An app is only built once – and costs the same whether you only have one or a hundred thousand users. You do not need to multiply its development cost for all the users that get it. Unlike sandwiches, mobile apps are highly scalable.

Apps are Very Complex

Mobile apps, alongside many other digital technologies, are easily among the most complex things ever built by humans. A mobile app that fulfills business objectives, looks good, scales easily and is highly intuitive for use by end users – is an incredible accomplishment.

Even small apps often have a complex structure with hundreds or thousands of parts. Each part is a statement that has to be crafted to be just right to work as intended across hundreds of different devices. A large app can have 500,000 parts or more, which are mostly custom work. Imagine what a mechanical engineer would charge you for a car with that amount of parts built to your specs.

The general rule is, the more features the application has, the more it costs. What can make app design cost more or less? There are factors like complexity, project size, designer’s level and geographical location leveraging which can affect the price.

App design and project management costs

Mobile application development is not just writing tons of code. It involves designing experiences, managing the project risks and deadlines, business analysis work on requirements, testing, and more.

Why pay for app design” – you may ask? Because design makes the difference between a great app that provides a return on your investment and an app that fails to recover your costs. Consider that there are about 3 million mobile apps available on Google Play and the Store. Of these, up to 50% generate few to no downloads. Nearly 70% of the balance is not used after the first 3-7 days of being download. That means only 1 in 6, 16.6%, of mobile apps are meeting their business goals.

UI/UX (user interface and user experience) design equates to usability – if people have a hard time using your app, they probably won’t. There is no sense in creating a beautiful code behind a button that perfectly solves a problem if the button itself cannot be easily found in the mobile interface. The better the design both UI and UX (which are different things, actually) the more users feel engaged with your app, and yes, in design the “Devil is in the detail“.

Upgrades and Enhancements

Software upgrades and enhancements are the modifications to an existing piece of software that result in additional functionality, enabling the software to perform tasks that it was not previously capable of performing. Costs for upgrades and enhancements that provide additional functionality should be capitalized. Costs incurred solely to repair a design flaw or to perform upgrades that extend the useful life of the software without adding to its capability (i.e. migrating to a web-based platform) should be expensed.

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