MVP development cost: Key affecting factors & Cost breakdown 

One of the most innovative ways for companies to test their ideas is to build an MVP. This is a way to secure the interest of investors and attract users without spending too much money. But the question is: How much should you spend on MVP development? 

Our guide will examine the real costs of developing an MVP, starting with choosing the design and technology stack, covering hidden expenses, and selecting the right team. It will also provide proven tips on optimizing your budget while guaranteeing the MVP's functionality for the following stages of development.

MVP Budget Estimation

In most cases, the budget varies from $30,000 to $180,000, depending on several factors, such as time to develop the feature, priority, platform type, and more, which we'll discuss later. 

In short, development costs depend on the set of features and the time you need to implement them. MVP's business value is justified due to faster time to market, adaptation of your strategy and vision, and quick testing of ideas. 

Calculation of MVP app development: 

Pre-development for MVP app development consists of the stage of research and validation of ideas. In terms of time, it is a variable step, as it takes place in the process of constant mutual communication. 

The average cost is $8,000 - $14,000

This step includes prototyping and creation of wireframes with a standard term of up to 2 weeks. You get documentation for quality assurance: 

Product Development Process

We would like to emphasize that the cost and terms are approximate and depend on your company's peculiarities and requests and the format of cooperation with the development partner. Nevertheless, the real MVP development cost varies from $30,000 to $180,000, so you get a product ready for the market at the finish line. 

After development costs are estimated, what can be done next? Next, you need to analyze what exactly influences the formation of this amount and the key factors of development costs and their causes.

MVP Development Cost Factors 

Many of the following factors are under your control, so you should be guided not only by development costs but also by the goal of creating a high-quality product with high profits. 

With this in mind, here are the factors that will significantly affect MVP development costs:

Complexity of the MVP Project 

Development costs depend on the complexity of your project, whether it's a simple MVP with a turnaround time of up to 4 months, medium complexity of up to 6 months, or highly complex of up to 9+ months. 

What exactly affects the level of complexity of an MVP project? 

Therefore, the project's complexity is due to the set of features that you want to release during the pilot launch. 

Development Team Structure 

Team structures that you can hire: In-house Team, Outsourcing, or Hiring Freelancers. Their working hours will also vary: 

The in-house team option is the most expensive and most extended with estimated development costs in the range of $50,000 - $200,000+ and a timeframe of 3 to 6 months. Additional costs will be required not only for the minimum viable product but also for benefits, office space, recruitment, equipment, etc. The in-house team cannot guarantee perfect MVP development; the advantage can only be in established communication.. 

Outsourcing the development of an MVP app to a dedicated team is more cost-effective than hiring internal staff or freelancers. Many agencies offer a wide range of services and domains and have a core value proposition that includes a successful MVP, proven market demand, and cost-effectiveness. The price of outsourcing directly depends on the initial MVP development budget's goals and basic business requirements. Before choosing an agency, also consider their experience in your domain. The timeframe for MVP development ranges from 2 to 5 months on average, but it can be longer depending on the complexity of the MVP.  It's more likely that the team will basically consist of 50% designers, 50% QA, 25% PM and 100% Senior. The average MVP development cost ranges from $50,000 to $180,000. 

The choice of freelancers is relevant for companies with a minimum budget. However, the difficulty is manifested in the inability to manage such a team for quality control, development process, and development phases. The development costs of hiring freelancers are as follows: 

Note: the cost is approximate and depends on the specialist's skill level, the MVP's complexity, and the region. 

Geographical Location

The budget for MVP development costs can be optimized by adjusting for the development team's location, compensation, qualifications, and expertise, as well as differences in approaches to organizing business processes. 

For example, the financial compensation for the average MVP development team is much higher in North America and Western Europe ($50,000 - $200,000+/m) than in Eastern Europe or South America ($15,000 - $50,000/m). 

This is despite the fact that, for example, outsourced development teams adapt faster to the requirements of a foreign client, have well-established processes, and guarantee high product quality of MVPs and software at the level of their Western counterparts. 

Note that these are not the only factors that affect MVP app development costs because some aspects often remain out of focus at first and affect the MVP development cost after the start of cooperation with the development team. Let's take a closer look at the hidden MVP development costs that are not taken into account at the beginning of a collaboration with the MVP development team.

Hidden Costs of MVP

Development costs are agreed upon at the start, but in practice, the price increases due to non-obvious expenses that cannot be analyzed in the future. To avoid unpleasant situations, let's look closely at what affects the final budget. 

Extra Features

This is synchronized with the addition of new features or changes to those already approved by the customer for MVPs and their development costs. This also applies to the logic of app development or the development process in general. 

For the development team and the customer, it leads to: 

As a result, you get a 10-50% increase in budget, which is an increased risk for minimum viable product projects with a limited budget and too fixed deadlines. 

Solutions for optimizing MVP app development: 

Quick Fix Risks

Trying to meet tight deadlines often leads to quick and inefficient solutions in MVP development, such as development simplifications or lack of proper testing. 

This has the following consequences: 

Elimination of the consequences of the "quick approach" to MVP development eventually requires: 

In complex cases, the problem of integration with external services such as analytics, CRM, or payment gateways leads to 20-30% additional time and budget for minimum viable product development. 

This has consequences: 

The solution to this issue is: 

Compliance Costs

Suppose your MVP is related to healthcare, fintech, or e-commerce. In that case, it must comply with the current legislation of the country or region, such as GDPR, HIPAA, PCI DSS, and others, depending on the project's focus, with the involvement of technical and legal consultants. 

Failure to comply with the requirements results in: 

Such issues can cost 5-15% of the total MVP app development costs.

Recommended solution: 

QA Gaps

Superficial testing in MVP app development is another way for your company to spend an extra $1,000 or 10-20% of the budget on fixing critical bugs. 

It also has consequences: 

Solution: 

Feedback Rework

After launch, implementing user suggestions for interface usability or functionality requires additional development cycles, which can cover up to 30% of the MVP development cost.

It can also lead to: 

If we are talking about a solution, it is possible if it is followed: 

*Note that MVP cost is not only about design and development but also many factors, such as repeated iterations, technical debt, and others that arise from a poor approach. We've provided several solutions to avoid these costs, and in our next section, let's take a closer look at our tips for reducing MVP development costs.

Our PRO tips for reducing MVP cost 

Based on our experience, let's examine the proven tips for reducing development costs without sacrificing the quality of the minimum viable product.

Don’t overcomplicate your architecture and MVP at the start

Your main goal should be to develop the core functionality and needs of the first users. Avoid overengineering and choose a monolithic or modular architecture. This will allow you to test business hypotheses and critical features faster and create value. Unlike POC or Prototype, MVP development allows you to launch a pilot project and interact with the target audience. 

Focus on essentials

Only close interaction with the development team will determine the product's essential functionality with business hypothesis testing. Then, it is much easier to provide specifics of the scope of work, such as the number of hours and payments, which can help reduce the overall cost of MVP development. It is worth abandoning nice-to-have secondary functionality that does not directly impact testing the core value of the product. Therefore, it is worth limiting the functionality to a basic UI in order to simplify the interaction logic, instead of bulky custom solutions. 

Opt for widely used and supported technologies

It is better to use a reliable technology stack instead of experimental and niche frameworks. Such an approach will significantly simplify further scaling of the project, make it easier to hire a development partner, and minimize the risks of losing documentation or support.

Fix the budget

Agreeing on a price at the start will allow you to cover the entire MVP development cycle with fixed rates and without the risk of overpaying for additional hours. 

*Note that this depends on the model you choose for cooperation.

Outsource model

Speaking of cooperation models, the main ones are Fixed Price and Time & Material. A fixed price is aimed at a transparent budget with clear deadlines for MVP development. However, the disadvantage is that the development team has less flexibility, as this model is not provided.

On the contrary, there is Time & Material, which is flexible and adaptable to changes. However, it may not have a 100% defined budget, which leads to greater cost control. However, outsourcing provides access to skilled teams and, in general, will reduce costs compared to an in-house team. It should be noted that outsourcing guarantees a high quality of work. 

Use Open-source tools

An experienced development team knows that there is an alternative to custom or licensed solutions for MVP development, such as free libraries, databases, and testing tools that will be entirely relevant to the minimum viable product.

Offshore Development

Partnerships with Eastern Europe and Southeast Asia are in no way inferior to the quality of MVP, PoC, or software development in North America or the West. The differences in price, geographical factors, and living standards in different countries matter. Nevertheless, getting a qualified team at much lower rates will help businesses with a limited budget get a high-quality and cost-effective product. 

The path from MVP to a full-fledged product should be accompanied by the creation and modernization of a product roadmap to avoid problems related to development costs in the future. 

Use cloud infrastructure and integration with ready-made services

It is worth preparing for scaling from the development of the MVP using cloud infrastructure. This is due to the fact that it allows you to manage resources, automate deployment and reduce support costs. For example, using PaaS or AWS or Firebase will allow you to focus on business logic, without excessive costs for server administration. To implement non-trivial functionality, you can use Stripe / PayPal for payment processing, or Google Analytics / Mixpanel for collecting user analytics. 

Conclusions

Getting an accurate MVP development cost estimation depends on many factors, such as project complexity, technical requirements, functionality, and implementation time. This article helped you get complete information with a cost breakdown and optimization tips. 

Working with our pool of developers, managers, and project leaders will guarantee you transparency and reliability at every stage of MVP development.