Every project and supplier is different so I cannot give you a scientific formula (though that would be nice), but let’s take a look at some prices (all from 2010) that I have seen paid for different apps (some info from sources, some from public statements available to anyone):
- Angry Birds, developed in-house (first version): ~$100,000
- Fantasy football game for a major newspaper, using top mobile agency: $150,000+
- Cost to produce a leading entertainment listings app (initial version), using top mobile agency: $100,000
- Cost to reproduce the same entertainment listings app and make some adjustments for a different market, using a top mobile agency: $25,000 (This could have been done for less elsewhere but in this case the client chose the project benefits / continuity aspect of using the same supplier (in some cases there may also be contractual obligations to do so as well))
Now how about the cost to copy the same entertainment listings app in the last example using a company (all of which have several quality apps in the App Store) from outside US/UK etc?
$4,000 – $8,600
OK, that’s a lot less, but you get what you pay for, right? Yes, but that depends what you’re paying for.
Let’s say you’ve gone directly to a few established suppliers, from ‘more expensive’ countries like the UK or US. The quotes are reasonable, but there is one company that stands out with an excellent track record, that sounds very easy to work with and is excited about your project (though as a popular supplier is inundated with other work too).
You are 90% sure you will press on with this supplier but before you sign-up you decide to use Elance/Guru and get a quote on the same spec to see how the market compares. After weeding out a few weaker responses you get a couple of good offers from companies from ‘less expensive’ countries who seem to produce good quality work but perhaps not the blue-chip track record you were looking for. The Elance/Guru quotes you like are more than 50% cheaper but now you are not sure what to do?
First of all let me say, you should not automatically assume the company from the ‘more expensive’ country’s work is going to be faster, better, of higher quality or they will be much more responsive to your needs. I have worked with great companies from developing countries and poor companies from developed countries. So how do you decide when there is no ‘right’ or ‘wrong’ answer?
The first thing to do (other than accepting that you will only ever have a limited pool of information to make a decision and that hindsight is always 20/20) is to expand your decision-relevant knowledge about each supplier quickly without spending two months procrastinating on the decision. You must then weigh this up against each supplier in relation to your priorities, not just their strengths (which may not be relevant to what you need).
How should you do this? My suggestions:
- If you haven’t already, make some kind of basic (or complex and colour-coded if that’s your thing) Supplier Matrix spreadsheet comparing each of the companies. Firstly, so you have somewhere to capture all this information and, secondly, so you have an easier way to make comparisons between each supplier (I’ve provided a template you can use or adapt if you need a starting point).
- Look hard (very hard) at the quality of their current published work in the App Store. How polished is it? What is the feedback like from users (on the Review part of its app page of the App Store)? Is any negative feedback something the developer should reasonably have picked up on?
- Talk to them, grill them if you have to, but find out where this project lies of their overall priorities? Can they/will they guarantee a final delivery date for submission to Apple (assuming you come good on whatever you have to deliver from your end)? I once worked with one top quality, very highly regarded supplier from a developed country. However because the size of the project and budget (although big by most people’s standards) was relatively small to them, when resources started to be stretched at their end their focus was always going to be on the even bigger projects they had for even bigger clients. Bear in mind a lot of the most successful app development companies are now in huge demand and, even though they are expanding rapidly in some cases, may be struggling to keep up. The smaller supplier conversely may see your project as an amazing opportunity instead of of just ‘another’ job and give it more attention.
- How much is time/money a factor? Is there a sponsor or other priorities involved? Will one company offer a guarantee by a certain date? Or if neither is prepared to do so, does one give you greater confidence that they can turn this around on time and error-free? If you are producing an app for your employer who has a large sponsorship deal riding on it of say $120,000 for the year. Then if you feel more comfortable with the $25,000 quote than the $15,000 one, go for the $25,000 quote and don’t be penny rich and pound poor. That $10,000 you ‘save’ may quickly disappear if the project starts to over-run. Not least if you are charging your sponsor by the month, where a one month over-run in this example will equal $10,000 ($120,000 divided by 12) in lost revenue anyway!
- Ask for references. Can you speak to some of their past or existing clients?
- Ask them to produce an advanced sitemap or ‘storyboard’ to show they understand the concept (that and the fact they’re willing to invest a bit of time in winning you as a client) or, even better, a working concept of the app itself? I’ve had many suppliers – particularly with simpler apps – happy to produce basic, ‘dummy’ versions free of charge, which you can install on your iPhone/iPad and test.
- Is this an app you are likely to make a lot of updates too? Or will you do spin-off versions of the same app for different markets? If so, does one company seem like a better bet for the long term? Will one offer you guaranteed rates/discounts for future updates of the app?
- Will you be required to roll out an improved version for iPad or other platforms (eg. Android)? Is one company more familiar with or has a better track record of ‘porting’ to / developing apps for other platforms?
If you are making the choice on behalf of your company then you may reasonably be asked to explain that choice later on, so think very hard before you decide and make sure that you pick for the right reasons.
Some general price ranges based on my experience follow below.
Just one note though: I realise the the world is more complex than the terms ‘developing’ and ‘developed’ country can adequately convey. They are my best, if clumsy attempt to pass on some of my experience in this area (as mentioned earlier, higher costs do not always equal a better project). Bear in mind many of these costs are development-only. If you need designers too that may be charged as an extra:
- Basic app (eg a ‘news’ app with a few different sections or a static ‘information’ app)
- Developing country company: $5,000 or less (I’ve even seen offers of around $1,000 for very basic apps but I would avoid!)
- Developed country company: $15,000 or less
- Medium-complex app (eg a more advanced news app, with extra features, like well-presented galleries / ability to save stories etc)
- Company from developing country: $7,500 – $12,500
- Company from developed country: $15,000 – $25,000
- Complex/high-end app, eg a high quality game, with high end design (this is where you will have most variation on cost):
- Company from developing country: $25,000 – $50,000
- Company from developed country: $50,000 – $150,000+
For a good UK/US development agency, with a track record in the industry and high-profile clients you can expect to pay £800/$1,200+ a day. For a company in the developing world, you may pay a lot less per day but if you end up needing more days to finish the project or going back and doing parts again (due to mis-communication or work not being up to scratch first time around) then you might still end up paying more! So weigh up all the factors, not just the day rate or the overall quoted cost.
Hosting and support costs
A lot of suppliers will try and hit you for large hosting and support costs, often coming in the form of several different packages. In most cases you won’t need anything other than the most basic package (ask for an explanation of each package if necessary and read all the information they send!). Unless you have a particular need then, I’d stick with the basic offer and rip out all the extras you don’t require.
Revenue share
Just say no kids! Unless it is the only choice because of financial constraints or because you are developing something truly different (that is more of a business partnership than a straight supplier/purchaser relationship) I would avoid these unless you have a really compelling reason for doing so. I have seen many cheeky proposals from suppliers, particularly in the early days of apps, asking for ridiculous deals on the simplest of apps (my favourite was a three year contract lock-in, 50% revenue shares and $100,000 to develop a very simple app!)
