The Cost of MVP Software Development for Startups from Scratch

Krunal Shah

Mar 22, 2022

10 min readLast Updated May 18, 2022

Once you've made the decision to create a new software product, the following stage is to validate the problem and test the solution. An MVP in software development comes to the rescue in this situation.

According to the concepts of the Lean Startup technique, MVP app development is critical. It allows you to test your hypotheses as quickly and inexpensively as possible, and every company founder understands the importance of every dollar and day. MVP is also a security bag for your company. It will assist you if you are concerned that your idea will fail or that your product will not find a market fit.

We'll give you a realistic estimate of how much it costs to develop an MVP in this article. Despite the fact that it is sometimes referred to as a "first version," MVP pricing is comparable to that of a standard mobile app.

But before we give you an insight into the cost of building MVP for startups, let’s know the basics about the MVP concept.

Why Build An MVP

Frank Robinson first proposed the MVP concept in 2001. Eric Ries and Steve Blank, on the other hand, helped it gain a lot of traction.

An MVP is a version of your product with the bare minimum of features to solve the problem, satisfy early customers, and gather user input for future development. The concept is also known as the first version of your website or mobile app. And it's true since you normally don't move on to the next level of software development unless you've proven your concept.

MVPs can be utilized by both startups and businesses irrespective of the business type. Building MVP for startups is imperative as it provides a few distinct advantages over other product development methods:

Test Your Idea

You'll never know whether your concept is a success or a failure unless you give it to potential end-users and get their input. The feedback you get from an MVP can tell you whether or not you've identified an issue and a solution correctly.

Gather Feedback

Using the MVP model, you may improve your product based on direct feedback from your customers as well as your ideas and assumptions.

Save Your Resources

To tackle the problem for early consumers, an MVP should be as simple as feasible (the part of your audience that has the most obvious need to deal with this issue). As a result, you won't have to waste time and money developing a product that no one wants or needs.

Gain Competitive Advantages

Because it takes less time while build an MVP for startups, a company might gain an advantage over its competitors by getting to market faster.

Raise Money

A working MVP is much more than a concept. A viable product (even if it's little) can be sold to end-users, pitched to investors, or utilized for crowdfunding. The notion is also the reason why MVP software will almost certainly not cost $500 or $1,000,000. A budget of $500 is frequently insufficient to create a working MVP that meets UI/UX standards, meets user expectations, and solves the problem quickly.

A product with only essential functionality should not cost more than $1 million.

Also Read: MVP Development Guide: Market Research and Customer Pain Points

PoC vs MVP vs Prototype

Additionally, as we indicated at the outset of this post, the MVP notion is commonly mistaken with a PoC (Proof-of-Concept) or a Prototype. These, on the other hand, are three distinct notions that define different stages of the product development process:

PoC

A little project to demonstrate that your idea can be implemented technically. It also aids in the selection of the best technology stack for development. The PoC, on the other hand, has not been made public or shown to end-users.

Prototype

An interactive visual depiction of your product that depicts key user flows. It's put to the test with your target users to see how they interact with your product and gather feedback. However, because it is only a UI prototype, it does not solve the problem.

MVP

A minimally viable version of your product that has been released and is now operational. It solves your audience's problem and is also utilized to gather input for future improvement.

What Factors Influence the MVP Price?

When it comes to the cost of MVP development for startups, each company or expert will give you a different estimate. The estimates will differ even if you describe your project in the same way. This occurs because the cost of MVP software is determined by a number of variables. Among the most significant are:

  • Design and development tasks' scope
  • Development team type
  • Contract Type
  • Technology stack required
  • Your development firm's hourly payout rate

Let's have a look at them more closely!

Scope of Work

The scope of work is one of the most important factors that influences MVP pricing. To put it another way, think about what features and functionality you'd like to have in your mobile or web app.

Aside from a few features, developers may consider the difficulty of implementation or the requirement to use a specific technology, framework, or other component.

  • What method is used to estimate feature development (or any other activity)?
  • The time it will take is estimated by the developers (in hours). This time is compounded by their hourly pay rate.

And that’s how you calculate how much it will cost to produce an MVP.

Also Read: 6 Effective Tips to Scale Product from MVP

Development Team Type: In-house vs. Outsourced

In-house development and outsourcing are the two main alternatives available to you. In-house development entails having your own full-time development staff based in your office and overseen directly by you. Furthermore, the whole point is that you hire them for your organization as a whole, not just for certain tasks. This places you in a "employer-employee" relationship rather than a "client-contractor" relationship, although it usually comes with additional costs.

On the other hand, outsourcing is usually a less expensive choice because you employ a dedicated company which offers mvp development services. Furthermore, you save time by not having to create such a team from the ground up.

Having an in-house team may be necessary for a startup that is founded around a mobile or web app and relies heavily on it. While outsourcing software development is a suitable intermediate solution for MVP development for startups while you build your in-house team. You might even consider hiring a CTO as part of this process!

So, let's look at how the type of squad you have might affect your MVP price:

In-house team expenses

  • Salary
  • Office rent
  • Insurance
  • Tech equipment
  • Taxes
  • Paid leave and sick leave
  • Cost of third-party services needed for the development

Out-sourced team expenses

  • Hourly rate of your team
  • Cost of third-party services needed for the development

Global Outsource Rates (per Hour) to Build an MVP

Employee Role

United States

Latin America

Eastern Europe

Asia

Business Analyst

$110 - $205

$45 - $55

$40 - $63

$30 - $42

Software Architect

$198 - $292

$60 - $72

$55 - $77

$35 - $48

Project Manager

$133 - $233

$55 - $66

$45 - $70

$35 - $48

Junior Developer

$105 - $111

$35 - $44

$25 - $42

$18 - $24

Middle Developer

$132 - $140

$30 - $52

$25 - $42

$18 - $42

Senior Developer

$176 - $187

$50 - $61

$40 -$70

$30 - $42

Lead Developer

$154 - $163

$45 - $55

$45 - $70

$30 - $42

Junior QA

$77 - $81

$30 - $39

$25 - $40

$15 - $24

Middle QA

$99 - $105

$35 - $44

$30 - $49

$20 - $30

Senior QA

$143 - $169

$40 - $50

$40 - $63

$25 - $36

Graphic Designer

$79 - $163

$40 - $50

$35 - $56

$25 - $36

Here is a list of global outsource rates for your knowledge -

Freelancers and remote teams are both included in this category. When dealing with freelancers, the elements that govern MVP costs are their hourly fee and expenses linked to third-party services.

The Average Freelance Developers Cost by Country

Country

Average Rate per Hour

United States

$70

Australia

$70

Canada

$65

Middle East

$64

Western Europe

$63

Eastern Europe

$56

Sahara Africa

$55

Latin America

$51

India

$49

Former USSR

$49

Northern Africa

$41

So far, we've focused a lot on the hourly rate, which is critical for determining how much an MVP with an outsourced team or freelancer costs. The hourly rate, on the other hand, is highly varied, ranging from roughly $15 per hour to $150 per hour or even more. Let’s see why.

The Hourly Rate

The primary benefit of this strategy is that you only pay for what you receive. What, however, accounts for the disparity in rates?  Experience/expertise and location are the two options for answering the question.

Experience/Expertise

Your offshore team's hourly pricing will be determined by these considerations. Developers can be split into three groups based on their experience:

  • Youngsters (0-1 year of experience)
  • In terms of quality-to-cost ratio, the middle (1-3+ years of experience) is the best option
  • Senior (with at least 5 years of experience)

If you require specialized knowledge, the price may increase slightly. Of fact, this isn't a rigid divide, as each organization may have its own system for defining developer experience.

Location

It might seem strange, but hourly prices are determined more by the developers' location than by their experience or other variables. Why? Because $20 is a different amount of money in Canada, India, and the Philippines in terms of purchasing power.

So, a developer in India earning $40 per hour may rest easy knowing that their monthly compensation will be almost 7.5 times more than the country's minimum monthly wage.

At the same time, their California colleague will earn just $200 more per month than the minimum wage. Their hourly rate would have to be at least $50/hour (which would add $6,900 to your monthly expenses) for them to have a salary gap of 7.5 times. However, the rate would generally be higher.

Simply put, working with an American developer for one month may cost the same as working with a Indian developer for almost six months.

The following are the average hourly rates for different regions:

  • North America - $100-$180
  • South America - $30-$50
  • Eastern Europe - $25-$50
  • Western Europe - $110-$200
  • Australia - $100-$180
  • India - $15-$40
  • Africa - $20-$40

As a result, you might not always consider developers from your own country. In some circumstances, it may be more cost-effective to hire an offshore development firm to handle your project and provide a successful MVP.

Contract Type

Finally, the sort of contract one has with the remote team may have an impact on the cost of building MVP for startups.

Cooperation with your remote staff will most certainly be based on a Time & Materials Contract. What exactly does that imply? It simply means that you only pay the hourly rate for the work. This model has its own set of benefits:

First, it allows you to be more flexible with your project development by allowing you to agree on changes even after it has begun. For example, if you wish to alter the technology stack, add or delete functionality, or make any other modifications to your project.

Second, it helps to keep MVP software expenditures to a minimum. You only pay for what has been completed, and you rely on it.

A Fixed Price Contract is another possibility. As you can expect from the name, this contract type is based on predetermined MVP pricing that cannot be adjusted later. As a result, all parties should agree on a specific scope of work and their respective obligations. Any additional alterations or adjustments may be difficult to undertake as a result.

This technique may appear to reduce the cost of the MVP, protect the budget from unplanned changes, and make mobile app development more predictable. While this may be true in some circumstances, such contracts frequently include a 15-40% buffer that assumes some risk. In practice, this implies you'll almost certainly overpay, resulting in a greater project cost than anticipated.

MVP App Development: Average Cost

As stated at the outset of this essay, the average cost of MVP development is between $15,000 and $50,000. We used the costs of previously completed projects by Third Rock Techkno team, as well as our general estimations, to produce these calculations. To convert hours into dollars, we used the $40/hour average rate for professional development organizations in Eastern Europe.

Here, we have created estimates on the average cost to develop an app. Also, these estimates are for MVP Projects that will be built with React Native, a mobile cross-platform app development framework.

App Type

Approximate Hours

Approximate MVP App Cost

Car Insurance App

356-448

$14,240-$17,920

Yoga app like Asana Rebel


442-544

$17,680-$21,760

Social Music Video App like TikTok


600-752

$24,000-$30,080

Workout Streaming App like Peloton


658-846

$26,320-$33,840

Bitcoin Wallet App

560

$22,400

Diet/Nutrition App

470-580

$18,800-$23,200

Marketplace Mobile app


770-978

$30,800-$39,120

App for Cleaning Business

384-502

$15,360-$20,080

Travel App

644-796


$25,760-$31,840

Mobile App for Event or Conference


435

$17,400

Loyalty App

560

$22,400

Fitness app Like Fitbit


790

$31,600

Weather App

131-158

$5240- $6320

Real Estate App like Zillow

648

$25,920

Cooking/Recipe app

360

$14,400

Car Rental App like Hertz

456-552

$18,240-$22,080

The Bottom Line

As you can see, a minimum viable product for your startup or business will most likely cost between $15,000 and $50,000 - most likely around $30,000. Of course, MVP costs may vary according to the extent of work, team, and contract type, among other factors.

Whether you're a startup or a large corporation, the MVP can help you test your concept before adding too many features or blowing your budget.

If you are looking for a reputed MVP app development agency, get started with Third Rock Techno’s expert team with years-long experience. Check out our portfolio and drop us a line to get started today.