Hidden Costs of Developing an App ~ Identify and Minimize Expense

Top Hidden Costs of App Development & How to Minimize Them

Numerous recurring charges add up the bill on your overall app development cost. These silent killers often go unnoticed and inflate the development budget. The methods to identify & reduce excessive expenditure.

Updated on :
November 25th, 2020
Twinkle Kalkandha
Twinkle Kalkandha
Product Strategist

Heading for app development without any idea about the cost of app development can cause a severe budget crunch. This implies that you may be able to save a lot of money if you identify different hidden cost categories and plan accordingly.

Ask anyone, who has ever got an app created, about the cost of their app development and their experience with planning a budget. The most probable answer that you get will show you how most people jump into development without accounting for post-production and app maintenance costs

App development cost breakdown reveals many subsets. From the cost of prototyping to testing cost (can be anywhere from 10-20% of the overall project estimate). Pricing for these services is generally included in the overall app development budget but there are a few recurring expenses that generally go unaccounted for in totality. 

To avoid being surprised by these hidden costs, we have presented a detailed account of such charges and the best methods to manage them effectively.

The Hidden Costs Categories of App Development

The following 4 categories entail many factors that come with a price. The compounding cost of these factors increases the overall budget for the app, can severely impact app development and can lead to you pumping excess money that you could have saved.

Not all of these costs are useless, some of them can be discarded, some can be managed effectively and others can be substituted with cheaper options.

Infrastructure Cost

A sound infrastructure is essential for smooth app function, to store user information, facilitate data transfer, and host the mobile application. Examples of infrastructure cost include-

  • Servers
  • CDN or Content Delivery/Distribution Network
  • storage data
  • Dat of Images
  • Development tools & libraries

Functional Cost

Targeting users is an important part of mobile app marketing and is directly responsible for increased sales. 

Examples of functional cost include:

Integrating SMS messaging, Push notifications & Social channels, email medium comes under functional costs for a business.

Administrative Cost 

An effective administrative setup gives more control over user data & content. The extent of administrative services varies from business to business but it is still an important service essential for app success. 

Administrative services like content management tools, dashboard emulators, user segmentation & app analytics will give you a comprehensive report of user behavior and very valuable insights for marketing & sales decisions. 

Technical Support cost

Technology is always making leaps in the marketplace. The only way to stay relevant and profitable is by updating with it and integrating new technologies to get an edge over the rest. Services include- 

  • Application update submissions
  • OS updates
  • API updates and maintenance
  • Bug fixing

Top hidden costs of developing an app

hidden app development cost breakdown

These costs generally sneak in and go unnoticed because they might not seem very big individually but collectively they create a huge impact. 

The application testing can cost anywhere from 10-20% of the overall project estimate.

1- Social Integration & chat messages

The impact of social media on marketing and engaging with customers is very significant. Integrating Social channels to the app is a popular technique for promotion. 

Messaging solutions ranging from one to one chat/group chat is an effective method for customer conversion and increased user satisfaction. 

Integrating chat and social can be done through services like Applozic, Sendbird etc. 

Cost- $1200 per year

2- Development tools & libraries 

Using paid tools to develop an application comes for a cost. This price can vary greatly depending on the tool used. 

Cost – $2000 + per year

3- App Update submission

Many times application updates require resubmission. This can become an unavoidable expense. 

Cost- $2,400

4- Push notification service

A great method to re-target existing customers and update about the latest products, offers, and discounts.

Making use of advanced Push notification services can have a high engagement factor and conversion rate. Services like Amazon SNS, Onesingal, UrbanAirship, etc provide an easy to integrate and customizable service. Significantly increasing the product purchases.  

Cost- $2400 per year

5- Data storage

Application data is extremely important and sensitive information. It carries critical insights into user behavior and needs to be stored safely. 

Cost- $3,600 per year

6- Content delivery network or CDN

A CDN is a group of distributed servers that work together to provide faster load time and improved performance.

This is especially useful if you are targeting users across the world.  Companies like Amazon Cloudfront, Akamai, etc provide a content delivery network to use. 

Cost- $3,000 + per year

7- Image storage

All applications make use of attractive visuals in the form of high definition images. They need space to be stored, processed and delivered. 

Services like CloudImage, Google & ImageX help with this. 

Cost- $4,800 per year 

8- API’s

Almost all applications make the use of API’s to maximize the application potential by accessing useful third party services. 

For instance, if you integrate with Mailchimp or Facebook and they update their API version then you too will need to update your application to facilitate those changes.

Cost- $4000 +

9- OS updates

Both Android and iOS keep releasing new updates with advanced features and enhanced performance. 

This requires an increased level of app maintenance. 

Cost- $12,000 +

10- Server cost  

Servers like Google, Azure, or amazon host applications for a periodic charge. App hosting costs vary from plan to plan but the general cost is between $10,000 to $15,000.

How much does it cost to build an app?

The cost of developing an app can range anywhere from $10,000 to $500,000 depending on the sophistication of the application.

The range is so wide because the scope of app creation is wide. From a singular function app to a multi-purpose app.

The average cost of app development is around $171,000 but that doesn’t mean that you can’t get more economical options for your app idea.

The average minimum for the app development process is around $5,000 to $10,000 for very basic apps. Outsourcing application development is a great way to save costs and create a high performing app.  

The cost of mobile app development depends on the following factors- 

  • Complexity- The number and nature of features, API integration, design type, multi-device compatibility etc define the complexity of the app and is the most important factor in defining application cost. 
  • Operating System- Creating native applications for both iOS & Android cost significantly more. A cross-platform app can prove to be a solution if the application is simple in functionality. 
  • Timeline- The amount of time for the entire app development phase defines the human resources that will be allocated to the project and affects the cost of the project.
  • Custom app development cost is relatively high- Most outsourcing agencies have a preset application framework at their disposal which makes development relatively faster but creating a new customized model takes up more effort and time which increases the cost of production. 

Popular App Development Payment Plans

The question of “how to reduce your mobile app costs?” also depends on which kind of contract you wish to opt for- Fixed charge or Time & Material.

Fixed Charge- As per this model, the charge is set for a specific period of time. The number of hours or efforts put into the work doesn’t matter as long as the work is done within the predetermined time. This is good for small projects but detailed applications have too many variables, fixes, updates, and changes to fit into this plan. 

Time & Material- This pricing structure is focused on the effort and time taken to complete the task. It is good for creativity and is more thorough in execution. Most importantly it can easily accommodate any changes in market trends, modification of a non-performing feature or fix any glitch in the application operations without compromising on quality.

How to Minimize App Development Cost?

minimize app development cost

Many of the mentioned app development costs have an integral role in ensuring the quality and success of the app but you can prioritize certain functions and ensure that you stay within budget. 

Perform the following 4 checks to plug any cost leakages- 

1) Pick a sustainable technology 

A mobile app architecture is created depending on the complexity and business requirements. There are various programming languages out there, some have survived the test of time while others are new and shiny. 

Understand which serves you best right now and which can survive the test of time. Filter out your results and pick the one that fulfills both these criteria. 

2) Know Your platform ~ Android or iOS

Attempting to reach all audiences might not be the most economic solution. A basic market analysis will reveal which platform your potential customers are using, you would want to focus on the platform with more users. 

Creating native applications for both the operating systems can be very expensive. A cross-platform app is a good solution if you have a simple app idea. 

3) Find the right mobile app development company 

This is an easy way to cut costs, outsource to an app development agency. They are very economical and also have much more experience in developing successful applications. 

Find an app development company that gets your vision, has market success and fits in your budget.

4) Limit third-party integrations

There are many third-party vendors that provide good services and have an impact on sales but not all of them would be relevant for your particular business. They can silently add up to a lot of money.

For instance, you can integrate social channels, SMS, email, chatbots and many Saas solutions to your application but there is no need to jump the gun. Identify the one that is most essential for you and test its potency over a set period of time to analyze whether it worked for you.

Why Are Mobile App Maintenance Services So Important? 

Software application maintenance is an absolute necessity when it comes to delivering quality to customers. As per Business Insider, more than 50% of apps are uninstalled within 90 days of download largely due to bad maintenance.

“Mobile applications need to be regularly updated and polished for a consistent premium experience”

Fixing glitches

Irrespective of the amount of beta testing pre-release. Applications do start to act up some time, at least for certain users. This could be due to a difference in the device or due to the incompatibility of a certain function with the OS. 

It becomes very important to fix such problems for an uninterrupted app experience. 

Improving UI/UX 

Understanding user behavior is always a challenging task. Data collected from real users reveals a lot about behavior and points out to things that are working and exposes the ones that are either difficult to understand by the user or redundant. 

Re-shaping the app interface as per real-time analytics is the secret sauce of application success. 

Technology upgrade 

Newer, more useful, and powerful technologies always have the potential to provide an exceptional solution and revolutionize app usage. This constant digital transformation is crucial to stay ahead of the competitive edge.

Improved Security 

No business wants to leave any flank exposed for hackers. Users place a subconscious trust on the app when signing up through their email addresses or social account. Any breach of this trust will not only result in loss of affected customers but it also questions the overall credibility of the business. 

Updating to the most recent security recommendations protects user data and in extension preserves the credibility of the app.

How Much Does Application Maintenance Cost?

App maintenance costs will be defined by your commitment to performance and quality standards. 

After the application goes live, it is essential to track MAU (Monthly Active Users) and DAU (Daily Active Users) to understand the app’s initial reach, success & note customer feedback. 

The maintenance cost is relatively higher during the first year, as there is more scope to fix and modify based on the user’s feedback. From the second year, the maintenance cost decreases significantly.

App maintenance costs during the first year would be about 45% to 50% of the initial development cost but it goes down to about 20% in the subsequent years. This means that if the application development cost is about $100,000 then –

The maintenance cost for the first year would be – $45,000 (45%)

Maintenance cost from second year onwards – $20,000 (20%)

This is no rule of thumb but it is a popular estimate in the market.

Costs are More Manageable When You Prioritize 

Now that you know about the hidden costs of development, you can handpick what your business really needs and set aside services that are not appropriate. Know what you want for your app then prioritize features and functions to reduce excessive mobile app development cost

If you exceed the application budget but feel that it is worth the return then analyze the customer response to understand whether it worked for you. You can discard or add API’s, based on the app usage data and performance.

Next up

Mobile App businesses form the single largest global market for everything and provide a market scope not to be missed by futuristic entrepreneurs.