As an app developer, a question you are very used to hearing is “how much does it cost to make an app”. It’s also a question you quickly learn to dread. Why? Because providing an accurate fixed price for designing and developing a mobile app is next-to-impossible. Worse, comparing fixed-price quotes from different companies is misleading. In this article I’ll explain some of the reasons why, and some better ways of pricing and organizing app development that we’ve found.

There are too many unknowns

How much an app costs depends on a large number of factors, many of which are unknown at the start of the project. We can try to minimize these unknown factors. We will always clarify which platforms and OSes it makes sense to support, what screen sizes, what features are essential and what are “nice-to-have”. It’s much harder to figure out how many iterations it will take to make a game fun, or to make a logic screen intuitive to use, or how long a vague feature like “add sharing” will take. Developers have to add in extra “padding” to cope with unexpected additions that occur as a normal part of development.

Changing your mind should be expected

When making an app, changing your mind is good. Iterating on an idea as it undergoes design and development leads to a far better outcome. But if the scope has already been precisely defined in the contract, this may not be possible. As of 2014, the app industry is rapidly changing. A business model which worked six months ago may not fit user’s needs or market trends any more. To keep ahead of the game, you need to be willing to change things, and to pivot on your original vision.

All developers are not alike

A popular metaphor is to compare asking how much it costs to make an app with how much it costs to make a car. A car could be very cheap, if it is simple, mass-produced and uses low-quality components. Or it could be complex, hand-crafted, unique and incredibly expensive.

If you give the same request to multiple developers and get very different pricing, what does that really mean? Why is this developer so much cheaper? Are they low-quality? Why is this developer so expensive? Did they misunderstand the scope of the project? As a client, how can you be expected to tell?

Apps are never “done”

The car metaphor has another problem. Because if you’re building a car, you generally reach a point where the car is “finished”. With apps, it’s not so simple. It’s important to get real users using your app as early as possible. So you typically want to do a “minimal viable product” release as soon as you can, and development work should not stop when you reach your v1 release.

As soon as people get their hands on your app, you’ll get user feedback you want to incorporate into your app. There’s always new features to add that didn’t make it into the first version. You might even need to “pivot” how the app works, or change the business model from paid to freemium.

Even if it’s not visible to the end-user, you may need to add analytics, email reports or dashboards to keep track of how people are using the app. The app needs to be marketed, perhaps ported to another platform. If you burnt all your budget developing v1, you are in trouble!

Fixed price projects: riskier than they appear

So, to summarize, the disadvantages with fixed-price contracts include:

  • It’s hard to know in advance how much work an app will take
  • Developers often “pad” their quotations to account for unknown issues
  • Different developers will have different standards, so comparing quotes is hard
  • It’s difficult to add in extra functionality, reorder or change functionality once the contract is signed
  • It suggests that there is a cut-off date where the project is “done”, which is not realistic or recommended for most apps

Going agile

At ReignDesign, we’ve recently started taking a more “agile” approach to estimating projects. Agile Development started in the software world, where it describes a way of planning software development projects which embraces the frequent changes that occur, rather than fighting them.

A backlog of features

The “user stories” to be performed are arranged in a backlog, which the product owner or client helps to reorder into a priority list. When new stories (things you want the app to do) are added, they are simply slotted into the backlog in the appropriate place. The developers then work down the list in order, in a series of typically 2-week long “sprints” they commit to completing the items on the backlog.

Applying agile to project planning

It turns out what works well for development can also work well for pricing of a project. Once we move away from a fixed-price model, the question is not “how much would it cost to develop this app”, but “how much can I commit to developing this app, per month“. When we move to a “agile retainer” style model of project pricing, the typical issues of project planning are turned on their head.

First we recommend a monthly budget to the client, based on their needs, the complexity of the project, and approximate dates for releases. We ensure the budget is sustainable, to make sure the client can afford to keep working on the app for at least several months after launch.

We then calculate how much work the developers and designers will do each month for that budget. This will allow us to estimate delivery dates for different stories, but these are advisory only. If it turns out we complete tasks faster than expected (in agile-speak, our “velocity” increases), we may be able to deliver features earlier. If the client requests certain extra features be added urgently, other items will get pushed down the backlog and delivered later.

Overall, an agile approach allows the client and the app developer to work in a way where their goals are aligned, and much better reflects the actual effort involved in creating and sustaining an amazing product on the App Store.

You can read this full article by Matt Mayer on ReignDesign.com.