Thanks to a change from Google in July 2021, they will be reducing their PlayStore service fee from 30% to 15% for the first $1 million in revenue. This follows Apple's similar change last year. This change can have a huge impact on smaller developers who make up 99% of all companies selling services through the app store.
To put this into perspective, if your app generates $1,000,000 in revenue, this change will save you $150,000 which can be put towards improving the app, buying (almost) four bitcoins or developing other areas of your business.
“This is the perfect time to push forward with our app” you might be thinking, and you’re right, but you need to make sure you’re aware of the build and launch costs that go into an app.
Budgeting for the build (and then some)
The App store has grown 28% this year, but with that comes huge competition. There are over 4 billion apps to download, compared to 3 billion back in 2017. Just having an app isn’t enough anymore to get traction. Building an app that aims to be unique, penetrates the market, is built for longevity and has great user experience is now more important than ever...and it’s not going to be cheap. Each mobile app is slightly different and unique in it’s own way, so it’s hard to pinpoint a ballpark cost. How many screens will it have? How complex are the integrations? Is it built for both iOS and Android?
It is possible to build a super simple mobile app for a reduced fee but ON AVERAGE, a MVP (minimum viable product) starts from around £15,000 - £20,000. This would give you a good quality app that you could use to raise funding or share with your market. Anything less than that would mean sacrificing the quality of the app, unless it’s very simple or based on a whitelabel solution. Even then, be aware of a few hidden costs and unknowns.
From experience, estimates can fluctuate when identifying the build costs so when briefing your design and development partner, make sure you’re both on the same page and understand the scope of the project. At Fortnight, we break it down into milestones to ensure each step is well thought-out and efficient. This ensures that if there are any delays they can be fixed, reducing the impact on the overall costs and timeline.
Think of it like building or developing a house. Grant Gias from App Press explains the analogy well:
“There are different stages of construction, and each stage is vital to the success of the next stage. Every house requires an architect to provide a detailed blueprint. The foundation of the house must be carefully poured -- if not, the entire house could collapse. The frame of the house must follow the blueprint, or else there could be structural issues. The wiring and plumbing is critical so the family living in the house can access the right utility when they need it.”
Read our playbook on how to grow your business with a mobile app here.
Identify your costs beyond the estimate
After you’ve budgeted for the build you’ll want to know what costs you might have missed, or might creep up after launch.
We’ve mentioned this in the previous section, but you should always have a 5% buffer with your budget to ensure you’re able to cover any costs that might be needed. Maybe a feature you want requires a lot of development time because it’s never been done before.
Continuing with the house analogy, once you’re in and living there you still have utility bills to pay, wear and tear (bugs) to fix and it’s always nice to refresh the layout and interior. Think about how this will apply to your app. Does it need new content to change each month? Are you planning to develop your branding? Will you have high traffic where you can expect a lot of feedback? Based on other clients with monthly retainers, they usually spend between £3,000 and £5,000 per month for their established app.
App Store Commision Costs
As mentioned, Google is following Apple by reducing their store commission fees from 30% to 15% for the first $1 million in revenue; the fee then increases to 30% after this milestone. When planning your monetisation and marketing strategies, you’ll need to factor this in to work out an accurate return on ad spend and return on investment.
Being aware of how to budget for the build and the costs that come after will position yourself well for planning your app roadmap, putting you on course for success.
Apple/Google Developer Account Costs
The cost of getting apps into Apple's App Store is $99 (excluding nonprofit organizations, schools, and government organizations, where the fee is waived). This is what a yearly membership to the Apple Developer Program costs. Google charges a one-time fee of $25 if your app costs the user to purchase. It’s only small but should always be included when budgeting.
Just because your app is new, unique and everyone who has used it says how amazing it is, this doesn’t mean it will be found easily. Because category competition is so tough, you need to cut through the noise and reach your audience not actively on the app stores all the time. Some of the most downloaded and used apps for 2020 (TikTok and Snapchat) are still spending big on their marketing; they know you can’t stand still.
Marketing is also a great way to keep users engaged with retargeting ads to remind them of the value you add to them, any app updates and much more.
Website Landing Page Costs
You’ve set up your app and marketing campaigns, but maybe you want to control what the user sees. You’ll want to create a landing page that is easy to navigate and tells the potential user everything they need to know. The cost of this varies depending on the level of complexity and if you want the page to be unique to you. You can design and launch this yourself using a common web builder, or use a design agency to tailor the page to your brand and app. The cost for this starts from a few pounds a month to a few thousand.
If you’re not tracking metrics and KPIs for your apps then you’ll never know how well it’s performing, and where you need to improve. There are many different tools that might be needed depending on what you want to track. Things like user behaviour metrics, session recordings and visual heat maps might be vital to your stack and these require different programs. The price for these tools will depend on the number of users/events your app is attracting.
There might be some back-end services required that are unique to your app, such as servers and database providers, which will be needed and have monthly subscription costs too. An app hosting server can range in price from $70 per month up to $320 per month. The price largely depends on factors that are unique to the app such as the content being served to users (video will be much more intensive than static text) and the number of active users.
Once you’re able to work out exactly what your app needs and what you expect the app to be in terms of quality and functionality, you’ll be better placed to estimate the budget you need. Giving as much information to the design studio will ensure you’re both on the same page to deliver a successful app everyone is proud of.
At Fortnight, we’re not just a team of designers and developers, but planners, strategists and product makers. Bring us your idea and we’ll work with you and your budget to build something that can be groundbreaking, award-winning and industry defining.
Want to find out if we can do this for you? Let’s partner up - send us a message using our contact form or just email! We look forward to hearing about your idea!