Fixed vs flexible budgets: what’s the best way to pay for app development?
When it comes to app pricing, the real question is: how long is a piece of string? The cost of developing an app depends on a huge number of factors, so it takes a seasoned professional in the development sector to provide a reliable quote before starting a project. Still, most people like to know upfront how much something is going to cost, so they inevitably ask the question: how much does it cost to develop an app?
App development is a complex process, which can involve augmented reality, machine learning, blockchain, IoT and more. It requires a skilled and experienced team with a history of learning from mistakes and successes, with robust processes and realistic timescales. This comes with a price tag. According to a businessofapps.com report of industry averages, a single native platform mobile app could cost around £30,000, while a native iOS and Android app could require a budget of £50,000, based on the development of an app with a multilingual interface, in-app purchases, a user account and custom UI design. Anything beyond that and you could be looking to spend anywhere between £75,000 and £500,000.
There are two main approaches to pricing app development: fixed price (a predetermined sum for the entire process) or a flexible budget (based on a time and materials model that represents the actual time spent on an hourly or daily rate). While there are pros and cons to each approach, we are confident that a flexible budget is the best way to pay for app development. We explore why below.
What factors impact the cost of app development?
There are a few key factors that influence app pricing:
What function and purpose will the app serve for users? What will it be capable of? The more complex or multifaceted the functionality is, the more expensive it will be to develop.
Will it require integration with third-party applications? This is where real issues can show up. For example, an API provided by the client could be outdated tech that’s simply not compatible with the functionality that’s planned for the new app. API documentation also takes some learning from the developers if it’s something they haven’t integrated before.
Platforms and devices
Will it need to be developed for iOS and Android? Will it support a variety of device hardware and operating systems (iPhone 13, Samsung Galaxy S22, etc)? The more platforms and devices it needs to be compatible with, the longer development may take.
Use of smartphone features
Will it incorporate the GPS, AR tech, NFC tech or motion coprocessors that are found in our smartphones and tablets? Developers will need to investigate whether those features will work with the app backend and find solutions. Some of these features might only work for native app development, increasing your frontend costs.
What level of ongoing technical support will the app require post-development? Will it need a rollout of new features or updates? Is this something you can provide in-house or will you require support from your developers?
Of course, it can be impossible to predict some of these factors at the outset of a project, as development can evolve and shift throughout the process. This is so important in deciding which pricing model to choose.
Let’s explore the choices.
The pros and cons of a fixed budget
A fixed budget for app development will take into account the factors listed above, which are usually defined in a project discovery call done at kickoff. This allows clients and developers to determine scope, requirements and risk factors. In order to price this competitively, developers will often build in plenty of time for amends and evolutions, as well as overheads for unforeseen circumstances and errors. If everything goes well and that overhead isn’t eaten into, that money is lost.
Imagine the project is thoroughly and specifically defined and developers get to work. A couple of weeks into development, the client decides on a new feature, which immediately shakes up the set requirements, scope and timelines. What may seem like a small change has not been built into the price, so will either need to be bolted on or require a reevaluation of the entire budget, potentially by making cuts in other areas of the project. Suddenly, the price is not so fixed.
Clients know in advance what their app will cost, which they can then budget for. This is an attractive option on the face of it.
Invoices tend to be issued once and once only, meaning you have to pay the entire cost of your project in a single chunk.
The project has set boundaries, which can become restrictive if issues or opportunities arise.
Developers can be resistant to changes during development because they’re not within the project scope or budget.
All key decisions must be made at the outset, in order to foresee changes to scope and timescales. This means the kickoff phase is drawn out while the details are agreed.
If there are delays on the client’s end that mean the developers aren’t able to make progress, money is lost on dead time.
A fixed price doesn’t take into account efficiency and speed. You could be paying a high price for an app that would have cost less on a flexible or time and materials model of pricing.
The pros and cons of a flexible budget
A flexible budget, or time and materials pricing model, recognises that app development is an agile process, one of consistent adjustment and improvement. It allows work to begin on app development much sooner, as less definition is needed for scope and timelines right at the beginning. It allows for faster progression, easy introduction of amendments and new features and immediate management of risks as you go along.
There isn’t as high a need for overheads as you pay for the hours worked on a project, which is an accurate reflection of time and resources spent. Experienced developers are able to accurately estimate, based on previous projects, how long each phase or element will take, so any estimates are likely to be close to the final cost - which is reassuring.
This model is more accurate and fair to both client and developers as it reflects the time actually spent on development.
Invoicing tends to come at key milestones, spreading the cost of your app development across time so you can budget according to cashflow.
You won’t have to pay for something that hasn’t been done.
Allows for continuous changes of direction, new features and evolution in development.
Offers more transparency and accountability over processes than a fixed budget, as invoices reveal what you’re paying for element by element.
If you’re working in an agile manner, you’ll need to be involved in the development process. There may be more opportunities for feedback and the need to regularly discuss changes and updates to ensure time is being used effectively. Is this a con? Not really. We just wanted to point out the time investment you’ll need to make.
Why price shouldn’t be the deciding factor
Less is not more in app development. A cheaper cost for developing an app may seem appealing to your stakeholders and to your budgets, but it may end up costing you more in the long run.
Red flags to look out for when comparing quotes:
Offshore development that isn’t accountable
Underestimated scope that doesn’t cover risk management
Discounts that seem too good to be true
Inexperienced or junior developers leading the project
A one-size-fits-all service that uses templates or white-label solutions
A team that says ‘yes’ to everything you say without challenge
While a low set price seems attractive upfront, the lack of flexibility once the project has kicked off can cause issues later down the line. A project on a low fixed price is actually incredibly likely to go over budget, miss deadlines or even turn out unviable thanks to lack of agility in the process and leaving tech support and maintenance out of the budget. This may mean bringing in new software development companies team to fix errors, or scrambling to find extra cash at the last minute.
The final word
Ultimately, when developing an app - an in-depth and highly specialised process - the scope of work will need to be flexible. A fixed budget is rigid, which is the exact opposite of agility and, as we’ve laid out, can end up costing you more in the end.
App development with a flexible budget, even though you may not have an exact figure in your mind from the very beginning, can end up costing less than one with a fixed price. It’s also more likely to benefit from qualified developers who have the freedom to implement improvements and features that set your app apart in a crowded market. It can optimise processes and mean you get the best bang for your buck, with visibility over each phase of development as it happens and the ability to make changes at any time.
We recommend a flexible budget approach to app pricing. That doesn’t mean we can’t offer you a rough idea of your total spend, and we’ll always provide an initial estimate to give you a clear indication of the overall potential price. If you want a high-level estimated figure for what your app development project might cost, use our handy quote calculator.
And now that you know how we will efficiently cost your project, let’s chat.