The $100,000 Question: Why Are Businesses Spending So Much Money On Custom App Development?

By Jason Peck on November 26, 2014

Many companies we work with are looking to reduce costs, improve productivity and streamline their business processes. We're priviledged to be able to help thousands of organizations all over the world revolutionize their business process and take them mobile.

In talking with people about GoCanvas, one thing we sometimes hear from people who are just learning about us is “This is great, but why wouldn't I just build my own app for my employees to use? We could do it in-house or outsource it.”

Many people treat building an app from scratch like getting a dog. They've decided they want one and just want to know where to get it.

Going custom can take a lot of your money. Photo credit: Tax Credits via photopin cc

Except when you've built a custom app, it's more expensive, messier to clean up when things go wrong and a lot less fun to deal with than a dog. 

You might be able to teach your dog to play dead, but when your app plays dead, you've got big problems. 

Building an app from scratch and managing it in-house is extremely expensive and resource-intensive. It's not unusual for this to cost over $100,000 in the first year alone. In fact, a 2014 Kinvey survey found that 37% of mobile leaders said each app costs over $200k! 

Let's look at how quickly costs can acrue in just one year. At the end of this article, you'll have a chance to download our custom app expense calculator template so you can manipulate the numbers yourself.

Design work

You're going to need someone to put together wireframes and mockups and then do the final designs for all the features and screens in your app. Let's say you outsource this and it takes 80 hours at $150 per hour.

That's $12,000.

App development 

This is a tough one to estimate because it depends on how simple or complex you get. A 2014 survey from Kinvey found that 56% of CIOs and mobile leaders said it takes 7+ months to launch a single app. . Let's conservatively estimate this at $25,000 for an app for a single platform. Add another $20,000 for an additional platform (let's say you have people that use iOS and Android devices and you want your app to be available on both). 

You're looking at $45,000 for an app that works on 2 platforms. 

App management, security and version control

If you build your app in-house, you're going to need someone to manage things for you. This will likely be someone in IT that is responsible for managing users and devices, ensuring the app stays compatible with new versions of mobile platforms, ensuring security is up to date, etc. This is not an entry level position. 

Let's say this person's salary is $80,000 (this is probably conservative since the overhead/benefits costs aren't included here). 

App updates

Many people don't do a great job planning and budgeting for making tweaks and updates to their app. After employees use it for an initial period, they will likely tell you about certain things could be made more efficient or better. 

Most of the time, people will make some tweaks and updates, since they don't usually get it perfect the first time. 

These updates aren't free. 

Conservatively, let's budget for 50 hours of work updating the app during its first year of use, at $150 per hour.

That's $7,500. 

Advanced features/integration 

Advanced features can be a variety of things. Maybe you'd like your users to be able to use their devices' cameras to barcode scan equipment or product labels. Maybe you'd like to be able to utilize push notifications to dispatch specific tasks to your users. Or maybe you want to push data from external sources in and out of your app via APIs. There are a ton of possibilities, and the costs can add up quickly. 

Let's estimate some advanced features and integration at $35,000, for your app, which is being designed to work on 2 platforms.

Total App Development Costs in Year 1: $169,500 

Are you willing to spend this? Photo credit: Ervins Strauhmanis via photopin cc

As you can see, you can easily spend more than six-figures on building a single app to improve your business. And this is just the first year of your costs. By year 2 (in this model), you'll have spent $257,000 on your app (includes salary of the manager and additional updates). 

spreadsheet template for costs to development a custom mobile app

What happens after 3 years?

Honestly, this is almost impossible to gauge. Due to the fact that new platform functionality continues to emerge, you may actually have to start from scratch to have an app that is relevant and taking full advantage of new innovations. 

In many cases, it makes much more sense to use a software service and mobile app platform like GoCanvas for your app building needs. 

Going with Canvas' mobile app platform make it easy to find, build and customize mobile business apps to streamline your business processes and save time. No coding required. Quickly deploy apps to multiple platforms and groups of users, take advantage of our robust security and integration features and experience a rapid ROI. Try it free today!

Want to plug in your own values to estimate your own costs?

Download the template below!