Starting a business is a process that always involves risk. On the way to the product’s launch, an entrepreneur may face a number of problems, ranging from the lack of demand for this product to the wrong allocation of limited resources. The latter is one of the main reasons for failure. In an effort to protect themselves from such a situation, entrepreneurs often use the Lean Startup method, which is based on the development of MVP.
Although testing your idea with minimum investment reduces the risk of bankruptcy, a certain problem still remains. An MVP is likely to require fewer resources than a full-fledged product, but these resources are still needed. At this stage, you may be wondering how much it costs to develop an MVP. There is no definite answer to this question since the actual cost of the MVP can vary from zero to tens of thousands of dollars. Software companies that are engaged in full-cycle development offer their customers to calculate the approximate cost of MVP, indicating the key details and features. You can find such a calculator on purrweb.com.
This article, in its turn, will clarify how much the MVP creation may cost and what factors affect its price.
Step 1: Understand what you’re trying to build
When thinking about the cost of developing an MVP, you first need to understand whether you should build anything at all. MVP isn’t necessarily something tangible, which requires development. The Lean Startup method is based on a hypothesis-driven approach. Simply put, with the help of MVP, you will test a hypothesis. There are several types of such hypotheses. The main types are the hypothesis of a problem and the hypothesis of a solution.
In the first case, you suppose that there’s a problem in the market and no one solves it. Or, the existing solutions aren’t effective enough. You use the MVP to check if this problem does exist. Often, there is no need to develop a product at this stage. Hypothesis validation can be achieved through surveys, email campaigns, and other marketing tools. Dropbox used this approach at the early stages. Their MVP was a two-minute video explaining what the future product will be like and what problems it will solve. If your case is similar to this one, the development of your MVP will actually be free, or nearly free.
The second case is more common. The problem is clear and it needs to be solved. You have an idea of a solution, but you don’t want to take risks and invest in full-scale development. You just want to check whether your idea is good with the help of MVP. In this case, it is necessary to develop a product with a focus on its key features which will bring the most value to your customers. This is the scenario that we will further expand on.
Step 2: Decide on design
The debate over whether the design is needed in the MVP has been going on for about 10 years. Indeed, if you are going to test the key functions of a future product, why waste resources on design? This is true, but here, your decision will again depend on what exactly you are going to create and what type of MVP you need.
There are cases when the design itself is a core function or feature of the product, so it shouldn’t be sacrificed. Of course, creating the product’s design and interface will require additional expenses. For a rough estimation, the average hourly rate of a UI designer in the US is $41.63.
Step 3: Define the core feature(s)
The number and complexity of features directly affect the development cost. In order to determine which features need to be developed, you should understand your target audience, their problem, and the exact value that your product will bring. Next, divide all the features into several categories: must-have, should-have, could-have, and won’t-have. For an MVP, you should select the features from the must-have list. If you have to highlight only some of the features from this list, then you need to carefully study your target audience and their needs again.
Step 4: Gather the team
Often, a product idea originator gathers a team of friends or local experts to make communication between them as smooth as possible. But sometimes, there is an urgent need for specialists, and entrepreneurs are forced to look for outside help. In such a situation, there are two ways out — you should contact either freelancers or software companies.
When it comes to freelancers, it’s essential to determine what kind of specialists you need and how many. Let’s say, you need 3 developers and a designer. Next, make sure you understand for what period their services will be purchased. It can take from 1 week to 4 months to launch an MVP. Taking into account the complexity of the product and an hourly rate of specialists, you can roughly calculate the development cost. However, there is a serious risk here. When working with freelancers, you won’t get any guarantees that by the time the allocated budget runs out, you will have exactly what you need.
Therefore, the best option would be to contact a software company. In this case, your relationship will be sealed by a contract and NDA, and you should not worry about the quality of work. Most companies providing MVP development services are ready to work on a bare idea from scratch and release it to the market in around 3 months.
As you can see, when calculating the cost of MVP development, there are too many different variables to consider. But once an entrepreneur has embarked on the path of minimizing risks, they must first decide whether it is necessary to develop anything at all.
If the development is still necessary, then use a calculator, the Internet, and in the shortest possible time, go through all the steps indicated above.