App Development Cost Breakdown for Small Businesses
One-third of small businesses (33%) spent less than $10,000 to develop a mobile app. 32% of small businesses spent more than $50,000 to develop their app. Mobile app development costs vary based on a host of business factors, including the location and size of the company, the app's functionality, and whether the app is developed in-house or outsourced. Small businesses can consider these factors when estimating the cost of building a mobile app.
Like it or not, many small businesses have been forced into the digital age. The COVID-19 pandemic, a younger consumer base, and the rise of technology-based services have many companies looking for new ways to reach their customers. One method is for companies to build a mobile app. But as with any business process, small businesses want to know how much app development will cost.
The answer varies: Top Design Firms surveyed 158 small business owners and managers in the U.S. about the cost of developing a mobile app.
We found that a small business will spend more to develop apps for iOS platforms, if it employs more than 250 people, if it is located in the Northeast or West, and if it develops in-house instead of outsourcing. Small businesses can use this report to estimate the cost of developing a mobile app.
How Much Does It Cost to Develop an App for Small Businesses?
- The cost of developing a mobile app can range from less than $10,000 to more than $100,000. Small business spending on mobile apps varies.
- 46% of small businesses in the Northeast spent more than $50,000 to develop an app, compared to only 25% in the South. The cost of developing a mobile app depends on what region a company is located in, with app development being most expensive on the east and west coasts.
- 84% of companies with 1 to 10 employees spent $30,000 or less on developing their mobile app. Only 35% of employees with 251 to 500 employees spent $30,000 or less on their app, suggesting that the larger the company, the higher the cost of developing a mobile app.
- 63% of small businesses developing only for an Android operating system spent $30,000 or less. In comparison, only 41% of small businesses developing only for iOS spent $30,000 or less.
- 49% of small businesses who outsourced app development to an agency spent less than $30,000. Companies are more likely to spend more than $30,000 if they use in-house developers or DIY app development software.
1. Typical App Development Costs Range Widely
The cost of developing a mobile app depends on multiple factors and can be difficult to predict. One-third of small businesses (33%) developed an app for $10,000 or less.
Other small businesses developed an app for $10,001 to $30,000 (20%), $30,001 to $50,000 (14%), $50,001 to $100,000 (16%), and more than $100,000 (16%).
Experts say that the range of possible costs to build a mobile app are the result of different factors developers must consider. Bohuslava Zhyvko, head of marketing at Exoft, a software company, says that his business calculates the cost of mobile app development by considering:
- Functionality: How many different tasks must the app be equipped to perform? Purchases, web searches, filtering, feedback
- Tech stack: Includes the combination of technologies required to build and run an application. Various front-end tools, back-end tools and application programming interfaces (APIs) make up tech stacks.
- Integrations: Integration allows for different apps and devices to exchange data.
- Team experience and expertise: The most experienced and knowledgeable app development teams and firms will charge the most.
Mobile apps are as varied and diverse as the companies that develop them. For that reason, the cost of developing an app ranges widely.
2. Mobile App Development Cost Estimate Varies By Region
The cost of doing business depends on where a business is located, and the cost of developing a mobile varies substantially depending on where a company is located. Close to half of small businesses in the Northeast (46%) spent more than $50,000 to develop a mobile app.
In comparison, only 33% of small businesses in the West, 31% in the Midwest, and 25% in the South spent more than $50,000 to develop an app. In general, business costs vary by region: the cost of office space, labor, permits, licenses, and taxes are typically higher in the Northeast and West.
Experts say that app developers adjust their prices depending on where they and the companies they serve are located. "App developers know how to target different levels of income by region and can learn to charge accordingly," said Veeraj Mehta, owner of MarketFly LLC, a startup consultancy.
MarketFly is located in Los Angeles and is currently developing a mobile app. Mehta expects the total cost of development to exceed $50,000, and recognizes that developing an app with many functionalities on the West Coast will be expensive. The cost of developing an app will be higher for companies located in the Northeast and West.
3. App Development Costs Rise With Size of Company
Small businesses value low-cost projects, but have difficulty keeping expenses down as they grow. App development is no different: for larger companies, developing an app will be more expensive. More than 8 in 10 small businesses with 10 employees or fewer (84%) spent $30,000 or less to develop a mobile app.
In comparison, only slightly more than half of companies with 11 to 50 employees (55%) and 51 to 250 employees (52%) spent $30,000 or less. About a third of small businesses with 251 to 500 employees (35%) spent $30,000 or less to develop an app.
Experts say that the two most significant reasons small businesses spend more on mobile app development as they grow are company spending power and customer security.
“Larger organizations can develop a full feature app in one go instead of developing it in iterations or batches due to budgetary constraints,” said Krish Nair, director of operations at IT Path Solutions, an IT company.
Small businesses with greater financial resources are less likely to choose the cheapest rates or services to develop an app. As small businesses grow, they also must give greater consideration to customer security.
Stephen Twomey is the chief technology officer at Kennected, a SaaS lead generation firm. Twomey says that security became more important to Kennected as the company attracted more customers.
“You need to ensure the security of both your product and client data,” Twomey said. “If your employees and customers are using apps that have easily breached security holes, your company is risking a lot.”
Consumers place more emphasis on data security than in the past, and small businesses may respond by spending more on app security as their budgets grow.
Overall, companies are likely to spend more on app development as they add employees. Larger companies service more customers and have more expenses – including those associated with app development.
4. Android Apps Less Expensive to Build
Life sometimes feels divided between those on Team Android and those on Team iPhone. App development is often divided between companies that develop for Android operating systems and companies that develop for iOS systems.
Developing for an Android system is less expensive: 63% of small businesses that develop apps exclusively for Androids spend $30,000 or less.
Half of companies that develop for both iOS and Android (50%) spend $30,000 or less; 41% of companies that develop exclusively for iOS spend $30,000 or less.
Dawei Li, outsourcing strategist for Aloa.co, an outsourcing consultancy, says that there are two reasons why Android apps are less costly to develop:
- “Native Android apps are built using Java or Kotlin. Native iOS app are built using Swift. Simply put, Swift developers on average are more expensive than Java developers.”
- “iOS apps generally take more time to develop due to Apple’s stringent approval process on the App Store. Apps often get rejected for various different reasons. The Google Play Store on the other hand does not have an approval process so it’s much easier to get apps uploaded on there.”
Li believes that businesses should cater their app development based on which operating platform they expect their users to primarily use. As time passes, Li thinks that developing for both iOS and Android platforms will meet customers’ demands and companies’ budgets.
“Recent advancement in software development has allowed developers to build both iOS and Android apps using one code base instead of two, saving development hours and cost,” Li said.
Android apps have traditionally been a higher cost for businesses, but frameworks such as React Native and Flutter are increasingly allowing businesses to cost-efficiently develop for iOS and Android.
5. Mobile App Development Cost Lower When Outsourced
The cliché is that if you want something done right, you should do it yourself. But businesses considering an in-house app development team should consider the potential savings outsourcing provides.
About half of small businesses (49%) who outsourced to an app development company spent $30,000 or less to develop their app. A similar number (47%) spent $30,000 or less by contracting a freelance app developer.
Fewer small businesses spent $30,000 or less on app development by using in-house developers (41%) or DIY app development software (33%).
John Ross, chief executive of Test Prep Insight, an online education company, says that his company outsourced app development for 2 reasons: expertise and cost. “App developers are highly specialized and outsourcing offers efficiencies you can't get in-house,” Ross said.
The specialized technical capabilities provided by an app development company convinced Ross to outsource instead of relying on his in-house web developers. The quality of outsourced app development can be complemented by reduced cost.
“When you outsource an app development project, you can often get a fixed price proposal, capping your project costs and limiting your financial risk,” Ross said.
This way, companies can avoid the costs of hiring additional employees and managing their work. Still, some small businesses find value in developing an app through an in-house team.
Daivat Dholakia, the director of operations at Force by Mojio, a GPS fleet tracking service, says that having an in-house app development team can help ensure the creation of a high-quality app that fits the company’s business model.
“Having people who understand your business model and can easily work with the rest of your team is important,” Dholakia said. “[An in-house team] can ensure your app will be of good quality.” Companies that do elect to develop an app internally should expect to invest more money into the project.
Cost of App Development Depends on Business Needs
The cost of app development is different for every company, and can range between less than $10,000 and more than $100,000. The factors that affect the cost of app development include:
- The app's functionality
- Location of the company and its app developers
- Size of the company
- Operating system the app is being developed for: Android, iOS, or both?
- Whether the app is developed in-house or outsourced
Small businesses decide how much to spend on an app based on what capabilities the app must perform. By considering these factors, small businesses can determine an app development cost that fits the company's budget.
About The Survey
Top Design Firms surveyed 158 small business owners and managers in the U.S. that have a mobile app to learn how much it cost to develop the app. Sixteen percent of respondents’ businesses (16%) had between 1 and 10 employees; 28% had 11 to 50 employees; 29% had 51 to 250 employees; 27% had 251 to 500 employees. More than two-thirds (64%) of survey respondents were male, and 36% were female. Thirty-five percent (35%) of respondents were between 18 and 34 years old; 58% were between 35 and 54, and 6% were 55 and older. Respondents were from the South (36%), West (25%), Northeast (25%), and Midwest (16%).