In the previous installment of our MVP software development article series, the Expanice team discussed what an MVP is and how it differs from prototypes, proof of concept (PoC), and market-ready products. We also offered practical advice on creating a minimum viable product version of your technology solution. Now it is time to consider MVP development costs, which play an important role in determining whether a project succeeds or fails.
Specifically, this article will go over why calculating MVP development costs in advance is important, the key factors influencing those costs, and examples of MVPs from our own portfolio, along with their ballpark estimates. Equipped with this information, your startup will be able to better plan your project and choose an MVP development services company wisely.
Table of Contents
- Why You Should Calculate MVP Development Cost Early On
- Top 5 Factors Affecting MVP Development Costs
- How Much Does It Cost to Build an MVP?
- Calculating MVP Development Costs: Summing It Up
Why You Should Calculate MVP Development Cost Early On
Calculating MVP costs in advance will help your startup avoid some of the most common product development mistakes, such as going over budget and losing your strategic point
Budgeting for an MVP isn't just a box to check off in your startup journey—it’s a proactive strategy to ensure long-term viability. Here's why:
- A realistic MVP cost estimate can help you avoid budget overruns. The most common reason for MVP development projects going over budget is scope creep, also known as feature creep. It occurs when stakeholders continue to improve their product, whether it is an eCommerce app or connected exercise equipment, with functionality that was not included in the original product scope, without adjusting the budget or timeline. Unexpected technological roadblocks, such as software integration issues, unanticipated bugs, or late-stage scaling challenges, can also lead to failure. These roadblocks frequently appear late in the development process, necessitating additional investments in resources, time, and problem-solving efforts, causing your MVP cost to skyrocket.
- Knowing your MVP development cost improves funding pitches. Less than 1% of all startups successfully raise investor funding. To enter the lucky club, it is vital to calculate your product costs (in our case, the MVP development cost) and include them in your pitch. This not only demonstrates your meticulous planning and financial awareness but also gives investors an idea of potential returns. Even if you have already built an MVP and are seeking funding to implement more advanced features, other businesses will be more likely to support a startup that has carefully calculated its expenses, resulting in fewer surprises down the road.
- MVP development costs determine project timelines. Estimating how long it will take to create an MVP is not always easy. Project timelines can be influenced by factors such as product complexity, team size, developer hourly rates, engagement model, ongoing requirement changes, market fluctuations, and misunderstandings among multiple teams involved. As a rule, MVP development projects typically last three to six months. However, this is not always the case with cutting-edge technologies like the Internet of Things and artificial intelligence. Understanding your MVP development cost upfront helps you align development timelines with realistic expectations, allowing you to plan launches, marketing, and subsequent development phases more effectively. A clear timeline also reduces the possibility of rushed development, which could compromise product quality or user experience.
- MVP cost estimates support strategic pivots. As an emerging technology startup, you may find yourself in a situation where you’ll have to quickly repivot your project, changing your product’s core functionality based on market feedback or technical feasibility issues discovered during the development phase. For example, if early testing reveals that a specific feature is not resonating with users or is prohibitively expensive to develop, a well-managed budget enables teams to effectively reallocate resources to pivot or refine the MVP's focus. Without a clear understanding of MVP development costs, pivoting can be a risky move that strains resources or disrupts the overall strategy.
- Calculating MVP costs beforehand helps avoid running out of cash. While budget overruns refer to exceeding initial estimates, running out of cash is a broader issue that involves total financial mismanagement or insufficient funding and causes 29% of all technology startups to fail before launching their products. The danger of running out of cash often stems from poor cost forecasting coupled with a lack of financial buffers. Calculating MVP development costs early on helps ensure that the project is not only planned within a reasonable budget but also prepared for unforeseen challenges that may necessitate additional spending. Furthermore, estimating costs upfront allows you to better plan for post-MVP phases such as scaling, feature enhancements, and marketing.
Early minimum viable product cost estimates can also attract potential strategic partners who may be interested in collaborating with your startup by co-developing your technology solution or providing resources. For example, a startup working on a smart home solution, such as a self-learning thermostat, may strike partnerships with hardware manufacturers to provide components at a lower cost or collaborate with utility companies to integrate the device into smart grid systems. Accurate MVP cost estimates help align such collaborations by establishing clear expectations for shared responsibilities, contributions, and mutual benefits.
Top 5 Factors Affecting MVP Development Costs
Several key variables influence the total cost of developing an MVP. These include:
- Product type. The cost of creating an MVP is heavily influenced by the type of product you want to build. For example, a single-platform shopping app for a brick-and-mortar retail chain might include essential features like a product catalog, product search filters, a shopping cart, and payment service integration. However, incorporating an augmented reality-based virtual try-on feature to improve the user experience would significantly expand the project scope and the MVP development cost. Similarly, MVPs for IoT products tend to have more intricate functionality. Consider a smart irrigation system that collects sensor data, transmits it using wireless connectivity protocols, processes the data in the cloud, and displays real-time analytics in a user-friendly dashboard. The MVP cost would escalate further if the system requires custom-built hardware or real-time, on-device data processing. And we’re not even talking about retraining foundation AI models with your data or, worse, creating AI solutions from scratch, which would dramatically amplify both complexity and development budget.
- Technology stack. Your choice of tools and technologies can impact MVP development costs significantly. Custom software engineering provides greater flexibility and scalability, but it is more expensive than no-code/low-code development services, which use technologies such as Bubble or Flutter and offer faster, more cost-effective alternatives for simpler MVPs. Hardware considerations are another factor, particularly for IoT solutions. Building a custom motherboard for a smart home device, for example, incurs additional design and testing expenses. In contrast, using off-the-shelf IoT development boards can save money but limit customization. When incorporating AI capabilities into your product, you can reduce MVP development time and costs with pre-trained models (such as OpenAI's GPT-based models or computer vision libraries like TensorFlow Hub's pre-trained detectors). However, these technologies may limit the level of personalization when compared to building and training models from the ground up using frameworks like PyTorch or TensorFlow.
- Development team. Hiring in-house developers gives you more control over the project, but it also comes with higher costs for salaries, benefits, and overhead. Outsourcing the MVP project can be more cost-effective, but the trade-offs vary depending on the geographical model:
- Onshore teams. Easier to collaborate with due to shared work ethic and cultural background, but higher median hourly rates (~$100 in the United States and Western Europe).
- Nearshore teams. Offer competitive pricing and moderate time zone differences. Central European countries like Poland frequently provide experienced tech talent at reasonable rates.
- Offshore teams. The most cost-effective option, with lower MVP costs in development hubs like India and the Philippines. However, these may come with communication and coordination challenges and varying code quality.
- Engagement model. Your preferred engagement model will impact the MVP costs. Fixed Price is best suited for MVP projects with well-defined, static scopes, such as a basic fitness tracking app that records user physical activity and syncs with a database. However, changes in requirements can be expensive and difficult to manage. Time and Materials (T&M) works better for complex projects where flexibility is key, like an IoT-enabled greenhouse that adjusts irrigation and temperature based on real-time data and weather forecasts. This model allows for iterative development without compromising overall project quality or timeline, but it requires an experienced product owner to prevent scope creep.
While collaborating with IT specialists with lower hourly rates may seem like a plausible way to reduce MVP costs, keep in mind that hourly rates frequently correlate with more extensive expertise and experience
- Design and user experience (UX). The cost of developing an MVP is also determined by the level of design sophistication and user experience integration. Basic designs with standard UI components can keep expenses low, but they may fail to captivate early users. On the other hand, investing in custom UI/UX can enhance user interaction, making the product more appealing and intuitive. For example, a food delivery app MVP with a simple interface and standard user flows may meet basic usability and engagement requirements, but adding tailored animations, interactive maps, or personalized user dashboards will significantly raise design and development costs. Additionally, UX research—such as user testing and feedback loops—adds to the overall MVP price but can make a crucial difference in validating product-market fit. Prioritizing essential design elements early on and iterating based on user feedback can help balance MVP cost with the quality that your product needs to stand out.
Understanding these factors will help you create a more accurate cost estimate for your MVP and better manage your project from start to finish.
How Much Does It Cost to Build an MVP?
Now that we know why it’s important to calculate preliminary MVP costs before actual development and what may affect them, it’s time to determine the average minimum viable product cost for different types of projects.
For this, the Expanice team selected three recent projects from our portfolio with varying technology stacks and scopes and estimated their approximate costs. If your technology solution significantly differs in functionality from our examples, you can also use our MVP cost calculator to better budget your project.
Project #1: Developing an MVP for a Smart Curtain Solution
Our client, a Western European smart home startup, aimed to revolutionize home automation by developing a retrofit IoT kit for existing curtain rods and tracks. The smart curtains device was designed to operate automatically based on a custom schedule or sunlight patterns while also providing convenience and security with features like a holiday mode.
Development Approach
Initially, our team was tasked with building the back-end infrastructure and admin console for managing the smart curtains. The scope quickly expanded to include firmware development, a cross-platform mobile app, and a flashing station to streamline the device production process.
The solution incorporated technologies like C for embedded software, Python for the flashing station, PHP (Laravel) and Vue.js for the back end, and React Native for the mobile app. The project followed an Agile (Scrum) methodology with a T&M engagement model.
Vital MVP Functionality
- Automated curtain opening and closing in response to schedules or natural light
- Smart curtain control facilitated by a user-friendly mobile app
- Device configuration and troubleshooting through a web-based admin console
- Integration with popular voice assistants (Alexa, Google Assistant) and other smart home systems
MVP Cost Estimate
The MVP stage involved approximately 1,000 hours of development, costing over $50,000. This phase covered back-end and web app engineering, ensuring a reliable and scalable foundation. As the project evolved to include firmware and the mobile app, total development hours approached 3,000, exceeding $120,000. Please keep in mind that the above MVP costs exclude custom hardware development.
Project #2: Building an MVP for a Cryotherapy Session Management Solution
Our client, a cryotherapy startup, wanted to improve user experience and operational efficiency by creating a solution that connects IoT-enabled cryotherapy units to a mobile and web platform. This solution would allow for seamless user registration, medical verification, session management, and on-site access control, all while maintaining user safety through real-time monitoring and compliance checks.
Development Approach
The cryotherapy unit management solution was built with a modular architecture, enabling independent updates to system components for easier maintenance. The development stack included:
- IEC 61131-3 for device firmware
- PHP + Go for back-end APIs
- AWS services (Cognito, DynamoDB, SNS, IoT Core) for secure cloud-based data management
The client also requested mobile and web applications with a clean user interface. The mobile app was built with Flutter to provide a consistent experience across Android and iOS, while the web interface was created with Tailwind CSS and Orchid software for an intuitive user experience. The team used an Agile methodology with a T&M engagement model to accommodate changing project requirements.
Key MVP Features
- User registration and medical verification for cryotherapy eligibility
- Session purchase and access control via NFC-compatible mobile devices
- Cryotherapy unit integration for real-time monitoring and emergency response capabilities
MVP Cost Estimate
The MVP development took approximately 1,200 hours, with an estimated cost of $60,000. Additional development, such as advanced safety protocols and session personalization features, increased the project's total hours to nearly 2,500, with a total cost of approximately $125,000.
Project #3: Creating an Expat Support Platform for IT Specialists Relocating to Poland
Expanice shifted its operations to Poland in early 2022 in response to political and economic instability in Eastern Europe. Halfway through the relocation process, our R&D department came up with the idea of creating an expat support platform. The platform, designed as an end-to-end concierge service, would help IT specialists from neighboring countries, such as Belarus and Ukraine, navigate Polish migration legislation, automatically fill out application forms for a temporary or permanent residence permit, pay for the consultants' services, request the necessary documents, and so on.
Development Approach
Our team conducted a thorough analysis of the local IT market, including the demand for a foreign workforce, existing competition, and potential legal implications. Based on the research, we determined optimum components for the expat support platform, which included a web portal and a cross-platform mobile application.
The chosen technology stack included AWS S3 for secure document uploading, AWS Textract for automated data retrieval, PostgreSQL for relational data management, Kubernetes for modular development, React for the front-end, and Flutter for mobile apps. We integrated payment services (Stripe, PayU), InPost delivery, and government portals.
Key MVP Features
- User profile management with document storage and application progress tracking
- Document guidance and submission with autocomplete and government portal integration
- Automated scheduling and reminders for in-person appointments
- Customer support with real-time chat and ticketing systems
- Integration with payment, delivery, and translation services
MVP Cost Estimate
The R&D project is still in progress, with the estimated effort to build the MVP version being 1,800-2,500 hours, totaling $90,000–125,000. Subsequent versions could add advanced analytics, multilingual support, and AI-powered features, increasing the estimate by $37,500–52,500.
Calculating MVP Development Costs: Summing It Up
While MVP development costs vary greatly depending on product type and technologies applied, it is rarely possible to build a minimum viable product for less than $50,000, unless we are talking about a relatively simple mobile or web application
Based on our portfolio examples, we believe the minimum plausible budget for your MVP project is $50,000 if you choose the custom software development approach. With no upper limit.
If you are operating on a tight budget, as most startups are, you could use no-code/low-code development platforms to cut MVP costs by about 30%.
Regardless of the development strategy, you are unlikely to create an MVP on your own, as even codeless solutions necessitate at least a basic understanding of programming and strong business analysis skills.
The good news is that you can entrust your project to Expanice! With over 13 years of experience in custom software engineering and unique expertise in IoT, we have helped numerous startups get to market faster while lowering MVP development costs. So, tell us about your project and see how we can help!
