How To Reduce Startup App Development Costs

What will reduce startup app development costs isn’t negotiation or outsourcing. Building the right product is the simplest way to minimize costs. It starts by getting customers involved in product development. (Photo by Valery Sharifulin\TASS via Getty Images)
Valery Sharifulin/TASS

An application is the product of a startup, it is how startups serve users at scale. Just like any business model, building, distributing and continuously maintaining and innovating the product is the costliest aspect of starting and operating a business. While there’s a limit to how much can be saved in product development, the sky is the limit to the revenue that can be generated with the right product.

What will reduce startup app development costs isn’t negotiation or outsourcing. At the end of the day, a low quality product today will need major redevelopment in the future bringing the cost of building a good app back to its market value. Building the right product is the simplest way to minimize costs.

The cost of building an app can range between mid-five figures up to seven figures. The costliest mistake that most entrepreneurs make is rush into product development assuming that the listed features and the overall product is what people need to solve a problem. Since most startups fail due to lack of market need and because the cost of redevelopment can potentially double the initial investment, entrepreneurs quit.

App development aside, here are the key business steps that will help you minimize costs and risks while increasing the probability of success of the product.

1. Build A Customer Advisory Board

Talking to customers is one of the most important rules of business. However, if you don’t have a product, chances are, you don’t have customers. At this stage, while most entrepreneurs spend some time interviewing potential buyers, rarely do they attempt to take the relationship to another level. This higher level can save hundreds of hours of work and help founders build the right product. It’s about turning leads into advisors. Follow these steps:

  • Identify 100 potential buyers that fall under your hypothesized ideal customer profile.
  • Reach out to ask for a little bit of their time for an interview to discuss a solution to a particular problem you are trying to solve. At this stage, it is a discovery and trust building meeting without sales pitches.
  • Design the first version of the product as in step two below.
  • Contact the list of interviewees for another meeting and a demo of the upcoming product.
  • Presell the product with some perks like 20% off annual subscription for the first two years.
  • Invite those who commit to join the customer advisory board that entails biweekly or monthly meetings to discuss the product and how it can be developed and improved in a way that addresses their needs and helps them solve their problems exceptionally well.

At this stage, a customer advisory board doesn’t necessarily have to include paying members however, if they have a stake and incentive in the business, they are more likely to give it the time you need. Also notice how at this stage you still haven’t invested time or money in product development. In fact, you should have made money through presales before investing in the product.

2. Focus On Design Only

It may cost six figures to build a scalable and solid first version but can cost you less than ten thousand dollars to design the product. Design allows you to make relatively cheaper mistakes. Nowadays, many no code tools can help you make your designs clickable for a better presentation and demonstration. Share the designs with your customer advisory board and make the necessary changes accordingly. Take at least two rounds of adjustments before you move into product development.

If you want an opportunity to raise more funds from customers, use the designs to meet and close other leads and continue to invite customers to the board. It is wise to categorize board members into active advisors, passive advisors and ambassadors. Passive advisors and ambassadors may be willing to spread the word and share their feedback over a phone call or email every now and then but do not wish to be actively involved in product development and design.

3. Distribute Your Funds

One of the key things that you need to identify with the help of your customer advisory board is the core of the solution. In other words, what are the key features that must exist today for the customer to be able to solve the identified problem? This will be your first version or minimum viable product.

Distributing funds simply means, instead of going all in by building what can be considered an advanced version of the product, entrepreneurs are better off splitting the investment into two or three versions which gives more room to improve the product on budget before investing more funds preferably for growth or to push things forward faster ideally partially with customers' money.

The reality is, no matter how much time is spent in customer development and discovery with or without a customer advisory board, almost never will an advanced product with numerous features satisfy user needs without continuous major changes. It is therefore wiser to build up instead of aiming high and bearing the high costs of product redevelopment later.

CB Insights attributes the major decline in the cost of starting startups to the widespread of cloud-based tools. Today, virtually any product can be simulated by gathering and combining the right tools. One of the simplest ways to minimize startup risks and development costs in addition to the three steps above is to solve customers’ problems by simulating the product through existing tools. For example, before building a platform, Groupon created a simple WordPress site and an email newsletter that displayed and promoted the products of their partners. Zappos also used a simple website to display the products while the founders physically purchased the orders from local stores and mailed them to the customer.

In conclusion, while these suggestions do not change the cost of an app, they provide a better way to diversify risk and budget while increasing the probability of success of the startup. It is also a great story to share with investors, the media and future team members.

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An application is the product of a startup, it is how startups serve users at scale. Just like any business model, building, distributing and continuously maintaining and innovating the product is the costliest aspect of starting and operating a business. While there’s a limit to how much can be saved in product development, the sky is the limit to the revenue that can be generated with the right product.

What will reduce startup app development costs isn’t negotiation or outsourcing. At the end of the day, a low quality product today will need major redevelopment in the future bringing the cost of building a good app back to its market value. Building the right product is the simplest way to minimize costs.

The cost of building an app can range between mid-five figures up to seven figures. The costliest mistake that most entrepreneurs make is rush into product development assuming that the listed features and the overall product is what people need to solve a problem. Since most startups fail due to lack of market need and because the cost of redevelopment can potentially double the initial investment, entrepreneurs quit.

App development aside, here are the key business steps that will help you minimize costs and risks while increasing the probability of success of the product.

1. Build A Customer Advisory Board

Talking to customers is one of the most important rules of business. However, if you don’t have a product, chances are, you don’t have customers. At this stage, while most entrepreneurs spend some time interviewing potential buyers, rarely do they attempt to take the relationship to another level. This higher level can save hundreds of hours of work and help founders build the right product. It’s about turning leads into advisors. Follow these steps:

  • Identify 100 potential buyers that fall under your hypothesized ideal customer profile.
  • Reach out to ask for a little bit of their time for an interview to discuss a solution to a particular problem you are trying to solve. At this stage, it is a discovery and trust building meeting without sales pitches.
  • Design the first version of the product as in step two below.
  • Contact the list of interviewees for another meeting and a demo of the upcoming product.
  • Presell the product with some perks like 20% off annual subscription for the first two years.
  • Invite those who commit to join the customer advisory board that entails biweekly or monthly meetings to discuss the product and how it can be developed and improved in a way that addresses their needs and helps them solve their problems exceptionally well.

At this stage, a customer advisory board doesn’t necessarily have to include paying members however, if they have a stake and incentive in the business, they are more likely to give it the time you need. Also notice how at this stage you still haven’t invested time or money in product development. In fact, you should have made money through presales before investing in the product.

2. Focus On Design Only

It may cost six figures to build a scalable and solid first version but can cost you less than ten thousand dollars to design the product. Design allows you to make relatively cheaper mistakes. Nowadays, many no code tools can help you make your designs clickable for a better presentation and demonstration. Share the designs with your customer advisory board and make the necessary changes accordingly. Take at least two rounds of adjustments before you move into product development.

If you want an opportunity to raise more funds from customers, use the designs to meet and close other leads and continue to invite customers to the board. It is wise to categorize board members into active advisors, passive advisors and ambassadors. Passive advisors and ambassadors may be willing to spread the word and share their feedback over a phone call or email every now and then but do not wish to be actively involved in product development and design.

3. Distribute Your Funds

One of the key things that you need to identify with the help of your customer advisory board is the core of the solution. In other words, what are the key features that must exist today for the customer to be able to solve the identified problem? This will be your first version or minimum viable product.

Distributing funds simply means, instead of going all in by building what can be considered an advanced version of the product, entrepreneurs are better off splitting the investment into two or three versions which gives more room to improve the product on budget before investing more funds preferably for growth or to push things forward faster ideally partially with customers' money.

The reality is, no matter how much time is spent in customer development and discovery with or without a customer advisory board, almost never will an advanced product with numerous features satisfy user needs without continuous major changes. It is therefore wiser to build up instead of aiming high and bearing the high costs of product redevelopment later.

CB Insights attributes the major decline in the cost of starting startups to the widespread of cloud-based tools. Today, virtually any product can be simulated by gathering and combining the right tools. One of the simplest ways to minimize startup risks and development costs in addition to the three steps above is to solve customers’ problems by simulating the product through existing tools. For example, before building a platform, Groupon created a simple WordPress site and an email newsletter that displayed and promoted the products of their partners. Zappos also used a simple website to display the products while the founders physically purchased the orders from local stores and mailed them to the customer.

In conclusion, while these suggestions do not change the cost of an app, they provide a better way to diversify risk and budget while increasing the probability of success of the startup. It is also a great story to share with investors, the media and future team members.

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I help tech entrepreneurs build startup products (apps) that generate revenue quickly with a higher probability of success to serve either as a side business venture or

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