The Cost of Building an iPad App

Ever wondered how much it costs to build an iPad app? Thinking about developing your own app?

The revenue generated by some apps in the App Store is impressive, but only a small percentage of apps actually make enough money to cover their costs. Before taking a home equity loan or asking your family for money, and before investing tens of thousands of dollars in your idea, the following guide may give you a better idea about how much time and money your app will require.

Typical app costs

Regardless of who actually develops the app, let’s look at what it takes to build it. An iPhone or iPad app typically takes anywhere between 2 weeks to several months to build, depending on the complexity. Building an app is not just about coding, as it requires:

• Design: Unless you have the proper skills to do the design yourself, design will cost you money, especially for more advanced apps. Expect weeks of work to build all the app screens, and this job cannot be off-shored. At $50 to $150 an hour, U.S. based designers will likely bill you anywhere between a couple thousands of dollars for a basic app, to several dozens of thousands of dollars if you’re building a higher-end app that requires many screens to be designed.
• Coding: Similarly, writing the app’s code will usually take several weeks to several months of work. This work can be off-shored, and several outlets in Europe and Asia do this job for a living. If you decide to off-shore, you will likely save some money, however, keep in mind that off-shoring requires a lot of coordination, as you will have to manage teams that may not speak the same language, work different hours, and have hundreds of customers like you to deal with. A U.S. based team will likely cost you more, but these teams are local and are usually a lot easier to deal with.
• Testing: Nobody wants bad reviews in the App Store. In other words, you will need to spend days playing with your app, trying to identify bugs and find out what could go wrong. Again, depending on the complexity of the app, this job could take one person a couple days, or five people two weeks. Expect a lot of “back and forth” between the testing and development teams, in order to get rid of all bugs identified within the app.
• Infrastructure: Unless your app does not require any interaction with external servers, keep in mind that server development and infrastructure is critical for the app to succeed, as a slow server response and/or overloaded server will likely lead to bad reviews and poor sales, even if the app is great. Don’t be shy and expect to invest a lot of money on the server side of the equation, especially if you expect your app to be wildly successful. Good infrastructures do not come cheap, and keep in mind that recurring monthly fees will have a direct impact on your revenue.
• Validation: When you are ready to launch, the last gate is the validation. Passing the validation could take anywhere from a couple of days to several weeks, depending on the app and depending on the number of Apple guidelines your app may be infringing.
• Project Management: The more third parties involved, the bigger your headache!

For a nice but simple app, the design work will likely take a designer about a week, which will cost you about $6,000. The server side will likely require a developer about 2 weeks of work, or about $12,000. Similarly, the app could be written in about 2 weeks as well, another $12,000. Add $5,000 for project management, hosting fees for a year, debugging, unforeseen delays, and your total budget is around $35,000.

For a nice high end app, like a high-end game, numbers are usually much higher. Design will likely cost you $30,000 alone. Development will be in the $150,000+ range. Hosting fees and extras will cost another $30,000. At the end of the day, your app will likely cost you at least $200,000.

Now, if you happen to be a great designer and a skilled developer willing to spend weeks on your own app, the cost could be very close to $0…

A couple examples

Twitterific

Twitterific, the most popular twitter app in the App Store, was solely built with sweat equity. Craig Hockenberry, the man behind Twitterific, recently revealed how much work was required to build the app: about 1,100 hours. At $150/hour, Twitterific for iPad costs about $165,000 for the code only (the iPad app also used existing code valued at roughly $20,000). On top of that, the design phase cost was about $34,000. Finally, project management, testing, and other costs were around $16,000.

When you add all these numbers together, the cost to build Twitterific is around $250,000 – note that this app does not even use a backend support system, which would have likely doubled the development costs.

FLUD and other news readers

FLUD, the popular news reader, was also built mostly via sweat equity. Compared to the competition, the team behind FLUD is very lean, as just like Twitterific, only two coders are behind the app. To put things in perspective, Flipboard has $13 million invested and 16 people, and Pulse News has a full-time staff of 5. FLUD has 2 coders.

The developers didn’t give much details about the cost of their app, but given the number of hours put into the app, the app would have likely cost at least $200,000, if the folks behind FLUD would have used a third party to build it.

The app costs $4 and sold about 20,000 copies to this day, so the gross revenue for FLUD is around $80,000. Nice if you do the work yourself, not so much if you pay someone to do it.

   Cut the rope

On the other end of the spectrum, the large game producer Chillingo recently launched the wildly successful Cut The Rope, and sold 1 million copies in less than 10 days. The iPhone version costs $1, while the iPad version costs $2, so the revenues generated by the app so far are somewhere between $1 million, and $2 million. If the app becomes as successful as other smash hits like Angry Birds, it will likely generate 5 times more revenue over its lifetime.

Chillingo does not typically develop its apps directly, and uses third party game studios. In this case, the UK-based company worked with Russia-based Zeptolab to build the game. The cost to put the app together is not public knowledge, but likely in the $200,000~$500,000 range. It is also likely that Chillingo and Zeptolab have some kind of revenue sharing agreement, but still, the game should already be profitable for both firms.

A few words of wisdom

• Ask yourself these basics questions: Is the concept new? If not, is it vastly better than what’s currently available in the App Store? How will the app be marketed? What price points? Paid app? Free app with in-app purchases? Or a totally free app? Who will design and develop the app?
• If you have a great idea, and happen to be a developer, sweat equity is the way to go, as the costs to sub-contract an app is high, even for low-end apps.
• If you are unable to code, and decide to use third parties, expect to spend at least $35,000 on your app. If you have high expectations for your app, expect to triple that cost, easily. Also keep in mind that only a small percentage of apps in the App Store generate revenues of at least $35,000.
• Do not forget that Apple keeps 30% of your revenues! Similarly, Uncle Sam will want his cut at the end of the year as well.

Building an app can be a fun journey for many, especially for the folks who have coding and design skills. For others, it can quickly become a financial nightmare. One simple advice: sharpen your pencils and build a realistic business case before you start pumping money and/or sweat equity into your app, to help you take an educated leap of faith.