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5 Critical Factors That Determine the Cost to Build an MVP
- John Smith
- Jul 24, 2023
- 3 min read
Whether you are a startup or a large business, efficient resource utilization is crucial, particularly when launching a new product. For startups with limited resources, every expense carries significant weight, but delaying the product launch may result in substantial opportunity costs. Striking a careful balance in allocating funds can determine how effectively you respond to market reactions. A Minimum Viable Product (MVP) serves as a cost-effective means to gather valuable market feedback, but it still requires considerable investment.
When it comes to the cost to build an MVP, several factors influence the overall expenses:
Type and Complexity of MVP
The cost of building out your MVP will change depending on the type of MVP you’re creating. High-accurate MVPs like Concierge, Single-feature, or even Wizard of Oz MVPs could cost you more to build. The element size and complexity will also influence your costs.
Technology
With the right techniques, you can build an MVP (minimum viable product) in a matter of days. Choices of development channels and languages, your approach (e.g., Native versus cross-platform development), and deployment infrastructure – on-premise or cloud will effect your costs. Include the learning curve for your development team and the risks of the channels, too.
Time Required to Build an MVP
Time is not an isolated factor but rather a consequence of the product's complexity and the chosen technology stack. The rollout time for the MVP will also rely on the clarity and availability of resources. These combined factors can extend the development time for the MVP, subsequently leading to an increased budget.
To minimise costs, it's essential to carefully manage the scope, prioritise features, and make informed decisions regarding technology. By focusing on the core functionalities and utilising cost-effective technologies, startups can strike a balance between gathering valuable market feedback and optimising their limited resources. Additionally, effective project management and communication play a crucial role in streamlining development processes, reducing delays, and controlling expenses.
How you build the team
There are several methods for assembling a team of developers to build your MVP, ranging from freelancing to outsourcing. Each approach has its advantages and disadvantages, and the associated costs vary accordingly. However, forming the development team can be the most intricate and costly task you'll encounter.
The engagement model
The engagement model is a crucial consideration from both a cost and cash-flow perspective, particularly for early-stage startups. Controlling cash flow becomes vital to ensure financial stability. In software development, two primary models are predominantly used - fixed price and time and material (T&M).
Fixed Price Model: In this model, the project scope and cost are agreed upon upfront. The development team commits to delivering the MVP within a set budget and timeline. While it provides cost predictability, any changes or additions to the scope during development might lead to extra costs and potential delays.
Time and Material (T&M) Model: T&M model involves paying for the actual time and resources invested in the project. It offers greater flexibility to accommodate changes in requirements and allows incremental development. Though it provides better adaptability, estimating the final cost upfront may be challenging.
To Conclude
There are numerous strategies to control and optimize the cost of MVP rollout. It is crucial to consider both the direct and indirect costs of development, operations, and marketing/sales. Taking an all-encompassing approach ensures that you allocate the right amount of resources at the appropriate time to achieve the desired outcomes.
We, at InfoStride, offer productive discovery workshops to help you arrive at an accurate estimate. As experts in delivering high-quality and scalable MVPs, we are committed to driving incremental growth for your startup.
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