How Much Does It Cost To Build An MVP?

Marius Vetrici
CEO wpriders
Date
May 30, 2019

The easiest sport in the world.

Have you ever tried searching for ‘the world’s easiest sport’ on Google? Try it.

Are you back? Good.

You’ll find quite a few articles that feature running among the easiest and least challenging forms of physical activity in existence.

In fact, ask your friends the same question, and you may discover that they, too, feel the same way. 

What sport could be simpler to learn and practice than running? 

Actually, is there even anything to learn? Running is just something that people know how to do naturally.

You don’t know how to run correctly. Do you?

Back when we were children, racing each other was one of the most exciting things we could do. And no one taught us how to do it.

We just did it.

And if you happened to be the fastest kid, man, everyone looked to you as if you were some kind of hero.

As a matter of fact, I used to be good friends with one of these super-athletic kids. Everyone kept saying how talented he was, so his parents had him enrolled in an athletics club.

You know what the coach told the boy the first time he saw him running?

He said: “you’re running wrong.” No joke, that’s what the coach said.

Although the kid happened to have more physical strength than most boys his age, and his superior strength allowed him to run faster than the average kid, apparently, his technique was pretty bad.

And since he wanted to become a competitive runner, he had to start learning proper technique.

But let’s say you’re an adult and you want to start running to get in shape. Regardless of your goals, you’d still have some learning to do.

For instance, you’d have to find out what type of equipment best suits your running style, you’d have to learn how to land on your feet without damaging your joints, how to breathe correctly, how to rotate your torso, how to swing your arms, and so on.

The truth is that, on the long list of things that are way harder than they seem, running is right there at the top.

Yet, people often think to themselves: “oh, how hard can it be?” and jump right to it, without knowing what running entails, and without having any type of plan on how to start training.

See, at a quick glance, running seems like a good idea because it looks so effortless. But the fact is that if you don’t know what you’re doing, you’ll get injured, exhausted, and you’ll end up quitting as fast as you started.

And this attitude isn’t exclusive to running. I see it in the business world a lot more often than I’d like to.

Are you prepared to go all-in?

Just like they often underestimate the amount of effort it takes to become a good runner, people also fail to recognize the amount of work it takes to develop a profitable business.

“It all starts with an idea” – we’ve heard this slogan so many times that we barely ever question it.

Suppose that, one day, that once-in-a-lifetime starting idea hits you out of nowhere.

Those podcasts you’ve listened to, the books you’ve read, the conversations you’ve had, and the research you’ve done – all of them have finally paid off. Your brain suddenly connected the dots, and you’ve come up with a brilliant idea.

An idea that seems so fresh and exciting that it couldn’t possibly fail. Long story short, you’re ready to go all-in on it.

But before you make any rash decisions, take a step back and think for a moment: what is it that really makes your idea brilliant?

How do you know that your idea is better than what your current competitors are delivering?

And if this is a completely new idea, how do you know that people have the problem you are trying to solve?

Do you know for a fact that your idea is workable and profitable, or are you going more on gut feeling?

Do you have the skills to actually execute the idea?
Are you sure that your product is what people really need? Would it sell?
Do you have the budget to develop the type of product you’ve envisioned? And if you do, how soon would your investment pay off?

A good idea is more than just an idea that sounds good.

And you can’t really determine whether your idea is feasible unless you try putting into practice.

Building an MVP will reveal how good your idea really is

When they were first starting out, most of the entrepreneurs I’ve worked with had the unshakeable conviction that their products were meant to become bestsellers.

And although self-confidence is commendable, holding the firm belief that your product is the answer to consumers’ problems isn’t going to be enough for that product to actually sell.

Before you commit to investing months of your life and tons of money into developing a new project, you need to determine how well-received your product is actually going to be.

Otherwise, you may be in for a rude awakening when you realize that the project you’ve bet your money on doesn’t really get the attention you expected.

And when it turns out that your idea isn’t as popular as you had hoped, what will you do?

What is there left to do after you’ve already invested all of your money into a losing design?

If you’re only at the beginning of your journey, your primary goal should be to find out how good your idea actually is.

And the best way to evaluate the potential that your concept has to become a hit is to see how the market responds to it.

Instead of putting months of work and copious amounts of money into building the ideal product, and only launch that product when you feel it has reached its definitive form, start by creating a basic version first.

By taking this route, you will have a product ready to hit the market much faster and with significantly lower costs than you otherwise would.

This initial version of your product, which only needs to have a basic set of features, is called a Minimum Viable Product, or an MVP in short.

Getting your product on the market early on will allow you to bring in some much-needed cash. That is, of course, if people are actually willing to pay for what you’re selling.

But wouldn’t you rather know if there’s a market for your product before you invest everything in it?

That’s why you need an MVP.

Getting one will help you decide which way to take product development. Your early customers are going to provide you valuable feedback regarding which product features they like and which they don’t. They’ll help you understand what’s missing, what’s unnecessary, and what needs improvement.

And if you listen to the market, you’ll understand how to build a winning product.

In short, here’s why you need an MVP:

  • to test your product and get customer feedback;
  • to get early-adopters to use your product or service and learn whether your product is a market-ready and market fit;
  • to get some primary revenue (if your business model allows it);
  • to be able to get some extra seed money with a much higher project valuation;

What’s the difference between an MVP that costs $2,000 and one that costs $80,000?

If you decided to build an MVP, the next thing you’d have to do is find the right web development firm for the job.

But as you’ll start calling left and right to ask for quotes, you may find out that the cost of an MVP can range anywhere from $2,000-5,000 to $80,000 and over.

No, that last zero isn’t a typo. Mind-boggling, I know!

How could the same product cost anything between $2,000 to $80,000?

Well, easy. It’s not really the same product.

Those very different estimates pay for very different MVP projects. When you call multiple web development firms asking for quotes, you have to realize that each company may see the “minimum” in “minimum viable product” quite differently.

Your minimum is not their minimum

So, comparing quotes from different companies would be like comparing apples and oranges.

Here’s why you may get such a wide range of estimates:

  1. Each company sees the essential features and, consequently, the complexity of your product, quite differently.
  2. The technology or the platform needed to build your product may drive up the price substantially. Not all technologies are created equal.
  3. Different agencies have different hourly rates.

So, each web development company may have its own understanding of your MVP.

You get different figures because each web development firm is building you a different MVP. They are not giving you a quote for your MVP. They are giving you a quote for the kind of MVP they would create.

But what is your understanding of the MVP?

Your MVP is not what you think

We all have a vision of what our products should be. But when it comes to building an MVP, it won’t be your vision alone that ends up defining your product. Real market needs and your budget will also have an essential role in shaping your MVP.

What you think the market needs
You’ve probably done a lot of research trying to figure out what type of features would make your customers’ lives easier. And although you’ve managed to come up with a few excellent features, some of which the customers in your target market don’t even know they need just yet, you may have also gone a bit overboard with it. Most likely, your potential customers need more than they think they do, but less than you think they need. So, there’s only a partial overlap between what you think people need and what they actually need.

What your market actually needs
This category encompasses all the product features required to solve the customers’ problems. Here, we include both necessary and unnecessary features. An important point to make here is that, often, customers fail to recognize the type of features they need. And because they don’t know what they need, it will be your job to figure this one out.

What you can afford to build
The reality is that you don’t have unlimited resources to invest in product development. No one does. I’m pretty sure that even Elon Musk and his team at SpaceX had to make some tough decisions during those 15 years they spent building the Crew Dragon spacecraft. So don’t lose heart! Out of all the features you’ve thought about implementing, some are definitely crucial while others, though nice to have, aren’t necessary. Right now, it’s time to focus on the essential elements, and leave the rest for later.

Your Minimum Viable Product
Your MVP is the simplest version of your product. It incorporates just the essential set of features that your product needs to become operable, on the one hand, and get consumers’ attention, on the other. One of the biggest challenges you’ll come across when building an MVP will be to determine which product features are essential.

But once you figure that out and your MVP is ready to hit the market, you’ll have yourself a powerful tool that you can use to learn just how impressed people are with your product. To gauge people’s level of interest, you can look at multiple metrics such as the volume of visits to your website, the number of downloads, or the number of sales that your MVP generates.

If it’s not what you thought it was going to be, then what is your MVP?

In the few minutes you’ve spent reading this article, you’ve found out, not only that your idea may not be as good as you imagined, but also that determining how good your idea really is may cost you anywhere between $2,000 to $80,000.

Confusing? Disheartening?

How will you even go about deciding what features your MVP should incorporate?

And how will you determine how much it should cost to get it done?

Don’t despair! You can figure it all out by devising a solid plan.

Think of it as an architectural plan.

You wouldn’t start building a house without one, would you?

Well, building a website is not that different. Sure, we’re talking about another type of structure; however, developing a website still requires creating a comprehensive architectural plan.

The architectural plan we use to design websites is called a Scope of Work. The purpose of this document is to offer you a detailed overview of your project. In other words, the Scope of Work will show you what you’re paying for and what you’re getting in exchange for your money.

To create a Scope of Work, we recommend having a Discovery meeting with your technical partner. Get together with your Project Manager and discuss all the details surrounding your product.

The Scope of Work is Your MVP.

A useful and comprehensive Scope of Work for an MVP should include the following elements:

  • Project overview – a general description of your product;
  • Project objectives – what are we trying to achieve here?
  • Project non-objectives – what features are we deciding not to include in building the MVP?
  • Sitemap – a list of all the pages on your site
    • Page 1 – here, you should write a description and wireframe of what goes onto this page;
    • Page 2 – same here;
  • Roles – here, you should define user types; for example, if we’re talking about a marketplace, we will have: vendors, buyers, and admins;
  • User stories for each role – here, we list all the capabilities or features that each type of user should be able to have; they go under the following format:
    • As a vendor, I want to be able to…” – for example: “As a vendor, I want to be able to create a vendor account;” or: “As a vendor, I want to be able to list my product on the website with the following information: name, price, category, quantity.

Once you have your Scope of Work, you are next door to your MVP!

So, how much does it cost to build an MVP?

If you’re looking to build a custom platform from scratch, the recommended budget to get it done would be anywhere between $75,000 to $100,000.

Remember that, in this scenario, your developers will tailor every single feature on the platform to your unique needs.

But before you start stressing out about that intimidating sum of money, let me tell you that there is a way to lower the price dramatically. It’s nothing complicated, really. It’s just a simple trick that we’ve been using to help our customers reduce development costs.

And it all has to do with the MVP. We’ve been talking a lot about how building an MVP can save you money. Now, it’s time to actually show you how easy it is to cut project costs by getting an MVP first.

But let me tell you just how much money you can save. In our experience, building an MVP can take your costs down to under $20,000. That’s quite an achievement, isn’t it?

Let’s find out how!

To cut more than $50,000 off the project price, we recommend starting your development journey by setting up a Discovery Session.

The price of a Discovery Session is around $1,500 and it involves about 5-6 hours of conversation and research.

This $1,500 investment can save more than $50,000!

Here’s why: there are pre-built components, called plugins, that developers can use to offer you many of the features that you might want to have on your web platform.

Just by using those plugins, we can reduce the costs of custom development significantly.

But the only way to find out whether we can use any of those ready-made plugins to build your website is to discuss at length about the key features you need on your platform and about how you’d like them to work.

That’s what we do during the Discovery Session.

And we’ve seen that this tiny investment can save people tons of money later down the road, and save our team hours of effort. Discovery projects have basically allowed us to deliver high-quality projects faster and cheaper – a combination that most people think is impossible to achieve.

So, to recap, how much does it cost to build an MVP? Well, if you follow our recommendation, then the MVP will cost you:

  • $1,500 for the Discovery session;
  • Between $10,000 to $20,000 to launch the MVP.

This formula has worked very well for the companies we’ve worked with up to date. We’ve been using this strategy to build and launch over 50 MVPs.

When do I need an MVP? Do I need it at all?

Generally, businesses reach out to us whenever they’re looking to launch a new project or rebuild an old one.

Whether you’re a startup wanting to get your first product out the door or an established organization interested in revamping an existing business idea, you can still benefit immensely from getting an MVP.

If you’re just starting out and you want to develop an entirely new product, the best way to go about it is to begin by creating an MVP and only go for a full build in the second or third iteration. In agile software development, each iteration reenacts the complete product creation cycle, from planning all the way to testing. The goal of an iteration is to create a new version of a product by adding more functionality to the previous build.

It’s better to improve functionality incrementally rather than try to do too much too fast. In the beginning, you won’t really know what works and what doesn’t, what features to implement, and what other features to drop. Only by continually working and perfecting your product will you be able to get the outcome you envisioned.

I am still not sure how to go about it and want to learn more

We’ve been talking quite a bit about the minimum viable product, but we never got to talk about viability.

We understand what the minimum is about, but what is it that makes a product viable?

According to the dictionary, something is viable if it works successfully.

So, to begin with, a viable product should be functional. It should work as intended.

Now, to be able to create a working product, you have to have the motivation, the resources, and the abilities to do it.

But that’s not all there is to it.

We have to remember that we’re not just talking about creating any item in general. We’re talking about creating a product, so an item destined for sale. And for a product to be viable, it also needs to sell.

In other words, consumers should want to buy it. But for people to want to buy a product, generally speaking, that product should satisfy a need or solve a problem.

Finally, the money you’re investing in building the product shouldn’t exceed the amount of money that people are willing to spend to solve the problem your product promises to fix.

So, here we go. To determine whether your product is viable, ask yourself these questions:

  • What is my motivation for wanting to build this product? Am I qualified to do it? Do I have the resources and the know-how to develop a functional product?
  • What problem does my product solve, or what need does it fulfill?
  • Who are the people who deal with the problem that I’m trying to address?
  • What type of solution would these people prefer?
  • Are consumers willing to pay for a solution like the one I’m offering?

Every new entrepreneur should consider these points. And here’s the thing: some of the answers to the questions above may not be the kind of things you’d like to hear. But that’s exactly why it’s crucial to have an honest conversation with yourself before you get started. Better to face the facts and change the course when there’s still time rather than invest in a losing idea. Download our free ebook 5 ways to test if customers will pay for the product you’re building and learn more about asking yourself the right questions before getting started. Or grab it here below.

 

Key takeaways

Entrepreneurs can fail, even after spending months and sometimes years developing and improving their final product. Here are the most common reasons why that happens:

  • they don’t test their ideas;
  • they don’t invest in real communication with their potential customers;
  • they’re focused on building the ideal version of their product just the way they’ve imagined it and fail to see what type of product consumers would actually like to see;
  • they don’t understand people’s wants and needs;
  • they base their assumptions on gut feeling rather than facts and research;
  1. The best way to avoid spending all your time and money on a losing idea is to build an MVP – a self-standing product that incorporates just enough features to satisfy your first customers.

  2. By building a basic version of your product and getting out there, you can start bringing in some cash right away. At the same time, your customers will offer you the feedback you need to understand what features to add, improve, or drop.

  3. The costs associated with building an MVP can vary greatly. They can go anywhere from $2,000 to $80,000 and beyond.

  4. To get an exact price, you have to make sure that your Project Manager understands what type of project you want to build. To this avail, it’s best to create Scope of Work – a detailed document describing every element you want to include in your project.

  5. The more customized features you need, the more your project is going to cost. Sit down with your Project Manager and work together on determining which parts of your project really require customization. Using ready-made plugins can save you up to $50,000.

  6. If you want to start a new project from scratch and you want to make sure that your product sells, you need an MVP. And we’re here to make it happen.

 

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