You want to build the Next Big Thing. And you have a pretty good idea of how it should work, look & feel. Great, now it’s time to find a dev team to build your MVP. But how much should your MVP cost? A freelancer will tell you it should cost $5,000 to $15,000. An experienced CTO will tell you it should cost between $50,000 and $150,000. Which one is right? Are they even talking about the same thing? No, they’re not!
SPOILER: it will cost you $50k to develop a Twitter MVP, $100k for an Instagram, $500k for a Facebook and $1M for an Uber. US dollars when hiring a US dev team.
Ok, but why are these MVP cost estimates so wildly apart?
Freelance developers, when asked about an MVP, are thinking about a prototype which they will be happy to single-handedly build for you over the next few weeks. It’s functional but not market-ready – it lacks great UX to make it competitive, isn’t scalable and has so much project “debt” (things you decided to do “later”) – technical, organizational and process-wise – that you will be having second thoughts if you’ve made the right decision to invest in it at all.
Why would you need a prototype?
- demonstrate the idea behind the business
- convince any stakeholders that you are serious about it
- get seed money to build an MVP
CTOs who have developed several MVPs and turned them into successful ventures when asked about an MVP are immediately thinking about assembling a team of professionals to design a satisfactory UX and develop a test-driven technology platform which would sustain several iterations of backend and frontend refinement while scaling in case of increasing traffic and backend data processing. They’re thinking about how to convince you to build it in 3 stages and add complex integrations as late as possible. They’re also thinking about your business continuity procedures and infrastructure, new people onboarding and supporting other CxOs. At the same time, they are leaving all the pre-wireframe market research and post-launch marketing, sales, customer care and all the back-office drama to other CxOs.
MVP is just a Minimum Viable Product – it’s not a service, not a relationship with your clients, not a well-functioning company.
Why would you need an MVP?
- test the product – get user feedback
- get early-adopters to use your website to prove it is market-ready
- if your business model allows – get some initial revenue
- get some more seed money with a much higher project valuation
Hiring a freelancer to develop a prototype is cheaper than hiring a CTO and his team to develop an MVP. But which one do you need at your present project stage?
“Wait, freelancers are cheaper simply because they don’t have an overhead that a CTO and his software house does. On top of that freelancers from less developed countries are cheaper than their US counterparts.” – you might say.
True that one guy will cost you less than a whole team. But you’re getting what you’re paying for.
Anyway, don’t take my word for it.
Ask your friendly CTOs, preferably with PhDs.
Ask Sergey Sundukovskiy, Ph.D., CIO, CTO, Chief Product Officer for 15 years, who in his presentation “From prototype to MVP” explains the difference.
Ask Dan Hackner, an experienced software architect holding a research degree with honors from the University of Maryland. In his article A Prototype is Not an MVP – Know What You’re Building he agrees with Sergey completely. And they haven’t even met (probably).
Let’s ask a bunch of CTOs for a price tag on a bare-bone MVP similar to the world’s hottest online & mobile companies:
- Twitter – $50,000 to $250,000
- Instagram – $100,000 to $300,000 in 3-6 months
- Facebook – $500,000 in 9 months
- WhatsApp – $250,000 in 9 months
- Uber – $1M to $1.5M
- Pinterest – $120,000 in 4 months
- Shopify – $250,000 and $300,000 in 4-6 months
- Vine – $125,000 and $175,000 in 4 to 6 months
That doesn’t include infrastructure scaling and hosting costs (Facebook shelling out $30M per month) or any operations & marketing related costs necessary to launch, operate and market the product (Uber funded with a quarter of a billion). Not mentioning backend supporting revenue sources, APIs, artwork, copywriting and all that. Timing, luck, and talent also not included. And it really helps to have all three.
But you could also invest in a $10,000 prototype by hiring a freelancer of the web.
Question is – what are you looking for? An MVP or a prototype?
Here are some average freelancer timeline & budget estimates for a prototype:
Little advice from Sergey – start small with whatever you can afford but make a conscious decision between the two. Don’t try to build something in between – you will be left with nothing.
Instead of a beautiful mermaid (half prototype, half MVP) you will get a smelly fish nobody is going to touch.
So what is it going to be?
An MVP for $50k or a prototype for $5k?
Is $50k too much? Let’s talk about project scope, timeline, and quality.
Let’s also talk about our CTO-as-a-service offering. And here’s why you need a CTO.