I’ve come across some government agencies and other businesses claiming they’d spent millions of dollars developing an app. How can developing an app could cost so much money?
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Designer, developer, and other salaries is one big thing
You’ve got project managers, devs, user experience designers, possibly legal counsel, testing engineers, and others that need to get paid. A quick google search of the average software dev salary in the US is ~120k/year. Depending on what all the app does, it could easily take months to a year to go from an idea to a public release ready application. That’s a good chunk of people needing to get paid.
Development is a lot harder than people think, it requires knowledge, skill and hours upon hours of focus, far more than people think. The developers and orbiters involved all cost a lot of money.
Then once it is all complete, there is no guarantee that it will be bug free or easily deployable/released to a live state.
Have you ever looked at the price of renting or buying office space in a major city? Now add employee salaries and benefits, consulting fees, computers and equipment, desks and furniture, utility bills, insurance, taxes, advertising and promotion, building repairs and maintenance, legal fees, repayment and interest on loans, shipping fees, etc. It costs a lot of money for most businesses to make money.
Developing software is much, much more expensive than most people expect it to be.
It’s also generally a moving target and prone to bugs. The way it’s made, it’s usually hard for new people to come in and fix those problems, unless the first people were exceptionally skilled (read: expensive).
There’s also a huge cost difference between making an app that kinda works on your phone and running a service that can serve thousands or millions of users 24/7 without interruption. Usually the government wants the second kind. 🙂
The last project I worked on had nearly 300 developers and took a little over 4 years.
On top of paying developers the company also has to provide infrastructure like servers, and pay for a lot of proprietary software
It has costed around 75-90 mil for the company
That app is probably a lot more than an app. It’s probably also servers running on the Internet that the app needs to talk to. And that server component needs to manage a lot of data with some kind of database. And there needs to be a communication protocol for the app to talk to the server. And it needs to be secure, and maintain the privacy of all the users’ data. And it needs to be reliable, with backup servers, and data backups.
In other words, something that is just an app from the user’s perspective is probably a giant complicated system with computers running on the Internet behind the scenes that make the app work. Big complicated things take a lot of work to design, build, test, operate, and maintain.
I do a lot of technical and software consulting for government agencies. In the consulting world everything is billed by time (usually in 1/4 hour or 1/10 hour) chunks.
If you have a 1 hour regularly-scheduled meeting with clients, you’ll usually need at least 1 technical resource, 1 business analyst, and one project manager. You may only have 2/3 of those but you get the idea. Each one of those people is billed anywhere from $150-250/hour. It’s not unusual for every meeting to cost over $1000/hr. If you have 48 of those weekly meetings per year, you just spent nearly 50k on status meetings. You haven’t even built anything yet.
Enterprise software development is time consuming. identifying all of the business logic (what are the things that can happen? And what should happen when those things happen?) is a huge undertaking. You have to be able to answer at least a chunk of those questions before you can even start writing code. Enterprise software also often interacts with old systems that do things differently. They may not work as cleanly with new tools and methods of coding. All of these things cost a huge amount of time and money to work with. Contrast that with one guy writing a startup app from scratch. He can make executive decisions all day long without nearly as much concern about how changing course will trickle down through the project.
Even many people in the industry have no idea how expensive software development is. One time I had to bid on the doing the embedded system software for a big mechanical device, I didn’t get the job. Later they told me that my software bid was nearly what they had charged their customer for development of the whole project. After they finished it the lead engineer said well, yes, I was right, they totally underestimated the software development, integration and testing required. They of course lost money on the job. Sometimes it is better to lose a job that get it. I think a lot of the problem may be that you cannot see software as you can when building for example a house. A software engineer friend told me his metric was to take his worst case estimate and multiply by pi. That might be optimistic. (source: had my own software consulting business for 35 years)
10 developers/designer on $100k/year for one year of development is $1m straight up, and that’s before support staff such as admin, plus equipment, marketing, legal and every other expense that has to be done by the book in government.
1. When people say “millions of dollars” it ranges from $2m to $999m, so it’s a big range. Often times it’s an exaggeration to make it sound $999m, but in reality it’s only a few millions.
2. Developing an app requires a team: project manager, front-end and back-end developer, designer, etc. Even those teams needs to get paid, so there’s accountants and even janitorial services to ensure a clean office for the team to work in.
3. There’s also fringe benefits, like medical insurance, dental, life insurance, etc.
4. There’s overhead cost, like paying the utilities to ensure there’s electricity and water so the office runs. Internet connection.
5. Often times #3 and #4 come as a multiplier; so if your salary is $100/hr, then multiplier could be 3x so it becomes $300/hr. So to keep aen mployee active, you’ll need to have $300 for every hour they work. And then multiply that by the number of staff and hours worked.
6. Then there’s server cost, cybersecurity, bug/patch updates.
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