Wednesday, 13 April 2016

How much would it cost to build an App like Uber or Grab ?

With startups like Uber & Grab fetching billions of dollars in valuation dominating the financial headlines, many entrepreneurs and technopreneurs are eager to  jump on the bandwagon to become the next Jack Ma or Ellon Musk. 

Anyone would dream of creating an app like that one day ! But the million dollar question is, how much would it cost to build an App similar to the aforementioned ?

Local Development

Generally mobile app development goes by man-hour or man-day. Typically an average app would take around 3 months to turnaround from design to development to testing.  So in South East Asia, it would at least cost USD 30-40K around if you engage a decent app provider.  

In Malaysia, there are also many solo developer that camouflage themselves as large companies to lure eager entrepreneur in paying them hundreds of thousands but deliver end product that's under par or without on-going support and maintenance. 

So, before you engage any developer, make sure you do you due diligence i.e check their office, check their ROC documents and most importantly interview them. 

Offshore Development

Of course you can choose to develop your app in lower cost location such as Indian.  However, for non-technical entrepreneur, managing off-shore development can be a real challenge. You have to understand different working cultures and communication styles in Indian to communicate your requirements and your vision to them. A "Yes" in Indian doesn't really mean "I can delivery what you want" or "What you want is  free of charge".  Most of the time, the bill for variation order ("VO") or redeveloping the app can cost your dearly. 

All in All

End of the day, the costing is very much dependent on what features you want to build into the App, what technology you wish to adopt and where you want to build it. In our previous write up on Building The Next Killer App , I shared with our audience on what options you have in building an app and the associated advantages and disadvantages of those options. 

Besides the upfront development cost, the biggest expenditure in "operating" an app is on marketing, on-going maintenance and upgrades. The reason that Uber and Grab is asking for billions from investors was because they needed the funding to fend off competitions and run aggressive campaign.  

Most of the time, during the first year in operations you have to pour millions of dollars in marketing and ongoing maintenance. Just to give you an idea  - Companies like Uber or Grab would spend up to USD5-10 Million a month on IT Operating Cost.  Building the app maybe cheap, running it it's definitely not for the fainthearted. 
Article courtesy of app developer malaysia


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