5 Critical Factors That Decide The Cost Of A Minimum Viable Product


Whether you are a startup or a large business, ensuring optimal use of resources is critical, especially if you are launching a new product. Given the limited resources for startups, even a small amount matters a lot, but at the same time, the delayed launch may result in high opportunity costs. Therefore, carefully balancing where you spend your money may decide how well you respond to the market reaction. While a Minimum Viable Product (MVP) allows you to gather such market feedback cost-effectively, it may still require considerable expenses.

This article will discuss various factors and lay down an indicative comparison of costs for different choices.

Factor #1: Type and Complexity of MVP

The cost of building out your MVP will vary depending on the type of MVP you’re developing. High-fidelity MVPs like Concierge, Single-feature, or even Wizard of Oz MVPs could cost you more to produce. The feature size and complexity will also influence your costs.

Factor #2: Technology

With the right tools, you can create an MVP (minimum viable product) in a matter of days. Choices of development platforms and languages, your approach (e.g., Native versus cross-platform development), and deployment infrastructure – on-premise or cloud will influence your costs. Consider the learning curve for your development team and the risks of the platforms, too.

Factor #3: Time Required to Build an MVP

Time is not an independent factor but a result of the product complexity and the choice of the technology stack. The time to roll out the MVP will also depend upon your clarity and availability. All these factors will increase the time for the MVP, and the increased time results in an increased budget.

Factor #4: How You Build The Team

There are many ways to put together a team of developers to launch your MVP, from freelancing to outsourcing. Each model has its pros and cons, and each of them will cost you differently. However, building the team will be the most critical and costly activity you will do.

At the minimum, you will require the following roles on your team.

  1.  Architects who design and model all the components of your MVP, starting from the development platforms to deployment infrastructure.
  2.  Backend and front-end or a full-stack developer.
  3.  UI/UX Designers
  4.  Quality assurance engineers

Factor #5: The Engagement Model

The engagement model is critical from an overall cost and cash-flow perspective. Controlling the cash flow is especially vital for early-stage startups. Two models are predominantly used for software development – fixed price and time and material (T&M).

With the fixed cost models, you can define the outcome you want in terms of features and timelines and determine a cost for that scope. This model ensures the predictability of cash flows, but such projects need careful monitoring and project management efforts. The in-house teams can be considered to follow the same model.

When you work with someone who charges per hour of work, you are following the T&M contract. This model is flexible for you to scale up or down, depending on the requirements. They are also usually more cost-effective than fixed-cost models.

Team Building Models & Costing

Option 1: Hire Freelancers

There are many ways to hire a freelancer through your network or sites like TopTal, Upwork, and Fiverr. Apart from the direct cost of resources, you will need to invest in project management and collaboration tools. It’s worth considering the indirect costs to manage such a team.

Option 2: An In-House Team

Building an in-house team will have the highest cost. Such teams require careful team development and strategic and cultural alignment to function effectively. In addition, with co-located teams, you will need to invest in office space and amenities. However, in-house teams can offer many benefits in the long term if the environment, culture, infrastructure, and employee engagement efforts are carefully implemented.

Option 3: Outsource MVP Development

If you decide to outsource the entire MVP development, you can opt for either an on-shore or an off-shore team. Off-shoring has been a successful strategy for many successful startups now. Such complete outsourcing might even take care of the overall project management. In addition, with the outsourced teams, there will be minimal indirect expenses compared to other options.

An additional benefit of such an outsourcing arrangement is the cross-pollination of ideas and talent. A capable partner can bring the learning and insights gained through successful past MVP development projects. They are also aware of the challenges for successful MVPs and may help with efforts for the overall success of the MVP even beyond pure development by sharing their experiences.

Such off-shore outsourcing arrangements are also flexible when scaling up or down, allowing you better control over your expenditure.

Quite a few successful startups have leveraged outsourcing successfully. For example, slack engaged an external team MetaLab to optimize their mobile and web applications early. Curiosity Stream outsourced its successful video streaming service to achieve success. WhatsApp used an external team during its early stages to build the platform. The value that these partners brought to product development contributed to the eventual success of these startups.

To estimate your Application Development cost and the duration to launch it, click https://www.techvariable.com/budget-calculator/.

MVP Post-Launch Costs

An MVP is an initial version of your product. You will need to enhance it further based on the feedback. Even if you might roll it out for a smaller audience, your MVP will still need to be promoted and maintained. It is therefore critical in terms of marketing your product.


There are many ways to control and optimize the cost of MVP rollout. You should consider direct and indirect costs of development and operations and marketing/sales. Such all-around consideration will mean you are spending the right amount at the right time for the right outcome.

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