How Much Does It Cost to Build a Minimum Viable Product (MVP)?
If you’re an entrepreneur interested in turning your idea into a SaaS product, I bet this is the number one question on your mind whenever a new idea strikes. And I know that because I get this question a lot from other entrepreneurs just like you, and because it’s hard to find the right answer. So with this article, my hope is to make it easier for you to figure out how you can determine the cost turning your idea into an MVP.
But before we get into estimating how much building an MVP should cost, I want to first point out that there’s a difference between an MVP and a Prototype. It’s important to understand this difference and the role each one of them plays in your product’s life cycle.
What is a business idea Prototype?
A prototype is used in the very early stage of a product’s life cycle. You should use a prototype, when you don’t have anything but the idea in your head (your vision), and you want to communicate that vision to an investor in order to obtain funding. You will then use those funds to go to the next step, which is your MVP. So in other words, the prototype comes before the MVP and it’s scope, cost and purpose are totally different than those of the MVP.
The prototype can be as simple as a back of the napkin drawing, an excel spreadsheet, a powerpoint presentation, or anything that works to make sure your investor can see your vision the way that you do. If you’re not looking for an investor, then you could use the prototype to convince a potential buyer to pay for your product (to pre-sell your product) which will validate your assumptions about the business idea.
In summary, here’s how I would describe a business idea prototype:
- it is used to communicate your vision to a potential buyer
- it is cheap, quick and it doesn’t need to scale
- it gets you some money to build your first MVP
What is a Minimum Viable Product (MVP)?
An MVP could either be the next logical step after the prototype or, if your vision is too complex for a prototype, the MVP can be used instead of the prototype. Your MVP should be able to provide some kind of value to your customer by offering a solution to one big problem that the customer is experiencing. It’s a step up over the prototype both in complexity and cost.
Just to make it clearer how an MVP differs from a prototype, imagine a prototype as a drawing and an MVP as something that you can play with, like a bare bones web application. The MVP should be able to accomplish at least one clearly defined task and have a way to measure it’s effectiveness.
In summary, here’s how I would describe an MVP:
- it is something that works, something that provides value to your customer
- it helps you test your assumptions by trying to sell it’s value to your customer
- it gets you even more money to help you grow the business
- it serves as a solid base for future development
Considerations on code quality
I want to take a moment to talk about that last point there, the “solid base” one, because I think it’s really important that you understand what it is and how it can affect your business.
Startups often find themselves under pressure, for various reasons, and they need to cut corners just to get the work done on time. And while looking for something to cut, code quality is one of the prime suspects that pops up on the product manager’s radar as it’s role is not obvious to non-technical people.
Obviously, if you were to ask me, I will tell you to never do that. It’s like building a house and deciding to cheap out on foundation materials.
Code quality directly affects the speed at which you’re able to improve your product.
What is the current stage of your product?
Knowing the difference between a prototype and an MVP, will help you make an informed decision about which one of them you need based on the current stage of your product. Not only that, but also how to get your funding in order to do so.
How much does an MVP cost?
So we’ve finally arrived at the big question. “How much do I need to spend on my first MVP?”. I’m guessing this is why you came here for.
The short answer is: spend as little as possible to get you to your next stage.
The slightly longer answer is: you should probably strive for less than $5.000 for a prototype and less than $50.000 for your first MVP. Of course this is a range, not a fixed price. But it’s the closest you can get to an estimation without having a roadmap.
Without a roadmap, the type of estimation you can get is one that’s based on past experiences on building similar products. A good analogy would be to think about how much it costs to build a house, without having a plan or knowing the details of what the owner wants to have built.