The Cost of Building a Minimum Viable Product

Helping You Solve the "Build vs. Buy" Discussion 

The “build vs. buy” discussion is one we here at HiringThing often have with customers considering whether to build a recruitment solution from scratch or white label one with our applicant tracking system. 

What is a Minimum Viable Product?

In terms of building, we frame this conversation around the cost of building a minimum viable product (MVP), a product that satisfies customer needs and begins to generate revenue. It’s important to note that an MVP doesn’t have to be perfect or complete but should provide enough value for customers to justify its cost. An MVP should be able to solve a problem or meet customers' needs and something they’re willing to pay for. 

How much it will cost a company to build an MVP depends on several factors, including the product you’re creating, the industry you’re in, and whether or not you have to hire or outsource a new team to support the production and rollout of the product. It’s a complex estimation that varies from company to company, product to product. Based on our experience and available data, we can give you a high-level estimate as to how much the average MVP will cost. 

How Much Does it Cost to Build An MVP? 

Monetary Cost

While numerous factors affect the outcome, estimates place the range for developing an MVP between $50-250k. However, there’s a high chance costs will be higher—70% of software development costs occur after implementation, and unexpected changes cause 53% of projects to cost 189% more than initially estimated.

You’ll also need to allocate resources for upkeep and updates that either divert the attention of your core team to work on the new application, pay for new hires, or outsource development talent. 

It Costs Money to Staff Up 

Too often, MVP estimates fail to include the costs for ensuring you have the talent to build your new product. It’s crucial to weigh the costs associated with supporting a new product. 

In 2021, 61% of US recruiters said hiring developers was one of their biggest challenges, characterizing the process as complex, long, and expensive—the average developer salary is $110,140. Additionally, 86% of organizations believe a lack of tech talent is a crucial barrier to achieving their planned business outcomes. 

To give you an idea of how much you should bucket for Engineer salaries, we’re including two charts by Career Foundry, one with the average costs for U.S. cities and another that’s worldwide if you’re considering outsourcing foreign talent. 

Consider, though, that this doesn’t include the costs associated with recruiting these positions, taxes, benefits, and other areas of your company that may need expansion or support. Aside from engineering, you’ll most likely need resources in the product, customer success, sales, and marketing departments to make the launch of your MVP a success.

Time Costs

According to DevSquad, building an (MVP) takes an average of 2 to 10 months but can take much longer. Other sources report build times can range from 8 to 9 months to get a platform up and running. 

Keep in mind the time it takes to hire or outsource new talent to produce your new solution, the time to get that talent up to speed, the learning curve for marketing and selling your new product, and build in time for the kinds of hiccups or pivots that arise during the software development process. 

White Labeling SaaS Solutions Can Help You Circumvent Building Costs

Data shows that 59% of businesses outsource in some capacity to cut costs. Additionally, software outsourcing is projected to be on a 10-year growth spurt through 2025 due to how pivotal and widespread new SaaS functionalities are.

We hope this brief overview gives you a high-level picture of what building an MVP from scratch could cost—it’s not an investment to take lightly!

White labeling—purchasing a SaaS solution from a vendor, branding it, and presenting it as a proprietary solution—is a way for tech companies to circumvent the costs associated with developing a new product. This modality lets you quickly and efficiently add a new solution to your platform. If you’re interested in how to go about starting a white-label partnership, check out our guide.