Mobile health app development costs are soaring, according to research from Research2Guidance. The survey found that app development from conception to launch cost companies an average of $425,000 with outsourcing nearly 50% of the development process.
The survey included 2,400 stakeholders.
Expenditures for top-tier apps or apps that are used more often are likely much higher. Costs only include the development and deployment of the app and do not include the cost of the app’s lifecycle after it has been deployed.
Experts expect the cost of mobile app development to continue to rise as artificial intelligence and machine learning grow in complexity.
A Manifest survey found that 46% of small businesses have an in-house staff that develops their mobile app. The survey found that 58% of small businesses don’t have an app and that businesses with more employees tend to have a higher chance of having a mobile app. The survey found that 30% of small businesses with just one employee didn’t have an app and had no plans to develop one.
The figure rose to 47% of small businesses with 50+ employees having a mobile app prior to 2017. The survey also asked about the cost of app development, with 48% of respondents claiming they spent up to $25,000 on the cost of apps. Costs were between $25,000 and $100,000 for 37% of participants and costs were over $100,000 for 15% of respondents.
Research2Guide and Manifest surveys are different in that one looks at apps as a whole while Research2Guide looked at health apps specifically. The complexity of the apps is not noted, making it difficult to compare the costs appropriately.
Research2Guide’s survey found that 12% of participants in the study had budgets exceeding $500,000, while 36% of app publishers spent less than $25,000 on their app through launch.
The study also found that there’s a large discrepancy in annual earnings from health apps, with 56% of apps making less than $10,000 a year. Publishers that bring in more than $1 million annually account for just 11% of all publishers.
Smaller publishers are being pushed out of the market as the number of developers with substantial backing continues to rise.
The difference in development between these two income brackets are that the higher earning apps have a greater reach, double the development budget, less competition and a higher development level.
Successful apps most commonly are developed with big investments backing them, allowing them to offer unique functions and be properly promoted.
Licensing was the most common business model among those surveyed, with 35% stating that their business model revolved around licensing. Service sales was the second most common business model, with 26% of apps making money through service sales. Third-party development followed with 25% while sponsorship followed with 24%.
The survey also found that 55% of respondents had fewer than 5,000 annual downloads across their entire app portfolio, while just four percent of publishers reached the 1 million download mark. Partnerships with health associations seemed to be the most common form of marketing, with 48% of apps using association partnerships to drive downloads.