In 2016 I wrote a blog post titled How much does it really cost to build a tech startup?.
Nearly 3.5 years on it feels like the right time to re-visit this and write about what it costs to develop a tech startup in Australia in 2019.
In that post I provide examples from 2 US sources that gave examples of startup development costs. The good news is that in our experience developing Australian startups, the prices haven't changed drastically over that time.
One example of costs given in that 2016 post was:
"2-sided marketplace with ‘medium’ complexity: $52,600 (web app);"
That's still fairly accurate in October 2019. Without taking too deep a dive I'd say that there has been an increase of about 5 - 10% in that time (inflation over this period was roughly 4% to 6%).
The not so good news for startup founders is that the demand for experienced developers / engineers continues to rise. As with any industry, as demand increases for a particular skill so do salaries.
Currently in Sydney salaries for senior developers for the web development services Launch Lab offer are*:
- Senior Python developer: approx $130,000 - $180,000 (usually higher on contract)
- Senior React developer: approx $100,000 - $180,000 (sometimes higher on contract)
- Senior Devops Engineer: approx $140,000 - $200,000 (a recent advert on Seek advertised a 12 month contract role at $250k+)
*to confirm our price brackets we looked at jobs available on Seek in September 2019 and found that these brackets appear to be a good representation of the market.
If we assume the average cost to launch a minimum viable product is $50,000 (this figure leverages off the example of the 2-sided marketplace mentioned above, but you can potentially get started for much less) and you're a non-technical founder in Australia you have the following options to get started:
- find a technical co-founder:
This is always the best option but can be time consuming and very difficult to find and evaluate the right person.
- Bootstrap (or raise a FFF round) & outsource:
Work with startup developers like Launch Lab if you feel you have enough research and market feedback to suggest this would be a wise investment. We'll help guide you to de-risking this investment as much as possible and will always promote a lean approach encouraging you to spend less and get to market faster. You could also consider using offshore developers. This can go one of 2 ways and unfortunately it is wrought with danger if you are not a developer or a seasoned product / project manager yourself. If you are considering an offshore developer please contact us before you do. We can offer help on getting this approach to work for you.
- Smoke test:
Run low cost experiments to test distribution channels and the market appetite for your product before you invest to develop an application.
In summary, if you're a non-technical founder and looking to outsource the development of your startup be prepared to spend between $30,000 - $60,000 on your MVP.
Keep in mind that some agencies will charge less than this and some much more. We recently quoted on the development of a fintech startup where one Sydney web development agency quoted $20,000, Launch Lab quoted $60,000 and another agency quoted $250,000. Be sure to do your home work and ensure the agency (or freelancer) has the right experience and you have enough trust in them.
If you are considering launching your first startup and trying to decide what to do next, you might find these startup lessons for first time founders helpful.
Finally, if you're still reading then be sure to read how long it takes to develop a startup application.
Photo by Melissa Walker Horn on Unsplash