How Much Does It Cost to Develop a Digital Product in 2024?

As per a PWC report, almost 30% of revenue for prominent companies comes from their digital products and services. So this counts as quite a lucrative offer for businesses to strategically invest in this arena. But have you ever wondered what is going to be the cost of developing a digital product in 2024? 

Technically speaking the answer to this is layered and complex. You ask why? Because the cost of development is not all-pervasive it surely depends on a variety of factors, including the product’s complexity, features, and target audience.

In this blog post, we will discuss the key factors that affect the cost of digital product development. We will also provide some tips for businesses and IT companies on how to estimate and manage their development costs. So let’s get started.

Estimating The Cost Of Developing A Digital Product

So you must be aware of what a marvelously engineered, intangible good, a digital product is which can be accessed anytime with the medium of technology. But are you aware of what goes behind the scenes in developing the actual product? It is the “man-hours” that any developer is going to devote to creating the product, which makes up the actual cost.

To understand how one can estimate the cost of development we have to be privy about what is digital product engineering, as a digital product can be anything starting from software, a website to an application, and a developer would have to devote that significant amount of time and resources to develop the product.

Imagine a scenario where a business wants to create a product, such as a food delivery app. To do this, they would need to consider the app’s user interface (UI) and user experience (UX), basic tracking and support functions, as well as other important features. This involves considering factors such as geographical location,  hosting platforms such as AWS, Flutter, etc., and the technical stack (which refers to the programming language and code used for the app). All of these factors combined would require approximately 500 to 600 work hours, sometimes even more. Taking into account the developers’ typical remunerations, a basic product with these specifications could cost the business around $50,000 or more in today’s market.

So it’s clear that as the functionalities and features expand, so do the costs. Now, let’s take a look at the factors that play a crucial role in determining the cost of developing a digital product.

Factors Affecting the Cost of Digital Product Development

These are some of the key factors that assist in estimation of the digital product costs, these are all vital and not mentioned in the order of preferences:

1. Product Complexity and Features:

The complexity of a product is influenced by the features it offers. Basic features may require less time and resources to implement, while complex features such as add-on tracking features or sophisticated payment gateway options etc., can significantly increase development costs and timelines. Moreover, there are various types of product platforms such as web, mobile, and desktop which add to the complexity layer further. 

2. Design and User Experience (UX):

Next up is the design approach that can greatly impact development costs.  Some specially personalized designs that are added to cater to specific user needs, often require more time and expertise than template-based designs, which can be quicker and more cost-effective.

Additionally, user experience testing is often facilitated through software prototyping and is essential for refining the product based on real user feedback, ultimately leading to a better user experience but potentially increasing costs and timelines.

3. Development Team and Expertise:

The choice between in-house and outsourced development can significantly affect both costs and project outcomes. In-house teams may have more familiarity with the company’s goals and culture, whereas outsourced teams can provide specialized expertise and potentially lower costs. Additionally, the location of the team can influence expenses. So it can be advisable to choose the development teams from skilled people from developing countries as it can directly affect salaries and overall project budgets.

4. Technology Stack:

The selection of a technology stack can greatly influence development costs and timelines. Some technologies may require specialized knowledge, which can increase labor costs if the necessary expertise is not readily available. Utilizing third-party tools and libraries can speed up development but may also incur licensing fees. Cloud infrastructure costs are another consideration, as hosting and storage solutions can vary widely in price depending on the scale and requirements of the application.

5. Project Timeline and Scope:

Lastly, the project management methodology adopted can also significantly impact the delivery timeline and overall costs. Some of the most popular methodologies are Agile methodologies and the Waterfall approach. The first one focuses on Iterative development (breaking down the SFLC – software development lifecycle into smaller achievable cycles ). The latter approach focuses on lengthier work cycles that incorporate some inevitable changes and exceed costs all the while.

By understanding these factors and their implications, businesses can make informed decisions that enhance efficiency and ultimately lead to the successful delivery of digital products.

Smart Ways To Save Up Costs

Here are some areas that one can consider to save their budget to get exhausted while developing a digital product.

1. Prioritize Essential Features And Functionalities:

Prioritizing essential features and functionalities is crucial for managing development costs effectively. Adopting a Minimum Viable Product (MVP) approach allows businesses to launch a basic version of the product with core functionalities, enabling them to gather user feedback before investing in additional features.

2. Optimize and UI Design Carefully:  

Optimizing the design of the digital product can significantly reduce costs while upholding its quality. Utilizing design templates and frameworks can accelerate the design process and minimize the need for customized solutions. Additionally, conducting usability testing early in the design phase helps identify potential issues and user preferences, allowing for adjustments before development begins. This is a proactive approach that can help in saving time and resources effectively.

3. Leverage Open-Source Technologies:

Leveraging existing technologies can lead to substantial cost savings. By exploring free and open-source tools and libraries, businesses can access high-quality resources without the associated licensing fees. These technologies often come with robust community support, enabling teams to implement solutions more efficiently and reduce development time.

4. Consider Opting for Staff Augmentation:

Outsourcing can be a cost-effective strategy when done thoughtfully. Researching and choosing reputable outsourcing partners ensures that businesses receive quality work without overspending. Plus, it is also essential to clearly define the scope and expectations beforehand to avoid any misunderstandings later on.

5. Negotiate Contracts Wisely: 

Negotiating contracts can help uncover hidden costs and fees that may arise during the project. Being aware of these potential expenses allows teams to budget more accurately and avoid surprises. Additionally, negotiating payment terms and milestones can provide greater flexibility, enabling businesses to manage cash flow effectively while ensuring that project deliverables are met on time.

6. Incorporate Effective Project Management Strategies:

Incorporating effective project management strategies is vital for controlling costs and ensuring timely delivery. Utilizing methodologies such as Agile or Lean can help teams remain adaptable and focused on delivering value while minimizing waste. More importantly, having effective communication can allow team members to strategically identify and address cost-increasing threats.

By considering these smart tips businesses can impactfully reduce their digital product development costs.

End Note:

One key takeaway from the blog is that the cost of creating a digital product depends on many factors, such as its size, complexity, the number of developers working on it, the technology used, and the geographical location where it’s developed.

If you feel stuck, consider following iterative development and continuous testing. You can also reach out to top digital product engineering services providers, such as Cyntexa, who are experts in helping businesses create high-quality digital products that align with their goals.