We invite you to view our two-year-later update of this post, How Much Does a Mobile App Cost? A Case Study.
Our corporate mobile app, the Handshake(TM) App, was made in-house. Creating it reminded me of starting another start-up. We worked fast and hard for long hours and learned as we went. Like at a start-up, we had no budget with fixed price billing or hourly billing to consider. We weren't paid by the hour nor did we bill by the hour. We just worked.
According to IP expert Anne Chasser, "A company’s intellectual property is its most valuable asset."
With four versions for clients and a fifth under development, the Handshake(TM) App is established IP for our company, Handshake Media, Incorporated. What does it add to our company's valuation?
To answer that question, in How to Value a Young Company, Martin Zwillig, writing for Forbes, says, "You could stick a wet finger in the air." Cute. He adds, "Of all valuation approaches, the asset approach – placing dollar values on all the assets on a company's balance sheet and adding them up – is the most concrete."
Let's go with "the asset approach." To do so, we need to know the market value of a custom mobile application. We've never bought custom mobile apps. We've only made them.
So, how much does a mobile app cost?
Why does a mobile app cost that much?
We can answer that: Know-how and labor.
According to TechCrunch reporting on mobile apps industry research, the minimum time required for a developer to master a mobile app development platform is 5 months. Nazmul Idris, in his white paper on mobile app development costs (language alert), describes the difficulty and complexity of mobile application development.
The hourly rate paid to a mobile app developer varies, and what the rate should be is a topic of discussion. The results of my several hours of research on the subject are represented well by this conversation on stack overflow. For our question, "How much does a mobile app cost?" we'll use the low end of the figures reported for development of the Barack Obama mobile app.
A mobile application that took 500 hours to develop at $100 per hour would cost $50,000.
According to the U.S. Census Bureau (.pdf), that was the one-year real median household income in the U.S. in 2009.
That's a lot of value.
Potential buyers of mobile app development may find this 8/18/11 discussion on Mashable of pricing mobile apps from the seller's pointof view of interest.
The Ins and Outs of Mobile Apps, The Wall Street Journal, 6/13/11
You're invited to read our series of posts about mobile apps on Handshake 2.0.