Budgeting and planning for your first digital product
Whether it’s a new mobile, IoT or web3 product, the one question I’m asked almost always is: How much will it cost to build?
I get this question often from entrepreneurs who know their business but don’t have experience creating software. Since there’s a different answer for nearly every situation, I have a few key points that are always helpful for business leaders considering a digital product for the first time.
Be clear about your budget bracket
There are five main points you should consider when developing a digital product. The first, and most important, is to establish how much you can afford to spend.
Then, you can reframe the issue into how much of a working, functional digital product can be built with that budget and how long it will take to do that.
If you’re a non-technical entrepreneur and don’t know where to start, you can consider some typical ballpark ranges. The budgets and timeframes for new end-user software products tend to fall into one of several categories.
Start by determining how much you can spend to develop the product.
Do it yourself; not a commercial budget
Bootstrap for a prototype, slideware or MVP
Functional minimum viable product
< 6 months
Large-scale project for a major innovation
Many variables impact these product development costs. Expenses can change significantly depending on the extent to which pre-built components or middleware can be used, how stringent the security or compliance requirements are and the variety of users or use cases the product needs to support.
Although you don’t need to learn to code, you should strive to understand how design, technology and development interact.
Establishing your bracket will anchor conversations with your financial and internal stakeholders, and help guide your selection of the right software development partner if you decide to outsource.
Budget prioritizing the business outcome you need
Of equal importance is the question of what your project needs to achieve. Be clear with your development partner on the goals for the project. For example, it could be:
A prototype to demonstrate to investors who might invest capital.
A proof of concept to gain commitments from potential customers.
A minimum viable product (MVP) that can be tested by customers for feedback.
A production-level product capable of scaling your user base.
We worked with an engineering consulting company that had a software-driven idea for its human resource management business. Their owner wasn’t a software expert, and the company had limited seed funds. We shaped a project plan that included research, architectural diagrams, sample screenshots and a realistic budget for building the product.
The deliverable was a professional PowerPoint presentation that helped the company secure funding to create the first full version of the SaaS platform. For under $50,000, the entrepreneur was able to achieve his goals without having to review a single line of code.
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