Why is app development so expensive?\r\n\r\nI get this question a lot, and it often comes from a shell-shocked CEO or CIO who discovers his five-figure-budget project ends up being six or even seven figures. That\u2019s crazy. Why\u00a0is\u00a0app development so expensive?\r\n\r\nThe easiest explanation is that apps are cheap; it\u2019s the engineering and design talent that\u2019s expensive. If you look in the App Store, you\u2019ll see over a million different apps. These were all built by independent developers, yet the bulk of these apps will never earn a penny.\r\nUsing Hundreds of Developers\r\nA different set of apps serves as the foundations of million- and billion-dollar businesses. Solo developers typically don\u2019t build these apps; instead they\u2019re built by teams of developers and designers. These teams range in size from nimble three-person teams to large enterprise organizations that employ hundreds of engineers.\r\n\r\nSeriously:\u00a0hundreds\u00a0of engineers.\u00a0Facebook, Google, Twitter, FitBit and many other tech giants have teams numbering over 100 people, often all working on a single mobile app. Teams this large aren\u2019t typical, but it is important to understand that there is a lot of work that goes into making products that on the surface, may seem simple.\r\n\r\nYou might be thinking, \u201cOK, but my project doesn\u2019t need hundreds of engineers.\u201d It\u2019s true that most projects don\u2019t\u00a0need\u00a0hundreds of engineers, but most products do need at least a small team of experienced engineers, designers and product people to produce an end product that is competitive and that will generate true business results. It\u2019s common to have between three and 10 people working on a single platform (iOS\/Android) app.\r\n\r\nThe typical timeline for an initial project is often four to six months. Much like building a ship, you\u2019ll end up doing architecture, schematics, design, building and launching.\r\nDoing the Math\r\nAt this point, the math is pretty simple. Labor costs are the No. 1 driver of the cost of your final product. Look up the salaries of top developers and designers in your region, and you\u2019ll likely uncover an annual range of anywhere from $60,000 to $150,000 for most of the roles. Multiply your average salary by team size to determine your annualized product design and development costs.\r\n\r\nYour annualized costs are often a good reflection of the true costs of building a product. Even if the initial version of the product takes three months and not six months, it\u2019s common for product teams to continue to improve the product and further drive revenue and key metrics for the core business.\r\n\r\nDriving core metrics of the business is the reason why the companies have the larger product and engineering teams. An improvement of one-tenth of 1 percent is still a million dollars in the upside. Larger businesses are simultaneously driving multiple new product feature initiatives that each aim to impact business\u2019s bottom line.\r\nDeciding Whether to Build or Buy\r\nAt this point, you have an annualized expected cost, and you may be thinking, \u201cShould I try to hire the people and build this myself or look for a services team?\u201d Great question. This often comes down to a question of timing and core competencies. For companies that consider themselves to be technically savvy, it may make sense to try to build the technology in-house. The biggest challenge we\u2019ve seen with an in-house strategy is hiring and staffing the appropriate level of engineers and designers to the effort.\r\n\r\nFor companies that aren\u2019t technically savvy, there\u2019s a second challenge, and that\u2019s retaining talent once you\u2019ve found it. Non-tech companies often experience high turnover when it comes to tech initiatives. This is often due to the fact that the culture and speed of a non-technology company may inhibit\u00a0tech organizations from getting things done quickly.\r\nLooking for the Best of Both Worlds?\r\nIf you want to have your cake and eat it too, there are always options. Based on what I\u2019ve seen, many teams can be successful by using an external team to do the heavy lifting, and a lower cost in-house team to keep the product running year-over-year. In general, you\u2019re trading cost for speed to market. You don\u2019t want to trade on quality of the product.\r\n\r\nAt the end of the day, I\u2019ve found that it\u2019s about the moving the needle for your business, and finding a team that can deliver is the most important part of growing your business for the mobile generation.\r\n\r\n\r\n\r\n[This post by Greg Raiz first appeared on the\u00a0Business Collective\u00a0\u2013 an initiative of\u00a0Young Entrepreneur Council, which is a free virtual mentorship programme that helps millions of entrepreneurs start and grow businesses.