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Return On Investment

ROI depends on income and costs. Income is Unit Sales * Unit Price. The Unit Sales will depend on the market demand for your app. You set the Unit Price based on your analysis of the competition and other market factors.

The cost for your project depends on the complexity of your application. The more sophisticated and complex the app, the more hours are required to complete the app and the more money is required.

We assume (rather naively) that your only costs are development costs. We calculate a break even point for each app. Use these examples as a starting point for your own calculations.

Hourly Costs

You will be charged by the hour for each developer working on your project. The current rates are:

  • Junior Developer: $80 per hour.
  • Senior Developer: $95 per hour.

Small Application Example

Let's start with a simple application: a four function calculator (add, subtract, multiply and divide) - even simpler than the built-in iPhone calculator. That will take one Junior Developer working for about 3 weeks (say 125 hours). The estimated project cost is:

  • = 125 hours x $80/hour
  • = $10,000

Our marketing analysis magically calculates that we can sell this app for $0.99 on the app store. Our break even point:

  • = $10,000 project cost / $0.99 price per unit
  • = 10,101 units

Medium Application Example

An example medium sized application is the iPhone Photo app. There are many features included in this app: take a picture, organize into albums, view in different orientations, email, save to contact page, save as wallpaper, synchronize with iTunes on PC/Mac. Assume we've done some investigation and we estimate 15 weeks of work. Most of the effort is done by a junior developer and some by a senior developer. We estimate the average hourly rate is $83.33. So the total estimated cost is

  • = 15 weeks x 40 hours/week x $83.33/hour
  • = $50,000

Our marketing analysis sets the price at $9.99. Our break even point:

  • = $50,000 project cost / $9.99 price per unit
  • = 5,005 units

Large Application Example

Larger applications require larger teams and more effort. We aim to finish every project in less than 6 months. Let's say the project requires 1 senior developer and 4 junior developers working for 6 months (25 weeks). The total estimated cost is

  • = (1 Senior Developer * 25 weeks x 40 hours/week x $95/hour) + (4 Junior Developers * 25 weeks x 40 hours/week x $80/hour)
  • = $415,000

Marketing sets the price at $1,999. Break even point:

  • = $415,000 project cost / $1,999 price per unit
  • = 208 units

Your Project

The ROI for your project depends on the size and complexity of your application. To get an estimate for your project, contact us.

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