How Much Money Can You Save On Your Startup If You Knew How To Code?

Written by NEXT Academy
Posted on 29 August 2016 in Coding, Entrepreneurship

The amount could make or break your start-up.

If no one from your start-up’s founding team is technical, then you would probably need to hire some good developers to build your product or outsource it to a dev house.

How Much Does It Cost To Outsource Your MVP?

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Doing so can be extremely expensive as good programmers and dev houses are hard to come by and would usually charge a high price for their services due to the high demand.

The Nature Of Your Product

simple vs complex product
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How much it could cost to develop your Minimum Viable Product would depend on the nature and specifications of the product you are trying to build.

If it is just a simple web application with basic functionalities, the costs would be considerably cheaper. However, even simple web applications would cost you at least RM60,000 if you engage an experienced dev house with a respectable portfolio and track record.

If your product involves any sort of advanced algorithm or custom features, the cost can easily skyrocket to a few hundred thousand ringgit just to get you a Minimum Viable Product.

Web, Android & iOS

IOS , Web, Android
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If you think that once you’ve built a web version of your app, building the mobile version would just cost a little bit more because the bulk of the logic has already been built, you have no idea how wrong you are.

If you knew how to code, you will know that web, android and iOS are three entirely different platforms altogether which requires you to code in entirely different languages. The native language for Android apps is Java while the native language for iOS is Objective C or Swift. Lastly, client side web development involves the use of Javascript, HTML and CSS.

Usually, building a web app is the cheapest, followed by building an android app. Building an iOS app would usually cost the most due to the rarity of good iOS developers.

Read also: Startups With Technical Founders Have A Higher Chance Of Success: Truth OR Myth?

Development Houses

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In Malaysia, most dev houses aren’t very good. Strictly speaking, most of them aren’t really dev houses to begin with. The bulk of their work involves building simple WordPress powered websites that don’t require much programming.

Even so, a lot of them still don’t do a really good job.

When you do find a dev house that does actual programming, most of them would either be lacking in the UI/UX design department or build buggy applications that don’t work very well. Usually, these dev houses would also be the cheaper ones on the market and turn out to be the ones most people could afford to hire.

Don’t Waste Your Money

waste money
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Most first time entrepreneurs would fall for the lure of a cheaper quote and go for the dev house which charges the least. More often than not, it doesn’t end well. The reality is that 90% of development projects don’t make it to completion.

Dev houses either find out that they couldn’t deliver on the platform or end up shipping code that doesn’t meet the client’s requirements. At which point, clients would refuse to pay the remaining payment tranches while insisting that the dev house complete the work to their satisfaction.

The dev houses, on the other hand, would refuse to do work without further payment because the amount of money they stand to gain from completing the project just doesn’t justify the mount of hours needed to do so anymore. That is where you hear stories of dev houses holding their clients hostage by refusing to complete work or withholding their code or domain addresses.

In most cases, the situation would end in a deadlock where the client loses their deposit and close to half of the project’s value in paid money while getting a product that is either unusable or not working properly.

Good Development Houses

outsource development house
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Of course, that is not true for all development houses. The top 10% of dev houses are usually able to do a good job. These are the ones that would usually have a stellar portfolio and track record in the projects that they’ve been involved it.

However, everything comes with a price. These dev houses don’t come cheap. Simple projects can start anywhere from RM60,000 to RM200,000 per app per platform.

Freelancers

outsource to freelancer
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If you can’t afford to fork out such fees to build an MVP to test out your idea, your next best alternative would be to hire freelancers.

Hiring freelancers comes with its own set of problems as well. For starters, it takes some time to find a freelancer who is good enough to deliver on your project. You would probably have to burn through quite an amount of cash before you are able to find one who is good enough to build you an MVP.

If you had technical knowledge and knew how to tell the bad ones from the good ones, hiring freelancers would be a viable alternative. If you have none, however, chances are you will have to go through a few bad experiences and burn some cash before finding someone you can trust.

Offshore Developers

outsource to india
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Through platforms like E-lance and Freelance, you could easily engage offshore freelancers or dev houses in places such as Nepal to build you an MVP. However, doing so is akin to taking a gamble.

This is because many entrepreneurs have lost hundreds of thousands of dollars outsourcing the development of their product to offshore developers whom they’ve never even met.

Read also:  Why People Are Quitting High-Paying Jobs To Join Programming Bootcamps?

The Nightmares Of Outsourcing Development

If you speak to enough non-technical founders who have tried outsourcing development of their product, you will hear all sorts of nightmares that come with outsourcing your project.

Unusable Code

unusable code
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Sometimes, you will get unusable code in return. The app might look nice on the outside, but the back-end logic might not be working properly. Everything you tap or click on simply doesn’t work or gives you an unexpected response.

Unscalable Code

unscalable code
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Other times, the code works when you have a couple of users but breaks down whenever you try to add any additional features to the app or when the user load gets heavier.

When other programmers that you hire later on find that they can’t understand the poorly organised and poorly written code so much so that it would be easier to rebuild the entire app from scratch, you will realise that you’ve gotten unscalable code.

Total Loss

In the worst cases, you simply won’t hear from them again after you’ve paid them the deposit.

The Cost Of Each Iteration

reiterate code
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Now, let’s just say you make it past building your MVP unscathed. The dev house or freelancers that you hired were able to deliver and the app turned out exactly the way you wanted it.

Chances are you would realise that you would need to change certain things about the app or add certain features after you’ve launched and gained new insights about how users are using your app and how it can be improved.

If you still don’t have an internal technical team by then, each further iteration would cost you a lot of money until you finally get it right.

Read also: 27 Things You Have Never Thought Of Learning In A Programming Bootcamp

The Cost Of Hiring An Internal Team

If you do decide to hire out an internal team to build and maintain your app, the cost of doing so isn’t cheap either.

Senior Developers

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Senior developers who are experienced enough to lead a team and solve complicated technical problems are hard to come by and command a high salary, most over RM10k per month. The best developers in the US can command up to USD 300,000 a year, not including stock compensation.

Junior Developers

junior developer
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Quality junior developers like those who just graduated from programming bootcamps or completed their CS degrees don’t come cheap either. The better ones would be able to command a monthly salary of somewhere between RM3,000 to RM4,500.

Hiring For Different Platforms

cross platform product
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If your product is on all three platforms, namely web, android and iOS, you would also need to hire different teams of developers to build and maintain your app on each platform. This effectively triples your operational costs.

How Facebook Was Built

mark zuckerberg built facebook
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Mark Zuckerberg coded the first version of Facebook in PHP himself. Hence, he did not have to go through the pain of hiring freelancers or dev houses while building additional features and scaling the platform.

Because of that, he could launch it to see its response without spending a significant chunk of money. Fortunately for him, Facebook took off and he was able to raise funding to bring in more developers whom he worked together with to continue building the platform to what it is today.

Read also: 12 Ways You Can Change The World With Code

How Instagram Was Built

Kevin Systrome instagram
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Similarly, the co-founders of Instagram Kevin Systrom and Mike Krieger learnt how to build a mobile app by themselves so they could get their idea to market. Instagram initially started as Burbn, a multi-featured location tagging photo app that eventually turned out to be to much like foursquare.

As a result, they decided to focus on the photo sharing function which they realised people loved and re-launched it as Instagram. That was when Instagram truly took off.

They were able to do it because they were coding and building the app themselves instead of outsourcing it. Imagine how much it would have costed them to build the multi-featured Burbn only to realise that it din’t work and had to redesign, rebuild and relaunch the app as Instagram.

The development costs that they would have had to pay their dev house or freelancers would have probably killed them long before they could even think of relaunching it as Instagram. By building the app themselves, they saved a great deal of money.

How Whatsapp Was Built

whatsapp cofounder
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When Jan Koum and Brian Acton built Whatsapp on the then newly launched iOS platform, the app kept crashing or getting stuck. As a result, not many users were using the app. Fortunately they stuck around long enough for Apple to introduce push notifications to iOS devices.

They rebuilt and relaunched the app incorporating push notifications so the phone would ping users whenever they received a message. Because of that, whatsapp took off and eventually got sold to Facebook for 19 Billion USD in cash and stock.

If they had hired a dev house to build an app on such a new platform (then) as iOS, it would have costed them a fortune because the dev house engineers would have to learn the ins and outs of developing on a new platform in order to do so.

A dev house might also have given up on fixing the bugs when the app kept crashing during its initial launch and just left it as another uncompleted project.

Wouldn’t It Be Good If You Knew How To Code?

Once you are aware of the tremendous costs and nightmares that might come with outsourcing product development to dev houses or freelancers, you’d wish you knew how to code it yourself.

Read Also: What Is The Best Way To Start Coding?

Immense Cost Savings & The Ability To Bootstrap

bootstrap saves money
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Once you know how to code, you will be able to save anywhere from RM60,000 to RM200,000 in initial development costs that you would otherwise have to pay a dev house or freelancer. Besides, you will probably be able to do a better job at building your product because nobody knows your idea better than yourself.

Furthermore, you will also be more passionate than anyone about the project that you are building.

The Ability To Keep Re-iterating At Minimal Cost

grow money
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More importantly, you would be able to keep re-iterating and improving your product at a minimal cost should the app not take off on its first launch. If you knew how to code, you would be saving yourself a lot of money that would otherwise be spent paying dev houses and freelancers that might not necessarily be able to deliver on their promise.

Read also: How To Learn To Code On Your Own?

Command A Higher Valuation Once There Is Traction

higher valuation startup
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Lastly, if you were able to keep re-iterating your product and bootstrap your startup up until a point where there is significant traction, you will also stand a higher chance at raising funds at a higher valuation, potentially saving you the unnecessary equity dilution that could end up costing you tens of millions if you start-up makes it big.

In conclusion, you would definitely be able to save a great deal of money if you knew how to code instead of having to rely on dev houses and freelancers to build your product.

You would be able to save on the RM60,000 to RM200,000 in development costs for your MVP, avoid the nightmare and extra costs of having to start over again when you get unusable or unscalable code from your developers, keep re-iterating and perfecting your product at a minimal cost as well as not having to raise funds as early so you can command a higher valuation when you have more traction.


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