July 14, 2020

5 Steps to Price Your Next MVP

Do you have an idea for a digital product that you are excited to invest time in to create? Releasing a new product immediately to market can be an intimidating process and lead many people to avoid development altogether. What if there was a way for you to test your product on the market and adjust it according to the feedback of real-time users?

One of the first steps when creating a new digital product is developing an MVP. MVP stands for Minimum Viable Product and is a basic version of your product, with minimal features, that can be tested on the market. MVPs are critical to the success of your product because they test many variables before you invest time and money into the full version. The list of benefits of building an MVP far outweighs the benefits of going straight to the market with a fully developed product.

Knowing that you need to build an MVP is the first step of the process, but how much will it cost? Pricing out your digital product can come with a lot of questions about what is needed, especially in the initial MVP phase. Although each product is different and comes with a unique set of variables, if you follow our step-by-step guide you will have a better understanding of the costs associated with building your MVP.

Step 1: Identify MVP Problem and User Types

The goal of your digital product is to solve a real-world problem for a specified group of people. A good question to ask is: “Why do my customers need this product and how can it help them?” If your product isn’t solving a problem or curing a real-world pain, then you need to go back to the drawing board and identify if your product is needed.

Once you define what problem you’re solving (Ex: connecting bakers to local restaurants where they can sell their goods), your goal is to determine who will use your product according to the problem it is solving. Your user types will guide the decisions you make throughout MVP development. For example, if you are targeting bakers in NYC, you will make decisions based on what problems bakers in NYC face selling their pastries and what problems restaurants face finding bakers. Without a specific user type, your MVP will not have any direction.

Step 2: Analyze the Competition

Is there already a similar product, like yours, on the market? Most likely the answer is yes, but that’s okay! Don’t assume that your product is unique without researching or you could run the risk of going to market with a duplicate product, with no specific differences.

Take time to research your potential competition, analyze feedback from their customers, and identify what features they include. Adopt their good ideas and learn from their mistakes. Ask the question: How can my product serve my customers better? The market will always be big enough for multiple variations of the same idea, but you want your product to be number one, and starting with a solid MVP can help you achieve that.

Step 3: Map Out the Details

There are several details you have to work through before you can receive a cost estimation for your MVP. Each of these details is important and by considering them early on you can save valuable time and money.

Platform: When developing a digital product you have a wide array of platforms for your users to interact on. The most common are web, mobile (iOS/Android), tablet (iOS/Android), smartwatch, and TV. It is important to note that different technologies are used for different purposes, so finding the correct platform for your product is important.

What platform will your product be accessible on? Once you know that, decide which of those platforms your MVP will be developed on and what kind of notifications you want users and administrators to receive. With an MVP you won’t go fully in on every platform, instead, you will wait and see if the initial product is successful and then spend the time/money to invest in alternative platforms.

Types of Data: After you have identified your user, the next step is to determine what types of data your product will deal with. For example, if we are building our app for bakers in NYC, the types of data could include individual bakers, bakeries, and restaurants in NYC. Data types are specific to the problem your product is working to solve.

Integration: Most digital products integrate with other products to improve quality and bring needed features. One major example is Google Calendar, which allows users to easily book appointments and view schedules. For our NYC baker example, Google calendar could be used to schedule tastings and meet with restaurants.

What integrations could you add to your product to make it better? Simple market research can be conducted to find what is already available that could improve your product for minimal costs. Don’t spend time developing a feature of your product when well-made products are already available and can be easily added.

Design: For any digital project, design plays a crucial part. No matter if it’s a fully functional product or an MVP, the design must be a priority. Starting with a solid design from the beginning will save you time in the future because you can focus on putting out updates and new features instead of design.

When building your MVP the general rule of thumb is that design should be kept simple and only focus on the core functionality. In an age that relies heavily on visuals, having a good looking design is a must-have part of the validation process. Without a solid design, in the beginning, users could lose interest and not return to the full version of the product.

Overall Requirements: Certain products have overall requirements that must be implemented into the MVP. These could include compliance regulations (HIPPA requirements for a medical app) or needed collaboration with other teams/products. Make sure that your product if following all requirements before it goes to market.

Necessary Features: One major way to save time and money before you send your product out to a developer is to prioritize your necessary features. Ask the question, “What is the single most important action that you want your users to accomplish?” Highlighting this feature will be the sole purpose of your MVP.

Once you have identified the main feature, plan out other features you want to add when the product is fully developed. Prioritize each feature as must-have, nice to have, and can have later on. Remember that the number of features you want on your MVP will determine how much it will cost.

Step 4: Finding a Product Design & Development Partner

Now that you have identified the problem and user type, analyzed the competition, and mapped out all of the details, it is time to figure out who will build your MVP. For MVP development there are several options to fit your price point. Each comes with its own unique set of pros and cons to help you decide which option is best for your product.

Option 1: Completely Offshore Development

Many startups decide to send MVP development offshore. Offshore development has many benefits, including; lower cost, a larger pool of talent, and getting your product to marketing more quickly. With an offshore team, you can release a high-quality MVP to your customers.

What are the disadvantages of offshore development? Early on in the life of your product, you will constantly be tweaking features to make it more accessible for your users. You will have to submit ideas to your offshore team and make sure they understand what you want, which doesn’t always go as planned. Different time zones can play a big factor in this as your developer may work completely different hours than you – leading to delays in resolving issues. Instead of being able to make changes quickly, your project will be added to the list of tasks your developer is working on.

Offshore developers can also have lower standards of quality assurance, although not true in all cases – finding the right developer is key. While they might be the cheapest option, the quality of work may be lacking and you might not see this until they present you with the finished product. Go for reputation, portfolio, and references instead of trying to outsource to the cheapest agency out there and you will benefit in the long run.

Option 2: Local Product Manager with Offshore Developers

If you are looking for the advantages of offshore development without the confusion of having to manage a team, this option is for you. Hiring a local product manager to work with offshore developers ensures that your thoughts and ideas will be correctly communicated. Instead of having to manage your company and the development of your MVP, this option takes the pressure off of you.

A local product manager can help guide you throughout the entire process and create a less stressful environment. You can run the risk of hiring a manager that doesn’t understand your vision. Make sure that you research the right company for your product and spend time having in-depth conversations about your needs.

Option 3: Freelancer

The main advantage of using a freelancer to build your digital product is that it usually costs less. You can save money because you are only hiring one person as opposed to a full team. Building a strong relationship with a professional freelancer can help with not only building your MVP but other projects down the line.

Hiring a freelancer also comes with a long list of disadvantages and greater risks. If your freelancer decides they don’t have enough time to complete your project or they get sick or go on vacation, your project could be at risk. Your freelancer may decide to abandon the project at any point and you will have wasted valuable time and money with no reward to show.

If you are going to use a freelance developer for the MVP, make sure you have a solid contract that will ensure they will finish the project and that they will be available for further updates once the product gets released. Try to work something out so future updates will not cost you a fortune. You will also need proper documentation for future developers – this will make the process much easier down the line if you decide to part from your freelancer.

Option 4: Local Team of Developers

The number one way to guarantee the success of your MVP is to hire a local team of developers. When hiring a local team, you get the experience of several developers and project managers all in one contract. They can guide you through the whole process of not only development, but your brand identity, marketing, coaching, and other steps to ensure success.

While the price of a local team is more expensive, you are paying for quality content, proven processes, higher standards, and premium design. You will have a dedicated team of collaborators who will support you throughout the process and help you overcome all obstacles. The team will communicate with you at every step when changes are made. They will also be able to develop your MVP into a full product once you decide that it is ready. Hiring a full-fledged development company can give you peace of mind that your product is in the right hands from the beginning.

Step 5: Proposal Process

Once you have completed all of the previous steps, it is time to pick your developer and receive a proposal. Each developer/development team presents a proposal in a unique way. At Clear Function, we will lead you through a Discovery Session where we will discuss all aspects of your brand and MVP. Then we will present you with a detailed proposal that outlines each step of the process.

It is important to be open and honest when going through the proposal process. To ensure that your product meets your standards, don’t shy about letting the developer know what you want your product to achieve, but be receptive to critiques from the experts.

Following these 5 steps will set you up to receive an estimation for your MVP that will be concise and effective. Do the hard work before the proposal and you will save time and money.

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