Exploring Mobile App Development Costs: In-House vs. Sourcebits Team

When it’s time to get a mobile application built, companies have two choices:

1. Recruit and hire an internal team (contractors or FT employees)

2. Find a mobile development company

Finding the right mobile app developer for your needs will take time and resources regardless of the team choice you make. (Check out our blog post and SlideShare on 6 steps to consider when evaluating developers). But the cost of recruiting an internal development team – let alone paying salaries, office space and stocking Red Bull – can be far higher and take longer than hiring an outside development company.

With so many mobile app startups in San Francisco – where our global Headquarters is located – we decided to do the math comparing the costs of hiring a full-time team based in San Francisco vs. hiring Sourcebits. As the Head of US Recruiting and HR for Sourcebits, I’m always hiring Developers, Designers, Product Directors, Project Managers and other staff. Year-round I’m wading through resumes, and our team spends hundreds of hours conducting interviews and testing applicants to build our team so we’re ready to meet the needs of our clients.

A mobile startup in San Francisco is competing with the Googles’, Facebooks’ and multitudes of smaller companies paying top dollar and/or hefty stock options for Designers and Engineers. Attracting and retaining top talent for an internal team presents a tremendous challenge. If you need to build an app quickly or it’s a big project, you may be in for an eye opener when it comes to recruiting and salaries.

Recruiting Takes (A Long) Time

It takes an average of 6 – 8 weeks just to fill a job requisition for a qualified Engineer – let alone get them ramped up. For top Design talent, it often takes even longer – usually months. But even once you’ve invested a great deal of time (and money) to carefully hire the “perfect team” (if such a thing exists), there’s no guarantee things will then go smoothly. People get frustrated or bored or recruited by other companies hunting for talent. They will move on, and demand vs. supply is in their favor. Now you’re recruiting again, which takes more time and resources. Meanwhile, how’s your app progressing? The loss of a key team member, especially when you’re running lean and people wear many hats, can seriously hurt your timeline and budget.

Hiring Costs Add Up Quickly

Ok. So I’ve told you it’s going to be competitive, expensive, time consuming and risky to hire your own mobile app development team. But what does it really take to recruit Mobile Developers, Designers and Project Managers today? Some potential hiring costs you need to factor (beyond salaries and benefits):

1. Advertising your job listings

2. The cost of running background/work eligibility checks

3. Hiring a recruiter and their finder fees**

4. Paying employees for referrals

5. Recruiting event fees (if you attend them)

6. Travel expenses for top candidates

7. Covering relocation costs

8. Sign-on bonuses

9. Potential immigration expenses

10. The time – cost for internal staff recruiting/interviewing

If you’re building a team in the San Francisco Bay Area, you might spend:

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Size Matters For Your Team:

Building an app requires someone to oversee the project, someone to design it, someone to build it, and someone to test it works. To get a project done in 6 months, you’re probably going to require two developers. If you need to go faster, you’ll need more team members. But let’s stick to a 6-month timeline. So your basic internal team might be:

1. 1 Senior Mobile Designer

2. 1 Project Manager

3. 2 App Developers

4. 1 QA Engineer

Using the estimated salaries and recruiting fees in the table above, the cost just to hire a San Francisco startup team would be $200,034, plus $630,000 in annual salaries (not including benefits, bonuses, stock options, etc.). That brings staffing costs alone to nearly $1 Million ($830,034+). It also means you’re running a very lean team, which puts you at risk if anyone gets sick, underperforms or leaves.

At Sourcebits, we have a deep roster of more than 200 talented, time-tested employees. We’ve built apps from scratch in under a month (extreme cases), but typically we spend 4-6 months designing and building a version 1.0 for launch. We then follow v1 with testing, analytics and iterations along the product roadmap. A Sourcebits team can scale up or down as needed, but a project team typically consists of the following:

1. 1 Creative Director

2. 1 UI/UX Designer

3. 1 Visual Designer

4. 1 Project Manager

5. 1 Product Manager

6. 2 Mobile Developers

7. 1 QA Engineer

*input from experts on strategy, marketing and analytics

Consider the Risk Factors

In addition to factoring the recruiting time, expenses and salary costs of hiring employees vs. an external team, there are three other risks to consider.

Loss of Talent

Imagine if your only designer leaves the team. It might take several months to fill this position again. What would happen to your project and timeline? There can be security in numbers – especially a deep bench of available talent. At Sourcebits, we have access to multiple resources at a time. If one person is not available (or you need to increase your team), we can quickly allocate someone else on a project to ensure timely delivery.

Misfit Hires

After months of hunting and interviewing, of course the hire you make will be amazing. Right? If only that were true. But we’ve all made a poor hiring decision and had to let go of a recently onboarded employee. Considering the recruiting costs and time, can you afford to make the wrong decision? Do you want to deal with hiring – and firing?

Quality

You may have a great vision, but the quality of your app is a measure of the quality of your talent. How can you truly vet candidates without working with them first? Sometimes someone with the best portfolio, or someone who has passed your technical testing with flying colors, may not deliver on your vision. The Sourcebits team comes battle-tested with 8 years and 550 projects of experience (including 30+ apps in the top 10 of their category). Our entire model, from consulting on innovation to design-led engineering to testing and marketing, is designed for success.

It All Adds Up

As previously stated, it will take about 2-4 months to build an internal app development team. The first-year staffing costs (recruiting+salary) in San Francisco could run $830,034.

At Sourcebits, our average engagement for a mobile app is $150-$250K for 4-6 months of work (we bill an hourly rate based on team location) – roughly the cost just to recruit an internal mobile app development team in San Francisco. We can also get started – or even build an entire app – in the time it will take to recruit and hire. Our staff works in an established process, with teams managed by experienced Project Managers and Product Directors. If a project needs to scale up/down or make any team changes, we can cover it.

Considering your budget and deadline requirements, hiring a development company like Sourcebits might make more sense than building an app in-house.

Want to talk about your project, or find out more about Sourcebits?

Contact Us

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Piotr Gajos, Chief Innovation Officer

Piotr is Sourcebits Chief Innovation Officer. A 2006 Apple Design Award winner, Piotr draws much of his inspiration from film and music, and focuses on leading our Innovation Strategy Workshops, generating new ideas for Sourcebits, and consulting on projects.