How we decided on the budget
Once we decided we had found a great idea (hopefully!) we had to figure out how much it was going to cost.
Thankfully, we have experience building a large web app because we finished DropSend in December 2005, which is great for learning how long things take and how much they actually cost. By the way, I’ve written in-depth articles about the costs of DropSend on Signal Vs Noise.
Gill and I were having breakfast at Magnolia Cafe in Austin, during SXSW and we started chatting about the new app (which doesn’t have name yet) - specifically the budget and timeframe. How soon can we crank this baby out and how much will it cost? Can we afford it?
So we divided the costs into these categories and put approximate figures on them:
- Design
- This involves branding, public website design, product blog (WordPress as always) and web app UI. This took about 4.5 weeks on DropSend, so we figured it would be less for the list app, as it was simpler. Gut feeling: 3 weeks at £250 per day = £3,750 ($6,500).
- Coding
- After DropSend, my gut feeling was that it should take around 4 weeks to code the new app. This is also based on my previous experience as a developer. If we got a decent developer (but not a rockstar) to code it, I reckoned it should cost us around £6,000 ($10,400). This is both the PHP and the XHTML/CSS. After the coder is finished, we would probably put them on a retainer of around £250 per month for updates and changes
- Legal
- Thankfully, we’ve already had general contracts written up for freelancers, for DropSend. However, we still need a Terms of Service drawn up for the new app, which should be around £1,000 ($1,740)
- Miscellaneous
- As always, there’s always miscellaneous crap that crops up. We reckon about £500 should cover it. This can be anything from extra phone calls, flights, meetings, hardware, etc
- Hosting
- Thankfully, all we’re going to need for the web app is a simple dedicated LAMP box. This should only cost around £100 ($170) per month
Total Cost
So all in, it looks like the app should cost us around £11,350 ($19,700). We can currently afford this cost (based on the ever-important Carson Systems cashflow Excel sheet), even if it fails and earns us no money.
The truth is, things always cost more money than you think. In order to allow for costs we haven’t thought of, it’d probably be safe to add another £2,000.
Total cost: £13,350 ($23,250)
[…] His quote was a little higher than our budget, but was workable […]
Pingback by Bare Naked App » Blog Archive » How we picked the designer — May 8, 2006 @ 10:33 pm
i don’t want you to have to reveal anything too Top Secret, but i’m curious: how did the idea for this application emerge? what bottom-up revenue projections did you arrive at, and how?
the costing is interesting reading alone, but would be even more interesting in the context of some assumptions about uptake and revenues.
Comment by optimus — May 11, 2006 @ 1:58 am
I LOVE IT.
Real costs real time lines. Back in the prebust days you needed a superbowl commercial, Hermann Miller chairs and a all of the stuff that never really made a product better.
I am looking forward to seeing what you guys are coming out with …..good luck on the project.
cheers
Scott
Comment by Scott Brooks — May 11, 2006 @ 4:01 pm
6000 pounds for a programmer!? I’d do it for 3 - 4000, easily.
And I know the works.
Comment by Vanco — May 12, 2006 @ 4:32 am
Ryan,
How much did it cost to have the lawyers do the freelancer contracts the first time around?
Comment by Nick — May 16, 2006 @ 5:20 pm
It was about £300, I think.
Comment by Ryan Carson — May 17, 2006 @ 12:50 pm
If you need some outsourcing from Serbia, just give me a call :) … We can do quality stuff here also, but cheaper… Great site, great info. I wish you luck with Amigo!
Comment by Zi — May 20, 2006 @ 10:16 am
only ~$20, 000USD?
To write out our policy and do the paperwork for a finanial service simular to paypal. It cost ~$14,000USD for 10 days of work (excluding travel expenses).
Developers ~$9,000USD per month for 4 months.
not sure how big your project is but for ~$20k for everything …bargin!
not sure how you guy are getting everything 10 times lower than us.You guys seen like you know what you are doing.
Goodluck :)
Comment by Rob — June 19, 2006 @ 1:01 pm
Ryan,
As you are approaching launch, I was wondering if you could give an idea of how you tracked against budget and plan and what the inevitable surprises were?
Or will we find out in your workshop ;)
Comment by James McCarthy — June 29, 2006 @ 6:59 pm
Hey James, I’ll definitely be going over details like this at the workshop.
Comment by Ryan Carson — July 1, 2006 @ 8:13 pm