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How Much Does It Cost to Develop an IoT App

lanars_inc profile image Arslan Tayliyev ・12 min read

In the 2020s, the Internet of Things (IoT) is likely to diversify and be embedded into just about anything you can think of. This approach, which is aimed at decreasing human involvement in digital operations, has already been applied to housing (smart houses), business processing (no-staff stores and storage), as well as banking (contactless and pre-set payments). Numerous other niches have yet to appear.

The idea behind IoT development is to simplify the daily lives of billions, as well as empowering businesses, allowing them to invest less in semi-skilled employees and more in the truly creative decision-makers. However, we can’t say for sure whether IoT, strengthened with machine learning such as AI, would be able to handle the more creative tasks.

In 2020, Internet of Things software development is a hot topic. The investment and profits in this area went up dramatically, turning IoT apps development into a no-lose gamble. The number of online connected IoT devices (excluding laptops, smartphones, and tablets) is forecast хto reach 28 billion by 2025ъ(https://iot-analytics.com/iot-2019-in-review/).

If you plan to grab a piece of the action, we advise you to plan your startup budget and project timeline carefully. Use our article as a guide to minimize the risks and stand out with your IoT business idea.

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IoT product case — Defigo by LANARS

What is it about? Defigo makes it easier for residents to get into their apartments and provides business owners with a tool to manage office personal access. Read more

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What May Influence the IoT App Development Cost

The development process concerning various digital products is similar. First, you need to finalize the general idea of your startup. Then, the market research and budgeting stages occur. Proper cost calculation is key to the commercial success of your project, so we’d like to provide you a general overview of what may influence your IoT application development in 2020. The significant difference between IoT products and everything else is its technical complexity.

Within the niche, you have to apply a novel tech approach to become in demand and profitable. At the same time, the more complex and extraordinary your solution is, the longer and more costly it will be to develop.

There are 6 major factors that might influence your development budget:

  • number and complexity of IoT app features
  • IoT UX complexity
  • UI requirements (number of screens, style guide)
  • app security level
  • device types on which it should work
  • operating system and API integrations

A detailed guide on app budgeting — How Much Does It Cost to Build an App?

IoT software development also includes hardware development issues. As usual, IoT requires building hardware from scratch or existing hardware optimization. That means you need to conduct research regarding existing hardware options and then test and choose that one that may be suitable for your IoT business idea execution. In the case of creating hardware from scratch, bear in mind that the process includes lots of costly stages such as Analysis, Modeling, Prototyping, and Testing.

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Building an IoT product also means your custom digital infrastructure will need IoT network and middleware. Middleware is about third-party device integration and digital ecosystem maintenance.

The type of application and its complexity also may vary. A Simple IoT app has limited device connection options and only basic features that allow it to render information. The general development budget may start from $30,000.

A Complex IoT app could have a large number of advanced features as a result of APIs, GPS tracking, payments, and other smart device integrations. This may include sync, third-party API, and security tool integration. The product development should be estimated at $50,000 as a minimum.

Finally, there are team issues. A bigger team may handle development tasks faster, so you’ll start returning a profit earlier. An average IoT development team consists of a Designer, Developers (2 or more), Testers, and a Project manager.

The forecast number of hours required for full-cycle product development differs concerning the type of your IoT product. However, your team is not going to spend less than 500 hours on executing project-related tasks. More on this topic — How to Hire Dedicated Developers.

The hourly rates of programmers matter as well. Development outsourcing remains the most cost-effective solution, as it allows you to choose specialists from the global talent pool. At the same time, consider the type of outsourcing (Offshore or Nearshore) risks with respect to the failure of your project execution completely or partly as a separate factor.

Find proven advice on how to overcome common outsourcing risks in our article How to Minimize Risks in App Development Offshoring. In brief, we recommend you study portfolios carefully and find a specialist with a similar cultural background and advanced English-speaking skills. The timezone gap might be a problem too, so try to find vendors or developers that are able to work with your in-house team on a synchronous or overlapping basis.

In 2020, the number one outsourcing region for European and US startups in Eastern Europe charges $50 per hour on average. For comparison: North American developers cost about $150 per hour and Western European businesses use $100 per hour as a average rate.

More facts — How to Outsource App Development.

Top Internet of Things Applications

There are numerous types of IoT apps. Their economic value is estimated at between $3.9—11.1 trillion by 2025. In this section, we look at examples of the most successful. Some of them made their first profits due to well-chosen market geography, some of them managed to enter the market with a brand new idea that was eagerly awaited by future consumers.

Manufacturing

Most IoT solutions were originally designed for manufacturers to cut production expenses and reduce the amount of human labor executing low-level operations.

Real-time production line tracking, production equipment maintenance, logistics, and quality assurance monitoring are the dominant areas IoT is used in. In the end, engineers come up with non-human factories and plants. Examples — Siemens, MAN and many more.

Healthcare

The IoT approach is widely used in healthcare. Wearable devices for vital sign monitoring, that automatically shares data with their doctor’s terminal and the customer’s smart devices (tablets, smartphones or something else) are the most popular among healthcare institutions. IoT app development cost for these types of solutions can be covered by governmental programs (Nordic countries, the US, Germany).

EHR (an electronic health record) system that provides patients and their doctors with real-time vital data are already being used in most US hospitals. The IoT EHR-base system is incorporated with diagnostic devices, wearable devices and allows disease study as well as prevention. The Healthcare Information and Management Systems Society, the largest U.S. healthcare IT industry group, is constantly upgrading EHR standards.

Smart home

Speaking of iOS and Android app development for IoT engineers usually means developing simple solutions that simplify human daily life. Smart homes and even smart cities, which are yet to be developed, remain the most well-known examples of IoT lifestyle. The possibilities of IoT for simple and even fully automated housekeeping are endless.

A smart home IoT ecosystem may include devices for electricity, gas, and water monitoring, multimedia, security and safety equipment management, remote home controllers, and communications. Smart homes are commonly controlled with voice commands, gestures, and smartphones. Amazon Echo, Insteon Hub Pro, Google Home, Samsung SmartThings are smart home hub examples.

Smart vehicles

There are lots of logistics and car maintenance tasks that could easily be outsourced to IoT. The major aim of car integration into an IoT ecosystem is to decrease on-road risks and car repair costs. Emergency dispatch, tech monitoring, preventative maintenance management, constant location tracking and sharing, anti-theft features, Wi-Fi and smartphone connectivity, as well as remote ignition and parking, are the most popular at the moment. The car industry was perhaps one of the earliest adopters of IoT in general.

ParqEx (for parking), Otonomo (car data cloud), Bransys (fleet management) tend to use the IoT approach designing car electronics sets and apps that can be integrated with onboard computers.

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Need some more comprehensive examples? Check IoT case study by LANARS

Challenges of IoT Applications Development

Compared to other sorts of digital development building an IoT app is a new area where lots of challenges haven’t yet got specific solutions. You may face various difficulties while working on the app idea or bringing it to life. Sometimes, this makes you feel like a digital explorer, turning you into a niche contributor. Here, we have collected the most common IoT-related issues you need to be ready to solve. However, there might also be some hidden ones at that can surface at any developmental stage.

  • Huge (unpredictable) investment required

IoT development involves creating a unique digital infrastructure. It is hard to predict the final cost, as there are numerous factors that may influence it. Hardware issues, difficulties with API integration, maintenance plan, unique solution promotion are among them.

We recommend you to split the development process into accurate steps and establish milestones. Also, invite those who have experience of working in similar startups to estimate costs and supervise your project plan.

  • Security issue

As IoT is about direct interactions between various pieces of hardware and databases, there is always some risk regarding data damage or theft. Besides, IoT is considered to be the most commonly hacked digital environment, as your ecosystem could interface via insecure devices.

Custom and flexible software and hardware encryption, a strong authentication process, and constant data backups are the most popular approaches to solving the issue.

  • No industry standards and communication Infrastructure

There is no universal IoT language, which makes it difficult for developers to create a well-balanced IoT ecosystem and increase the risk of further system errors. However, an institution like the Open Connectivity Foundation and IEEE are working on that issue. It is expected that in the upcoming decade we’ll see more established tools to create an IoT app.

At the same time, IoT apps don’t always work properly in low-digital infrastructure regions and locations with a poor Internet connection. That makes IoT apps hard to distribute globally.

More on this topic — IoT Ideas and Opportunities.

How Long Does It Take to Bring an IoT to Market?

How to build an IoT app and how long does it take? As previously mentioned, it is very difficult to estimate your project idea without knowing the list of tech requirements, features, UX peculiarities, platforms, promotion strategy, and monetization model, as well as timelines.

In this section, we provide a general overview of the stages that your development process might have and provide you with minimum time estimations, based on LANARS own experience. Take into consideration that we are talking here about the Discovery stage (market research, idea finalization, team hiring, etc.).

Design stage
from 200 hours

How to design an IoT application? The Design stage consists of three substages — project requirements and market analysis (UX and UI aspects), prototyping, and visualizing interfaces. At that stage. designers need to study your idea, conduct market niche research, come up with several design concepts as a proposition, and then create a full-stack prototype of the most suitable of them.

Although the process is commonly started with UX, developers and marketers also take part in team discussions and provide designers with expert area feedback. UI design finalization is the last task the design team needs to execute. Then, the project documentation, together with design layouts, should be handed over to the development department.

The most time-consuming factors here: lots of features, screens, and dynamic visual elements.

Development stage
from 600 hours

The development stage remains the longest within the project. It usually takes not less than 3 months to come up with a ready-to-use solution. The complexity of the app is the major factor that influences the timelines and budgets. However, the more developers you’ve got, the less time you need to develop your app.

Simple IoT apps do not have custom UI elements and do not support complex integrations, while complex apps operate with numerous databases, are integrated with third-party services, and provide users with a constant synchronization feature.

The rapid application development (RAD) approach can help developers to optimize their resources. Strong data encryption, payment integration, machine learning features, third-party API interactions, as well as synchronization across various smart devices are factors that influence development duration.

Testing and deployment stage
from 100 hours

This is perhaps the simplest stage of IoT development, with fewer specialists involved. QAs need to check if your app meets the tech requirements and works correctly. An app code and security system will also be tested. User testing is also a good idea and may save on costs. The deployment substage includes code packaging, licensing, and the launch process. If you take the MVP route, (How to Build an MVP), be ready to study real user experience soon after the product is launched, upgrade your product according to feedback, and increase your profits.

How Many Developers Do You Need to Build an IoT app?

Previously, we wrote about the team roles that your employees need to fill in order to form a well-balanced startup team. Here, we’d like to focus on basic and advanced IoT mobile app development teams and your chances to speed up the development process by hiring a certain number of similar specialists for the same period.

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According to LANARS experience, a minimum IoT development team should include these specialists:

  • Project manager
  • Developer (with experience of your required platforms)
  • UX/UI designer
  • QA engineer

However, a team of this type is suitable for only simple IoT app development. For executing a large number of complex design and development tasks you need more employees, as well as niche experts to supervise your budget, solutions, and timelines. Custom mobile IoT app solutions might also need a strategist. An advanced team (suitable for complex IoT app development) should consist of:

  • Project manager
  • Business analyst with IoT background
  • UI/UX designers — 2
  • Developers — 3—5
  • Backend developers — 2
  • QA engineers — 2
  • IoT consultant
  • Marketing specialists — 2

Follow our advice given in How to Hire Dedicated Developers article to learn how to evaluate candidates’ knowledge and skill set, conduct an interview, or find appropriate specialists from the global talent pool.

What Is the Total Cost of IoT Application Development?

The costs involved with IoT app development may vary according to the complexity of your startup idea, the professional level of your team members, as well as the area you’d like to work in. Earlier, we listed the key factors that influence the projected budget costs in the IoT area. Besides, you may receive very different budget estimates for an app of a specific type.

According to the latest survey, manufacturing, smart homes, smart cars, sports IoT apps, and eHealth solutions are the most expensive to implement. At the same time, they are extremely in demand and could bring you significant profits in 2020. The average IoT development costs are between $10,000 and $50,000. As an example, approximate costs of an IoT app for manufacturing, home automation, and smart cities are $50,000. Monitoring systems and IoT for media are the cheapest areas (up to $10,000).

It is also expected that Internet of Things software development will become cheaper over the next few years, empowered by ready-made solutions, tools, and standards. Even now there are a few approaches that may save developers’ time significantly which will lead to cost reductions.

The country and the exact location of development also matter. In-house development costs are twice as expensive as remote ones (dedicated development). The trick is to find specialists or an entire team in the local digital labor markets where hourly rates are lower. In 2020, high-quality solutions at the best prices ($50 per hour) are provided by Eastern Europeans. More on this topic — How to Minimize Risks in App Development Offshoring.

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Conclusion

IoT application development is extremely in demand at the moment. Users want access to modern and technological solutions that will simplify their lives and make them safer. At the same time, there is a shortage of IoT solutions on the market. That’s why brand new apps, that allow private customers and businesses to save time and effort are now earning a lot. Examples — Arundo Analytics, Bright Machines, and Dragos.

In 2019, IoT startups received $3.6 billion in funding. The number of connected devices is exploding too. It is forecasted to rise to more than 200 billion by the end of 2020 making IoT software development a part of any business maintenance process. Smart homes, manufacturing, healthcare, monitoring, security, automotive niche, and education are the hottest areas to be discovered by startups.

At the same time, IoT development is fraught with risks. IoT requires significant investment and the lack of standards forces developers to create solutions from scratch, which makes the process more expensive. In addition, the world's digital giants such as Google, Apple, Intel, LG, Samsung, and Qualcomm are also fighting for superiority in IoT.

Will there be room for your startup? Only you know the answer.

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