Whether you're a new venture or an established company looking to upgrade an existing IT ecosystem, investing in app development requires careful cost consideration.

You don't want to spend thousands of pounds on a mobile app that adds little to your business, right?

But the problem is, there are tons of app development experts out there, making it a bit hard to choose an agency with the right pricing model.

To help you decide based on your needs and budget, this article will explore the different mobile app agency pricing models available.

Without further ado, let's get started!

What is a Pricing Model?

A pricing model is a framework used by mobile app development agencies to set the cost of their services.

While several pricing models exist, different companies typically apply a specific model that determines the final cost of a project.

Benefits of the right pricing model include better cost control and a streamlined app development process.

If you're wondering: How much does it cost to develop an app? The answer isn't a simple one. The price will depend on several factors, including the agency's chosen framework, performance, hourly rates, and the projected business value of the app.

Choosing the right one helps you avoid unexpected expenses and fosters transparent collaboration with the agency from the beginning.

Now, let's move on to the most common pricing models agencies use.

Comparing Mobile App Agency Pricing Models – Which One is Right For You?

The right pricing model should also align with your project's needs. In this section, we will provide you with an overview of common pricing models, along with the benefits and drawbacks of each model.

Fixed Price Model

Offering a predictable cost and a clear scope and timeline of the project, the fixed price model is favoured by both business owners and mobile app development agencies.

A fixed pricing structure often covers the whole steps to launch your app, including planning and development to final testing and release.

Advantages

• The structure ensures predictable budgeting and resource allocation, helping you prevent overspending
• Knowing the total cost upfront lets the agency optimise their development process

Disadvantages

• The fixed price model is not the best fit for complex projects, as it will be difficult to estimate the cost
• Making changes to the app's functionalities mid-course can lead to extra fees

Hourly Rate Model

This model suits projects with undefined parameters and changing needs for its flexibility.

Agencies using an hourly rate structure will track the development time dedicated to building your app and charge you based on those hours.

Initially, the agency provides an estimated timeline, and you will only pay for the total hours spent. That way, you can adjust features along the process as your ideas become clearer.

Advantages

• You can adjust your app's functionalities based on user feedback and interaction with it during testing
• Suitable for complex projects that require constant changes
• You will have more control over ongoing budget expenses

Disadvantages

• The total app development cost can be difficult to predict
• Significant changes can lead to project delays and potential budget overruns
• The hourly model requires close monitoring to keep development on track

Value-Based Model

Unlike hourly rate and fixed price models, value-based pricing focuses on the perceived value the app will deliver to your business.

This model is ideal for apps with lucrative monetisation strategies, for instance, e-commerce apps or subscription services that directly generate revenue.

Agencies using the value-based model will then structure their costs around that projected financial gain.

Advantages

• This pricing structure offers shared success between your business and the agency
• Your app development partner will prioritise understanding your goals to build an impactful app that drives value
• You might save on costs compared to a fixed price if the app performs better than the initial projection

Disadvantages

• Predicting the app's future value can be tricky
• If your vision of value differs from the agency's, the project might end up with an app that misses the mark

Conclusion

The most common mobile app development pricing models include fixed price, hourly rate, and value-based models.

Ultimately, the right pricing model should reflect the scope and flexibility of your project.

The fixed price model excels with predictable costs and detailed project scope, while hourly rates offer more flexibility to adjust features and functionalities. Moreover, the value-based pricing model can be an excellent solution for e-commerce apps.

Understanding the cost structure upfront allows you to mitigate financial risks and allocate your budget effectively.

If you're ready to bring your brilliant app ideas to life, contact Intelivita today!

Let's discuss your specific app development requirements and our pricing options to find the perfect fit for your project.