In 2023, emerging technologies like voice search integration, AI and machine learning, and augmented reality technology are making their way into the mobile apps that small businesses develop for internal and external use.
The emergence of these technologies, along with the growing need for stronger cybersecurity measures, has altered the landscape of mobile app development.
To gauge the current state of mobile app development, we recently surveyed 300 small business mobile app developers to explore:
-
The number of mobile apps being developed by small businesses
-
What goes into the cost of mobile app development
-
The growing role of mobile applications as tools rather than products
-
The role externally-focused apps have in supporting specific marketing initiatives
-
and The positive impact mobile applications have on a business’s bottom line and operations
Let’s take a closer look.
Quality over quantity: Most small businesses develop less than one new app per month
With the average user having upwards of 80 mobile apps[1] on their devices at any one time, we wanted to know more about how many apps agencies were developing regularly for clients.
71% of SMBs surveyed develop between 2 and 10 apps per year
On its own, the fact that businesses are only developing between 2-10 mobile applications per year doesn’t quite provide insight into just how much demand there is for mobile apps across industries.
According to current data, there are approximately 33 million small businesses[2] operating in the United States. If even a small percentage of these businesses are creating applications for either internal use or to enhance their service offerings for consumers, the overall number of applications being developed per year is much higher than you might think at first glance.
The limited number of projects being handled in-house (more on this below) by SMBs and startups makes sense, given the time it takes to progress a project from the discovery phase through to the minimum viable product (MVP) stage.
It takes even more time from there to put the MVP through the iterative development process necessary to improve and perfect your app design and functionality.
This could mean adding new features like eCommerce functionality or ensuring that basic features like push notifications, in-app messaging, and SMS function properly, or improving the application’s accessibility.
This process alone requires significant resources and manpower, and could greatly limit how many applications a small development team can build in-house over the course of a single year. This is where outsourcing comes into the conversation.
40% of businesses that outsource some of their app development to an outside provider create 6-10 apps per year
Outsourcing is the backbone of growth for many startups and small businesses looking to break into any highly competitive industry segment. Data shows that the percentage of software development projects outsourced by startups and SMBs is anticipated to reach 23% in 2023, up from only 17% at the start of the pandemic in 2020[3].
Add to that the fact that–according to the employment experts at Zippia– there are close to 460,000 web developers in the United States alone[1], and you realize that the demand for mobile applications is significant.
Outsourcing is an effective way to ensure that software development projects are being handled by teams that have the expertise necessary to deliver projects on budget and on schedule, to improve efficiency in the development process, and to ensure risk mitigation and security are prioritized throughout the project.
Outsourcing also allows smaller businesses to enjoy increased efficiency and customer satisfaction, as they can focus their resources on these elements of their business without being bogged down by expensive and time-consuming development processes.
Research, code development, and design take up the lion’s share of resources during app development
Code development, design, and research are among the development processes that took up the most time for development teams. Considered together, developers are spending roughly 51% of the total application development timeline on these three elements, according to the developers we surveyed in 2023.
When you consider that your average cost to develop an application is often broken down by hours spent working on the project, these elements become some of the most costly components in the development process.
Businesses that spent less than $10,000 per app project found the design stage to be both the most time-consuming (27%) AND costly (30%) stage of development
Digging deeper into app development cost breakdowns, the developers in our survey who spent around $10,000 for the design and creation of a mobile app pointed to the design stage as taking the longest out of all of the other steps required to conceive and launch a mobile application.
Some of this can be chalked up to the need for cross-platform functionality. During the design phase, it’s important to decide whether native apps or complex apps are the goal, or if your problem requires a simple app or hybrid app instead. This decision can greatly impact the API integration and backend development, as well as how you design your front-end user experience and user interface.
It’s hard to pin down the final costs of a mobile web application, as app maintenance costs, app marketing, and other expenses after the launch of the product might increase the overall app development price over time. However, on the front end, the associated hourly rates make the design phase the most expensive step in the process prior to the launch by the app development team.
Research is by far the most financially costly stage of mobile development in the app development budget, according to our survey, with design in a distant second
When we take into consideration projects of all sizes and scopes in our survey, research emerged as the most expensive step in the app development process. Research is time-consuming and costly because it’s a deep dive on several fronts.
Assuming that the app is designed for public use, the developer has to consider their target audience, similar applications offered by the competition, the state of the industry and trending demands, and current market trends that could impact the longevity and relevance of your mobile application.
Internal mobile applications require benchmarking of best practices, assessing what other applications on the market are doing to address the same problems or business process challenges, and user studies and other internal agile processes to ensure the application meets the needs of the team.
Depending on whether the initial scope of the project was sufficiently defined, the research phase could go through several iterations as the project design is refined over the course of the project until it sufficiently meets the initial project requirements.
Many SMBs use apps as business tools rather than products
While services and products often require externally-facing mobile applications, businesses are turning to custom applications to support increasingly complex business processes so that they can accomplish more with limited staffing and resources in order to remain competitive.
59% of SMBs say that the apps they develop are designed for internal business use, according to our survey
In fact, more than half of our respondents are leveraging custom applications for internal use. This can be an especially helpful approach for businesses that use a number of different software platforms and have a strong need to support third-party integrations in order to perform day-to-day business tasks and gather data from their customers.
A customized mobile application can be created to bridge all of the disparate flows of data and combine those data streams into a single dashboard for your company’s business analysts and leadership to make more informed decisions.
This can be especially useful if a business has several legacy software applications in place that are too entrenched to replace, but cannot integrate with the other tools you’re using.
Brand awareness and engagement cited as primary goals for external apps
In the post-COVID business landscape, brand awareness and customer engagement are crucial marketing strategies in 2023.
Brand awareness (35%) and user engagement (35%) were the leading goals for the external apps developed by our respondents
Increasing awareness of the brand and retaining customers over time through a mobile application have become especially important given the potential of a recession on the horizon. Brands are driven to create tools that deliver content and have both a strong UX design and UI design to maximize user engagement.
Small businesses want applications that can deliver engaging loyalty programs that will not only convert leads into customers, but also help them retain and engage those customers long-term so that they remain customers despite market conditions. This will help increase current revenue streams and create a cushion against attrition in the event that the economy is struck by a downturn.
Mobile app developers generally find their projects to be successful
While the return on investment (ROI) of launching a mobile application internally or externally might not match the profitability of other marketing tactics, business owners and developers felt that the applications they built definitely delivered on the project requirements and brought value to the organization.
95% of our respondents found that the apps they developed were either somewhat successful or extremely successful
A mobile application is successful as long as it delivers on the project requirements. This can include meeting user needs through basic app features, having a fast and reliable interface, and having responsiveness and optimization folded into the design. Bottom line, the mobile app has to be easy to use.
If any of these elements aren’t present, it can be hard for the company to consider it a success, and it might be necessary to send the application back to the app development project team to redesign and iterate on making improvements to address gaps.
The fact that 95% of our respondents found apps developed to be at least somewhat successful means that developers are focused on meeting the needs of customers by ensuring they are nailing down their app idea and the subsequent research phases so that the final project is in line with the intended functionality.
On average, businesses that outsourced their app development to an agency or contractor had slightly lower success rates (31% extremely successful, 59% somewhat successful)
The fact that fully outsourced projects had somewhat of a lower success rate follows what many experts consider to be the pros and cons of outsourcing. Outsourcing can bring more efficiency to a project, and often deliver the final product in a tighter timeframe. But the drawback is that your team has to be able to effectively communicate to a third party what the goal of the app is without them being a part of your organizational culture.
This can sometimes lead to a lack of alignment in the functionality of the app with the business processes it’s built to solve or the service it’s intended to support.
Similar challenges can arise when an application intended to service customers is outsourced. While a third-party mobile app development company or freelance project manager might understand what you’re looking for technically, they may not be able to fully convey your brand’s culture or provide an experience that meets your customer expectations, as they don’t engage with them on a regular basis, as an in-house development team might.
This is where a hybrid model–in which an in-house development team contracts out some development work to an agency or freelance developer–can pay off.
More than a quarter of our respondents reported using a combination of in-house and outsourced development teams. This type of arrangement allows businesses to retain control and oversight of a mobile app development project while also benefiting from the increased efficiency and added insights of an outside voice.
In fact, businesses that used this development model reported a 97% success rate (34% extremely successful, 63% somewhat successful) on their app development projects.
A majority of our respondents use customized software to develop their apps, though developers reported roughly equal success rates (97%) whether they used customized or off-the-shelf software
There are as many types of development software as there are types of applications. It’s important to align the needs of the project with the capabilities of the software tool before deciding what type of tool makes the most sense for any given project.
Take advantage of free trials to get to know the development platform and read reviews. Engage with other customers on the software’s social media channels or support forums to find out what the experience is like and if there are any challenges that don’t show up in reviews and your own testing of the product.
If you decide that you need a custom tool with which to build applications on an ongoing basis, ensure that you’re going to get the value out of that tool over time, as the cost to build, plus the ongoing costs of maintaining and updating the functionality to meet your evolving needs should be covered by the revenue or savings you expect those apps to generate.
Navigating the costs and challenges of developing a mobile app in 2023 and beyond
Chances are, as a business operating in the modern economy, you’ll at some point need some type of app to either engage with customers and sell your products or services, or support an internal business process. You could buy something off-the-shelf, but it’s likely that it won’t have everything that you’re looking for, and it will not grow with your brand. That’s where custom-built mobile and web applications come into the picture.
Whether you’re planning to tackle your mobile web application development projects in-house or plan to bring them to an agency or third-party, you’ll need a solid plan in place to ensure your application meets the needs of the project at hand. Our experts within the UpCity marketplace community can help plan your project or support its development at any stage.
Sources
- 40 Fascinating Mobile App Industry Statistics [2023]: The Success of Mobile Apps in the U.S., Zippia
- 10 Small Business Statistics, Oberlo
- Software Development Outsourcing To Grow 70% by 2023: Report, Spiceworks
Survey Methodology
UpCity used Pollfish to survey 300 small business employees who were screened for their contributions to the development of mobile applications for a business.
In 2023, emerging technologies like voice search integration, AI and machine learning, and augmented reality technology are making their way into the mobile apps that small businesses develop for internal and external use.
The emergence of these technologies, along with the growing need for stronger cybersecurity measures, has altered the landscape of mobile app development.
To gauge the current state of mobile app development, we recently surveyed 300 small business mobile app developers to explore:
-
The number of mobile apps being developed by small businesses
-
What goes into the cost of mobile app development
-
The growing role of mobile applications as tools rather than products
-
The role externally-focused apps have in supporting specific marketing initiatives
-
and The positive impact mobile applications have on a business’s bottom line and operations
Let’s take a closer look.
Quality over quantity: Most small businesses develop less than one new app per month
With the average user having upwards of 80 mobile apps[1] on their devices at any one time, we wanted to know more about how many apps agencies were developing regularly for clients.
71% of SMBs surveyed develop between 2 and 10 apps per year
On its own, the fact that businesses are only developing between 2-10 mobile applications per year doesn’t quite provide insight into just how much demand there is for mobile apps across industries.
According to current data, there are approximately 33 million small businesses[2] operating in the United States. If even a small percentage of these businesses are creating applications for either internal use or to enhance their service offerings for consumers, the overall number of applications being developed per year is much higher than you might think at first glance.
The limited number of projects being handled in-house (more on this below) by SMBs and startups makes sense, given the time it takes to progress a project from the discovery phase through to the minimum viable product (MVP) stage.
It takes even more time from there to put the MVP through the iterative development process necessary to improve and perfect your app design and functionality.
This could mean adding new features like eCommerce functionality or ensuring that basic features like push notifications, in-app messaging, and SMS function properly, or improving the application’s accessibility.
This process alone requires significant resources and manpower, and could greatly limit how many applications a small development team can build in-house over the course of a single year. This is where outsourcing comes into the conversation.
40% of businesses that outsource some of their app development to an outside provider create 6-10 apps per year
Outsourcing is the backbone of growth for many startups and small businesses looking to break into any highly competitive industry segment. Data shows that the percentage of software development projects outsourced by startups and SMBs is anticipated to reach 23% in 2023, up from only 17% at the start of the pandemic in 2020[3].
Add to that the fact that–according to the employment experts at Zippia– there are close to 460,000 web developers in the United States alone[1], and you realize that the demand for mobile applications is significant.
Outsourcing is an effective way to ensure that software development projects are being handled by teams that have the expertise necessary to deliver projects on budget and on schedule, to improve efficiency in the development process, and to ensure risk mitigation and security are prioritized throughout the project.
Outsourcing also allows smaller businesses to enjoy increased efficiency and customer satisfaction, as they can focus their resources on these elements of their business without being bogged down by expensive and time-consuming development processes.
Research, code development, and design take up the lion’s share of resources during app development
Code development, design, and research are among the development processes that took up the most time for development teams. Considered together, developers are spending roughly 51% of the total application development timeline on these three elements, according to the developers we surveyed in 2023.
When you consider that your average cost to develop an application is often broken down by hours spent working on the project, these elements become some of the most costly components in the development process.
Businesses that spent less than $10,000 per app project found the design stage to be both the most time-consuming (27%) AND costly (30%) stage of development
Digging deeper into app development cost breakdowns, the developers in our survey who spent around $10,000 for the design and creation of a mobile app pointed to the design stage as taking the longest out of all of the other steps required to conceive and launch a mobile application.
Some of this can be chalked up to the need for cross-platform functionality. During the design phase, it’s important to decide whether native apps or complex apps are the goal, or if your problem requires a simple app or hybrid app instead. This decision can greatly impact the API integration and backend development, as well as how you design your front-end user experience and user interface.
It’s hard to pin down the final costs of a mobile web application, as app maintenance costs, app marketing, and other expenses after the launch of the product might increase the overall app development price over time. However, on the front end, the associated hourly rates make the design phase the most expensive step in the process prior to the launch by the app development team.
Research is by far the most financially costly stage of mobile development in the app development budget, according to our survey, with design in a distant second
When we take into consideration projects of all sizes and scopes in our survey, research emerged as the most expensive step in the app development process. Research is time-consuming and costly because it’s a deep dive on several fronts.
Assuming that the app is designed for public use, the developer has to consider their target audience, similar applications offered by the competition, the state of the industry and trending demands, and current market trends that could impact the longevity and relevance of your mobile application.
Internal mobile applications require benchmarking of best practices, assessing what other applications on the market are doing to address the same problems or business process challenges, and user studies and other internal agile processes to ensure the application meets the needs of the team.
Depending on whether the initial scope of the project was sufficiently defined, the research phase could go through several iterations as the project design is refined over the course of the project until it sufficiently meets the initial project requirements.
Many SMBs use apps as business tools rather than products
While services and products often require externally-facing mobile applications, businesses are turning to custom applications to support increasingly complex business processes so that they can accomplish more with limited staffing and resources in order to remain competitive.
59% of SMBs say that the apps they develop are designed for internal business use, according to our survey
In fact, more than half of our respondents are leveraging custom applications for internal use. This can be an especially helpful approach for businesses that use a number of different software platforms and have a strong need to support third-party integrations in order to perform day-to-day business tasks and gather data from their customers.
A customized mobile application can be created to bridge all of the disparate flows of data and combine those data streams into a single dashboard for your company’s business analysts and leadership to make more informed decisions.
This can be especially useful if a business has several legacy software applications in place that are too entrenched to replace, but cannot integrate with the other tools you’re using.
Brand awareness and engagement cited as primary goals for external apps
In the post-COVID business landscape, brand awareness and customer engagement are crucial marketing strategies in 2023.
Brand awareness (35%) and user engagement (35%) were the leading goals for the external apps developed by our respondents
Increasing awareness of the brand and retaining customers over time through a mobile application have become especially important given the potential of a recession on the horizon. Brands are driven to create tools that deliver content and have both a strong UX design and UI design to maximize user engagement.
Small businesses want applications that can deliver engaging loyalty programs that will not only convert leads into customers, but also help them retain and engage those customers long-term so that they remain customers despite market conditions. This will help increase current revenue streams and create a cushion against attrition in the event that the economy is struck by a downturn.
Mobile app developers generally find their projects to be successful
While the return on investment (ROI) of launching a mobile application internally or externally might not match the profitability of other marketing tactics, business owners and developers felt that the applications they built definitely delivered on the project requirements and brought value to the organization.
95% of our respondents found that the apps they developed were either somewhat successful or extremely successful
A mobile application is successful as long as it delivers on the project requirements. This can include meeting user needs through basic app features, having a fast and reliable interface, and having responsiveness and optimization folded into the design. Bottom line, the mobile app has to be easy to use.
If any of these elements aren’t present, it can be hard for the company to consider it a success, and it might be necessary to send the application back to the app development project team to redesign and iterate on making improvements to address gaps.
The fact that 95% of our respondents found apps developed to be at least somewhat successful means that developers are focused on meeting the needs of customers by ensuring they are nailing down their app idea and the subsequent research phases so that the final project is in line with the intended functionality.
On average, businesses that outsourced their app development to an agency or contractor had slightly lower success rates (31% extremely successful, 59% somewhat successful)
The fact that fully outsourced projects had somewhat of a lower success rate follows what many experts consider to be the pros and cons of outsourcing. Outsourcing can bring more efficiency to a project, and often deliver the final product in a tighter timeframe. But the drawback is that your team has to be able to effectively communicate to a third party what the goal of the app is without them being a part of your organizational culture.
This can sometimes lead to a lack of alignment in the functionality of the app with the business processes it’s built to solve or the service it’s intended to support.
Similar challenges can arise when an application intended to service customers is outsourced. While a third-party mobile app development company or freelance project manager might understand what you’re looking for technically, they may not be able to fully convey your brand’s culture or provide an experience that meets your customer expectations, as they don’t engage with them on a regular basis, as an in-house development team might.
This is where a hybrid model–in which an in-house development team contracts out some development work to an agency or freelance developer–can pay off.
More than a quarter of our respondents reported using a combination of in-house and outsourced development teams. This type of arrangement allows businesses to retain control and oversight of a mobile app development project while also benefiting from the increased efficiency and added insights of an outside voice.
In fact, businesses that used this development model reported a 97% success rate (34% extremely successful, 63% somewhat successful) on their app development projects.
A majority of our respondents use customized software to develop their apps, though developers reported roughly equal success rates (97%) whether they used customized or off-the-shelf software
There are as many types of development software as there are types of applications. It’s important to align the needs of the project with the capabilities of the software tool before deciding what type of tool makes the most sense for any given project.
Take advantage of free trials to get to know the development platform and read reviews. Engage with other customers on the software’s social media channels or support forums to find out what the experience is like and if there are any challenges that don’t show up in reviews and your own testing of the product.
If you decide that you need a custom tool with which to build applications on an ongoing basis, ensure that you’re going to get the value out of that tool over time, as the cost to build, plus the ongoing costs of maintaining and updating the functionality to meet your evolving needs should be covered by the revenue or savings you expect those apps to generate.
Navigating the costs and challenges of developing a mobile app in 2023 and beyond
Chances are, as a business operating in the modern economy, you’ll at some point need some type of app to either engage with customers and sell your products or services, or support an internal business process. You could buy something off-the-shelf, but it’s likely that it won’t have everything that you’re looking for, and it will not grow with your brand. That’s where custom-built mobile and web applications come into the picture.
Whether you’re planning to tackle your mobile web application development projects in-house or plan to bring them to an agency or third-party, you’ll need a solid plan in place to ensure your application meets the needs of the project at hand. Our experts within the UpCity marketplace community can help plan your project or support its development at any stage.
Survey Methodology
UpCity used Pollfish to survey 300 small business employees who were screened for their contributions to the development of mobile applications for a business.