Every startup begins with a great app idea, but the journey from the idea to a fully fledged product follows a long and stormy road full of market competition, technological innovations, and ever-changing consumer demands.
A minimum viable product (MVP) is a vital step in your app development journey that allows you to test your business idea within a real-world market. Such an approach is widely used within the software development industry. Amazon, Dropbox, Instagram, and Facebook also started their journey with an MVP.
As a product development consulting company, we've long worked with startups and helped them turn ideas into the next unicorns. Over time, we became skilled hands at building MVPs for our clients. Having such experience under our belt, we're happy to share everything we know about the role of MVPs in startups.
What is an MVP?
A minimum viable product is the smallest version of a product you can develop to deliver value to your customers. The term has been around for some time. Frank Robinson coined it in 2001, but it was spread later by Steve Blank and Eric Ries, pioneers of the Lean Startup movement.
The main goal of developing an MVP is to deliver a product with minimal functionality that will solve essential users' problems. With an MVP, you can investigate the market with minimal time and expense compared to launching a full-scale application. By narrowing the product scope to basic features, you can start the customer feedback loop quicker and iterate the product rapidly based on real feedback, not guessing.
An MVP is built to verify the economic viability of the end product. Passing an MVP stage is very important to success. 74% of startups fail because of premature scaling. The "too fast, too furious" approach can play Old Harry with your business idea. MVPs make sure that everything is just right for further scaling.
When starting a business, you need to understand that everything is about customers, not revenue or personal goals. Without users, your product or service will just be useless no matter how great it can be.
If you have the right team by your side and come to MVP development wisely, you are more likely to find your spot in the sun and become one of the next billion-dollar disruptors.
Key Goals of Developing an MVP
Not every startup can become a unicorn and follow the success of Slack or Amazon. For every success story, there could be dozens of cautionary tales. So, passing the MVP development stage is important because it lets you:
Test the viability of your app idea
MVPs have no rivals when it comes to testing the market reaction to your product. Core functions are enough to determine the future direction of your development. You cannot be 100% sure that the market will lay out a welcome mat for your app without testing out your idea with real users. Listen carefully to what your users are saying. User feedback provides valuable insights into how to improve the features.
Save time and money on product development
When you focus on core functions only, operational expenses are lower, safeguarding your budget for future app scaling. So, developing an MVP seems like a pretty viable idea, especially if you are short on money and need to land meetings with investors.
Launch a full-scale product faster
While working on an MVP, you can kill two birds with one stone — minimize your time and expense, and develop a solution to cater to customers' exact needs. In some cases, getting to the market early means 100% success. If Instagram wasn't the first photo-sharing app, could it get 2+ billion monthly active users by 2022?
MVPs give you space for evolution and experiments. If there is any emerging technology to power up your solution, you can integrate it quickly and stand out from the crowd. Moreover, adding new features is easier than deleting old and unnecessary ones. So, MVPs make your startup highly flexible for later changes.
Get more attention from investors
An MVP is a real product that investors can test, browse, and use. With an MVP, you can show your product instead of just talking about it. Moreover, MVPs can showcase the early traction of your product. For investors, having early users is a convincing factor. According to The Tipping Point by Malcolm Gladwell, early adopters can convince a huge chunk of the target market.
Besides, building an MVP with your own funds can show investors that you really care about your product and believe in your own success. This can be hugely attractive to investors.
Five Stages to Pass Through While Building an MVP
MVP app development does not differ much from regular product development. The steps are the same, but the goals, resources, and speed are different. Here’s how we develop MVPs at ODG:
Stage 1: Identify the problem your app is trying to solve
All apps come to the world to simplify users’ lives and solve their particular problems. Your app should deliver value to users. Otherwise, it will just gather dust in an app store.
Stage 2: Research the market
Without a thorough market analysis, you won’t get a full picture of your competitors, your users, and their needs. You should know whether competitor solutions exist, and if they do, you’ll need to define your product’s unique features.
Stage 3: Prioritize features
The idea of an MVP is developing a fully functioning app with basic functionality, so you need to define the features that give the most value to your customers. Write down all the features you want to load your app with, and then choose the ones essential for building an outstanding minimum viable product.
Stage 4: Build and test
When you pass the planning stage, it’s time to start turning your thoughts and ideas into the early version of your application. But the app should be high quality and bug-free to avoid crashing on the first screen. Moreover, your MVP needs to attract users from the very first taps and screens, and solve their problems as well as encourage them to use your app regularly.
Stage 5: Collect and analyze feedback
Creating an MVP is all about getting user feedback. With an MVP in your hands and feedback from your users, you can iterate again and again to achieve the desired results. Collecting feedback and field-testing the changes is the only way to build the product that users really want, need, and love.
How to Measure the Success of Your MVP?
Everything is part of a process. First, you define the core features; then, you move to the product development and launch. You need to constantly measure the success of your app and react to any changes.
The numbers are the best success markers. Here are the eight most crucial product performance metrics you need to monitor:
- App traffic. This important metric can show the number of people using your app. If there are tons of traffic, you’ll get tons of users in the long run.
- Sign-ups. The number of registrations is the strongest indicator of your app’s success.
- Active users. This is an essential factor influencing the success of your app. The number of active users shows how the market reacts to your app and its level of interest.
- User engagement. This metric can help you understand the behavior of your users. You need to identify the most important indicators and then use them to measure user engagement rates. For example, the time spent on the app is a decisive factor for YouTube and Instagram.
- Paying users. Though the number of active users is important, if your app cannot generate revenue, it’s useless. If the numbers are unpromising, it’s time to pivot and take another round.
- Customer acquisition costs (CAC). This refers to the money you spend to get a user. The lower CAC is, the easier you can grow. For example, if you’ve run a $200 Facebook campaign and gotten 20 new users, that works out to $10 per user.
- Churn rate. The churn rate shows how many customers cancel their subscriptions and stop using the app. If customers' average subscription spending cannot cover their CAC, it’s again time to rethink your business concept and take a pivot.
You can control and measure everything on your own, but while partnering with ODG, we can take these tasks off your hands and make your solutions beneficial and profitable as well as valuable for customers.
Factors Influencing the Price of MVP Development
When you’re done with ideation, it’s time to get to the financial part of your project and actual numbers. The price for building an MVP for startups varies greatly depending on the following factors:
- Type of development team (freelancers, outsourced, or in-house specialists)
- Hourly rates
- Level of expertise
- Business domain
- Features to develop
- Mobile platforms to reach (Android, iOS, or both)
That’s why talking about the average price of an MVP before you know all the project details is useless.
While estimating the budget, don’t forget about maintenance costs as well as project management, design, coding, and testing. Based on our experience in MVP development, the average total costs lie between $20k to $60k.
But this is just a rough estimation that depends on feature lists, technologies involved, and mobile platforms. For a more detailed price estimate, contact us. We’ll help you turn your crazy app ideas into a full-fledged product.
Instead of Conclusions
An MVP is all about continuous analysis and a never-ending decision-making process for founders. It requires not only business expertise but also a reliable and experienced tech vendor.
With ten years of experience with startups, we know all the ins and outs of the startup industry. Our team can cover the full cycle of MVP development, from testing your app idea to product maintenance. Contact us to discuss all your ideas.