The emergence of platforms like Uber and Airbnb have given rise to a new business model known as “on-demand mobile services” or in other words “Uber for X,” which became a new catchphrase. “Uber for X” can be best characterized as a mobile platform that provides delivery of products or services by aggregating customers’ demands online and then serving them offline.
Investments into on-demand economy have increased five-fold since 2013, and this trend will continue to grow since there are still a lot of unexploited possibilities. So far we’ve seen on-demand mobile startups offering car rides, helicopter rides, food delivery, house cleaning, family care, pet care, laundry and a host of other exotic services like “Eaze,” an Uber for marijuana delivery, or “Mr X,” an Uber for gay dates. Human imagination knows no boundaries so why not build an Uber for everything!
Transportation services have been dominating the on-demand economy since its inception and remain the hottest investment strategy to this day. The popularity and success of Uber has compelled many entrepreneurs to replicate Uber and its business model in various industry sectors. A burning question has arisen in business communities (among entrepreneurs) “How much will it take to build an app like Uber?,” or, to be more accurate, “How much will it take to build an MVP for an app like Uber?.” In this article, we will attempt to answer these questions and shed some light on what it takes to build the smallest possible representation of a working on-demand platform similar to Uber.
We won’t go into too much details on what MVP is and its significance for startups. Suffice to say that it’s good practice and a good starting point for any startup. We highly recommend to build an MVP first. This is the safest way to validate your idea, determine the most demanded features, test the market and raise additional funding.
As for Uber itself, a minimum viable product for it costs about $1.5 million. But since we’re talking about replicating its business model, the costs could be significantly reduced. To copy a proven model is much cheaper and easier than to build something never seen before from scratch, because you already have something to build on, you already have a well-established pattern to follow. Of course you don’t have to build an exact replica of Uber, you can choose another technology stack, garnish it with unique design, and spice it all up with new features to make it stand out – and you’re good to go!
Let’s do the math
In order to calculate the costs of building an MVP for an Uber-like platform, first of all we need to define the most essential features required for it to function. These are key components for any “Uber for X” platform we can’t do without:
- Mapping and real-time navigation
- Registration
- Aggregation and matching
- Notifications and scheduling
- Administration
- Payment systems integration
- Driver (service provider) details
- Rating
Actually, rating is not so vital for MVP to function, so we can check it off the list and implement it later (in the next releases). But everything else is a must.
Besides the above-mentioned essential features, we must also take into consideration project-specific features and complexities they may entail. And don’t forget that an Uber-like platform actually comprises of two apps – one for passengers (i.e customers) and one for drivers (i.e service providers). Multiple stakeholders involvement and the mixed online-offline nature of such platforms also make them more difficult to design. As you can see, developing an app like Uber is not an easy task and takes a great deal of time and effort to accomplish.
We are not going to elaborate on how to implement all these features, but merely give you an approximate time frame in which a bare-bone MVP, with all the above-mentioned basic functionalities, may be completed. By our calculations it will take approximately from 1200 to 2500 hrs to put out an MVP for two platforms (Android and iOS):
- Requirements gathering will take 150 – 250 hrs;
- Design – 160-260 hrs for mobile app + 160-260 hrs for web interfaces and the landing page;
- Development – 250-350 hrs per mobile platform (passenger app) +150-200hrs per platform (driver app) + 300-500 hrs for web (backend and frontend);
- Testing – 20% of total time for development
Now, knowing the average hourly rates charged by mobile development companies, we can finally calculate the approximate cost of developing an MVP of Uber-like application.
North American-based companies charge from $50 to $150 per hour. According to these figures, bringing an MVP to market in the US or Canada will cost you from $60,000 to $400,000 (and even $500,000+ for a very large-scale project). Even by American standards this is not petty money. However, you could still build an Uber-like product inexpensively if you take advantage of offshore outsourcing.
There’s an option to buy the “Uber Clone Scripts.” You will find lots of companies offering them, but we’d rather recommend staying away from these cheap alternatives: they are usually of poor quality, it’s difficult to maintain, customize or add new features to them, and almost impossible to scale.
Benefits of offshore and nearshore outsourcing
- Development shops in Western Europe and UK typically charge for their services $50 to $120. Thus, building an MVP in this region will cost you from $60,000 to $300,000;
- Living standards in Eastern Europe are quite low compared to Western Europe, not to mention North America. So, per-hour rates in Eastern Europe are at affordable $30 to $50. Which sounds very tempting, given the high literacy rate of the population and high level of technical education (the legacy of the former Soviet Union education system by the way). Developing an MVP here will cost you from $35,000 to $125,000;
- And finally, the region with the lowest rates is India. Here software development shops will charge you $8-20 per hour, which means that the approximate cost of developing an MVP will range from $10,000 to $50,000.
Once again we want to reemphasize, these are approximate calculations and the final price will depend, to a great extent, on the scale and specifics of the project.
