15 Reasons New App Projects Lose Money (And How To Address Them)

When a development team is building a new app, it can be all too easy to incur costs that haven’t been budgeted for. If the project is a build for internal uses or a specific client, out-of-control scope creep can inflate costs, while an app released in the marketplace that doesn’t perform to expectations can lead to a lower-than-expected ROI. In any case, the underlying problem has usually cropped up fairly early in the process.

There are several ways app development projects can unnecessarily burn through cash, and the industry experts of Forbes Technology Council have experience with most of them. Below, 15 of them share common reasons new app projects end up losing money and offer tips on how to avoid them.

1. The Concept Isn’t Mature

Often, apps are developed before an idea is fully baked, or the decision makers aren’t given the chance to buy into the app build until time and resources have already been invested in a minimum viable product. When they request changes, the result is wasted cash, focus and enthusiasm. This situation can be easily prevented by fully maturing an app concept before production and getting approval along the way. - Gergo Vari, Lensa, Inc.

2. There’s No User Research Or Historic Cost Data

Development teams often fail to do user research and rapid prototyping, and/or they fail to validate prototypes via testing, which means they work in circles on the wrong things and never achieve product-market fit. They also don’t track time and costs historically, so there is no data to build a model from for accurate estimates, which leads to an inability to estimate the cost of developing validated prototypes. - Jonathan Cardella, Ventive, LLC

3. The Team Doesn’t Have The Right Talent Mix

I’d focus on an often overlooked area: team talent. Does your team have the right talent for the various components that will be built as part of the app ecosystem? “Just-in-time” hiring (read: a talent crunch) is one of the leading causes of cost overruns in app development projects. - Greg Bhatia, Intelion Systems

4. There Isn’t An Outside-In Perspective

Neglecting to think about the customer is a sure way to burn through your resources. When you’re building products and experiences, it’s important to have an outside-in perspective. Don’t just rely on the opinions of your team. Make sure you go to the customer and get their perspective on what they want. It will save a lot of unnecessary iterations. - Chet Kapoor, DataStax

5. The Project Is Too Complex

Reduce complexity—and when in doubt, reduce complexity some more. Clearly define the minimum parameters of what you are building. The deeper and wider your software is, the higher your software development costs will be. Integrations also increase your costs. So, be clear about what you need, and prioritize the development of the parts of the product that are essential. - Olga V. Mack, Parley Pro

6. There’s No Contingency Plan For Market Changes

Multidisciplinary balance and contingency planning are key; prioritization/reprioritization and transparency at all levels are critical. Whatever your original business case or select features were when you started the program, the market and your initial clients will take you to new, unexplored places. This is a good thing when it’s anticipated. When it happens, reassess what is critical for success. - Shawna Koch Mishael, SenecaGlobal

7. There’s No Budget For The Unexpected

Overambitious planning and the subsequent cost and schedule overages have plagued the software industry since the ‘60s. Experienced leaders allocate large amounts of budget and time to handle the unexpected things that come up and constantly reassess the product roadmap, schedule and budget to ensure things stay on track. - Dave Hecker, iTechArt Group

8. There’s No Comprehensive, Validated Feature Backlog

Stakeholders sometimes lose focus on delivering a product to their revenue-generating customers. This is why we suggest they create a feature backlog and justify why each feature needs to be a part of the MVP. Then validate those assumptions with your paying customers. If the feature isn’t a must-have, don’t build it. Every additional feature adds complexity and keeps you from delighting your customers. - Andrew Siemer, Inventive

9. The Mobile Backend Wasn’t Done First

App development usually has deep dependencies on mobile-optimized APIs, and you need careful planning to make sure you don’t start too much of your app development team before the backend is ready. Solid development practices, including dependency management, are still important for apps. It may feel slow, but it will be more efficient in the long run to design and build your mobile backend first. - Luke Wallace, Bottle Rocket

10. There’s A Lack Of Discipline Surrounding Sprints

The whole team needs to clearly define the project with the minimum viable product, as well as the sprints that will go along with the total program. With agile, there is a tendency to put more into sprints than can be accomplished within the time frames defined or to create more sprints than the development team can address. If the project is disciplined and focused on the delivery of releases, you’ll succeed. - Sean Barker, cloudEQ

11. Features Are Being Overengineered

Overengineering a feature based on instincts not backed by data is a surefire way to burn a lot of development time and money. The best app development teams ship consistently, keep the feature set small for each release and always have a mechanism to allow customers to provide constant feedback. - Shashank Agarwal, BridgeML

12. There Hasn’t Been Client Collaboration During The Process

App costs rise when requirements change and grow throughout development. To avoid surprise budget impacts, we uncover as many requirements as possible throughout the initial discovery phase and then continue to evaluate and reprioritize work with clients to ensure we’re focused on delivering the critical features on time and on budget. It’s a collaborative conversation, and we keep it going from start to finish. - Cleve Gibbon, Wunderman Thompson

13. There’s No Marketing And Branding Plan

To set your app project up for success, it’s important to focus on your marketing and branding approach. Consider who your target audience is. How will you get your app in front of them to drive engagement and downloads? Without a well-established marketing and branding plan, even the best app can go unnoticed. - Marc Fischer, Dogtown Media LLC

14. There’s No Customer Service Portal

One of the quickest ways to lose money on your app development project is if you fail to implement a robust customer service portal. You’ll find that many of the people using your app have questions. If they can’t get support, they will uninstall your application and check out the competition. A strong support system can guide consumers through various funnels and help deliver a well-rounded user experience. - Thomas Griffin, OptinMonster

15. Maintenance Costs Have Been Underestimated

A common way app development projects burn through cash is when maintenance costs are underestimated. These costs are inevitable but can be significantly reduced—for example, by adopting the right app development platform. Although cross-platform apps do not offer special features since developers cannot focus on a specific operating system, they are cost-effective and easy to maintain. - Roman Taranov, Ruby Labs


This article was originally published on Forbes.com

Published by Bottle Rocket in App Development