The Internet of Things is capturing value across its many use cases. For instance, as per the most recent McKinsey report, IoT will capture 16% of economic value in product development, 24% in sales enablement, and 27% in human productivity. In monetary value, the growth by 2030 is as follows:
- HR redesign is expected to grow to 110-260 billion US dollars;
- IoT-enabled real-time personalized promotions will increase to 60-90 billing US dollars;
- IoT-supported wellness will amount to 310-560 billion US dollars.
These are just a few use cases, but they are presented for their potential in IoT app development. Developing an IoT app is regarded as more complex and challenging than a regular app. Particularly, it is due to the presence of hardware – IoT sensors. Let’s look closely at all aspects that influence an IoT App Development Cost in an IoT app development company.
Challenges of IoT application development
When calculating project costs for a regular app development project, you have three major cost items:
- project management,
- backend development, and
- front-end development.
In IoT app development, you also have to add IoT system architecture design and hardware. Furthermore, IoT data must be collected, stored, and processed. Whenever an application works with user data, regulatory compliance comes into play. In addition, what kind of IoT scenario are you going for?
- A simple IoT app will utilize existing IoT devices, e.g. fitness bands for an IoT wellness app. So all complexity is about catering to SDKs of different device manufacturers.
- A mid-complexity app means that you assemble your own IoT system from existing devices or integrate a few different existing devices. For an HR solution, you might build your IoT net with employee smartwatches, RFID/NFC tags, smart desks and chairs, and environmental sensors for air quality temperature, and noise levels.
- High-complexity app will entail developing your own firmware from scratch. It can be a haptic T-shirt with gloves for an IoT game.
Requirements engineering: Understand what is needed for your IoT solution
First and foremost, you are still likely to follow the MVP development path. Even if it involves IoT hardware. So, after having completed the idea validation stage, and having done prototypes of your system, you move on to the pre-development stage. This is where the tech stack is defined along with requirements engineering for the IoT part of your app.
Requirements engineering (RE) is the activity of defining, documenting, and updating the requirements of a system. RE often goes into critical MVP development documents:
- Business Requirements Document (BRD),
- Product Requirements Document (PRD), and
- System Requirements Document (SRD).
Custom hardware IoT solutions are often not feasible during MVP development. Therefore, your team should consider the existing off-the-shelf solutions (Arduino, Raspberry PI, and generic sensors) that satisfy product and system requirements while balancing cost (business requirements).
RE is not the place to focus solely on the users. Remember the words of Vesa Torvinen, Lead Security Master at Ericsson Automation:
“Requirements cannot be observed or asked for from the users,
but have to be created together with all the stakeholders.”
Once your IoT app is past the growth stage and is ready to scale, it is the right moment to opt for custom firmware and hardware. Custom IoT hardware at the right stage can improve the product and optimize costs.
What may influence the IoT app development cost?
If we talk specifically about IoT app development projects, then the number and complexity of IoT components are what will be driving the development cost. In MVP development, utilizing IoT platform vendors is the cost- and time-efficient solution. Here are some major IoT vendors and their IoT platform pricing.
| IoT vendor platform | IoT Pricing | Use cases |
| IBM Watson IoT Platform | 30-day free trial, then 500$* per instance per month (*depending on services) but you should book a call to get an estimate. | Energy IoT solutions, healthcare IoT, industrial solutions, and smart homes. |
| AWS IoT Core | AWS Free Tier is available for 12 months;Then you can use their calculator to get a custom estimate for your specific solution. | Health and wellness IoT applications, industrial solutions, healthcare IoT, smart retail, connected vehicles, and smart cities. |
| Microsoft Azure IoT Hub | The basic tier costs from $10 to $500 a month; The standard tier has a free plan with others ranging from $25 to $2,500. | Health and wellness IoT applications, industrial solutions, healthcare IoT, smart retail, and connected vehicles. |
| ThingWorx | Available only after contacting a sales team. | Mainly target industrial solutions, predictive maintenance at factories, and smart cities(isn’t suitable for consumer solutions). |
As you can see the IoT platform price can vary. It’s best to contact platform vendors that suit your use case and get a more accurate estimate.
What influences the total cost of IoT application development?
Overall, the total IoT app development cost includes the following:
- IoT app core functionality. Prioritize value-carrying functionality and postpone the rest.
- UI/UX development hours. Information architecture is essential for IoT applications. Their backbone is data storage, analysis, and presentation. Therefore, UI and UX need to aim for clean presentation and simplicity of data insights.
- The number of platforms. Is it a web application, mobile, or cross-platform? The common practice is to launch on one platform: either web, native iOS, or native Android.
- Hardware mainly consists of the cost of IoT sensors.
- Integrations, licensing, and security. Any IoT is likely to require strict encryption protocols and rigorous testing to avoid security issues.
Hidden IoT development costs and how to avoid them
Hidden IoT app development costs depend on the professionalism and straightforwardness of your development agency. For instance, scaling costs are often listed as hidden IoT development costs. But, the better option for an MVP IoT solution is to select off-the-shelf solutions. Then if launch and growth go well, you switch to custom firmware for scaling. In this case, it is not a hidden cost, but a strategic and calculated move. So the best tip for avoiding hidden costs is to use a solid development agency with a proven track record of satisfied clients and transparency as their policy.
How to calculate the total cost of an IoT solution?
Calculating the total cost of IoT combines the three regular app development cost items and adding the IoT-related costs. However, it all depends on your budget. If you want to have it done within $30k, it is possible if you outsource. This app is not likely to have automated testing and it is likely to have a minimal number of sensors. For a more elaborate solution, you are looking at price tags starting with $50k-90k+.