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What's the average budget you agree to spend for prototype development of your start-up
I very often encounter different budget, from rediculous $300 to fantastic $30K. And what is the fair price you woud spend for making prototype?
Honestly, there's no good answer to this question. It depends on the complexity of the technology that you're trying to produce and how much content you've created internally to hand over to a developer. Wireframes, copy, photographs, and a clear outline can help you when working toward a prototype.
Do you have some technical knowledge or can you provide specs / mockups of your vision? If not, a technical PM could be helpful. Would love to know what you're trying to build - could help the community give you some feedback on estimates to build your product.
I would say that your budget should be determined by what you identify as a prototype and your own personal skillset. If you're a coder yourself and looking to launch quickly, you might just spend very little to hire a few freelancers to help out. If you're a nontech co founder, then you want to spend as little as possible to get your app up as soon as possible so you can start generating some revenue.
During the building phase, you could be out there getting feedback for your product and making presales. The first version of your prototype shouldn't be the best, but it should solve the main problem you are trying to solve and then you can focus on features later after you have paying customers.
I would want to launch in less than a month with a spend of less than 15k if possible.
Thank you, Wilson! Perfect insight!
In my personal experience I have had to test roughly 30 ideas to find an idea with people actually willing to buy the product.
If I was to spend for example 5k usd on each MVP, it would cost me 150k to find an idea with traction. Thats a strategy totally useless to most poor entrepreneurs.
Some people might say "well, I only need to test 5 ideas to find a winner". Sure, some people do. But I would call bullshit on that, most of the time. The number of MVPs you need to test might decrease to 10-20 if you are a really talented entrepreneur or if youre really knowledgeable in some area like dentistry and you understand the problems/solutions in that market very good.
But if youre just an average entrepreneur you will probably need to go through a whole bunch of MVPs.
My solution is to put a qualifying step before building a MVP. Simply describe the idea verbally or on a website with some text/mockups. Buy some ads/cold call and see if you get any interest/sales. No interest at all - I just drop it. Maybe I could have sticked to it longer and it would have worked in the end, sure. Maybe the market needed education, maybe the marketing channels I tested were wrong etc etc.
But the alternative for me is crazy. Going all in on every idea. Maybe 2 months of work and 5k on every idea I test = 60 months of work + 15k in MVP costs. Thats 15k + 5 years of missed salary.
But to be honest, I dont think my method is ideal either. It has big drawbacks. Its just the method Im using in lack of a better solution.
Thank you, Sebastian! This sounds really interesting!
The only one thing I can't get is the equation you mentioned here:
"Maybe 2 months of work and 5k on every idea I test = 60 months of work + 15k in MVP costs. Thats 15k + 5 years of missed salary".
Could you elaborate it here?
Sorry, should have been 150k.
So if i need 30 ideas to find a winner and each idea takes me 2 months full time + 5k to test it would cost me:
30 ideas times 2 months per idea = 5 years
30 ideas times 5k spent per idea = 150k
Lost salary because ive been working on testing ideas = 5 years of lost salary.
The problem with the current MVP narrative for me is that most books on how to start a startup is written by founders with an exit and 1 million in the bank. Usually they are awesome entrepreneurs and people wanna learn from successful people. But these guys have lost touch with the little man and disregard the fact that most people dont have 5 years and 150k to spend.
The MVP model is only great from a scientific perspective, how to really validate if an idea is good or not. But the goal is to make money, not perfectly validate an idea.
Same with growth hackers. Most blog posts on conversion rate is written by great growth hackers. And they always talk about how important it is to statistically validate your ab-tests.
Where do most great growth hackers work? At big companies with tons of users to test. So its easy for them validate. If u have a small website with 100 sales per month, u dont have that luxury. You can run one AB test per year maybe.
Instead maybe you need to kill tests if they dont show 20%+ improvement after one month instead of letting it ride out to catch a statistically safe 5% improvement. Maybe you need to measure other conversions like visitors to order form and go with that metric instead, although it could be wrong etc etc. The goal is to get paid, not win a scientific award.
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