What Should Your App's First Year Budget Really Include?

About 40% of apps fail to generate any meaningful revenue in their first year, and one of the biggest reasons for this is poor budget planning from the start. When someone comes to me asking what their app will cost, they're usually thinking about the build phase (which makes sense), but what catches most people off guard is discovering that building the app is only about half of what they'll actually spend. The rest goes into things that don't feel like development work but are just as important for success.

Your first year app budget needs to cover development, launch, marketing, maintenance, and a buffer for the things you didn't know you needed to budget for

Look, I've worked with founders who put together what they thought was a complete budget, only to find themselves scrambling for extra funds six months after launch because they hadn't factored in server costs that scaled with users, or they'd completely forgotten about the need for ongoing content creation. And these weren't inexperienced people... they just didn't know what questions to ask. The goal here is to help you build a budget that's actually realistic, one that covers not just the obvious costs but the stuff that tends to surprise people when they're already committed to the project.

Understanding the Real Cost of Building an App

The development phase typically runs between £25k and £150k for a decent app with proper functionality, though I've seen simple apps come in at around £15k and complex ones push past £250k. But here's the reality... that's just the starting point. Your first year expenses will be somewhere between 150% and 200% of your initial build cost when you factor in everything else that needs to happen.

What tends to throw people is that costs don't stop after launch. They sort of shift into a different category. Instead of paying for feature development, you're paying for hosting, support, bug fixes, and the marketing work needed to actually get users downloading your app. The business model matters too (learned that the hard way)... a fintech app will have compliance costs that an e-commerce app won't, while a social app might need much heavier server infrastructure than a productivity tool.

I usually tell people to think in thirds for their first year budget. Roughly one third for the build, one third for launch and marketing, and one third for keeping things running and making improvements based on what you learn from real users. This isn't a perfect formula, but it's a better starting point than just budgeting for development and hoping everything else works itself out.

Development Costs and What You're Actually Paying For

When you're paying a development team, you're paying for the time it takes to write code, test it, fix the bits that don't work, and then test it all again. A mid-level developer in the UK costs between £300 and £600 per day, and a typical app takes between three and six months to build with a small team. The math adds up quickly.

Get detailed time estimates for each feature before you start building. Ask your development team to break down their quote by feature rather than giving you one lump sum. This makes it much easier to cut scope if you need to reduce costs, because you'll know exactly what each piece costs and can make informed decisions about what to keep.

But you're not just paying for coding time. You're paying for:

• Project management to keep everything organised and on track
• Backend infrastructure setup (databases, servers, APIs)
• Security implementation to protect user data
• Testing on different devices and operating system versions
• Integration with third-party services (payment processors, analytics, etc.)
• Documentation so future developers can understand the codebase

The choice between native development and cross-platform tools affects cost quite a bit. Building separate native apps for iOS and Android can cost 60-80% more than using something like React Native or Flutter, but native apps tend to perform better and feel more polished. For a first version, I often recommend cross-platform development to get to market faster with a smaller budget, then you can always rebuild native later if the app takes off and you've got more resources.

Design Work That Users Will Notice

Design costs typically run between £5k and £30k depending on how many screens you need and how custom you want things to look. This covers user research, wireframing, creating the actual visual design, and producing all the assets developers need to build what the designer created. A good designer will also create an interactive prototype before any code gets written, which helps catch usability problems early when they're cheap to fix.

What Design Actually Includes

The design phase breaks down into several distinct pieces of work. User experience design comes first, where someone maps out how users will move through your app and what actions they need to take. Then comes user interface design, which is the actual visual work (colours, fonts, button styles, layouts). You'll also need icon design, illustration work if your app uses custom graphics, and animation specifications if you want things to move smoothly. Professional wireframing and prototyping tools help designers create these assets efficiently and ensure consistency across your app.

The mistake I see people make is thinking they can skip proper design work and just have developers build something that looks "good enough". What happens is you end up spending more money later rebuilding things because users found the app confusing, or you realise the navigation doesn't make sense once you actually try to use it. Spending money on design upfront saves you from much bigger costs down the line.

Getting Your App Into the App Store

Apple charges £79 per year for a developer account, Google charges a one-time fee of £19. That's the cheap bit. The expensive bit is getting your app ready for submission... creating all the screenshots in different sizes, writing the app store description, making the preview videos that users see before they download, and handling the back-and-forth with the app store review teams when they ask for changes.

Budget at least two weeks and £2k-£4k for app store submission work, including the time it takes to respond to reviewer feedback and make any required changes

Apple's review process has gotten quite strict over the years. They reject apps for all sorts of reasons... incomplete functionality, crashes during testing, privacy policy issues, design problems, or not following their interface guidelines closely enough. The first submission often comes back with requests for changes, which means more development time to fix whatever they flagged. Google's process is usually faster and a bit more relaxed, but they've tightened up their requirements too.

Store Listing Optimisation

You'll need professional screenshots for multiple device sizes (at least five different screenshots for each), an app icon that works at multiple resolutions, and ideally a preview video. Most people hire a designer or marketing agency to create these assets, which costs between £1k and £5k depending on how polished you want things to look. The quality of your store listing directly affects your conversion rate... an app with professional screenshots might convert at 30-40%, while one with basic screenshots might only convert at 10-15%. App store optimization is crucial for maximizing your organic downloads and reducing your marketing costs.

Marketing Your App So People Actually Find It

This is where budgets get really interesting (crazy when I think about it), because you can spend anywhere from a couple of thousand pounds to hundreds of thousands depending on your approach. For a typical startup or small business app, I'd recommend budgeting between £10k and £40k for first year marketing efforts. That might sound like a lot, but acquiring users costs real money now... you're competing against companies spending millions. Building an email list before your app launches can help reduce these acquisition costs by giving you a warm audience to market to from day one.

Different Marketing Channels and Their Costs

The thing about marketing is that it needs to be ongoing, not just a one-time push at launch. I worked with a client who spent £15k on launch marketing, got a decent spike in downloads, then stopped spending and watched their daily installs drop to nearly zero within three weeks. Apps need consistent visibility to maintain download momentum, which means you need a marketing budget that covers at least six months of activity, not just the launch period.

App store optimisation is your cheapest marketing channel (sort of), because it's mostly time rather than direct spend. You're optimising your keywords, testing different screenshots and descriptions, and trying to improve your organic ranking. This work costs between £500 and £2k per month if you hire someone, or you can learn to do it yourself and just invest the time.

Keeping Your App Running After Launch

Monthly running costs typically land between £500 and £3k for most apps, covering hosting, monitoring services, crash reporting tools, analytics platforms, and the various subscriptions you need to keep everything working. Server costs scale with your user base... an app with 1,000 active users might spend £150 per month on hosting, while one with 100,000 users could easily spend £2k or more. When choosing cloud providers, it's worth understanding the differences between AWS, Google Cloud, and Azure to make an informed decision about long-term hosting costs.

Set up proper monitoring and alerting from day one. Use services like Sentry for crash reporting and Google Analytics for user behaviour tracking. Getting these in place early means you'll spot problems before they affect too many users, and you'll have data to guide your decisions about what to build next.

Monthly and Annual Service Costs

• Cloud hosting (AWS, Google Cloud, Azure): £150 - £2k+ per month
• Database services: £50 - £400 per month
• Push notification service: £0 - £300 per month depending on volume
• Analytics and tracking tools: £0 - £200 per month
• Security and compliance monitoring: £100 - £500 per month
• Content delivery network (CDN): £50 - £400 per month
• Email service for transactional emails: £20 - £150 per month

Then there's support and maintenance work, which is different from building new features. This is fixing bugs that users report, updating things when iOS or Android release new versions, keeping security patches current, and generally making sure nothing breaks. Budget at least £2k - £5k per month for maintenance work, or roughly 15-20% of your initial development cost per year.

Planning for Updates and New Features

Your app will need updates, both to fix issues and to add the features you couldn't afford to build in version one. I tell people to set aside at least 30-40% of their initial build cost for first year improvements. So if your app cost £60k to build, plan for another £18k - £24k in development work during year one.

The updates you need to make will be driven by user feedback, analytics data showing where people struggle or drop off, and your own product vision for where the app should go. Some updates are maintenance work you have to do (like supporting new iPhone models or Android versions), while others are strategic choices about adding value and staying competitive.

What's interesting is that your update costs can actually exceed your initial build cost over time if you're actively improving the app and responding to user needs. I've seen apps that cost £80k to build end up with another £100k in development work over their first two years, and that's actually a good sign... it means the app is successful enough to justify continued investment.

Hidden Costs Nobody Tells You About

Payment processing fees add up fast if your app handles transactions. Stripe and PayPal typically take 1.4% plus 20p per transaction for European cards, while Apple's in-app purchase system takes a 30% cut on subscriptions in year one (dropping to 15% after that). On a £100k revenue app using in-app purchases, you're handing over £30k to Apple, which is a real cost you need to factor into your financial planning.

Legal costs for privacy policies, terms of service, and GDPR compliance typically run £1.5k - £5k, and that's before you deal with any licensing agreements or intellectual property work

Insurance is another cost people forget about. Professional indemnity insurance for app development work costs between £800 and £2.5k per year depending on your coverage level. If you're handling health data or financial information, you might need cyber insurance too, which adds another £1k - £3k annually. These aren't optional extras if you're running a proper business... they're protection against the kind of problems that could shut you down. Understanding which regulations your app needs to comply with helps you budget for the right insurance coverage and legal requirements.

Customer support costs money whether you handle it yourself or hire someone. Support tools like Intercom or Zendesk cost £50 - £300 per month, and then there's the time spent actually responding to users. A moderately active app might get 50-100 support requests per month, which could be 20-30 hours of work. Either you're doing that yourself (which has an opportunity cost), or you're paying someone £10 - £15 per hour to handle it.

Third-party services and API costs can creep up on you. If your app uses mapping (Google Maps charges after you hit certain usage levels), sends SMS messages (6p - 8p per message), uses AI features, or integrates with other platforms, you'll have ongoing costs that scale with usage. Budget at least £200 - £800 per month for these kinds of services, and watch them closely because they can spike unexpectedly if you get a surge in users. For apps planning to expand beyond the UK, you'll also need to consider international legal requirements which can add significant complexity and cost to your budget planning.

Conclusion

A realistic first year app budget breaks down something like this... 35-40% for development, 25-30% for marketing and user acquisition, 15-20% for ongoing maintenance and hosting, 10-15% for updates and improvements, and 10-15% for all the other costs (legal, insurance, tools, support). On a £100k total budget, that's roughly £40k for the build, £25k for marketing, £18k for keeping it running, £12k for improvements, and £5k for everything else.

The apps that succeed are usually the ones that went into the project with realistic financial expectations and a plan for funding the full first year, not just the development phase. You can adjust these numbers based on your specific situation, but the principle holds... building the app is only half the battle, and your budget needs to reflect that reality.

If you're planning an app project and want to talk through what a realistic budget would look like for your specific situation, get in touch and we can walk through the numbers together.

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