There is a massive increase in mHealth app development costs. Today the average mHealth app costs $425,000 to develop until launch. 47% of the costs are outsourced externally on development, 11% are outsourced externally on marketing.
It costs $425,000 today to develop a mobile health app. $425,000 are just the average expenditures including internal and external development costs as well as marketing costs. The expenditures don’t include maintenance or follow-up development costs after launch.
Pharma companies are outsourcing most of their app development
Companies that outsource more than average of their development budget are ‘Pharma companies’ and ‘mHealth app companies’. Those companies outsource 80% or more of their external development budget.
An analysis of the group of those ‘outsourcers’ shows that:
– Companies with a higher budget are outsourcing more of their budget. The more money a company has allocated for development, the more money will be outsourced.
– Big companies are outsourcing more of their budget than small companies. Corporations with more than 5,000 employees are outsourcing above average of their development budget.
– Companies with the business model “transaction” (e.g. selling drugs, selling devices) are outsourcing more of their budget, which again hints to pharma companies.
Nearly two thirds (62%) of those companies are not earning any money at all with their apps (average value: 40% are not earning any money with their apps). On the other hand, companies that are not outsourcing a lot of their development are “low earners”. One third (33%) are making between $10k and $100k (on average 24% are making between $10k and $100k).
There are hardly any differences in regional nor in experience in app publishing (number of apps published) nor in development time. Also, there are hardly any differences between experienced (minimum 7 years industry experience) and inexperienced (maximum 2 years industry experience) market players.
Companies that outsource a lot on development also outsource more of their external budget on marketing. And speaking of marketing: Their preferred marketing channels differ from the average: They are relying more on social media and influencer marketing.
Integration with EHR/MHR are the big cost drivers in mHealth app development
The biggest driver of development costs for a mobile health app is the part that has to do with electronic health records. A comprehensive exemplary mobile health app could include the following features:
1. Login & Security (e.g. login via password or social profile)
2. Users & Accounts (e.g. profile, dashboard, rating)
3. Special Healthcare Functionality (integration of HER, Medicare / Medicaid standards, communication to HCPs)
4. Using Device’s Hardware (e.g. access to camera, access to other devices)
5. Locations & Dates (e.g. integration of calendar, map)
6. User Engagement (email, SMS, forum)
7. Payments & Billing (shopping, billing, in-app-purchases)
8. APIs & Integration (to 3rd parties or to own API)
9. Look & Feel
10. Admin & Other features (e.g. analytics, content management system, user admin)
In this above app example by far the biggest part of the money has to be spent on the special healthcare functions – approximately two thirds of the costs.
Those healthcare features are also the burdens that make healthcare cumbersome for industry newcomers. Different standards, data security, compliance and privacy are making development hard to understand and hard to execute. For industry newcomers not familiar with the according rules, regulations and best practices might take months (or years) to understand.
In the future, technologies included in healthcare apps will be much more complex: Artificial Intelligence / Machine Learning are a lot more difficult to develop.
mHealth app development is time-consuming, which is driving up costs
The complexity of health apps – mostly the complicated healthcare environment –is what drives up development time.
Most apps are developed within one year (56%), four fifths (84%) within 2 years. But also, most market players are inexperienced and need more time for their app development. As we know from our previous market analyses, the majority of market players in digital health is rather new to the industry, thus rather inexperienced. Even for experienced publishers it can take 3-4 months alone to e.g. adapt an mHealth app to US-American Medicare & Medicaid standards. For players who are not familiar with this subject and its regulations, it might take much longer.
Health documents (e.g. related to Medicare & Medicaid) are often huge (with several hundred fields to be connected, which extends development time immensely.
The time frame above (2 years) includes only the time until app launch. For most mobile health apps app development is not finished after the launch. For start-ups app development as well as development of the business model is an ongoing task, thus a long-term project.
App with more functionalities, longer decision cycles, information seeking periods, higher marketing budgets or more complex technologies like machine learning will drive up costs.
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