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4 cost efficient ways to develop your startup

We had several interesting experiences with startup web products and companies so we will try to provide some helpful details about the following questions:

  • What is the best solution in terms of cost efficiency for the development of your startup online product?
  • What options you have?
  • What are the benefits and drawbacks for each option?

Well these could be hard questions because...

  • you might not have the technical background to analyze the potential providers;
  • there are lots and lots of companies and freelancers around the world; Where should you go? and How should you decide?
  • you want the best for your money and is out of question to launch a poor quality product;
  • you would go for a local company but your initial budgets are just not enough at this point;
  • you would like to consider a nearshore company but you are concerned about the project control;
  • you want to have the overview of the development process but you can’t afford to invest all the time in this considering all the other challenges you have with an online startup product;

Before pointing the real options you have when it comes about a cost efficient approach for your online product, we will also mention the “no go” options just to help you avoid some common traps.

Local Students
Attractive becauseNo go because
they charge low; no real availability and reliability;
they promise big; the serious expertise is lacking;
they are “good” at pretty much everything

(programming, graphic design, design integration, testing, etc)

the product development process will take a lot;
  no documentation or organized environment for development;

 

Freelancers
Attractive becauseNo go because
lower price rates than companies; no real availability and reliability;
show convincing project references; work on many projects in parallel;
display multi “skills”; low initial estimate to achieve projects, but the fun comes after;
  no regular working times;
  no documentation and organized environment;

Getting back to real options, we believe that the best ways to develop your online start up in a cost efficient way could be the following:

Offshore companies (we consider companies from other continents in this case)
BenefitsDrawbacks
lower price rates; big cultural differences;
availability; time zone issues;
expertise; less project control;
references and experience; language and communication problems;
documentation more communication required;
  difficult access in case workshops and presentation are needed

Conclusion: This could be an attractive solution but still pretty risky considering the distance from the provider.

Solution: Maybe you might consider to budget some trips to the provider location at least for the important milestones of the project.

Nearshore companies (we consider companies from the same continent in this case)
BenefitsDrawbacks
lower price rates; less control of the project;
availability; language and communication problems;
lower cultural differences; more communication and project management required;
similar or close timezone; difficult access in case workshops and presentation are needed;
technical expertise and experience; less flexibility for technical team to attend to the investors or stakeholders local meetings;
organized development environment;  

Conclusion: This is a good option if you have a well documented project and a low volume of project changes. In case you have a very flexible project with many changes and/or the project has no consistent documentation this cost efficient opportunity might quickly change into a “no go” option. Why? Simply because lots of communication will be needed and the real cost of the development will be increased dramatically...

Nearshore companies with local technical project manager
Benefits Drawbacks
lower price rates than local companies; higher prices than nearshore or offshore companies;
high availability due to local presence; the technical project manager works remotely with his development team;
good project control;  
similar timezone;  
efficient communication and project understanding;  
technical expertise and experience;  
easy access to workshops and presentations;  
organized development environment;  

Conclusion: This option is perfect for the dynamic projects or for multiple projects delivered in parallel by the same technical partner. For example when an application has to be supported on both desktop and mobile devices and 2-3 sub projects need to run in parallel. In most of the cases the local project manager is adding significant value to a project and the extra costs of this option could actually be a good decision in the end.

Strategic partnership with web development agency
Benefits Drawbacks
cost reduction at least in initial phases of the project; it is difficult to find a good agency that is willing to participate and has the needed time;
good risk sharing; the revenue for the strategic partner will be higher compared to a normal provider in case the product gets successful;
full commitment considering the same goals;  
similar timezone;  
proactive approach;  
valuable consulting and suggestions as the main goal is a successful project for both sides;  
higher flexibility for project scope;  

Conclusion: You need a great product plus a convincing revenue plan in order to put this option in use but in case you succeed it is clear that you will have more time and energy to focus on the other critical aspects of your start up online product (marketing, investors, strategy).

We know that there are many particularities when it comes about the development of a new online product and we really hope that this short guide will help you go for the best decision in your case...

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