14 Ways to Reduce Product Development Costs in Your Startup

29% of startups fail because they run out of cash. At the same time, 74% of them fail because they scale too fast.

This all points to the fact that if a startup wants to survive in the long-term, it should minimize its costs.

One of the biggest cost for any software company is its product development costs.

Of course, this makes total sense because you need developers to build your software product and they cost money.

In this blog post, we’re going to cover some of the best ways to reduce the product development costs in your startup.

Reduce complexity

Unnecessary complexity can increase your product development costs by a lot.

In most startups, engineers setup goals to develop tons of features and functionalities of products most of which they don’t really need.

A lot of the time they decide that they want to build something just because their competitors have it.

However, this doesn’t mean it’s useful for their customers and that they need it.

So always think about what features your users need and how they benefit them. Focus on developing the ones that bring the biggest value to them and ditch everything else.

If it’s not helpful to your customers at this stage of development, you don’t need it.

Another way to decrease complexity when developing new features is to look at old products that has similar features and how they were developed.

You don’t need to reinvent the wheel. Especially, when you have developed similar things in the past.

Draw Up Your Requirements

Before you start with the development process, you should take the time to draw up a requirements analysis.

This is like a business plan for your development team.

By drawing up documentation of all the things you require, from start to finish of the process, the chances of miscommunication are decreased.

This will streamline the development process and serve as a roadmap template for your developers. That way they can always go back to it and remind themselves what needs to be done.

Reduce prototype development time

The more time it takes you to develop a product, the costlier it becomes. Especially, if you pay salaries or people per hour.

That’s why reducing the development time is crucial to minimizing your expenses.

A simple way to save time is reduce the time it takes you to build your prototype.

For example: you can use a software like SOLIDWORKS to simulate interferences and collisions between moving parts.

You can perform all sorts of simulations, right there in the design suite: linear and nonlinear static, vibration, fatigue, thermal, optimization and nonlinear dynamics.

You can compare the performance of different materials, and you can automatically calculate forces on critical components – such as springs and bearings.

By using simulations early on in your design process, raises the quality of your products and dramatically reduces the burden of real-world prototyping.

Listen to the people on the line

The developers working on your product most often than not have a lot of ideas when it comes how your product can be build faster, easier and cheaper.

However, most of the time nobody cares to ask them and get their opinion on things. At the same time, they also don’t feel encourages to share these ideas because they simply feel this is not their job.

In reality, your development team can have a huge impact when it comes to reducing your development costs.

Their first-hand insights can help you identify how to avoid costly mistakes and ways to improve the development process.

Another huge benefit from listening to your people is learning about the everyday problems they are facing. That way you can react on time and help them solve them.

Think like a customer when it comes to features

Never forget that the only reason you create features is to satisfy the needs of your customers.

You don’t do that to please your developers and designers.

A lot of times your team might come up with cool ideas and features they would like to develop. However, they might not be what your customers want and need right now.

So always think first what features of your software can help your customers solve their biggest challenges or achieve their biggest goals.

If something doesn’t help your customers, you don’t need it.

So by elimination of useless features, you can focus only on the things that really matter for your customer and decrease the time it takes you to get the product to market.

Also make sure you think about how your customers are going to be using your product.

Always simplify

Your customers want a software that is easy and intuitive to use.

More often than not, people tend to find software products understandable and hard to use.

That’s because your engineers in their desire to create innovation forgot that they also need to create products that your customers would be able to use.

This usually means less features, simplicity and easy navigation.

Concentrate effort in the planning stage

Many developer rush too quickly through the planning stage which make things way too complicated afterwards.

Just because they would like to start designing and developing as soon as possible.

This is a huge mistake because it might send you off on the wrong path. And it will be way to costly and hard to get on the right path.

That’s why at the beginning of each project you should spend some time clarifying the task, visualizing the problem that needs to be solved and brainstorming ideas on how to solve it.

Getting to grips with the project from the start will reduce the need for complicated, costly iterations, revisions and improvements later.

Use Agile Strategy

A lot of variables can affect a software project at each turn.

In the past, many software companies used the waterfall method, in which the software follows a sequential lifecycle.

So what was happing was that the company was determining its software needs and they were hiring developers to build said request.

This usually leads to a lot of errors and misunderstandings.

Using an Agile strategy towards your software development tends to fix this.

This is due to the fact that an agile approach requires goals and needs in an iterative fashion, following the process closely step by step.

Then when a small portion of the development is released, then the client can determine what works and what doesn’t immediately. Which on other hand saves tons of time and costs.

Agile strategy reduces the need of reworks. The development team can get an immediate feedback leading to immediate revisions without affecting the rest of the development process.

Good project management

Without good project management, your product is probably going to fall apart.

Your team is likely to go sideways, a lot of time will be wasted on unnecessary tasks and it will be harder to recover.

Not only that, your developers might lose clarity on what’s important in the project and might not know on what to work first.

At the same time, communication between team members might suffer and you as a result your project will be delayed.

That’s why bad project management can increase your development cost by a lot if you’re not careful enough.

The first step when it comes to good project management is having clarity.

Especially, when it comes to which features you prioritize and who has to work on what functionality.

Your team needs to know why you need something, what it needs to do and how it should be done.

Focus on prevention, not cure

According to former Gartner researcher Theresa Lanowitz, Founder of voke, found that agile software project teams reported an increase in project cost from $3.2 million to $3.4 million over a four year period.

And the reason for increased cost lied in 2 things – rework and defects.

It turned out that developers were spending up to 50% of their time on avoidable rework. At the same time, the cost of fixing errors after development turned out to be up to 100 times higher.

According to a study made by the National Institute of Standard Technology, it might take up to 15 hours to fix a defect in product stage, as compared to 5 hours in coding stage.

That’s why preventing yourself from making these mistakes can reduce your development cost by a lot.

Document the defects

There are ways to reduce defects but in no way you can catch them all.

So that’s why defects tracking is a really important step towards reducing your development costs.

Detecting defects, investigating them, finding solutions and creating a system to help you stop defects can reduce your expenses by a lot.

When you document your defects it’s important to list the following:

  • Describe the defect clearly
  • The phase where it occurs
  • Interactive comments linked to specific features in a prototyping tool; or screenshots
  • Details of who found the defect

Early user acceptance testing

The worst thing that you can do is design your software in a way that your users won’t be able to use it.

Then it will be extremely expensive to change things and make it user-friendly for your customers.

This is where early user acceptance testing can be used to minimize your development costs.

It’s best to be done after unit testing and functional testing but it could also be started in the prototyping stage.

The way to do it is build test scenarios around user journeys or personas, and have either an industry expert or a user experience expert run the tests.

This approach will also help you reduce rework time and catch defects which you can fix on time.

Be sure to invest in QA

Quality assurance can help you decrease your development costs by a lot.

In order for this to happen, it’s a good idea to implement QA early in the project.

So ask from your QA experts early in the system definition phase to weigh in on functional and nonfunctional requirements.

That way they will be able to design relevant testing procedures much easier. They can also point out if requirements are testable.

Outsource product development

Hiring full-time developers can be extremely expensive. Especially, when you’re searching in Silicon Valley where you’re competing with big companies like Google, Facebook and Amazon.

The other thing is that you might not need a specific expertise all the time.

For example: if you need a Java developer for a small project, it doesn’t make sense to hire him full-time and pay him a salary every month.

That’s why in some situations it’s much started to outsource.

According to a study made by Deloitte, 59% of companies claim that outsourcing is more cost-effective. Especially if you hire overseas.

At the same time, by hiring a software development company you would have the access to a large pool of talent that can work on all kinds of projects.

They also have a know-how and experience that allows them to execute projects faster and with less mistakes.

You just need to be sure you hire the right people.

For more information on the topic, check out our blog post: How to hire talented software developers even if you don’t have deep pockets.

In conclusion

Reducing the product development costs in your startup is extremely important.

It is a huge expense and if you’re not careful, you might run out of cash.

This means that you won’t be able to bring your product to market and realize your deams.

In order to reduce your product development costs, you first need to reduce complexity and simplify the process.

Draw up your requirements so your developers know what you expect from them. Spend some quality time on the planning stage to make sure you understand how the product is going to be developed.

Be sure you agile strategy so you can adapt and adjust quickly. Don’t forget to document all your defects and to create software designed for its users.

Never develop features that your customers don’t need.

And last but not least, you can always outsource to minimize your costs.

Do you have high costs for product development in your startup? How do you plan on minimizing your costs?

Priyanka heads the Client Servicing team at Ebizon. With over 10+ years of impressive experience in technology consulting and software project management, she has worked with clients from diverse industries including Ecommerce, Retail, Education, Healthcare and Publishing. With deep tech industry knowledge, Priyanka is known for bridging the gap between those who are highly technical and those who are business minded. She was also invited by Drupal4Design Camp held at MIT, Boston to present Case Study on “Scaling Drupal with Confidence “.

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