How To Determine The Cost of Blockchain Implementation?

The cost to build a blockchain app depends on the various factors, including app features, complexity, type of blockchain, blockchain platform and other technology stacks. Considering various factors, examples and specific numbers, we have analyzed the cost of blockchain implementation. 

Consider the following questions before you look at the cost of implementing blockchain:

  • Do you need to build a new blockchain product or integrate blockchain with an existing product? 
  • What type of blockchain hosting will your product require? – Private or Public Blockchain
  • Does your application need to deal with financial transactions?
  • Does your product need cloud computation outside of the blockchain network?
  • What type of product interface do you require? – Web Interface, Mobile Apps, Admin Interface or all of these interfaces
  • Do you require a Proof of Concept? 
  • How many users will interact with your platform? 

If you have answers to the above questions, try our cost calculator for blockchain app development. 

We have estimated the cost of a blockchain app based on the following scenarios:

Cost of Blockchain Implementation: Process

The following table represents the cost percentage with respect to a specific development phase.  

 

Milestone Wise Cost DistributionIn-House
Consulting10%
Designing15%
Development50%
Quality Assurance25%
Deployment and 3rd party CostPrivate Blockchain: ~$1500/month
Public Blockchain: $0.01 / transaction-based for public blockchain + ~$750 for 3rd party
Maintenance Cost~15% to 25% of the overall project cost.

Cost of blockchain implementation is spent on multiple activities or phases of the project including:

  • Design: System Blueprint, user interface/experience design including wireframes, high-fidelity designs with a prototype and low-fidelity designs with app flow.
  • Development: Coding and Testing
  • Deployment: Deployment on Cloud Platforms, Delivery and DevOps
  • Migration: Moving the existing solution to the Blockchain platform
  • Maintenance: Maintaining new updates and testing that app runs smoothly on every OS release
  • Upgrade: New features, Changes in Smart Contracts
  • Third-Party Tools: Hosting, Storage, Notification System, Collaboration

Blockchain platforms also, contribute to the cost of blockchain app development. A developer has to pay a certain fee to deploy a contract on the blockchain.

For example, deploying a contract on Ethereum involves a minimum fee of 32000 gas + 200 gas/byte of the source code. Also, users need to pay to run smart contracts.

Here are some of the 3rd Party Tools that Blockchain Apps might need:  

  • Amazon Web Services: Computing, Delivery, and Storage ($100 to $1000, depending on the number of users)
  • Bug Tracking Tools like Instabug and Bugsee: Gathering and reporting live bugs ($10 to $100 per month)
  • Monitoring Services like Uptime Robot and Statuspage.io: Sending notifications for downtime ($10 to $50)
  • Notification Services like Twilio, Kumulos, Amazon SNS:
    Enabling notifications within the app ($10 to $50)
  • Analytics with Flurry or Mixpanel: Analytics of data, funnel, insights and reporting ($0 to $150)

Cost: Project Management

The development of a blockchain app also involves the cost of project management. For example, we use an agile methodology to conduct frequent meetings or daily scrums, track the current sprint, testing, timeline, bugs and deliverables. We use tools like Confluence, Trello, and Jira can be used to facilitate the agile technique.

The cost of such software tools also contributes to the cost of blockchain implementation. For instance, we use the Jira project management tool to deliver action items to clients and track the progress of our internal team.

Cost: Continuous Integration

It is also crucial to maintain a pipeline of quality code. Every developer must write code and check it in a common code repository to ensure that the code works smoothly with everyone else’s code.

The right way to check this is to use an automated process. The source code can be managed using tools like Bitbucket and Github. Such tools also contribute to the blockchain app development cost.

Cost: Maintenance 

Since blockchain technology is still new to the market and new platforms are coming to the market every day, the apps can be switched to different platforms depending on its scalability, flexibility and confidentiality.

Also, new OS updates are released by Apple, Google and various blockchain platforms every year. Maintenance of a blockchain app could cost between 15-25% of the overall project cost and it could vary depending on the complexity of the application.

Cost of Blockchain Implementation: Complexity of a Blockchain App 

The cost of Blockchain implementation also depends on the complexity of your project. 

The complexity of a blockchain project is defined by a number of factors. To understand the type of blockchain app you require, you should know the purpose of your app, problems end-users are facing, need of blockchain solution, how your app will bring transformation and what are the existing solutions. 

We have classified the blockchain apps into three categories based on their complexity:

Low Complexity Blockchain Apps

  • Basic Smart Contract Development App
  • Payment applications built with existing cryptocurrencies

Medium complexity blockchain apps

  • Semi-decentralized apps
  • dApps built on the blockchain platforms like Ethereum, Hyperledger Fabric/Sawtooth, EOS and more

High complexity blockchain apps

  • Building a blockchain platform from scratch
  • Building a complete decentralized network

Cost of Blockchain Implementation: Development Resources

How many resources do you require to build an app? The cost of hiring a team for app development is a significant contribution to the estimated cost.

Salaries of software developers are the primary expense; however, there are other important factors including benefits, vacations, incentive compensation, payroll taxes and holidays.

There are many ways to get a blockchain app built and each will cost differently with some benefits and limitations. 

Following are some of the ways to get an app built:

In-House vs Freelancer vs Agency: Whom should you prefer?

In-house Team

Initially, maintaining a team of in-house blockchain developers seems to be troubled with only monetary issues. But, when you think deeper, you will get to know about a plethora of issues. Though you will have a dedicated team, you will be their first priority in the case of some emergency. There’s no doubt that you will have full control over blockchain app development, you will have to manage over expenses of the team, including their vacations, incentives, workspace and more. 

Since blockchain is still in its infancy stage, there is a scarcity of experienced blockchain developers in the market. An average salary of a blockchain developer is $150,000 per annum. Working with a blockchain developer could be expensive for the businesses as compared to hiring a blockchain development company.
If your primary business is software development, you should work with an in-house team of developers. Otherwise, it’s better to work with a third-party provider or freelancers.

Freelancers

Though hiring freelancers could be the least expensive way for blockchain app development, 80% of the businesses face issues like freelancer’s availability, their response time and quality in some of the cases.
You can hire a freelancer if your project is small as the risk factor increases when the project scope grows.

Agency

Any agency specialized in the blockchain app development can be a viable option. Agencies serve as a full-time development service provider and are experienced in the best app development practices like DevOps and Agile.
As compared to an in-house development team, the cost of blockchain app development offered by agencies is lower. They sign-off a contract before they start working on your project that includes deliverables with specific timelines. So, you can rely on them and focus more on your core business competencies.

Author’s Bio

Akash Takyar
Akash Takyar
CEO LeewayHertz
Akash Takyar is the founder and CEO at LeewayHertz. With the experience of building over 100+ platforms for startups and enterprise allows Akash to rapidly architect and design solutions that are scalable and beautiful.
Akash's ability to build enterprise-grade technology solutions has attracted over 30 Fortune 500 companies, including Siemens, 3M, P&G and Hershey’s. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

Since the blockchain technology is emerging at a rapid pace, customers are migrating their existing solutions to a blockchain solution. Building a blockchain app can be very expensive if you develop it with an internal team. Hiring a company or agency who is specialized in blockchain app development and can offer you the right cost with lower risk.

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