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How much does it cost to develop IoT application?

Internet of Things is expected to dramatically grow bringing larger connectivity with more than 5 billion users by 2020 using tremendous potential the network has, forecasts World Economic Forum in its case study on digital transformation.

IoT analytics in its recent report acknowledges that the TOP 3 shares of global IoT projects will be in Smart City (23%), connected industry (17%), and connected buildings (12%) distributing the efforts among Americas, Europe and APAC in 2018.


What it takes to engage in IoT app development and how high the stakes are? So let’s take a closer look.

Proof of concept

What should be the first steps after you decided to go all in and create IoT app? Discovery phase is a good idea to foresee the competition out there and assess a potential demand for your creation.

This opportunity to test the unchartered waters is necessary to understand whether or not you should start IoT app development process at all. Since you don’t want to splurge on something that might not be a success, creating a minimum viable product for your app with core functionality is a way to roll to get initial traction.

First off, research what’s trending on the market and if your app can acquire some slice of a pie. Compare apples to apples and decide what areas of improvement you can tap into with your prototype.

Beyond that, create PoC (short for Proof of Concept) is a step ahead from just an attempt to pilot project of IoT app development that will help you verify your assumptions and test your hypothesis applying it to a real-world use cases.

According to Cisco, more than half of IoT projects do not go beyond proof of concept stage.

For example, you can create a questionnaire, start a promo campaign and create a landing page to see if there is a room for your app among potential users. There is myriad of tools out there to help you kick off with the proof of concept, an important step on your way to success.



Interconnected hardware is at the core of IoT products. Quick prototyping and refinement is an ideal approach when you are managing an IoT project.
Nowadays, you can find a broad range of electronics prototyping platforms you can use to speed up your development: BeagleBone, or Raspberry PI along with popular Arduino and many others are great ready-to-use alternatives to yet to DYI PCBs.

On a side note, it is necessary to take into account the hardware requirements for that particular IoT application you’re creating. As a part of weighing a number of processing board, you’ll need to assess and polish the prototype IoT components against those specifications e.g consumer or industrial IoT app development.


An application hosting and development platform is another important step to account for. So apart from the small computer embedded in a “thing”, you will need to plan what cloud infrastructure and software to use to make it function.

If you’re on the look for a way to quickly create a “intelligent app”, consider, for instance, using C++ which is popular when it comes to IoT application development. To glue it all together and blend Data Science and AI, you’re likely to hire Python gurus. Such engineers are quite pricey, so any mistake can cost you an arm and a leg, so recruiting amateurs is out of the question.

Depending on an app complexity and, as a result, the team size, to create an IoT soft can cost from $3-8K to more than $15K


Along with tremendous opportunities IoT creates for variety of business domains from retail to healthcare, the introduction of greater connectivity brings greater cyber challenges. Sending the data across networks can get out of hand if security needs are underestimated. Cisco has proposed its own Secure IoT Framework to battle potential attack threats.

To top it off, IBM published a series of recipes for building secure IoT apps demystifying the basics along with certificate-based user authentication, authorization as well as application ID validation.

Brad Casey: Completely “hackable” homes are being powered by IoT devices

Therefore, it’s essential to engineer a bulletproof security system when engaging in IoT app development that would mind e.g. encryption and proxies and securing firmware responsible for IoT.


Usually, such projects require both the embedded software creation and the server part. On top of these two, it’s necessary to have mobile app to allow communication with the IoT ingredients. Bear in mind, you are likely to have numerous end points, so a proper infrastructure and its config are essential.

Business Analysis

How to juggle different scenarios and use cases of an app to guarantee exceptional user experience? Get ready to work hard and conduct multiple tests during IoT app development. A thorough business analysis and planning is essential to understand how things can connect with the end users and foresee their further interaction.

Key Takeaways

If you have a daring project in mind to create something different from a typical IoT solution, it’s necessary to begin with the Proof of Concept. In addition to that, you will need to either create yourself or go for one of off-the-shelf hardware that is already ready to use. Think of the infrastructure concept to go for to make your IoT app development a success. Then you need to account for IoT infrastructure requirements depending on the level of sophistication of the offering. To get all in components of the network in sync and running, you will need to spend up to 1/3 of your budget on IoT app development.

The food for thought is the following: if you estimate and list the costs of IoT components including hardware, infrastructure, software etc, you will arrive to about $50K bare minimum.

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