This is a question I often get. I am sure you already know the answer, “It depends!!” Like many things, you can spend a little, or a lot, on a prototype. How much you spend on the prototype depends on; where you are in the validation process of your idea/new product/service, what you have already defined as being critical for your potential users and potential investors to see, and on what type of a prototype is best to develop.
But before I get in to that, the first question I usually ask is, “What does a prototype mean to you?” It means different things to different people. Officially, in software development, as in other disciplines, a prototype is an incomplete version of a final product. The objective of a prototype is to simulate only a few functions of the desired application. The owner of the prototype needs to get feedback from potential users and investors, as to the value of the solution for the market, i.e. market validation. Typically an entrepreneur has already been out talking about their service with potential users and potential investors (at least friends and family to start). They have received validation from a select group that the idea is good, they may have showed them wireframes or a presentation on the idea, but now they need to go to the next step, which is to “show” something so that the idea becomes more real to potential users and investors. Thus they can get more real feedback. They need to answer questions like; “How would the system do that?”, or “What would I do in this case, if I was using the system?” The answers to these types of questions do not make sense until users can actually “touch” something, or in the case of software, actually play with something and see how it could work. In reality a prototype should only simulate a few functions, and ideally those functions which will be those that will differentiate it from other similar existing services or solutions to the user’s problem.
Now that you know what a prototype is and what it can be used for, then you need to decide, do you really need a prototype? If your new product or service is similar to ones that already exist, and that can be viewed by others, and your differentiation is going to be based on pricing or target market or other, then maybe you do not need to create a prototype. However, if your differentiation is going to be based on unique features, you may need to validate those features. Especially if they are more complicated, you will want to simulate them in a prototype in order to get feedback that the features will make the product truly unique and that they have value in the market place. If your new service is going to be totally unique in the market, then definitely creating a prototype to validate your market is the way to go.
So if you need a prototype, what type of a prototype do you create? In broad strokes we can divide prototypes in to two categories; throwaway and evolutionary. A throwaway prototype is just that, it is created to simulate the desired features, then after market validation or after the prototype’s purpose has been outlived, it will be thrown away. If, during the use of the prototype, it was decided to go forward and develop the full service, development will start from scratch and not reuse any of the code from the prototype. An “evolutionary” prototype is one that is designed to be “built-upon”, it is intended that as the prototype is shown around, feedback is received; new features will be added to it, modified, removed, etc., until it is ready for launch as a brand new service. All code will be used, or at least that code for the features that will stay in the new service, will be used going forward. Because evolutionary prototypes are going to be used for the final real service, more time needs to be spent up front on technical design and architecture. The prototype needs to be built using the desired coding language, database, etc. If you take your budget for your prototype, you can plan that for a throwaway prototype you will be able to show more features than with an evolutionary prototype since part of the time and money for an evolutionary prototype will be spent on design and architecture. Create a throwaway prototype if you need more feedback on the idea and the target market and you need to show a lot of different features. You could end up pivoting from the original objective and market for your new service and in this way you would not have spent a lot of money architecting something that may never get used, or that you find there is no market for. Go for developing an evolutionary prototype if you are very very certain of your idea. Maybe you came from that industry and have already done a lot of validation of the idea and you know the concept won’t change that drastically. It is a good idea to also have the budget available to fund ongoing development of an evolutionary prototype to add new features or take them away as more and more potential users look at your system (keep in mind that the first prototype is going to be light on functionality).
All of the above brings me back finally to the original question, “What does it cost to build a prototype?” Typical budgets for prototypes range from $3,000 to $7,000. As an entrepreneur you are not necessarily going to want to spend more than that on a prototype. Your objective is to get something out there fast and get moving to the next step in validating your idea. You could always, of course, spend much more on the development of more simulated features, but really concentrate on those that differentiate you the most, not on everything. A throwaway prototype can fall anywhere in that price range, the higher the pricing, the more functionality that can be simulated or the more effort put in to design, if the user interface is extremely key to helping you validate your market. An evolutionary prototype will fall towards the higher end only, because of the need to do the technical design and architecture. Typical timelines for creating prototypes are 2-3 weeks to 4-5 weeks. There will typically be 2-3 iterations before you get to your final prototype. Also expect to really engage with the team developing your prototype, both on UI, on refining the features to be simulated and on review/feedback cycles.