How much does it really cost to build an app like Starbucks?

Written by Laura Bosco

You probably don’t know Starbucks’s founders considered naming their coffee startup “Pequods,” after Captain Ahab’s boat.

Or that they launched a literary magazine called Joe. (It lasted 3 glorious issues.)

And it’s a shot in the dark you’ve gone down the rabbit hole about the logo and the Illuminati.

But you don’t have to be knee-deep in coffee lore, or even drink the strong brew served up in most American cities, to have heard of their app.

With 16.8 million people and counting in their active user base, there’s a good chance you, your friends, or your family use it every week.

Given its popularity and our office obsession with all things coffee, we wanted to know:

How much would it cost to build the darn thing?

Here’s what we cover in this post:

Wait, who is this post for?

This post is useful for any founder (B2C or B2B!) looking to understand the costs of building an app. It’s a hard look at everything from prototyping, to building an MVP, to maintaining an app in the wild.

What makes the Starbucks app such a big hit?
#

To reverse-engineer this coffee-slinging software, we need to look at why people use the thing in the first place.

Sure, downloading and clicking around the app tells us what it does, but we’re not simply looking to replicate features—we’re looking to replicate core value.

Why Starbucks’s execs value the app (business appeal) #

The Starbucks app has been out in the wild since 2009, and it kicks back some serious benefits.

The app generates roughly 30% of all transactions for the retail coffee giant. And in the overall mobile payment landscape, it has more users than ApplePay and more users than GooglePay and SamsungPay combined.

Starbucks app mobile payments exceed apple, google, and samsung payments

Via: https://www.vox.com/2018/5/22/17377234/starbucks-mobile-payments-users-apple-pay-google

But there’s at least one other huge perk—customer data. The Washington Post says Starbucks is “gathering a rich trove of data about its most loyal customers, something it can eventually leverage to shape its marketing tactics, promotions and even store locations.” In an age where companies succeed by knowing and catering to customers, that kind of data is nothing short of gold.

Rising sales and venti-sized piles of consumer data are why Starbucks execs love the app. But that’s only part of the picture. Why do customers keep it?

Why Starbucks’s customers value the app (consumer appeal) #

As someone who doesn’t use the Starbucks app, I conducted an informal friend poll and some web-based research to find out why folks can’t live without it. The reasons are fascinating.

Let’s start with an obvious one. Starbucks has a robust loyalty system, and as customers rack up points from purchases, they earn free drinks and other rewards.

Starbucks app welcome screen

One friend said, “I like the convenience of paying with my phone but I really just do it for the points and free stuff.” Another friend noted, “The points and free coffee is pretty much the only reason I do it.”

people love starbucks app freebies

Sadly, this word never caught on. 😂

And this freebie obsession makes sense. Personally, I’ll burn more gas money than a drink is worth, just to get to Starbucks on my birthday. Because free drink!

I’m not alone. Ever since 1887, when Coca-cola distributed coupons for “any dispenser of genuine coca-cola” for free, businesses have been cashing in on the psychology of freebies.

But can free drinks account for all of the app’s popularity? Doubtful.

Another big reason customers dig the app is the ability to locate their nearest caffeine fix. Starbucks may feel like it’s everywhere, but (thank the coffee gods) a store isn’t always visible from where you stand. The app’s “find a store” feature helps customers quickly pinpoint nearby stores, plus identify which stores carry their favorite drinks.

location store screen on starbucks app

One contact mentioned, “My husband likes it because he can find out which Starbucks have the nitro coffee he likes.” And another friend told me, “I used it a lot when I was a traveling consultant, because Starbucks is literally everywhere.”

Then there’s the mobile payment factor. On a small scale, it simplifies home accounting. One person noted it’s easier to have “one debit instead of 22 at $2.10 a cup.” Fair.

However, that’s only scratching the surface. If we dig into why simple home accounting is nice, we see a much bigger piece of the puzzle: mobile ordering saves customers time. Time accounting, time standing in line, and time waiting for their order. In the customer’s words, “you place your order at your favorite Starbucks, tell them what time you will pick it up, and they have it ready and waiting.” Like magic.

a fanciful mobile order through the starbucks app

The Starbucks equivalent of every fountain drink option...in the same cup.

In fact, time-saving is such a core value, people lose their ever-living minds when the app crashes and they have to stand in line to order through a human.

twitter outrage when the starbucks app crashes.

LIKE.A.PEASANT.

Seriously. The day the app crashed, customers skipped coffee altogether rather than “waste” 5 minutes they’d become accustomed to saving.

more twitter outrage when the starbucks app crashes

SIX packets of Stevia? Really?

So, from our very official and organized research so far, it looks like the primary reasons consumers use the app are:

  • #1: To save time in their already packed days
  • #2: To earn free stuff

From a Jobs to be Done perspective, these are likely the primary “jobs” consumers “hire” the app to fulfill.

Other reasons consumers use and love the app include:

  • The app is visually appealing and easy to use
  • It works 99.99% of the time; it’s reliable
  • It lets people order fantastical drinks without shame
  • It helps them locate stores, including ones with their favorite drinks
  • It reduces the need for a wallet
  • It makes old guys feel hip (primary source: my dad)

Now the question is, if we were to build a no-code prototype, which of these value pieces would go in it?

How we’d build a no-code prototype of the Starbucks app #

A prototype is a kind of preliminary version of your product. And in most cases, it’s a rough draft of one particular piece of your product.

Prototypes are especially handy when you want to test a key assumption. Such as, “do people want a problem solved in this way?" They’re also a fantastic way to start more conversations with customers.

All of which is why, any time a founder approaches us for an app-build, one of the first things we want to know is: “have you built a prototype?”

We’re going to break down some ideas for a no-code prototype below. But first, you need to know a few assumptions we’re making. This prototype is for a founder with:

  • A brick and mortar store in several locations
  • A sizeable customer base (enough to keep the stores afloat)
  • A concept that’s bringing in profit

Start small: a prototype shouldn’t include EVERYTHING #

We’d be making a big mistake if we rushed into replicating everything you see in the app today.

A prototype should start small.

Among other things, this ensures you actually release what you build, instead of adding “important features” to it for years. Starting small also ensures you know what is and isn’t working. Imagine your prototype includes 5 core values and 15 features. If the prototype fails, how could you possibly know which aspect was to blame?

To avoid these pitfalls, we want to start with one core value and a limited number of features.

Options for building a no-code Starbucks prototype #

The two core values we could test are: earning free stuff through a rewards program and saving time with mobile orders. Let’s look at options for building one or the other.

For the rewards program, three options immediately come to mind:

  • A physical loyalty card. If you’re anything like me, you have about 7 of these hanging from your car keys. They’re the small pieces of plastic you scan to earn rewards whenever you make a purchase at the designated store. CVS, with their mile-long coupon receipts, is a great example.
  • A punch card. A paper card where 12 punches (corresponding to purchases) earn you a free drink. Printing these would be cheaper than the plastic + scanner option above.
  • POS add-on: If you already use something like Square as your point of sale, you could test run their loyalty system (starting at $45 per month) to gauge customer interest.

If you’re thinking, “hey! Some of these don’t even include online stuff!” you’re right. Keep in mind no-code doesn’t have to mean online. There’s often an entirely manual way to test parts of your product; don’t discount an option just because it doesn’t involve a computer.

On to the next core value.

If we wanted to prototype mobile orders, we’ll need to get a bit more creative. One option that comes to mind here is Glide. Glide is no-code tool that turns a Google spreadsheet into an app. We gave it a test run back in 2019 and were really impressed with what we saw. Since then, it’s only gotten better, and I suspect it’d be useful in this scenario.

Here’s what you could do.

First, start with one of Glide’s existing templates, such as the city guide. This one will give you a good base setup for adding store locations.

creating a starbucks app prototype with city guide template from glide

To get to this screen, I clicked “copy app” on the City Guide template at https://www.glideapps.com/templates. Really, that’s it.

To customize this template, you’d spend 15 minutes or so creating a Google sheet with your own data. It’d look like the example below.

basic spreadsheet for locations in starbucks app prototype

If you do nothing else besides load this spreadsheet into Glide, you already have a store locator! Nifty.

But we set out to test the time-saving benefit of mobile ordering, so let’s go ahead and add menu items for customers. That way, they know what’s available at each store. (Something we know the Starbucks users love, and one step closer to mobile ordering.)

basic spreadsheet for locations in starbucks app prototype, with menu

Adding a menu, including seasonal items and snacks!

The actual ordering piece is where this gets a bit tricky. Initially, we could lean on customers to call in an order based on the menu they see in the app, but that puts the burden of convenience on them.

To enable real ordering within the app, we have two options:

  • Wizard of Oz route (free): From browsing other Glide templates, I know I can add a form to any app I create. To mimic online ordering, I could create an in-app form that lets customers select food or drink items. When they submit this form (literally, when they hit the submit button), I could make their request go into a separate spreadsheet, or to a designated email address. Someone in the brick and mortar store could monitor the email/spreadsheet, and the customer would pay in-store.
  • In-app payments route (13% fee): If I’m willing to sacrifice a 3% cut to Stripe and another 10% cut to Glide, I could add in-app payments straight to the prototype.
How to add forms to a prototype in Glide

But really. There are so many cool things you can do with Glide.

By the way, none of what I just described requires any code. Adding payments and routing form submissions to a specific location? That’s all drag, drop, and select in Glide.

Meaning, if you have a few hours, you could set up an actual mobile ordering system with one no-code app, Google sheets, and your own two hands. Pretty friggin’ cool, right?

So, how much does building the prototype cost? No-code prototypes usually cost you more time than money. When I built my own prototype for another project, it took me around 20 hours from idea to near-completion. (For context, it was my first time prototyping, and I’m non-technical.)

While it is possible to spend only time, a few subscriptions may come in handy. We recommend you budget $20/mo or so for the paid version of some free tools. Zapier, a tool that helps you connect apps, is one example that comes to mind. Another is the tool we used above, Glide; the paid version gives you lower transaction fees. Both Zapier and Glide are $20/month.

And remember, your own prototype may take you more or less time depending on what you opt to build.

Signs it’s time to move from prototype to MVP #

Some founders are able to run a year or more on systems like the one above. But if your business gains traction, you’ll experience growing pains. These are good problems to have, but you’ll need to find a way past them to keep scaling.

Some signs it’s time to move from no-code prototype to MVP are:

  • You proved your assumption: One of the goals of a prototype is to prove or disprove a key assumption (e.g. “my customers want to save time by placing mobile orders”). If you proved a key assumption is true, it’s time to keep moving forward. If you proved it was wrong, test another one!
  • You gathered helpful feedback: Wait until your customers and/or their data can tell you what they love, find frustrating, or wish they had before you keep moving along. Otherwise, you’re shooting in the dark for the MVP.
  • You’ve built up funds: If you’re contracting someone to build an MVP, it won’t be cheap (more on that below). Make sure you have money saved up or, better yet, have pre-sales or revenue before you move on to the next step.

Assuming you check all those boxes, it’s time to look into MVP.

How much would a Starbucks MVP cost? #

To make sure you’re not getting some super wide and unhelpful price range here (what good does $20k-$200k do you?), we need to look at:

  • What an MVP actually is
  • Upfront planning costs
  • What goes into designing + building the app
  • Ongoing costs to maintain the app

Defining an MVP, or what we call a Minimum Loveable Product #

Your MVP will be more robust than the prototype, but it should still be streamlined. The ideal MVP will be as simple as possible but well-designed enough to accommodate planned changes.

This is what we call a Minimum Loveable Product.

A Minimum Loveable Product is a complete story; it has a clear purpose and just the right set of features. It's not a barely functional piece of a bigger idea. Rather, it's an insanely valuable package of one or two core functionalities that let you start small, gather feedback, and build up to exactly what customers want.

Remember, Starbucks (and any other app on your phone) didn’t start with the version you see now.

the spotify playlists feature in the starbucks app

The Starbucks app didn’t launch with all the current bells and whistles. Many features, such as Starbucks playlists, came later.

In fact, the first public version of the Starbucks app was initially released as two apps back in 2009.

One app was called myStarbucks, and it functioned as a store locator with a few other features. The other app, Starbucks Card Mobile, was for managing Starbucks cards, loading money onto existing cards, and paying with a barcode. It debuted in Seattle and Silicon Valley first, then expanded to more Seattle stores, Target locations, NYC, and then thousands of other cities.

Fun fact: Starbucks contracted an external team to help develop the app for multiple platforms.

A Minimum Loveable Starbucks App will more closely resemble the older versions (a few core features) than the current version (everything plus a shot of caramel).

What we need now is a roadmap that outlines what we’re building. And the only way to get that is to do some planning.

Planning Costs: figuring out what to build and why #

Any agency worth its salt will go through some sort of “discovery” process with you. While this initially sounds fluffy to many founders, it’s a crucial part of the process.

Consider the alternative: you hire an agency, developer, or consultant who immediately dives into the project. One month down the road, you’re arguing over designs that need to be completely re-done. Turns out, they had no clue what the main point of the product is.

That kind of misalignment isn’t just frustrating, it’s expensive. It costs you more time building, more revisions, and more months not in the market. Upfront planning saves you sunk cost and a load of frustration.

For us, planning looks like a Roadmapping Session. It’s a full day strategy session with our team followed by intensive research on our end. At the end of that research, you receive a complete product roadmap, user flow diagrams, technical specs, and a fixed price and timeline we stick by.

How much for planning? If you do this by yourself (here’s a step-by-step how to), it’ll cost you a few days of time and energy. If you’d benefit from outside guidance or developer’s input, our Roadmapping Sessions cost $3,500.

Design & Build Costs #

After planning, your technical team will jump into design and development.

Design is where the team figures out how the app delivers value in the context of users, their goals, and your business. Among other things, this means designing how a customer moves through a product, learns to work with it, and uses it to acquire benefits.

For example, when we were thinking through a minimal Starbucks point system, we came up with the following screen sketches.

Sketch of the points system in the Starbucks app

Sketches are just one step of design, though. We’ve documented our design process in more detail elsewhere on the blog, but here’s a recap of how it works:

  • Sketches and concepts: These are the first steps of design. They look like quick, unpolished drawings that visualize an idea.
  • Wireframes: Think of these as blueprints for a house. They outline which rooms go where, but not what color the walls will be. Wireframes focus on layout and information placement.
  • Mockups: Very detailed displays that show, as closely as possible, what the app will look like once it’s developed.
  • Kritiques: Feedback sessions that give our designers important information on how to make a good design great.

Once the mockups are critiqued, improved, and approved by the founder, they go to development.

Development, like design, is complex. It includes:

  • Documentation: An outline of what the code will do. This paints a clear picture and roadmap for what needs to be developed.
  • Sandbox: Where frontend developers store all user interface components, so anyone on the team can access them. (This is like pulling out and preparing all the ingredients before making an elaborate meal.)
  • Setup: Setting up the environment we deploy the code to.
  • Automated tests: We write automated tests as we go and aim for at least 80% code coverage as we develop. Meaning, at least 80% of the code we write has to pass a “this is good to go” test.
  • Manual testing/QA: On top of automated tests, we do manual (by hand) and quality assurance testing. Like automated tests, these ensure the code is doing what it should, the way it should.
  • Deploying to production: When developers initially write code, they keep it on their computer—they’re the only ones who can access and edit it. (Similar to if you created a Microsoft Word document on your desktop.) Once developers polish their code, they move it somewhere that the app, or other people, can access. The activities that move the code are deployment.

For the Starbucks MVP, we determined we’d design and develop:

  • iOS and Android mobile app (React Native): While a web app is a legitimate option here, we opted for native apps. A native app ensures customers don’t have to rely on an internet connection to place their order when we add in mobile ordering features.
  • Authenticated customer sign up: An essential piece for tracking customer rewards. This includes authentication, forgot/reset password, minimal onboarding, and customer profiles.
  • Rewards program: A point system, reward levels, a QR code customers can scan in-stores, and news/updates around rewards.
  • Store locator: A map of locations, geolocations, and a store/address switcher.
  • Store menu: A menu with item details, categories, and search.

Version 2 (immediately following the MLP) would then include the ability to order ahead, checkout, and pay through the app. This would include other items like current and past orders and additional user settings.

Why not include mobile ordering in the MLP? Well, for starters, it significantly increases how complicated the app is. Meaning it also significantly increases the price and timeline. Instead of packing everything into the initial release, we opted to create a MLP that has value for customers (ability to earn rewards and find stores) and then continue adding value based on their feedback.

This approach is modeled by other successful food service giants, such a Chick-Fil-a. They launched their initial app in 2012, but didn’t begin piloting mobile orders until 2013. (Another reminder that every app evolves over time!)

Of course, it’s important to note some assumptions* we made here too:

  • In-store POS system: The in-store POS system would already be equipped to translate the QR code from the app into purchase points for the reward system. In other words, we’re assuming we wouldn’t need to touch, design, or code an in-store piece.
  • Push notifications: Customers would only receive push notifications on their birthday or when they reach a new rewards level. I.e. only when they’ve earned a reward.
  • Sign up: To register for the app, customers would enter their name, email address, birthdate (for rewards) and create a password.
  • Onboarding: The app would provide a Slack-like walkthrough (what you experience when you hop in new Slack workspace) that guides customers through three key pieces of the app: rewards, in-store locator, and mobile menu.
  • Store CMS: To create accurate in-store menus and location information, we’re assuming there’s an existing store CMS we can tap into.
  • Buffer: We add a buffer to every project to account for the unaccountable.

*Building an app, even a simple one like this, is incredibly complex. There are many more technical and nuanced assumptions we’ve made here, but we chose not to list those in the interest of reading time.

Okay, so how much for design and build?

  • The cost for the MLP design and build is: $70,000
  • The cost for version 2 (adding mobile ordering and related piece) is: $49,000
  • The combined cost for both the MLP and version 2 is: $119,000

👉 Keep in mind, when you pay for design and development, you’re not just paying for the features and the software. You’re also paying for the years of experience and expertise the team has developed and the proven process that delivers the quality level you want.

Maintenance costs #

Even the most flawless apps aren’t set-it-and-forget-it pieces of software. And they shouldn’t be either.

If you’re regularly interacting with customers and gathering feedback on your app, you’re going to collect a lot of new data. Some of that data will point to changes you need to make in the app: removing distractions, adding new features, optimizing a workflow, adding an integration with your customers’ favorite tool, and so on.

The old-school way of building and selling software was to spend months or years building one version, then sell it for people to install. Later, users would pay again for the new version with all of the bells and whistles.

But the rise of Software as a Service and the cloud has changed customers’ expectations. Now, customers pay a smaller monthly fee for software that’s constantly being improved. While we aren’t charging for our software, customers will expect it to get better over time, because that’s now what they’re used to.

Lots of agencies won’t talk about these costs upfront in an attempt to hide the true cost of building and running a software company.

Another reason you need to factor in maintenance costs? Software your app relies on will change. That calls for updates on your end too. Maybe Apple changes the way iOS works, or a payment processing system makes a big update.

To keep your app in prime condition, you’ll want access to someone who can make regular updates.

How much for maintenance? Maintenance costs vary. Our maintenance packages range from $3,750 to $11,250 per month, with the option to purchase in 25 hour or $3,750 increments.

Other costs that are difficult to quantify #

Building an app is a big financial, emotional and mental investment. We’ve covered the financial piece, but there are some other aspects we think you should know about. Building an app will also cost you:

  • Time: Prototyping your initial idea, interviewing as many customers as possible, promoting your product, making decisions, marketing your app before it’s released, and building processes all take an enormous amount of your time.
  • Energy: The same items that demand your time also demand your energy. And if you’re working a full-time job, not to mention raising a family, that time is already limited.
  • Relationships: When you’re redirecting so much time and energy to a project, your existing relationships can—and often do—suffer.
  • Health: While starting a product can certainly impact your physical health (loss of sleep, effects of stress) it mainly does a number on your mental and emotional health. You're making big decisions with high pressure and limited resources. This causes a lot of anxiety, stress, and emotional conflict for most founders.
  • Personal finance: Even if you raise VC money, you'll probably sink some of your finances into building a product. It's not uncommon for founders to go into debt.

We can’t put dollar signs on these because every founder values their time, health, energy, and relationships differently. But each of these impact how you function—both as a founder and person—so they’re important to consider.

Recap: total cost from prototype to maintained version 1 #

Okay, let’s bring this all home with some number crunching:

  • Prototype: $0 to $20/month
  • MVP Planning: $3,500
  • MVP Design & Build: $70,000
  • V2 Design & Build: $49,000
  • Maintenance: estimated $5,000 per month

This means, strictly in terms of cash, you’re looking at a minimum of $122,500 to go from prototype to launched version 2.

If you assume 3 months of paying for prototype tools and the first six months of maintenance, that cost rises to $152,560.

The bottom line? Developing an app is more complicated than it seems and costs add up quickly. If you’re a non-technical founder with a vetted idea, make sure you sign on with a partner you can trust!


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Laura Bosco is a writer and people person. She helps tech startups do tricky things, like explain who they are and what they're doing. Ping her on Twitter to say hi.