The ROI of Native vs. Hybrid App Development
At a time when cost savings and efficiency matter more than ever, hybrid app development rises to the occasion. See how a hybrid approach to app development can help you deliver 60 to 80% savings, and a 234% ROI compared to native.
All About Speed & Efficiency
There are many reasons to choose a hybrid approach like Ionic over the native toolkits provided by Apple and Google.
In fact, we wrote a whole ebook about it. Based on independent research and our own conversations with thousands of developers, we boiled it down to four key reasons to choose hybrid over native mobile app development:
- Faster Time-to-Market: Building for multiple platforms from a single codebase often makes delivering cross-platform apps 2-3x faster than native.
- Efficiency: Reduced development times, and the avoided costs of hiring and retaining specialized native talent, can save teams 60% or more compared to native.
- User Experience: With one codebase running on desktop, mobile, and web, hybrid apps provide better design and UX consistency across platforms.
- Skillset: Hybrid gives web developers and businesses with in-house web teams the tools to build powerful mobile apps using their existing skills and talent.
But one thing that the ebook didn’t address was how to quantify the financial benefits of hybrid over native.
In other words, what does all this mean for your bottom-line?
In this article, we’ll share a model for evaluating your alternatives and quantifying, in real numbers, the impact of your technology decisions.
If you’d like to skip to the end, you can download the original ROI model here and play around with real numbers from your project, to see how it works for your specific requirements.
Why ROI Matters
Too often, technology decisions come down to gut feel and the trading of assumptions and beliefs about the performance, features, and capabilities of each approach.
While these are important dimensions for decision making at the engineering level, IT & Business leaders are likely to have other considerations:
- How long will it take to develop the initial version of the project?
- What impact will that timeline have on revenue in Year 1?
- What are the expected initial costs?
- What are the ongoing maintenance costs?
- Do we have the talent to tackle the project in-house? If not, how long will it take to find the right people, and what are the associated costs?
- What is the economic impact (ROI, cash flow, net profit) of choosing approach X vs. Y?
If you’re a senior developer or IT leader charged with finding the right solution for a critical project, anticipating and modeling out the answers to these questions will increase your credibility and put you on much better footing when championing your cause.
This article and the model we share is designed to help you do just that.
3 Ways Hybrid Delivers a Higher ROI Than Native
1. Time is money
Many Ionic customer testimonials cite a 60 to 80 percent time savings, on average, from building with hybrid versus native.
For example, Aladin El Hedri, Founder & CEO at Siberian CMS, stated:
Aladin El Hedri, Founder & CEO at Siberian CMS
“Working with Ionic saved us around 60% in development time compared to native coding, and 80% savings on maintenance versus native coding.”
We’ve heard similar statements from many other Architects & IT Leaders, and certainly it makes sense. If you can reduce the scope of a project from two codebases to one, it’s logical that you would cut the time to develop and maintain an app in half, at the very least. If you want more reading on this, check out our FAQ guide featuring real-world examples from customers who have built with hybrid.
So how do these time savings translate into a higher return on investment?
Let’s start with revenue. Getting to market faster doesn’t just reduce your costs. It helps you earn more money in the first year of the project.
For example, let’s assume we’re working on an app that will generate $200,000 in incremental revenue in Year 1, or $3,486 per week. By cutting time-to-market in half, we would actually generate an incremental $46,154 in revenue in the first year.
This is a really important consideration if you’re comparing development approaches and thinking through the benefits of approach X vs. Y. Don’t just consider the labor cost savings. Make sure you’re factoring in the incremental revenue or economic benefit of the project that will be realized sooner by choosing the approach that helps you get to market faster.
Time & labor
The next, and more obvious factor, is labor costs savings. And not just in the initial development phase, but throughout the maintenance phases of the project as well.
An engineer making $200,000 per year will cost you $3,846 per week. Reducing a 24 week project to 12 weeks, and shaving off 6 weeks per year in maintenance time, will save you $115,385 over the course of three years. Sure, in most cases that person will still be on your payroll, but you can allocate their time and cost to other projects throughout the year.
2. Reduced hiring costs
According to the 2019 Stack Overflow Survey, less than 7% of all developers possessed the requisite skills to develop apps using the native toolkits and languages used by Apple and Google.
Given the scarcity of native mobile developers, it’s safe to assume that salaries for these types of developers will be on the higher end. And if you don’t already have a native developer in-house, you should assume an additional 20% in year 1, to account for expected hiring and onboarding costs.
In addition, you’ll have to account for more than one native developer, since many are specialized to just a single native platform, so you should probably double that to estimate the minimum team size you’ll need for a project.
That means you likely already have a team of web developers in-house. And if not, it should be easier to find a web developer to staff your project, when compared to the relatively scarce talent pool of native mobile developers.
3. Project feasibility
Given the lower cost profile of building with hybrid over native, it might just be the difference between whether a project gets the green light or not.
For example, let’s assume a native mobile project with the following inputs:
- Expected benefit: $200,000 per year / $3,846 per week
- Initial time-to-market: 24 weeks
- Active maintenance: 12 weeks per year
- Team: Two native engineers at $200,000 per year each
- Labor costs: $4,808 per week
In this example, our native project would generate $46,154 in profit over a three year period, or a 10% return on investment.
However, if we were to increase the maintenance time to just 15 weeks per year instead of 12 weeks, building with native would have cost us $23,077 per year — meaning the native approach would have generated a negative return on investment. Meaning the project probably wouldn’t have been approved from the beginning.
The Impact of Hybrid Development
Now let’s imagine we planned to tackle the same project using a hybrid approach, assuming a 50% reduction in initial time-to-market (from 24 weeks to 12 weeks) and a 50% reduction in ongoing maintenance costs (from 15 weeks per year to 7.5 weeks per year), as well as lower hiring costs because we’re using our in-house web developers instead of outside specialists.
- Expected benefit: $200,000 per year / $3,846 per week
- Initial time-to-market: 12 weeks
- Active maintenance: 7.5 weeks per year
- Team: Two in-house web developers at $125,000 per year each
- Labor costs: $4,808 per week
Sticking with a hybrid option like Ionic would have earned us a net profit of $387,981, or a 234% return on investment.
In this case, the project would not just be faster and less expensive with hybrid, it would only be viable with hybrid.
Modeling the ROI of Native vs. Hybrid App Development
How did we arrive at that number?
By using a basic ROI calculator that our team built to show how a given development approach could be compared with hybrid, using strictly financial terms. The calculator requires just a few basic inputs:
The first part of the model takes into account the expected benefits of the app. If you’re approaching the build phase of a project, it’s likely that you or your client organization (e.g. an internal business unit or external customer) has already identified the expected revenue or cost savings that they anticipate from the project in the first 2-3 years.
Note: If this is an internal app that can’t be tied directly to revenue, then you might calculate the cost savings that the app is expected to generate on a per annum basis.
Initial Time to Market
Consider how long you think it will take to build the app using native toolkits, keeping in mind that we’ll need to build the app fresh on each platform if we’re going to support both iOS and Android. Later, we can work backwards from there to estimate the time it would take to build the app using a hybrid approach.
Active Maintenance Time
Now think about how many weeks of active maintenance (i.e. bug fixes, UX improvements, feature additions, etc.) you expect to spend on the project, once the initial app is built.
Many teams aren’t just managing a single app. They’re balancing a portfolio of projects. Our most recent developer survey showed that 68 percent of enterprise teams are managing up to 5 apps at one time, and the rest (32 percent) are managing 6 or more apps at once. Thus, it’s likely that you won’t be spending all of your time maintaining just one app, so it’s safe to estimate some subset of the year that will be committed to working on the project.
Calculate the fully-burdened cost (including benefits, taxes, etc.) of each engineer on the team, and consider the total number of engineers that will work on the project. The calculator will take these as inputs to compute a weekly labor cost in dollars.
Time Savings of Native vs. Hybrid App Development
Lastly, consider the expected time savings of building with hybrid over native, in terms of initial time-to-market and ongoing maintenance time. Most customers cite a benefit of 60 to 80 percent, so anywhere around 50 percent is a safe bet. But if you want to be more conservative, you can enter something around 20 to 25 percent.
Once you've entered the above inputs, the calculator will then compute the expected benefit, costs, and ROI over a three year period.
Bringing it the Real World
If you’re not already factoring financial impact in your decision making, it’s good to bring this type of rigorous analysis to the table when your team is evaluating different development approaches.
Of course, the example we used for this analysis is all hypothetical. How can you make it real for your team or project?
You can start by requesting a free copy of the ROI calculator and playing with the inputs and calculations to come up with your own model. Hopefully, this gives you a basic starting point to go, but feel free to adjust the model based on your unique needs.
Secondly, schedule a free strategy session with one of our Ionic App Strategist, we can help walk you through the ROI model to find the best approach.
Ionic is a leader in enterprise app development. Thousands of enterprise customers use Ionic to build mission-critical apps for their customers, both external and internal.