How much does IoT app development cost? 6 key factors to consider

Building a top-notch, state-of-the-art app is the best way to stand out in a crowded IoT market.

And with the number of connected IoT devices expected to reach 29.42 billion by 2030, this is only going to become more important.

But, you might ask, how much does all of this cost?

Well, you’re in the right place.

In this article, we’ll discuss how much IoT app development costs on average and the key factors influencing the cost.

Let’s dive in!

What is an IoT app and how does it work?

Let’s define the basics first – what exactly is an IoT app and how does it work?

An IoT app is a software application through which users interact with and control IoT devices.

IoT apps are a key part of the IoT triangle, along with cloud computing services and the IoT device itself.

source: Limmat

Your IoT app is the main point of contact between users and your IoT device.

On a more technical level, it’s a part of the application layer in a typical four-level IoT architecture:

source: ResearchGate

So, how does this work, exactly?

The IoT device has sensors and embedded software that allow it to communicate and share data with other systems.

This data is then transmitted through the network and middleware layers to your IoT app.

And crucially, this works in both directions, as both your app and device can receive and send data to each other.

Other than that, it’s designed and built just like any other app.

How much does IoT app development cost on average?

Estimating the cost of developing an IoT app can be tricky. 

Unfortunately, there’s no one-size-fits-all answer to this question and there are many variables that influence the final cost of development.

But, we can give general cost ranges based on the complexity of your IoT app:

• Basic IoT apps – These apps are typically designed to manage a single device or a small number of straightforward tasks, like turning on smart lights or adjusting a thermostat. Costs for these apps typically range from $30,000 to $50,000.
• Advanced IoT apps – If you’re building an app that connects to multiple devices or requires advanced features like real-time data analytics or geolocation, costs increase significantly. These apps generally fall within the $50,000 to $150,000 range.
• Complex IoT apps – Enterprise-level solutions or apps that integrate with a wide variety of devices or use advanced technologies like AI, can easily cost $200,000+ to build.

Also, keep in mind that this doesn’t include the cost of developing an IoT device, just the IoT app.

And other costs, like cloud hosting and data storage, will add recurring costs you’ll need to account for beyond just the cost of developing your app.

Next, we’ll break down the main cost factors influencing the cost of IoT app development.

6 key IoT app development cost factors

Here, we’ll look at the key IoT app development cost factors in more detail.

IoT device type

Not all IoT devices are created equal. 

Some are relatively simple, like smart light bulbs or temperature sensors, while others are far more complex, especially industrial IoT solutions.

For example, developing an app to control a smart thermostat like Nest is relatively straightforward. 

source: Pocket-lint

The device and app only need to monitor temperature and respond to user inputs, so they’re relatively simple and cheap to build. 

On the other hand, apps for industrial IoT solutions that connect heavy machinery and industrial equipment are much more expensive to build.

source: Sentech

These apps often need to have advanced functionalities like:

• Advanced monitoring systems
• Predictive maintenance 
• Secure communication protocols

And this will drive your costs up.

For example, devices that use common communication protocols, like Wi-Fi or Bluetooth, are generally cheaper to integrate.

But, devices that need more specialized communication protocols like Zigbee or LoRaWan, will be more difficult to integrate and take longer to build – and that will increase development costs.

In a nutshell, simpler devices lead to lower IoT app development costs, while complex, data-heavy devices will require a more significant investment. 

Development team size and location

The size and location of your development team will seriously impact your development budget.

Of course, having a skilled, well-balanced development team working on your IoT app is essential.

A larger team can work faster but increases your overall costs, while a smaller team is cheaper but will take longer to develop your app.

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If you have an experienced team with specialized skills, they will work faster and make fewer mistakes – but that level of expertise doesn’t come cheap.

According to Glassdoor, the average salary of a senior software engineer reached $214,000/year in 2024 while a mid-level engineer on average earns $147,000/year.

And these salaries, as well as other costs like employee benefits, quickly add up.

So, what other options do you have, if you’re on a tight budget?

The cheapest option is hiring a group of freelancers, but it’s also the riskiest.

And that’s why the most cost-effective option is outsourcing development to a dedicated team.

It’s the best of both worlds, since you’ll cut development costs without sacrificing quality.

And your cost savings can be substantial, largely due to lower labor costs. Here’s a comparison of the average hourly rates by role and region:

Average hourly development rates by role and region

Let’s say you’re a U.S.-based company and you outsource your IoT app’s development to Eastern Europe.

Your labor costs will be 2-3x lower and you’ll minimize (or completely eliminate) other costs like:

• Recruitment costs
• Onboarding costs
• Employee benefits
• Administrative costs

If you hire a company with the right expertise, you’ll also get a long-term development partner who won’t just build your app – they’ll help you grow it, too.

And you just can’t beat that.

IoT app type and features

The type of IoT app you’re building and its features will heavily influence the overall development cost. 

The first factor is your app’s platform, like:

• Android
• iOS
• Web 
• Cross-platform mobile
• Desktop 

Of course, if you target more than one platform, it will cost you more.

Even then, there are ways you can cut costs – building a cross-platform mobile app, for example, is much cheaper than building 2 native apps.

But, the features you want your app to have are even more important than the platform(s) you’re targeting.

Your app’s complexity determines the level of effort required for development, which directly impacts costs.

While basic functionality is often enough for simple consumer IoT apps, more sophisticated apps need advanced features that add complexity – and cost.

These can be features like:

• Real-time data processing
• Data analytics
• Automation and AI
• User authentication and security
• Third-party integrations

You also have a choice between developing a fully custom IoT app or using pre-built solutions. 

While a custom app gives you full control over features and functionality, it’s also more expensive.

Pre-built IoT platforms, like AWS IoT Core or Microsoft Azure IoT Hub, offer scalability and essential features out of the box.

And that’s a great way to cut both development time and costs.

Third-party integrations

Third-party integrations are essential to many IoT apps.

They improve their functionality by connecting the app with external services, platforms, or devices. 

These integrations allow your app to communicate with other systems, use external data, or even let you add new features without building them from scratch.

But, your team will need to build or integrate APIs to connect these services with your app.

source: Wallarm

And this will increase development complexity and cost.

The more integrations you need, the more time and resources your team will need to ensure everything works smoothly.

Some of the most common integrations for IoT apps include:

• Cloud platforms – Most IoT apps need a cloud platform to store and process data. Popular options include AWS, Microsoft Azure, and Google Cloud. Cloud services often come with ongoing costs for data storage, bandwidth, and processing.
• Voice assistants – Integration with voice assistants like Amazon Alexa, Google Assistant, or Siri is a popular option for consumer IoT devices. While voice assistant integration can greatly improve your app’s UX, it requires additional coding, API management, and rigorous testing to ensure compatibility.
• Payment gateways – If your IoT app includes e-commerce features or subscription models, integrating a payment gateway like Stripe, PayPal, or Square is essential. Integrating them into your app requires significant development effort and they also come with their own fees.
• Data analytics and AI platforms – IoT apps need to process and analyze large amounts of data, often in real time. Third-party analytics platforms, like Google Analytics and Watsonx, give you strong data analysis capabilities and AI-driven insights. Also, they can help you build advanced features like predictive maintenance, energy optimization, or personalized user experiences.

In short, each integration comes with a price tag.

They can increase both upfront development costs and ongoing expenses due to platform fees, API usage costs, and maintenance. 

So, you need to choose them carefully.

Security and compliance standards

Security and compliance are non-negotiable when it comes to IoT app development.

IoT devices and apps collect and transmit sensitive data, so they’re a prime target for cyberattacks – on average, there are 5,200 attacks on IoT devices each month with 7 million data records compromised every day.

They’re also uniquely vulnerable compared to standard apps.

source: Cardinal Peak

So, you need to invest in security from the start of development – it’s a necessary investment to protect both your users and business. 

But, this can drive costs up.

To build a truly secure app, you’ll need to add features like:

• End-to-end encryption – End-to-end encryption is an essential feature for IoT app security. With it, all of your data is encrypted as it travels between devices, cloud platforms, and the app which prevents unauthorized access.
• Authentication and authorization –  Secure authentication mechanisms, like multi-factor authentication (MFA) and biometrics, are crucial for preventing unauthorized access to IoT devices. They ensure that only the right users can control specific devices or access sensitive data.
• Secure communication protocols – IoT devices often communicate over networks that are not always secure, such as Wi-Fi or Bluetooth. Using secure communication protocols like TLS or DTLS ensures your data is encrypted during transmission.
• Firmware updates and patches – You need to regularly update your IoT device and app to address security vulnerabilities. Implementing an automatic update system or over-the-air (OTA) firmware updates increases development costs but will ensure your app’s security.

And while securing an IoT app isn’t cheap, the cost of neglecting security is far, far higher.

The average cost of a data breach reached $4.88 million in 2024 – and that’s just the financial cost.

You risk reputational damage, too – 60% of companies end up going out of business after suffering a data breach.

And that’s why you need to invest in it from the start.

Long-term maintenance and updates

Building an IoT app is not a one-time investment. 

IoT apps are part of a dynamic ecosystem and devices, networks, and software constantly evolve. 

So, you need to regularly update and maintain your app if you want to keep pace with the competition.

These long-term costs are often underestimated. Over your product’s lifetime, they add up to over 50% of the total cost of ownership (TCO).

source: LinkedIn

But, why is that the case?

That’s because maintenance and updates includes things like:

• Bug fixes and performance improvements – Like any app, IoT apps get bugs or performance issues after launch. You’ll need regular monitoring and updates to fix issues, optimize data processing, and ensure your app works smoothly.
• Device compatibility and firmware updates – Firmware updates for connected devices ensure seamless communication with your app. This is especially important for consumer IoT products like wearables or smart home systems, where compatibility with the latest devices is key for user retention.
• Scalability and infrastructure updates – As your IoT system grows, your infrastructure needs to scale accordingly. This includes upgrading cloud storage, optimizing server performance, and improving data processing algorithms to handle increased loads.
• Feature improvements –  User expectations constantly evolve, so to stay competitive you need to regularly add new features or improve existing ones. 

That’s a lot of work and the costs quickly add up.

Still, your maintenance costs will primarily depend on your app’s complexity.

But, a good rule of thumb is budgeting 15-25% of your initial development budget for annual maintenance.

So, if your IoT app cost $100,000 to build, you should budget $15,000 to $25,000 for maintenance every year.

IoT app development cost: FAQs

Need an IoT app development partner?

Do you have an IoT device but don’t have the in-house resources to build an app? Or do you want to lower development costs without sacrificing quality?

We’ve got you covered.

In the past 12+ years we’ve built a range of different IoT apps in industries ranging from healthcare to HVAC.

So, you can say we know a thing or two about building great IoT companion apps.

If you want to learn more, feel free to reach out and our team will get back to you as soon as they can to discuss your needs in more detail.