Blockchain is more than cryptocurrencies and NFTs. As a decentralized and distributed digital ledger technology that enables secure and transparent transactions, it is often used in supply chain management, healthcare, energy, education, and even retail.
As more and more organizations invest in building their own blockchain, they need to create comprehensive budgets before hiring service providers or starting the project.
This article goes into detail about what you need to consider when creating a budget for your blockchain development project.
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What Goes Into a Blockchain Development Budget?
Regardless of the scope of your blockchain project, your development team will have to go through several phases to bring your project from ideation to completion.
Whether you have an internal development team taking the lead on your blockchain project or you’re planning to outsource the bulk of your work to a blockchain development partner, you will need to account for the full scope of the project in your budget.
Here’s what you need to account for in your blockchain budget:
- Discovery: At the beginning of the project, the team will spend time identifying the primary goal of the project. This will help them align on goals and scope so they can create project requirements.
- Planning: Having determined the project requirements, they will determine what programming languages they will use, what integrations will be needed, whether they will use platforms like Ethereum, Hyperledger Fabric, or EOS. With this in mind, they will outline a plan to develop your custom blockchain solution.
- Designing: Developers design the architecture of the blockchain, including the components, modules, and interactions. They define the structure of the smart contracts or chaincode, which are self-executing contracts that store and manage data on the blockchain. Additionally, a big part of the success of a blockchain is the user interface. Blockchain developers will do more than ensure the configuration of the platform, but will also make sure that it will be easy to use.
- Development: With a solid plan in place, your team will begin to build your blockchain solution. Smart contracts or chaincode are written using programming
- Testing: Once development is complete, they will test the blockchain for functionality and security.
- Deployment & Maintenance: Once your blockchain solution has been deployed, your team will need to maintain it. This allows them to resolve issues, maintain security, and ensure reliability.
How To Create a Budget for Blockchain Budget
- Establish a cost limit
- Outline project requirements
- Determine whether you should hire internally or outsource
- Budget for surprise expenses
- Account for maintenance fees
Establish a Cost Limit
As with any project, it’s important that companies don’t go overboard on spending when it comes to blockchain development. Blockchain development isn’t a small project and can become a big expense.
To keep costs in check and make sure that your company can afford to take on a project of this size, company leaders should set a maximum budget for the project.
Keep in mind that most blockchain projects cost several tens of thousands of dollars. Be sure to go through your company’s expenses and profit statements to identify how much you can afford to invest into this project.
Learn more about how much a typical blockchain project costs in Clutch’s ‘Blockchain Development Pricing Guide.’
Outline Project Requirements
As discussed above, the complexity of the project will have a big impact on the overall cost. Projects that have multiple stakeholders, complex smart contracts, unique consensus mechanisms, and advanced APIs are likely to be more expensive.
Additionally, blockchain projects require a robust infrastructure that supports the network's functionality and performance. This includes both software and hardware components, such as the choice of blockchain platform, hosting and storage capabilities, and network connectivity. This will all need to be folded into your budget.
Outlining your project requirements ahead of time allows you to discuss your needs with developers more openly so you can get a more accurate estimate for your project.
Determine Whether you Should Hire Internally or Outsource
Blockchain development generally requires specific expertise. To build a blockchain solution, you will either need to hire an internal expert or outsource to a team.
Generally, companies choose to outsource blockchain development because it is more affordable than hiring full-time developers. Internal teams require salaries, benefits, professional development, and more that make it expensive to build blockchain solutions. Additionally, it is a lengthy process to hire internally, which means it will take longer to begin the project.
Outsourcing allows your company to connect with experts in blockchain technology who can deliver a top-of-the-line solution for your company.
Budget for Surprise Expenses
Projects rarely go off without a hitch. Keep in mind that even small problems will extend the project timeline and increase the overall cost of the project.
Rather than stressing out about costs when something comes up, add a buffer to your budget. By accounting for surprise expenses early on, you can ensure that the project stays on track.
Account for Maintenance Fees
Ongoing maintenance is extremely important to the success of your blockchain. By maintaining your platform regularly, you can secure your blockchain and prevent cyberattacks. Additionally, you can resolve bugs, add new features, and provide a better user experience.
However, you need to budget for maintenance fees. Your development team will likely offer a maintenance contract in which you will be able to retain their services for a flat monthly rate.
Blockchain Budget Template
Factors for Blockchain Development Cost
The cost of developing a blockchain varies widely. Various factors can impact the timeline of the project, needed team skills, and more. These factors include:
- Project complexity
- Team experience
- Blockchain platform
- Extent of ongoing maintenance
- Location of development team
When creating your budget, it’s important to accurately estimate how much the overall project will cost. Be sure to consider all of these factors as you plan your project.
Budget for Custom Blockchain Development to Keep Your Costs in Check
While blockchain development can be costly, budgeting properly can help you keep your project on track. Once you’ve outlined your project requirements and set a maximum budget for your project, you can break down how you will allocate spending.
Be sure to talk with your development team — especially if you’re planning to outsource your project — to make sure you’re all on the same page. They will be able to help you understand each aspect of the project and how much it will cost.
Finally, by accounting for several iterations, surprise expenses, and ongoing maintenance fees, you can minimize expenses. Download our custom blockchain development budget to get started on your own project.
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