How much does it cost to build a social networking platform from scratch?

Here’s how much (I think).

That’s the question an acquaintance asked me once. The question actually caught me off-guard because, I am used to people saying – “ooh”, “aah”, “That sounds so much fun”, and so on – when they here what I do both in my day-job and my moonlighting affairs. But when I was asked this question, my mind started swirling a bit (maybe because it was my second glass of wine at the alumni reunion… but whatever). Although I gave him some numbers that he ‘seemed’ to be convinced with, I thought about what would be a ballpark number of moolah one would need to build a Facebook or a Hi5.

So, I set forward to create a spreadsheet that will give an ‘indicative’ number for this. First, I listed down all the possible ‘feature sets’ or ‘story titles’ (depending on which development style you may want to follow). Then I started adding effort estimates for each of them completely based on my experience/gut-feel.

And then I started to think about outsourcing. Somewhere on Mashable I read about how programming skills are getting commoditized (is that the correct word?) and what matters is the main idea or concept. Now, if you’ve read my previous blog you would know what I am talking about here. So, if you want to just own the concept and you want to focus all your energy and resources in building a community on your platform, then outsourcing platform development would actually make sense. Now, there are various implications and factors that influence the decision of outsourcing your platform development – maybe I will save that topic for another post. But at a high-level, outsourcing can be of 2 types –

1. Complete (offshore) outsourcing of a custom built social networking platform

2. Using white-label, on-demand platform vendors to build and customize your community on top of it.

Both are completely different animals and need different set of skills and resources to manage them. So, just for the sake of discussion, let us focus on Option 1 – complete custom platform development.

In my spreadsheet, I started factoring on offshore costs from 2 theoretical locations. But the efforts involved in managing outsourced development is not the same as an on-premise engagement. Therefore, I added ‘Effort’ columns for outsourced work as well.

Taking all this into account, my “highly scientific” methodology of effort and cost estimation have led me to believe that a non-differentiated, plain-vanilla social networking/community platform can be developed well within a $100k budget. Of course, this can be made more cost-efficient by adding the offshore factor, which can bring the development costs to around the $50k mark.

Now, I am not sure how aggressive or pessimistic this estimation is. So, feel free to take a look at my spreadsheet and use it for your own planning needs (no copyrights whatsoever). And yes… If you feel that I may be way off mark here, I would love to hear about it. Let me know if you find something missing or if you think my estimates are too aggressive.