If you’re looking to create a smart device for the consumer segment or enhance your corporate IT infrastructure with IoT capabilities, it’s only natural for you to wonder how much IoT solutions cost.
In this article, you’ll find a detailed overview of the key factors affecting IoT price, as well as ballpark estimates of several custom IoT systems from the ITRex portfolio. Let’s plunge right in — and start from the very basics.

Here’s what the majority of IoT cost estimates do not take into account

How much does the Internet of Things solutions cost?
Go on, type that phrase in the Google search bar! You’ll see dozens of articles featuring ambiguous cost estimates of mobile applications working in tandem with connected devices — and not a single word about the devices in question! Meanwhile, the Internet of Things term refers to cyber-physical systems where electronic and non-electronic objects collect environmental data using sensors and exchange it over a network. These networks are often wireless; companies implement wired IoT solutions in industrial settings and other environments with a high risk of electromagnetic interference.
IoT devices further relay the information to the cloud for analysis and visualize insights via a user interface — typically, a cloud dashboard or mobile application (although voice interfaces have also been trending up lately). In edge IoT deployments, devices possess enough computing power to process sensor data locally and orchestrate other IoT nodes.
Good old ITU-T Y.4000/Y.2060 recommendations document , which has been around for almost a decade, still provides the most accurate reference model for IoT products and is a must-read for all companies eyeing the Internet of Things market. As you can see from the scheme above, IoT systems operate at four different layers:
So when we talk about the Internet of Things cost, it is key to understand how much every one of these functional components is going to cost you.

That’s what a realistic IoT cost estimate may look like

Deciphering the cost of IoT devices
If you’re looking to create a custom IoT solution, there are two routes you can take: design a device from the ground up or enhance non-electronic/analog objects with sensors. How much does it cost to build custom IoT hardware? The price of building a custom device depends on the type, functionality, and complexity of your IoT solution and may amount to 70–80% of the total Internet of Things project costs. 
The custom hardware/firmware design process spans several stages:
Overall, connected devices spend anything between six months and two years in the development stages listed above. How much would it cost your company to build IoT hardware — given that you need to analyze technical requirements, prototype and test your idea, and manufacture devices en masse? 
The honest answer is, “It depends” :) 
A self-learning smart home system with facial recognition capabilities may cost up to $5 million (hardware and software costs included). The price of building a custom ECG tracker that analyzes the electrical signals of a human body and measures how well your heart works could reach The price of building a custom ECG tracker that analyzes the electrical signals of a human body and measures how well your heart works could reach $ 300,000 — but there are additional IoT development costs you should be aware of.
Hardware certification
Certification is often considered one of the major factors behind the cost of IoT hardware. Although the Internet of Things regulations differs from country to country, they usually encompass the following categories:
According to Entrepreneur, the price of a certificate for a simple electronic gadget (including devices that rely on wireless connectivity) starts from $10,000.
Estimating the cost of non-electronic IoT solutions
The Internet of Things concept revolves around continuous data acquisition and exchange — and you don’t always need an electronic device with custom-written embedded software running on it to collect sensor data and send it to a cloud-based or on-premises server. Here are several examples of non-electronic and pseudo-connected IoT devices that cost little to nothing:
While there are many ways to save on hardware components, cyber-physical systems still need a place to collect and process sensor data — and that’s where your IoT cost estimate might go awry.

Assessing IoT infrastructure costs

For your convenience, we’ve combined the network and service/application support components under a single moniker while providing approximate IoT cost estimates for each tier:

Hidden IoT infrastructure costs 

Many IoT solutions require a complex support system, which is also called “infrastructure.” For instance, your company specializes in predictive maintenance and sells transformers enhanced with smart sensors. You need a mobile app to generate alert notifications if sensors register abnormal behavior. Your IoT solution may also incorporate a web application for managing field technicians and ordering equipment parts that need replacement. To automate these processes, you have to contract equipment manufacturers, network providers, and maintenance, repair, and operations (MRO) companies — and integrate your custom software with their business apps, which is bound to incur additional IoT development costs. Another example is IoT-based remote patient monitoring systems, which (besides hardware, applications, and connectivity!) require a dedicated customer support team ready to help users whose condition is worsening.

Calculating the cost of IoT applications

How much does it cost to develop an IoT app? Just like with hardware, it depends on the size and complexity of your undertaking. These examples of IoT projects from the ITRex portfolio will give you an idea of what you should expect. 
IoT software projects and their cost estimates

How to reduce IoT development costs — and avoid failure

If you add up the costs of IoT components cited in the previous sections, you won’t arrive at a sum smaller than $50,000 thousand. That’s how much a minimum viable product (MVP) version of an IoT solution costs. Considering the fact 75% of IoT projects never materialize into market-ready products, this is a significant investment.
According to the Microsoft IoT Signals survey, some of the common reasons why IoT projects fail include technology roadblocks, insignificant budgets, and a lack of a clearly established use case.
Below you will find several tips that would help you sail through IoT development — and avoid making costly mistakes in the process.
That’s all for now. Drop ITRex team a line if you have any questions about IoT costs or need help building a connected solution.