The Cost of IoT: Ready-to-use vs. Custom IoT Solutions

If you are thinking about adopting an IoT solution for your business in 2026 but do not know where to start – we are here to debunk the myth of IoT complexity, give clear costs breakdown and help you navigate the world of IoT development services.

TL;DR

• IoT market scale: the global IoT market is forecast to surpass $1 trillion in 2026 (IDC), with McKinsey estimating $5.5–$12.6 trillion in total economic value enabled by 2030. Investment is led by AWS, Microsoft, Siemens, and PTC among others.
• SMB deployments & MVP ($42K-$520K): a TCO for a bundled SaaS solution for 100 devices runs $42,000-$178,000 over three years. A custom build at SMB scale starts at $70,000-$520,000 in year one – the right path once you exceed 500 devices or have requirements no platform can cover.
• Mid-market and enterprise ($600K-$10M+): mid-market deployments of 1,000+ devices typically land at $600,000-$3,000,000 over three years. Enterprise industrial solutions with complex integrations and compliance requirements can reach $10M+.
• Hidden costs add 40-60% on top: visible development (code, app, dashboards) typically covers only 30-40% of real project cost. Factor in security, maintenance (+15-20% a year), cloud metering overruns, and compliance.
• Euristiq IoT app development starts at $30,000/month: covering connectivity integration, cloud infrastructure, analytics, and the end-user application. Rates are based on Central and Eastern European pricing; AI-native delivery is built into the process.

“2026 update – AI has changed the economics of IoT development. A project that needed six specialists a couple of years ago now runs with two people and AI agents filling the gaps. The costs are lower, the timelines are shorter, and the barrier to entry has dropped significantly.”

– Ivan Muts, CEO of Euristiq

The state of IoT in 2026

In 2026 IoT is no longer an emerging technology – it’s infrastructure. Enterprise IoT spending reached $324 billion in 2025, with each year growing by 13%, with enterprise connections now accounting for 45% of all global IoT connections. And the global market is forecast to surpass $1 trillion in 2026, up from $805.7 billion in 2023.

Three trends are actively reshaping what IoT projects cost and what they can do.

AIoT: AI and IoT are merging – but slowly

The convergence of AI and IoT (often called AIoT) is the most significant cost and capability shift in the market right now. The AIoT market is projected to grow from $25.4 billion in 2025 to $81 billion by 2030.

Despite the hype, fewer than 1% of the world’s 21.1 billion IoT connections currently have a true edge AI component, making AIoT one of the fastest-growing investment areas in 2026.

5G: more connections, lower latency, new use cases

Cellular IoT connections reached approximately 4.5 billion at the end of 2025 and are predicted to approach 8 billion by 2031. 5G subscriptions surpassed 2.9 billion globally by end of 2025 – one in three mobile subscriptions worldwide.

For IoT specifically, 5G enables the low-latency, high-density connectivity that industrial and real-time applications need: smart factory floors, remote monitoring, autonomous systems where hundreds of sensors must respond in milliseconds. One practical cost note: 5G modules still carry a price premium over LTE-M and NB-IoT, but that gap is closing as volumes scale.

Edge computing: processing moves closer to the device

Instead of sending all device data to a central cloud for processing, edge computing handles it closer to where it’s generated – on the device itself or a nearby gateway. Global edge computing spending is expected to reach $380 billion by 2028, up from $261 billion in 2025.

For IoT projects, this matters because it directly changes the cost structure. Processing data locally means less bandwidth consumption, lower cloud bills, and systems that keep working in remote or low-connectivity environments. It’s also what makes real-time decision-making possible at scale, something a cloud-dependent architecture can’t deliver reliably.

Challenges of IoT project development: Layers of IoT solution

IoT solutions are considered complex because a whole lot of components need to fuse together to make them work. And as is the case with things that we do not understand – they tend to be expensive and we don’t even know where that cost comes from. Plus, IoT technology is evolving constantly, and to get the best deal for your money, you need to be in line with the latest trends. So if you are a company with no in-house tech expertise, you’ll probably experience a “Houston, we have a problem” moment here.

To demystify the myth of complexity, we will break down all the components of an IoT solution into 5 major layers – Hardware, Communication, Cloud Services, Software, and Security – and explain each of them and what role they play in an IoT solution. Also, we will suggest what can be done on each layer to cheapen the overall cost of IoT applications.

What influences calculating the cost
of IoT

Layers of an IoT solution

1. Hardware layer

Internet of Things is all about making “things” smart by connecting them to the Internet. Such connected devices – hardware equipped with sensors or actuators that are more common in IIoT solutions – gather data, transmit it and monitor parameters. Bear in mind that the number of sensors or devices in your IoT solution, their battery life, and their functionality, all influence the overall IoT
cost estimate.

If you have an understanding of what your hardware should do, what you would like to track, and what information to collect, consider prototyping on platforms such as Arduino or Raspberry Pi. We advise you not to invest in custom-made hardware from the beginning, but to test your idea first. To learn more about the available off-the-shelf hardware options, take a look at this guide from IBM.

In case you’re thinking about creating your hardware from scratch, consider trying out already available options at first, even if they don’t meet your needs at 100%. In most cases, it should be sufficient for the MVP. If you’d like to learn more on this topic, we recommend reading this article that explains the role of MVP in IoT software development.

2. Communication layer

The Communication layer can also be called the Network Connectivity layer. Communication is a defining characteristic of an IoT device as it is needed to connect your hardware to the IoT platform (a so-called middleware between your hardware and an application). Network connectivity can be wireless or wired.

Among wireless connectivity, we can differentiate cellular networks (LTE-M, NB-IoT, 3G, 5G), local area networks (Wi-Fi, Bluetooth), low power wide area networks (LoRaWAN, SigFox), and mesh protocols with short-range capacity (Zigbee, RFID). When choosing a network for your IoT solution, find out what is already available in your region. Who knows, maybe a good old WiFi connection will suffice in your case.

Connectivity expenses depend on the network of your choice and their pricing plans. For instance, the connectivity cost in a narrowband cellular network is calculated at $6 to $12 per device, and with LoRaWAN it is from $4 to $6.

And if you would like to know which wireless network connection option to choose, we have covered all four types of wireless IoT networks in full detail.

3. Cloud services

The next stage in your IoT development would be connecting to a cloud server. A third-party cloud server is more cost-effective than building a web server from scratch. Cloud supports IoT devices and applications and this is where the data is aggregated and stored.

It is also reasonable to choose not just a cloud provider, but an IoT Cloud Platform, as it can offer more benefits. A cloud platform not just establishes communication between the devices and application, stores and processes data, but also offers a set of ready-made features that make it faster and easier to develop and deploy IoT apps.

4. Software

A notion of software in an IoT solution can mean embedded software in sensors, IoT platform  and an IoT app for end-users. The latter presents the device data in the form of rich visuals and interactive dashboards and can be web, mobile or cross-platform applications. Embedded software is implemented in the devices and is intended for their proper functioning and control.

As for an end-user app, we will discuss all its aspects in terms of how much they influence the cost a little bit further in this article.

5. Security cross-layer

And last but not least important layer is security. The security of an IoT solution is the foundation of all its building blocks and should be considered at all stages of IoT design and development. Devices should be protected physically and from unauthorized use, and data should be encrypted so it cannot be exploited.

IoT solution, platform, and application: what’s the difference?

First, we need to get clear with terms. Some sources use the IoT solution, platform and application interchangeably, but it adds to the confusion. 

• An IoT solution is the end result: a specific implementation of IoT technology built to solve a business problem. Fleet tracking, predictive maintenance, smart energy monitoring – these are all IoT solutions. When a business commissions IoT development, this is what they’re buying.

• An IoT platform is the infrastructure layer underneath. It connects devices to the cloud, manages data flow, handles authentication, and provides developer tools for building on top of it. AWS IoT Core or Azure IoT Hub are platforms. In most cases, businesses don’t build a platform from scratch – they choose an existing one and build their solution on top of it. Platform licensing fees are one of the most commonly underestimated ongoing costs in IoT projects, and we discuss it below.

• An IoT application is the user-facing layer: the mobile app, web dashboard, or control interface that lets people actually interact with the data and devices. It’s what a warehouse manager opens to check sensor readings, or what a technician uses to configure hardware in the field.

In practice: your business needs an IoT solution, built on an IoT platform, accessed through an IoT application.

Understand what is needed for your IoT solution: Requirements engineering

The next step in figuring out the cost of your entire IoT solution is to define the requirements.

To determine whether you have the necessary technical expertise in-house to create a solution, begin with going through all 5 layers described in the chapter above. Ask yourself a few basic questions to elicit the exact requirements and to find out what is exactly needed for your IoT solution:

• How do I intend to collect the data?
• What data should be collected?
• How should the data be analyzed to generate strategic insights?
• What systems should be connected?
• What services do I need to offer to end-users?

When you’ve defined how much data will be collected, in which form, and how fast, you can determine which kind of database and storage option is needed for your IoT solution. Then you need to decide which components of the solution you would like to build from scratch and which to buy as a ready-to-use solution.

If you are just starting out in the world of IoT solutions, it might be reasonable to choose as many out-of-the-box components as possible. They will help you to prove your concept (or not) and save you lots of time and money.

IoT-based Smart Office Solutions

Efficient workspace management and meeting room utilization

From Outdated to Precision Farming

Seamless modernization of an application for managing connected devices

IoT Device Management App for Field Workers

Streamlining configuration management in IoT ecosystem with mobile app

Ready-to-use IoT platforms: Vendor evaluations

After assessing the engineering requirements for your IoT system, decide which parts should be developed from scratch. A lot of existing solutions can cover a lot of services, like storage, advanced analytics, device management, adaptable modules, drivers, and source libraries that reduce development and testing time, and even the development environments with SDKs for creating apps/services. Selecting the IoT platform vendor that offers the most components for your solution will take a lot of things off your mind.

But those are not the only benefits that “out-of-the-box” IoT platforms offer. By integrating one of the IoT platforms, you can access readily available partner networks, secure development lifecycle, ability to scale with ease and achieve a quicker time-to-market.

Finding the best IoT Cloud Platform among 426 vendors on the market is no mean feat. Pay your attention to the components they offer and, of course, the cost of implementation.

n the table below we collected a brief comparison of IoT platform pricing comparison that can guide you in your choice:

Note: Google IoT Core, IBM Watson IoT, Salesforce IoT Explorer, and Cisco IoT Cloud Connect have all been shut down or deprecated. If your current IoT platform is among them, AWS IoT Core and Azure IoT Hub are the most common migration paths. More on this in our IoT cloud platforms guide.

Although we are strong advocates of simplifying the solution development process – especially if it’s for an MVP – in any way you can, we cannot omit to mention that in some cases companies opt for building everything from scratch. For instance, companies that have strong technical support in-house may find that the operational expenses on out-of-the-box solutions exceed what they can do on their own.

Build vs. buy: when does custom development make sense?

After looking at the platform options above, a natural question comes up: at what point does building your own IoT solution actually make more financial sense than subscribing to one?

The honest answer is: less often than you might think – at least early on.

Off-the-shelf IoT platforms cover roughly 80% of real-world IoT requirements. For most companies at the start of their IoT journey, a bundled platform will get you to market faster and at a lower upfront cost than a custom build. Below 500 devices, custom development almost never wins on cost alone.

The economics shift once you cross certain thresholds. If your per-device SaaS fee exceeds $20-25/month and you’re managing 500+ devices, your 3-year platform cost is heading toward $360,000 – and that’s before the 36-month prepaid contracts that dominant vendors typically require. At that point, a custom build starts to make more sense.

When custom development makes sense

• You’re managing 500+ devices and per-device SaaS fees make the 3-year cost prohibitive
• Your industry has strict data compliance requirements that forbid third-party hosted platforms
• You’ve outgrown your current platform and switching will cost more
• Your sensing or analytics requirements aren’t served by any available platform
• IoT is a core part of your product, not a peripheral feature – and long-term ownership of that infrastructure matters strategically

When it doesn’t

• You’re at MVP or PoC stage – a platform gets you validated feedback faster
• Your device count is below 500 and per-device costs are reasonable
• Your team has no prior IoT development experience

One cost that’s easy to underestimate in both scenarios: annual maintenance. Custom builds carry a 15-20% yearly maintenance cost on top of initial development. A $200,000 build means $30,000-$40,000 per year, and it adds up to more than the original investment by the end of year six. That number should be included in any honest build-vs-buy calculation.

If you’re not sure which path fits your situation, that’s exactly what our Discovery phase is designed to answer – before you make any financial commitments. 

What influences the total cost of your IoT solution?

Several factors shape how much your IoT project will cost, excluding hardware – and some of the most impactful ones are easy to overlook when planning. 

Here’s what to take into account.

Application complexity

The end-user app is often where IoT budget surprises hide. The complexity of the IoT app and its type is in direct correlation to the development cost. 

Key cost drivers:

• Features scope – define core features upfront and postpone the development of the  non-essential ones to the later releases
• UX/UI complexity – a clean, intuitive interface is something worth investing in because it directly affects user adoption and ultimate solution success
• Target app platform – web, mobile, or desktop IoT app each have different development costs
• OS and API integrations – launching on one mobile OS first (iOS or Android) is reasonable; add the second if there is a demand for it

Security

Security isn’t a layer you omit when rushing to market – it runs across every component of an IoT solution: hardware, network, cloud, and application. Cutting corners here creates expensive problems later.

What good IoT security looks like in practice:

• Use cross-stack, standards-based security approach
• Implement secure access controls at every entry point
• Establish one-way network connections for devices where possible
• Host on a platform with built-in security features
• Use encrypted communication protocols 
• Spread end-user awareness

Ensure adequate IoT security is considered at all stages of the development process. Even with an MVP, data integrity and security should remain non-negotiable.

Interoperability

Building on a standardized ecosystem, relevant for your case, saves significant time and money – both upfront and in ongoing maintenance. Open-source messaging protocols ensure your devices, platform, and application can communicate reliably.

Most popular protocols available to know by layer:

• Physical: Bluetooth, Wi-Fi, Cellular, LPWAN variants, Ethernet
• Network: IPv6, Modbus, Profibus, OPC-UA with TLS
• Application: MQTT, AMQP, CoAP, RESTful HTTP, DDS

Scalability

When building an IoT system from scratch, you should plan with future integrations and scalability in mind. Retrofitting scalability on a 10,000-device system that was designed for 100 can cost much more than the original build. 

Adopting a microservices approach would solve the problem of scalability early on. This modular approach is about building many smaller services that are loosely coupled, independently deployable, and are more easily manageable. Also, don’t forget to consider the number and complexity of IoT app features, as they might influence the development cost.

How to calculate total cost of ownership for IoT?

Time to get brutally honest – there is no single number here. With IoT, when too many components are at play, the price can fluctuate depending on your requirements and expectations.

One thing worth knowing upfront: in our experience, companies underestimate IoT project costs by 40-60% on average. The reason is that visible development – code, app, dashboards – typically accounts for only 30-40% of actual total cost. The rest hides in integration, security, firmware, hardware certification, and ongoing maintenance.

So let’s wrap it in some real numbers. We have analyzed 2024-2026 market pricing for 100 devices at SMB scale and 1,000 devices at mid-market scale to give you a clear picture of what to expect.

If you’re SMB or a startup operating with a scale of 50-1,000 devices, you’re essentially choosing between two paths – a bundled SaaS platform or a custom build.

A bundled SaaS platform (hardware, connectivity, cloud, and app priced per device) typically rounds up at a 3-year total of $42,000 – $178,000 for 100 devices – fast to start, but terms of contract need to be watched carefully, as lots of vendors often require 36-month prepaid commitments.

A custom build makes sense once you exceed 500+ devices or have requirements no platform can cover, and starts at $70,000-$520,000 for the first year, depending on hardware complexity and whether regulatory certifications apply.

At mid-market scale (1,000+ devices), the cost structure changes. Implementation and integration become the dominant expense – doubling or tripling the software license cost for the first alone. A realistic 3-year total for a cloud platform build at this scale reaches somewhere between $600,000 and $3,000,000. And don’t forget annual maintenance: it is roughly 15–20% of your initial development cost, every year. On a $200,000 project, that amounts to more than the original budget by year five.

Like with overall IoT development, the cost also depends on whether you build in-house or bring in a development partner. With a team extension model, you pay an hourly rate per specialist. With end-to-end development, the full solution cost is estimated upfront. At Euristiq, we use feature-based cost estimation – which gives you a clearer picture of the full investment before any commitments are made.

The table below maps out realistic costs across four common deployment paths:

How AI reduces IoT costs

AI changes the cost structure of an IoT project at two levels: what it costs to run, and what it costs to build.

Running costs

At the connectivity layer happen the most immediate savings. Rather than streaming raw data continuously from every device to the cloud, AI-driven edge models filter and compress data before it leaves the device – sending only what’s relevant. This alone can reduce bandwidth consumption by up to 90%.

At the maintenance layer, AI-powered predictive maintenance reduces servicing costs by 18–25% compared to conventional scheduled maintenance. Instead of replacing components on a fixed calendar, the system monitors actual equipment condition and flags issues before they become failures.

At the analytics layer, AI models trained on data from one facility or asset type can be deployed across hundreds of similar ones without rebuilding from scratch. AI enables quick scaling instead of required bespoke engineering work at every deployment.

Development costs

The shift happened to the traditional IoT development team as well – a specialist squad of six to eight people, each owning a lane with handoffs between them – is giving way to a smaller team of expert generalists working alongside AI agents that fill the gaps. Two or three people with deep expertise in the right areas, augmented by agents handling engineering, data, and QA tasks, can now orchestrate a full workflow end-to-end. It’s one of the reasons the price tiers in the next section look the way they do.

So unless you have solid IoT expertise in-house, the best way to arrive at a realistic number is to partner with an experienced team – and ask for an estimate that covers the full picture, and the AI-boosted development as well.

How much does it cost to develop an IoT application with Euristiq?

Nota bene: Euristiq covers the software layers of your IoT product – connectivity integration, cloud infrastructure, analytics, and the end-user application. We don’t manufacture or install physical sensors, but if you have hardware sorted or are partnering with a hardware vendor, we take it from there and build everything on top. Our rates are based on Central and Eastern European market pricing ($30-60/hr), and as an AI-native company, we develop with AI built into the process – which is part of how we deliver enterprise-grade IoT at these price points.

Cost depends on how your solution correlates in terms of complexity.

Small IoT app/MVP – from $30,000/month
Best for single-device management or a focused use case: tracking data from one device type, building a connected product’s first application, or creating a dashboard for a limited sensor set. Clear scope, limited integrations.

Medium IoT app – from $60,000/month
For solutions connecting multiple device types, processing real-time data from a larger device fleet, or requiring integration with existing systems – ERPs, third-party APIs, back-office tools. The right fit for a concept that’s been validated and is ready to scale.

Large IoT solution – from $90,000/month
Multi-system or high-load deployments with advanced capabilities: predictive analytics, AI-driven monitoring, complex integrations across multiple geographies or business units. If IoT is a core part of your operations rather than a standalone product, this is what you can expect regarding the costs.

IoT development costs tiers at Euristiq:

Bear in mind these are monthly development rates – the total investment depends on scope and timeline, which is exactly what the Discovery phase we offer at the beginning defines. It’s how we move from “I have an IoT idea” to a feature-based cost estimate and a concrete roadmap, before any development begins.

Hidden IoT development costs and how to avoid them

In this chapter we would like to discuss the less obvious factors that influence the overall IoT project development cost and how to prevent them.

Scaling up

IoT system scalability is something that is often overlooked at the initial stages of the development process in order to save costs. But after the trials, if the system is scaled up from hundreds of devices to hundreds of thousands and it needs to handle different types of data and tasks without losing quality or speed, the costs can soar sky-high.

As we have mentioned earlier, we recommend designing for scale from the start. Your system should be capable of handling an increase in features, users, and numbers of connected devices with great performance. And if you need another argument, the research by McKinsey shows that IoT offers significant economic value potential which can be captured by those companies that have achieved scale.

Annual maintenance

The cost of building an IoT solution and the cost of running it are two very different numbers. Maintenance, monitoring, security updates, and incremental improvements typically amount to 15-20% of the initial development cost every year. On a $200,000 project, that’s up to $40,000 annually from year two onwards. This number should be noted from the start – not be a surprise when the project moves into production.

Security and compliance

IoT solutions handling sensitive data or operating in regulated industries carry additional costs that are easy to underestimate. Implementing encryption, secure communication protocols, and access controls typically adds 15-25% on top of the development budget – and that’s before factoring in compliance requirements like GDPR for EU deployments or HIPAA for healthcare IoT in the US.

Compliance means additional development time, documentation, and testing, plus regular security audits to maintain system integrity over time. The earlier these requirements are factored in, the less they cost.

Changes to the scope

Insufficient planning may result in redesigning and making U-turns amidst the development process and it will not come unnoticed in your invoice. Unfortunately, such situations happen more often than not and it is frustrating for all parties involved – for the customer and for the development team. To avoid such pitfalls, we advise following the development best practices and starting the whole process with requirements elaboration and composing the SRS document.

At Euristiq, we offer our clients to start cooperation with the Discovery phase, during which we conduct workshops and interviews to specify all the requirements, understand the project scope and technical limitations. The main goal of Discovery is to get on the same page with our clients and elicit Software Requirements Specification, project roadmap with the detailed timeline, and feature-based cost estimate.

Depending on the complexity, the Discovery phase may cost around $5,000-15,000 and take up to three weeks, but it is a small price compared to prolonged development with lots of changes on the way or even a complete abandoning of an entire project halfway through.

Of course, there are cases when not everything can be 100% predicted beforehand. If our clients would like to suggest changes when the development of their solution is in full throttle, they can do that via our Change Management Process. Then we recalculate how the changes will impact the budget and time of the development and present it to the client for approval.

Cloud metering

And last, but not least worth mentioning is cloud pricing. In IoT it has a way of surprising even experienced teams. AWS IoT Core, for example, bills per 5KB message chunk rather than per message – which can push real costs 15-40% above headline pricing once devices start transmitting at scale. The same pattern applies to data storage and analytics computation as the number of devices grows. The fix is simple: check your actual data profile – message frequency, payload size, device count – through the provider’s pricing calculator before committing to an architecture.

Summing it up or How to start your own IoT project

Combining the physical and digital worlds, IoT continues to drive the transformation of businesses and the economy. Getting on board with the latest technological advancements will yield great results for your business if you follow the rules.

• Rule no.1 – Don’t rush into the IoT solution development headlong.
• Rule no. 2 – Assess your idea from the perspective of IoT solution components.
• Rule no. 3 – Ask the right questions.
• Rule no. 4 – Join forces with software development professionals.

Entrust your IoT solution to the hands of professionals who have handled the matter before. We can help you manage risks and get your product to market faster than the industry average. Contact us for a consultation or if you need support.

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