How Much Equity (or Cash) Should You Give a Dev Studio for Your App?

The question shows up constantly on r/startups and r/Entrepreneur: “A dev studio wants equity in exchange for building my app. Is that normal? How much should I give?” It is one of the most misunderstood deals in early-stage startup life — and getting it wrong can haunt your cap table for years. This guide unpacks the equity vs cash app development studio deal from a founder’s perspective, with real numbers and a framework you can use before your next conversation.

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Why Studios Ask for Equity (and Why You Should Be Cautious)

A development studio asking for equity is not automatically a red flag. It can signal genuine belief in your idea. But it often signals something else: you cannot pay market rate, and the studio is compensating for risk.

Most founders underestimate what equity actually costs over time. A 10% stake that feels like “just a slice” today can be worth hundreds of thousands of dollars at a Series A or acquisition. Unlike a cash payment, equity does not disappear when the project ends.

Before agreeing to any equity deal, ask one simple question: would this studio build my app for cash if I had it? If yes, equity is a financing decision, not a partnership decision. Treat it that way.

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Cash vs Equity: What Each Structure Actually Looks Like

Pure cash engagement

This is the standard model. You pay for development services at a fixed project price or an hourly rate. You own 100% of the product. The studio has no ongoing interest in your business after the invoice is settled.

In 2026, realistic price ranges for iOS app development:

App type	Boutique studio	Freelance
Simple MVP	$5,000 – $15,000	$3,000 – $10,000
Standard feature app	$15,000 – $45,000	$10,000 – $30,000
Complex (AI / real-time)	$45,000 – $120,000+	rarely advisable

Hourly rates in 2026: large agencies charge $150–$250/hr; boutique studios like ours run $60–$120/hr; freelancers range from $20–$60/hr depending on experience and geography.

Cash is cleanest. If you can find the budget, it is almost always the right choice.

Equity-only or equity-heavy deal

Some studios will offer to build your app at zero or deeply discounted cash cost in exchange for a meaningful equity stake — typically 5–25% depending on the scope. This arrangement is sometimes called a “sweat equity” or “co-founder studio” model.

Be very careful here. Ask:

• Is the studio taking board seats or just economic rights?
• What happens to their equity if the project is abandoned or pivoted?
• Is there a vesting schedule, or does the studio receive equity upfront?
• What are the anti-dilution provisions?

A studio that takes equity and then delivers slow, low-quality work is extremely difficult to remove from your cap table after the fact.

Hybrid: reduced cash + small equity stake

This is the most common equity arrangement we see discussed in founder communities, and it can work — with the right guardrails. A typical structure might look like:

• You pay 60–80% of the standard cash rate
• The studio receives 2–8% equity, often on a vesting schedule tied to milestones
• Clear IP assignment: all code is owned by you from day one, regardless of equity status

The hybrid model makes sense when you cannot afford full cash rates but want a studio that stays invested in the outcome.

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How Much Equity Is “Fair”?

There is no universal number, but there are reasonable benchmarks:

• For a simple MVP (2–4 months, $5–15k value): anything above 3–5% is likely too high
• For a standard app (4–7 months, $15–45k value): 5–10% is common in hybrid deals
• For a complex platform (7–12+ months, $45–120k+ value): equity alone rarely covers the studio’s opportunity cost; expect a substantial cash component alongside any equity

A rough rule of thumb: equity should reflect the studio’s contribution to total company value at build time, not its hoped-for future value. If you are raising a $2M pre-seed, a $50k development project represents 2.5% of your raise. That is a ceiling, not a floor.

Also think in terms of dilution math. Give a studio 10% now, raise three rounds that each dilute you 20%, and that studio still holds a meaningful percentage of a much larger pie — without writing a check, taking customer risk, or spending sleepless nights on product.

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What a Good Equity Deal Must Include

If you decide an equity arrangement is the right path, insist on these protections:

1. Full IP assignment — All code, designs, and assets transfer to you immediately upon creation, not upon final payment
2. Milestone-based vesting — Equity should vest against delivery milestones, not on a time-only schedule
3. Clawback clause — If the studio fails to deliver, unvested equity is forfeited
4. No governance rights — A development studio should not have board seats or voting rights
5. Right of first refusal on additional work — Optional, but it gives the studio legitimate upside if your product grows
6. Termination provisions — Define clearly what happens to equity if the relationship ends early on either side

Have a startup lawyer review any equity term sheet before you sign. An hour of legal advice is far cheaper than unwinding a bad equity deal.

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Red Flags in an Equity Pitch

Watch for these warning signs when a studio proposes an equity deal:

• Equity demanded upfront, before any work — Legitimate studios earn equity through delivery
• Vague valuation language — “We’ll figure out the equity amount once we see how it goes” is not a deal structure
• No track record of shipped products — If the studio cannot point to live apps with real users, equity compensation amplifies your risk, not the studio’s
• Pressure to decide quickly — A genuine long-term partner will not rush you into a cap table decision

At Fera Tech, we have 12+ apps live on the App Store — including our own products Launchcast and Clove AI. Building our own products means we understand both sides: what it takes to ship and what is worth protecting on your cap table.

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When Equity Actually Makes Sense

There are scenarios where an equity deal is genuinely the right structure.

• You are pre-revenue, capital-constrained, and have validated demand
• The studio has domain expertise that makes them a genuine strategic partner
• The scope is large enough that the studio is effectively functioning as a co-founder
• Existing investors or advisors have signed off on the structure

Even then, keep equity below 10% for a pure development engagement and use the protections listed above. If the studio wants more than 10% for development work alone, you are in co-founder territory — a fundamentally different conversation.

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Common Questions

Can I give a studio equity instead of cash if I just don’t have the money?

Yes, but treat it like taking on a business partner, not paying a vendor. If the app succeeds, that equity will cost far more than the cash price would have. Consider alternatives first: pre-selling the app, a small friends-and-family raise, or scoping an MVP small enough to fund with cash.

What if the studio insists on equity and I don’t want to give it?

That is a valid dealbreaker. Many professional studios, including boutique shops, work purely on a cash basis. If a studio will not work without equity, it may be because they do not believe clients will pay their full cash rates — which itself tells you something.

Does Fera Tech take equity in client projects?

Our default model is cash-based. Our services are structured for founders who want a reliable partner without cap table complexity. If your situation is non-standard, reach out and let’s talk.

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Make the Right Call for Your Company

The equity vs cash question does not have one universal answer — but it does have a right process. Start with what a full cash engagement would cost, understand what you would be giving away long-term, and only consider equity when the numbers and relationship genuinely warrant it.

If you want a straight conversation about structure, scope, and cost, contact Fera Tech. We are happy to walk through your specific situation — no equity required just to have the call. Browse more guides on the blog for practical, numbers-grounded advice on building and funding your app.