Software Development Cost: An In-Depth Pricing Guide for Founders & Tech Executives

Introduction:

Planning to create software for your firm and wondering how much can a Software Development Cost? Well, you are not the only tech executive or founder with this question. The competition level is rising and every business is now developing custom software solutions to attract more customers. 

Custom software reflects your brand and your commitment towards customer satisfaction. However, if you are thinking about it, you should also know about the custom Software Development Cost as it can be a major factor in unlocking success in your digital innovation. 

Apart from understanding the development cost, it is also crucial to know how you can keep the cost low. These are the things that you will get to know in this detailed article. So, let’s get started with this. 

Some Interesting Facts Related to Software Development Costs

A typical software development task can take around 4.5 months and may cost $36,000.

• Around 38 percent of IT companies charge $40,000 to $60,000 to create sophisticated software. 
• The costs for creating a custom eCommerce software from scratch generally start at $50,000 and based on the complexity, it can go up to $100,000 and more. 
• As per a study, more than 41.81 percent of participating companies witnessed better results by outsourcing software development services. 

What Are the Average Cost of Software Development?

While talking about Software Development Pricing, you should keep in mind that there is no such definite way to evaluate the cost. Every software has some unique requirements and the cost will vary greatly. 

We will discuss those factors in detail later in this article. But for now, we can break down the cost in the following manners: 

• A software with basic complexity: $10,000-$40,000
• A software with average complexity: $45,000-$60,000
• Software with advanced complexity: $75,000-$180,000

To provide you with a clear understanding of how much does it cost to develop software, we have outlined some of the major development costs below. Let’s have a look. 

Types of Software Development Cost

Direct Costs 

• Cost Of Hiring A Development Team

This cost will differ based on the type of development team you wish to hire. Here, you need to select the most beneficial and effective option to create your desired software under your budget. Hiring a local development team may cost you around $200,000. 

A freelance developer may charge you $150,000. With an offshore development team, you may need to spend around $100,000. Consider your budget, the choose the best option for you. 

• Cost Of Hardware And Software 

This is the cost of technologies that will be used in your software development. While software can be created using a single API, others may require multiple programming languages. Well, this greatly correlates with your project’s complexity. 

If you want to add more advanced features, then you will have to use more sophisticated technologies and that can increase your software development estimate. 

• Licensing Fees 

From developing to using software, all things need a valid license. Licenses are quite important as they create a legal framework for software usage and between different parties, like providers, software developers and users.

The cost of licensing will vary based on the complexity of your software, support and maintenance, license type and more. In general, drafting an agreement for a software license may cost you around $ 900 and filing the agreement may cost $800 to $1000. 

• Training Expenses    

While evaluating How Much Does Software Development Cost, you should also consider the training expenses related to software. As you will be implementing new software, you will have to spend some money on user training.  You may need to spend on creating user training manuals, customer support teams, arranging workshops, etc. All these factors can help to increase the software’s full potential and you may also get fewer support calls in the future. 

 Indirect Costs

• Project Management

Project management is a crucial element of every software development project as it can help you ensure your project attains the required quality through a perfect balance between planning, organizing and supervising the execution of the development project. So, this is something unavoidable. You may need to pay around 3 to 5 percent of your total development budget for this. 

• Quality Assurance and Testing

Proper software testing ensures that you have flawless software for your customers. However, from initial testing to translation accuracy and assessment of user experience, all aspects of software testing have a price tag. In general, the cost of software testing accounts for around 15 to 20 percent of the project budget. 

• Documentation   

Your development budget must include the cost of software documentation which is generally created by software engineers or developers. Documentations offer important information about the development and the product to support the maintenance. 

You may need to spend on creating internal and external software documentation like end-user documentation, administrative documentation and more. In today’s tech industry, the cost of the production as well as maintenance of technical documentation can represent around 5 to 10 percent of the total budget. 

• Communication and Collaboration Tools

Whether you create an in-house team for software development or outsource the task, you may need to use different collaboration and communication tools that will increase the development costs. While you can use some free collaboration tools, but in some cases, you may need to go for premium software to get more features that can increase your team’s productivity and help in task management. So, don’t forget to include this in your development budget. 

Hidden Costs

• Maintenance And Updates

Software development is a continuous process. Even if you have launched the software, it is possible to integrate new features to boost user engagement. Besides, you also have to keep updated the software to boost performance and fix bugs.  So, you can’t avoid the costs of software updates and maintenance that include the cost of web hosting, and support from DevOps, backend experts and frontend developers. 

• Integration    

You all know that every business is unique. Customizing software to successfully meet your unique needs often leads to additional expenses. Well, this is something that you can’t avoid. After all, you will have to ensure maximum user satisfaction for your new software. So, consider this cost while calculating the development cost. 

• Security Measures

Your Cost To Develop Software must cover the cost of data security. Digital threats are emerging constantly and it has become crucial to integrate advanced privacy and security features in the software to keep your users’ data secure and build a solid trust among your users. So, consider the cost of security audits, integrating encryption, various authentication methods and more.

Factors That Can Affect Software Development Cost

#1. Complexity of The Project

The complexity of the software that you want to develop will affect your Software Development Budget. If the software is complex, it will require more testing, complex coding and programming. This will increase your development cost. Besides, developers will also charge more for complex algorithms and coding. So, try to reduce the features you want to avoid, especially those unnecessary features and keep the software as simple as possible. 

#2. Expertise and Skills of Developers

Understanding the complexity of How to calculate software development cost takes much more than just technical expertise. It also requires partnering with developers with considerable technical acumen and industry insight. With their expertise, you will come up with more informed decisions. However highly experienced and skilled developers generally ask for a higher rate. However, with them, you can expect to get high-quality results.  They can also complete the project quickly under your budget.

#3. Software Deployment Platforms

The costs of development will also vary based on the deployment platform as each form comes with its own unique specifications. For example, Android has a greater number of users and devices compared to iOS. That’s why developing software for the Android pl atform can be more expensive. If you want to ensure your app or software runs perfectly on all major platforms like iOS, Linux, Windows or Android, then you will have to spend more. 

#4. Development Methodology

Speaking about development methodologies, you may want to go for agile development or a fixed-free model. Under the fixed-free model, the client and development company agree on a fixed budget. However, this may lead to low-quality results as there will be no scope for any changes during the development process. In the agile model, your project will be carried out based on an iterative development process and it also focuses on frequent feedback. That means you will have better control over cost. Besides, it allows you to create software with future requirements and scalability in mind. 

#5. Urgency and Timeframe

When dealing with a tight deadline or quick development schedule, your project may require extra measures to successfully meet the urgency. This may involve increasing your team size, overtime work or using extra resources. All these things will affect the overall cost of the development project. 

#6. Integration with Your External or Existing Systems

Most software programs require integration with different third-party, external systems, like maps, payment gateways, CRM or ERP. While some integrations are easy, others can be time-consuming and complex. Such types of integration can increase the development costs. 

#7. Data Migration 

Remember that the cost of your development project will also increase with the database migration. When conducting a database migration, you need to consider tasks like analysis, data conversion, validation, security and more. Besides, you also need to hire a development team to deal with these things. The combination of these factors increases the overall cost of software development.  

#8. MVP Requirements

The MVP- Minimum Viable Product is a great way to test the ideas before the launch of the product. The money and time spent in MVP can cover around 20 to 40 percent of your total budget, but this is worth it as the feedback you get from early adopters will help you a lot in fine-tuning the product. You can outsource MVP development to save money. Brands like Slack, Groove and WhatsApp also outsourced their MVPs. 

4 Ways to Reduce Software Development Cost

• xEmbrace open-source software

While thinking about the ways to reduce the development cost, you should consider this point. Instead of opting for proprietary languages such as Java, you can go for open-source technologies like Ruby and Python. Besides, open-source software programs are available for free of cost and you don’t need to spend on getting licenses. Besides, as your developers get access to pre-built and quality codes, the development process will be faster, lowering the cost. 

• Minimize third-party integrations

While using third-party integrations can help you add more features to your software, they can also make you spend more money. So, try to reduce the number of third-party integrations you are using. Only choose the integration that is useful for your software to keep your resource utilization low. If you need any help to understand what types of features will work for your project, you can hire software developers. 

• Implement Agile project management

Well, agile methodology is not a cost-cutting technique or a magic pill. It works like an insurance policy and protects you from changing markets. When you design your project based on agile methodology, you can ensure your project’s flexibility. You can easily keep an eye on the changing circumstances and make the required changes in your project to satisfy the target audience’s requirements. Besides, this methodology focuses on the important things to cover while eliminating unnecessary tasks. This, in turn, helps you avoid waste and lower costs. 

• Simplify the design

If you are worried about the cost, then try to keep the design of your software project simple. A complex design will require you to use more complex coding and for that, you also need to use more advanced programming languages. This can cost you more. Instead of creating a visual impact, try to focus on the usability of your software. Besides, a user-friendly and simple design will also enhance the UX of your software. 

How to Determine Software Development Cost?

• Select The Right Software

The first thing that you need to consider while determining the cost of software development is selecting the right software. For this, you need to consider which platform will be the best for your software, the developmental approach, software’s scalability and scope. This decision will play an important role in considering the rest of the important factors. 

• Hire A Suitable Development Team

Hire a software development team that is suitable for your requirements and business. Here, you need to keep in mind that a large development team can cost more compared to hiring a solo software developer. However, if you are creating custom software for your large-scale business, then you will need an experienced and big team. If it is simple software then a freelancer or student developer can be a cost-effective option for you. 

• Consider the Risk Factors

When developing custom software, it is necessary to consider the risks that you may face during future development. For this, you can take the help of the CTO or Chief Technology Officer. The technological landscape is changing every day and it is important to find a perfect niche as soon as possible. An experienced CTO can forecast possible challenges and help you in the scalability of your software. To lower the cost, you can also outsource CTO service. 

• Offshore Software Developers

If you are concerned about the cost as well as responsibilities, then working with offshore developers can be a good idea. This way, you can ensure that you have the best experts in the industry working on your project at a competitive pricing model.

• In-House Developers

Creating an in-house development team can be an ideal option if you need your team to work closely with you. However, setting up a separate team in your company requires effort and of course, a lot of money.  That’s why small enterprises or mid-range businesses don’t have an in-house development team. 

How Can Manektech Help You with Custom Software Development Cost Estimation?

Navigating the complex landscape of the cost of software development can be very daunting, as there are many factors that can easily influence the final price tag. However, getting an accurate cost estimate for your software development can help you a lot here. This is where you can count on Uptech. As a leading custom software development company, Manektech follow a systematic process when it comes to providing our clients with a cost estimate. Our cost estimation process includes the following steps: 

• Send Us the Request

The process begins as soon as we get your request for cost estimation of software development. Just fill up the online form available on our website to raise a request with us. 

• Call With Our Team

Once we get your cost estimation request, one of our experts will get in touch with you through a call. We will ask you some questions related to your software development along with your business goals, size and specific requirements. 

• Creating Estimation

We will analyze the information given to you and will come up with a cost estimation. While creating an estimation, we also analyze the software development trends and use different cost calculator methods.

• Proposal Call

Once we are done with creating an estimation, we will get back to you with the estimation. We will explain the Software Development Cost Breakdown and also suggest some software development improvement tips so that you can get the best product for your business and save more money. If you give your consent and agree with the estimation, we will move forward and suggest different options to build the software in the best way. 

If you still have any confusion, please feel free to give us a call. Our team would love to help you in this process. 

Conclusion

The costs of software development are shifting constantly and some major reasons behind this can be new global collaboration chances, rapid technological innovation and introduction of new methodologies. Well, creating new software is a costly process, but with the right strategy and analyzing the important software development factors correctly, you can eliminate unnecessary expenses and keep the cost low. 

Before hiring software development services in the USA, ask the developer to offer you an estimate so that you can get an idea of how much you will need to spend. But don’t give your developer a vague idea as this will lead to unwanted expenses. And always work with a reliable and experienced software development company like Manektech as they offer different options to build the software that will meet your requirements. Always remember that staying informed about this ever-changing landscape is crucial for every business. So, understand and accept the changes. 

FAQs

1. What Are Software Development Costs?

In simple words, software development costs are the costs related to the development and maintenance of a software program or service. In some cases, these costs can also be described as the costs of buying software from a third-party vendor for certain business operations. 

2. How Much Does It Cost To Build Software For A Small Business?

Medium-sized software can work well for a small business and the average costs for this can range between $50,000 to $100,000*. 

3. How Much Does It Cost To Build Custom Enterprise Software?

The cost of developing a custom enterprise software with basic complexity can range between $10,000 to $40,00* and if you need to integrate some advanced features, then you may need to spend around $75,000 to $180,000*. 

4. What Are The Hourly Software Development Rates?

This will depend on the vendor or developer’s location. For example, in the Eastern Europe region, the costs per hour may range between $35 to $60. However, in Western Europe countries, it can go up to $ 60 to $ 80*. Working with a vendor or developer in the US can cost you more as they charge $80 to $100* per hour.