How Much Does Software Development Costs

August 16, 2022
How Much Does Software Development Costs

When your business grows with more customers, sales, & data, you’ll likely find that the software you have been using since the beginning isn’t as efficient or effective anymore. That’s where custom software development comes in!

More businesses are trying their luck in bespoke software development and digital marketing solutions to reach more audiences in such competitive market scenarios. However, it’s a costly affair and requires detailed planning, analysis, and of course investment.

To help you give a better understanding of the costs of software development, we have come up with this article. Here are the key points we’ll be discussing –

  • What is custom software development?
  • What are the overall costs of custom software development? 
  • Which factors affect the cost of Software Development?
  • Which are the Standard ways of Custom Software Development Charges Estimation?

Let’s get started!

What is Custom Software Development?

Custom software development avails your business with a program to do what you need to do. It saves time and money while increasing efficiency and eliminating barriers down the road. Technically, when we consider custom software, we’re usually referring to custom code.

There are 2 ways to get a Software developed for your business – 

  1. To buy a license for an existing code and use it as it is in your product or business. This Software is created once and then sold multiple times to multiple customers. Adobe Acrobat, Microsoft Office, Canva, etc. are the perfect examples of this.

However, sometimes, your businesses need something specific to build a unique and exclusive brand image among your audience. 

  1. That’s when they require custom software development services. 

In such cases, a small amount of programming will be needed to be done or they can hire experts to work on an already written piece. 

Custom software makes your life easier while saving cost and time and unlocking more opportunities for your business to grow.

What Would be the overall Cost of Software Development? 

The costs of Software development could be influenced by many factors including –

  • The project size
  • How complex is the functionality
  • Which features are required, etc.

For example, developing a simple mobile app for iOS or Android mobile devices would cost approx. 5k to 50k dollars depending on functionality. 

Whereas developing complex enterprise-level software with many advanced features may cost millions. Therefore, fixed prices don’t really apply to most software development projects. 

Besides, there are many more factors that impact the cost of software development.

Which factors affect the cost of Software Development?

It’s very tricky to estimate the overall costs of software development accurately. From the project’s size, complexity, and novelty directly impacting the overall cost, there are many more factors that join the list including the work hours, the number of people involved in the project, their skill sets, etc. 

Here is a detailed overview to help you understand better – 

1. Functional Features Required in the Software

The cost of custom software depends on how much functionality you would require in the software. To determine how much you must pay for custom software designed exclusively for your business, it’s important to first consider how many features you require in the software to meet your business needs. Outline your needs and expectations to frame the budget guidelines.

If a feature is not mission-critical, cut it down from the list until you have enough budget to have everything in place. 

2. The complexity of the Software

The more complex a software will be to develop, the more cost will be charged. On the other hand, developers can complete a simple software project in only a few months at a low price. 

In contrast, complex projects with multiple modules need ongoing maintenance as well as various platforms, so it may take more time to complete at an exorbitant cost. Also, complex Software requires experienced developers because you will have to hire professionals to get the job done. So, analyze how complex your project could go before you get started on the development phase.

3. In-House Team or Outsourcing

Hiring an in-house team will cost you more as you’d need office space, computers, tables, chairs, etc. In contrast, an outsourced software development company like Cloudester could save you these costs as they have their own team. You only need to pay for the cost of a software development project. 

4. The Country Where You Develop It

The location will affect your budget because the cost of software development is relatively cheaper in India and Eastern Europe. 

However, many software development companies are trying to challenge that standard and build up their in-house development team at a lower cost. 

On top of that, U.S.-based companies have higher health insurance premiums than almost any other country, so they usually charge higher. 

5. Time Required for Development

The time it takes to develop a custom software depends on several factors – 

  • List of features to be implemented
  • The complexity of the project
  • Extra efforts that are required to meet the project expectations, etc.

However, in general, most enterprises will budget up to six months for custom software development. 

Also, note that the App development pricing is usually much lower than custom software because there’s less overhead, so keep this factor in mind when thinking about software development.

6. Dedicated Team Model

This model requires you to pay more for a dedicated team with required skills and specialized processes than working with a freelancer. 

It leads to an established workflow and increased management and helps to avoid issues where multiple developers with not enough knowledge or experience on different parts of a project.

7. Analogy Based Estimation

Let’s create an analogy between your project and another similar project to get a rough estimate.

Top-down Estimation:

This is also called order-of-magnitude estimation. For example, if there are 12 features, and it takes 3 weeks to develop one part, it will take (12*3) 36 weeks to complete them all.

Bottom-up Estimation:

In bottom-up estimation, you can break down all your project’s activities into their most minor possible components to accordingly estimate the costs of software development.

For example, if you plan on hiring a software engineer, you will pay $20/hour for their time. 

In bottom-up estimation, you can estimate the cost for ten person-hours to finish any given activity.

Parametric Estimation:

In this condition, you make estimates for each project phase and then extrapolate them based on how long each activity will take. If you think some tasks will need twice as long, add two hours; if you think it’ll be half as long, divide by two.

Final Words

The most reliable method to estimate the costs of software development is a parametric estimation where engineers analyze an actual project they have already worked on. However, these methods still are only one part of an overall cost estimate process in custom software development.

We hope the article will help you analyze the cost of your software development more accurately. Alternatively, you can connect with our custom software development company to get a more detailed analysis of your software development project with zero consultation charges.

Share this

Looking for a software development company?
Let’s start with a free quote!


All your ideas are protected by NDA


Detailed time and cost estimation

24 hours service

Helping to shape your idea and scope