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A Detailed Guide to the Cost of Software Development

The article contains in-depth information about the cost of software development. It contains different aspects that contribute to the cost of software. Also, this article shares some examples of famous software and their building cost.

software development cost

Software development is not something to take lightly. With businesses migrating more and more towards a digital working process, software development acts as a pillar of the modern digital automation ecosystem, sustaining hyperconnectivity and digitization of business processes. 

From startups to multinational corporations, organizations are relying on custom software solutions to streamline operations, enhance customer experiences, and gain a competitive edge. According to Statista, global IT spending on enterprise software solutions will progress from $225 Billion in 2009 to $856 Billion by the end of 2023.

This figure solidifies the growing demand for custom software development services that cater to unique business requirements. However, estimating the average cost of software development can be a pain, leading to several roadblocks and challenges. Figuring out the cost of software development is the go-to step before building one. After all, businesses are meant to be profitable, and the price of building such a product must translate to an effective ROI.

In this article, we'll explore the factors that influence software development costs, how the calculation of the software development cost differs, and some hidden expenses you could encounter during or after the development process. If you’re an aspiring startup founder, serial entrepreneur, product manager, or technical head looking for a software costing estimation, this article is for you. So, without waiting, let's get started!

Giving an Estimate Right Off the Bat

Loosely speaking, the average cost of hiring software development companies in the USA can range anything from $15,000 to $1,000,000+. Too vague? Don't worry we have a detailed breakup of software development pricing depending on the complexity scale below.   

Complexity Level Budget Range
Basic Complexity $15,000 - $40,000
Normal Complexity $40,000 - $70,000
Advanced Complexity $70,000 - $100,000+

Though these figures can give you an idea of software development costs, there is a lot more than meets the eye. Software development services are a complicated endeavor that contains a lot of different factors, each with its own software project costs and budget. Hence, determining the cost of custom software development is not a straight line. 

Factors Affecting the Cost of Software Development

As stated, software development pricing cannot be determined by just one factor. Instead, many different tasks and factors work coherently to develop an application or software; hence, its price depends on several factors. Here are some factors that largely affect the price of a custom software or application:

1. Project Type and Complexity

For defining the cost of an application or general software, complexity and type play a critical role. How much funds a development process will consume is directly dependent upon the nature and type of the software. 

For example, if a client wants to develop an application or software from scratch, then the cost of development will be more than $30,000 as it will require creating wireframes and pushing the development process from concept to product. However, if the client wants to add some features or modifications to a pre-existing product, then the cost will be significantly low. The same goes for integration. If a pre-existing product requires a new technology or data integration, then the cost will be relatively cheaper than creating a new product. 

Coming to the complexity, a simple project, such as adding features to an existing software, will cost substantially less than a sophisticated enterprise-level software suite. Also, complex software will require larger customization and personalization, leading to more effort and inflated software project costs. Customization is a time-consuming process as developers have to write new codes and create new pathways to provide the required functionality within the software. Furthermore, more complexity means more rigorous testing of the custom modules. These long testing processes also result in a higher cost of software development. 

2. Development Platform

The choice of the development platform and the technology stack also influence the cost. For instance, building a mobile app for both iOS and Android platforms requires more resources compared to targeting a single platform. Let’s look deep into some software development platforms largely preferred in the market.

  • Web software development - Web development refers to the process of developing software that is accessible via a web browser. This platform allows users to access its services without downloading a specific application on the device. 
  • Mobile application development - Probably one of the most popular and in-demand software platforms, mobile app development allows users to access the software via a mobile device. Mobile development can be costly as there is a need to develop applications for different operating systems (OS) like Android and iOS. This means that to create a mobile application, 2X efforts and resources are required. Developers often cut this problem by creating a cross-platform application that can work on both Android and iOS. 
  • Desktop software development -  As the name implies, desktop applications and software are exclusively created for desktop-based operating systems. The cost of developing software fluctuates a lot as the cost is hugely dependent upon the complexity and requirements of the client. 

3. Technology Stack

Apart from the platform, choosing the right technology stack is also paramount to consider while estimating the average cost of software development solutions. While developing software, you’ll need to use several programming languages, frameworks, and databases to code and develop the software into existence. And it's no surprise that licensing these languages is not cheap.

For example, using AI/ML and Data Science can skyrocket your cost of developing a software as the technology is still expensive, and their developers charge huge salaries given there are limited experts within the development community. As a consequence, you’ll have to pay extra to hire a professional to develop the software.

4. Design and User Experience

Ever wonder why one app struggles to keep the retention of users while another app with the same features excels in traffic management and user interaction? The difference is UI/UX. User experience (UX) and user interface (UI) design are critical to the success of any software product that uplifts the entire customer journey. An ideal UI/UX in an application refers to the best placement of buttons and visual elements that allow the user to quickly and easily navigate the app. Thus, while investing in intuitive design and seamless interaction patterns can increase software development prices, it can lead to higher user satisfaction and engagement.

5. Team Composition and team type

The composition of the development team, including designers, developers, testers, and project managers, significantly impacts the development cost of the software. Arguably the most expansive resource of any development company, these experts are the bread and butter of the company that leverages different technologies to create excelling software and applications. Different applications require a distinct blend of experts to develop and manage the application effectively. Thus, it also makes a big impact on the development cost. Generally, the cost of hiring a software developer differs as per their seniority. 

Developers’ seniority Rate per hour
Junior Developer $40/hr - $60/hr
Mid-level Developer $80/hr - $100/hr
Senior Developer $100/hr - $120/hr+

Moreover, the geographical location of the team plays a role, as labor costs vary significantly across these types. Typically, these team types are divided into 4 categories. 

Team Type Cost
Local development company, US $200,000
In-house developers, US $220,000
Freelance developers $150,000
Offshore software development solutions agencies $100,000

 

6. Project timeline and methodologies

 

 

While developing software or applications, asking the question ‘How Long’ is also paramount to assessing the required development budget. There is a big relation between the complexity and size of the application, and both combined define how long a project would last. So, it's pretty simple: the longer the project lasts, the more financial capital it will take. The table below indicates the application's size and type and determines how long the project could take. 

Role Small Medium Large Enterprise
  Weeks Months
Software Modification 1 - 2 2 - 6 2 - 6 4+
Web Development 3 - 6 4 - 8 6 - 18 3 - 6+
Software Integration 2 - 6 2 - 6 6 - 12 6+
New Software 4 - 8 3 - 8 6 - 18 8+

The choice of development methodologies, such as Agile or Waterfall, can also impact the overall cost.

Some famous software and their Development Costs

1. Minecraft 

Minecraft is the world’s most popular video game right now. If you don't know about it, believe us, your kids do. Despite being one of the most played video game of all time, the beginnings of Minecraft was very humbling. The software was created by a single developer, Markus "Notch" Persson, back in the day for just $13. However, as the game progressed, it was picked up by Mojang Studios in 2011 and redeveloped with an estimation of $100,000.

2. Pinterest 

Much like Google, Pinterest is also a search engine for images. It is referred to as a visual discovery engine that stores millions of images in its database by users and shows results based on the query search. However, in 2023, developing an app like Pinterest would cost around $30,000 for initial application development. 

3. Uber 

Uber is a mobile application known to connect drivers with potential riders. It is a ride-sharing app that quickly allows users to schedule a car ride from a simple mobile application. While the development of the Uber app required a mammoth budget, the average cost of developing an Uber-like app can range from $30,000 – $100,000+.

Hidden Costs in Software Development

The cost of Software development can extend beyond the obvious aspects of development. Many hidden expenditures can creep up and snag away a large chunk of your budget. So, tracking these small expenditures can give you better insight into software development costs. Some hidden expenses to consider include the following:

  • Maintenance and Updates - Software requires ongoing maintenance and updates to remain secure and compatible with evolving technologies. The budget for software maintenance should be twice the development cost.
  • Integration and Testing - Integrating the new software with existing systems and thoroughly testing for bugs and performance issues can add to the cost. Thus, evaluating the integration stage budget can be a good option. 
  • Training and Support - Investing in user training and providing customer support can contribute to the overall expenditure.
  • Marketing - If your software solution is intended for the consumers. Then, preparing a marketing budget can also go a long way. However, the budget for marketing the software is entirely dependent upon the business and executives. 

Tips to prepare a cost estimate for software development Solutions

Estimating software costs is never easy, especially when working with something as complex as software development solutions. However, there are some tips and tricks you can follow to prepare an accurate cost estimate for software development. Some of the tips are mentioned below.  

1. Detailed Requirements Gathering

Assessing your requirements and defining key objects can give you a start for estimating software costs. You can engage with stakeholders, end-users, and development teams to identify and gather comprehensive insights into the software. A clear and well-defined scope helps prevent scope creep and helps eliminate unexpected costs during development.

2. Consult Development Experts

Upon encountering any issue or confusion, collaborating with experienced software developers during the planning phase is the best remedy. You can conduct periodic meetings with developers or the development agency who can provide close to exact estimates based on their knowledge and expertise. They can also help in defining potential roadblocks and the intricacies of coding and integration, ultimately leading to more accurate software project costs projections.

3. Monitor extra software prices

Apart from the core development process, there are also various miscellaneous expenses that can slowly burn a hole in your pocket. Moreover, these activities can gradually add up to a big cheque that you have not estimated in the quotation. Thus, closely monitoring these extra payments is necessary to keep your budget estimation in check.

  • Pre-development expenses
  • Revisions
  • Bug fixes
  • Deployment fees
  • Testing

4. Plan for Documentation and Training

It might not seem like it, but creating user documentation and providing training for end-users also contribute to the overall cost. This is why creating clear documentation reduces user confusion while training for user adoption can minimize support requests and after-sales costs.

5. Evaluate Third-Party Solutions

Consider whether third-party software components, frameworks, or libraries can be integrated to expedite development. Leveraging existing solutions can reduce development time and costs and enhance the software's overall quality.

6. Factor in Testing and Quality Assurance

A software solution can’t just willy-nilly enter the market straight from development. Testing and quality assurance is also an important step that needs to be considered for effectively estimating software costs. Rigorous testing identifies and rectifies bugs, performance issues, and security vulnerabilities. Ignoring testing can lead to costly post-launch fixes and potential reputation damage.

How to Reduce Your Software Development Costs?

We have talked a lot about making an accurate software costing estimation for software development services. However, the next thing people want to know is how can I reduce this software development prices. Preparing software development pricing is one thing, but how can businesses reduce this cost to get high-performing software at an affordable rate? Well, we have a cheat sheet for you.

1. Simplify the software design

It's a given in the development industry that the more complex UI/UX you’ll have, the less engagement you’ll get from the users. But, it also translates to cost. A complex UI will require more time and effort, leading to inflated costs. A simple, clean, and straightforward design can help you cut down on development complexity, along with reducing software development costs significantly. 

2. Prioritize offshore development

While the USA is a hub for IT and innovation, many companies prefer to outsource their development requirements to other countries like India. It is because mobile app development companies in India are capable enough to produce high-quality software and applications with a ridiculously low budget, as human resources and development are much cheaper. Outsourcing development to regions with lower labor costs can provide cost savings and provide great collaboration with knowledge experts.

3. Create a minimal viable product (MVP)

Before taking the complete software development head-on, starting with a minimum viable product (MVP) with all key features will be more beneficial to better assess the solution and collect feedback. An MVP is a test product created to analyze an idea’s viability within a target audience and its overall success per-requisite KPIs. This can help you gather real-time feedback from the users and help you understand will the product works or not. 

4. Try to include open-source technologies

It's well known that software development services are costly and can even touch the million-dollar mark. However, to reduce the development cost of software, you can integrate open-source software and technologies in the development phase. These technologies do not require licensing and allow you to leverage their potential for free. Moreover, these technologies come with a large community of developers that can help develop the software.  

Conclusion

In a nutshell, the cost of developing software is a very subjective aspect that can vary greatly, spending on different factors and software project costs. However, with the above tips, not only can you identify the cost of custom software development for your project, but it can also reduce your software development prices significantly. 

Top custom software development companies are revolutionizing digital automation across industries, providing award-worthy software development services with minimal software development prices. We hope this article helped you answer the question: How much does a software cost? And allowed you to achieve better calculation of the software development cost for your project.

Aparna <span>Growth Strategist</span>
Written By
Aparna Growth Strategist

Aparna is a growth specialist with handsful knowledge in business development. She values marketing as key a driver for sales, keeping up with the latest in the Mobile App industry. Her getting things done attitude makes her a magnet for the trickiest of tasks. In free times, which are few and far between, you can catch up with her at a game of Fussball.

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