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What does Software Development Cost?

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A common question that we’re asked here at Software Development UK is this: what does software development actually cost?

Even for experts with over 10 or 20 years of software development experience, this can be a difficult one to answer. This is because a straightforward answer or figure cannot be given; there’s no definite answer because the cost depends on several factors. What we can do, though, is explain how to estimate software development cost factors and budget accordingly.

The word ‘software’ has such a broad meaning, that it can be used to cover all manner of development projects, ranging massively in size and the associated price.

Before you can pin down your software development cost, then, it’s necessary to pin down the fundamentals of what you’re setting out to do, as well as contributing cost factors.

 


{What Are The Costs Associated With Software Development?}

The cost of software development is determined by both your needs and the factors associated with your particular project. It completely depends on what kind of software you’re looking to develop, whether that’s a simple phone app, a PC game, or even a large-scale finance platform.

Breaking your software development project cost estimation down into three stages – design, implementation, and maintenance – can help you to get a clearer idea of a ballpark figure.

You must consider every step of the process before embarking on a software project to ensure that late-stage costs won’t sneak up on you and cause trouble further down the line.

Software design

Design costs can vary massively; on the whole, they are determined by the level of the technical complexity of the application you want to build, reflected in the hours it will take to design.

While having a team design basic/simple software is the cheapest option, highly complex software with data encryption, third-party integrations, and video content will take significantly longer to design, and be far more expensive.

Implementation

Once your newly developed software has been designed, it needs to be implemented. The implementation costs are fees that come with getting your new solution set up.

It can include the cost of training up staff to use the new software, as well as integrating existing data into the new solution- a process termed data migration.

Data migration will be a smaller and speedier project for smaller enterprises, while large companies can expect a far longer and more expensive process overall. For very large businesses, this can easily cost upward of £7 million, while small businesses may expect to pay £7,000 to £110,000.

Although there’s a tendency among beginners to massively underestimate maintenance costs, you must avoid falling into this trap.

Modern software is incredibly complex and requires regular updating to run smoothly. This work is time-consuming, repetitive, and, of course, costly. Many applications require a team working around the clock to ensure there are no technical issues.

Tech experts have recently estimated that as much as 90% of the costs of modern software are associated with regular maintenance. Many companies don’t account for these costs, however, with dire budgetary consequences, it’s important to consider maintenance and support before beginning a new software project.

{Contributing Factors To Software Development Cost}

Now you’re familiar with the stages of software development and their associated costs, we can get a little more specific. There are many contributing factors to consider which will determine the exact price you pay for your software solution.

It’s important to understand these factors so you can stay within budget. Understanding potential bumps in the road will help you to avoid nasty surprises, like unexpected costs further down the line.

Stage of Development

The cost of your project will, of course, be determined by what stage of development you’re at.

New software project

If you’re embarking on an entirely new project, there is, of course, a lot of work to be done. Because hours of work can translate directly to cost, this means that new projects will require more funding to reach completion.

It is estimated that new software development can cost anything between £35,000 to £180,000, depending on the application’s complexity.

Upgrading existing software

If you’re not looking to design new software, but instead want to improve your existing application, you’ll be pleased to hear that the cost is significantly lower. In short: the price you pay depends on how much work there is to be done.

Type of project

Similarly, the cost of your project will depend on the project type. Different types of applications are more complex than others, and prices will vary depending on what it is that you’re setting out to do.

Blockchain

Blockchain is complex, and to build it, developers require a very firm grasp of data structures. If you’d like to pay an expert to develop a Blockchain application for you, it will set you back anywhere between £60,000 to £1.5 million, depending on the specifics of your project.

Less experienced developers charge less, though the average cost for Blockchain development is still high.

App Development

Web apps are some of the most commonly requested development projects. While the app’s costs will vary depending on the features of the app itself, you can expect to pay between £28,000 to £45,000 for an app with a basic user interface and some essential features.

Mobile Development

A 2015 study found that the median cost of a mobile app is £123,450, with developers paid £108.00 per hour. Single platform development will work out significantly cheaper than cross-platform, which will mean covering costs for each platform you want your mobile app compatible with.

Data Science

Data science projects vary in price, completely depending on who you hire. While scientists with 3 or fewer years of experience often charge £180p/h or less, an experienced data scientist may cost you upward of £5000, on a project basis.

Backend Development

Backend or server-side development, which focuses on APIs, servers, and databases, varies in cost. Simpler projects may cost only a few thousand, while trickier ones can require over £7,000.

Embedded Systems

Compared to other development projects, embedded systems are relatively budget-friendly. They have a single function, which means they’re cheap to design and integrate.

Fintech

Fintech- which provides services to the financial sector on both the business and consumer sides- is a relatively cheap solution, in a booming market. A basic finance app costs between £20,000 to £40,000.

Cloud Computing

Using the Cloud is much cheaper than setting up your very own infrastructure from scratch. This makes it a popular choice among businesses.

Web development

If you’re just looking for your website, for example, then web development is a potential option.

Size of the software

Smaller-scale software has a fundamentally less complex architecture, meaning its development is cheaper. Enterprise software (which is bigger) requires more investment, because of its complex features.

Software complexity

Similar to the last point, it’s common sense that more complex software will cost more to develop because it affects the duration of the project. The more features that developers have to design, the longer the project will take.

The longer the design process, the more days’ wages you’ll have to pay overall using a time and resource pricing model.

Use of reusable components

Reusability- referring to the re-use of any existing assets during software development- is another factor to consider.

Whether these components are testing suites, designs or code, they may be able to save you money on designing them from scratch. Consider if you have any of these reusable assets in your developing arsenal.

Developer Experience

Not every developer costs amount the same to hire. On the contrary, you’ll pay far, far more for a very experienced professional.

Experience is reflected in the pay, meaning that a data scientist at the very top end of the scale will mean far greater software costs for your project than a web developer at the bottom end.

Number of target platforms

Your intended deployment platform will partially determine your software development costs. Android is a popular platform in the current market, but selecting it means that you’ll need to escalate your scalability for efficient performance.

Multi-platform deployment also requires multiple teams, whether that’s for Windows or iOS. If you’d like your it to be deployed across platforms, your software costs will unsurprisingly be far higher.

Integration with external systems

If you want to improve the functionality of your software, integrating third-party APIs can help you to do this. You have to be prepared for integration costs, though, because there can be compatibility issues that increase your overall software development costs.

User base

Your expected user base- that is, how many people will use your software at one time- will determine the size of your server. This will be reflected in your software development costs, with larger user bases costing more to accommodate.

Your location

Whether you’re building a mobile game or a Fintech application, the software development cost of your project will be determined in part by your location in the world.

In the US and Western Europe, developers will cost you much more to hire, while the final cost of a project will be lower if you’re in India or Pakistan.

Wherever you are in the world, consider the specifics of the industry in your area. Though it may seem like a minor factor, this will shape your project as much as any other contributing factors.

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{How to Budget For Your Software Development Project}

There are several different approaches you can take when estimating your software development costs. Here are the most popular ways to budget for your software project.

Fixed Cost

With this model, a cost figure is given at the beginning of the project. The software development process is then adjusted to this cost, with developers planning their time in conjunction with how much they will be paid.

This model is less flexible than other pricing methods and can put a strain on developers to meet tight deadlines.

Time and Materials

This software development pricing method is based on both man-hours and resources. It offers more flexibility than a fixed-cost contract and ensures that developers are compensated fairly for their work.

It is often used to support an agile design process, where the hours required may not be clear from the outset of the project.

In-house Team

In contrast to off-the-shelf software, in-house software is designed by a team that you directly employ. They often work in your office, with your direct involvement in the process.

This pricing model, where you bring developers into your own company, allows for the best communication and the ability to adapt as the project develops.

It also allows you to follow the software vision more closely because your developers are in fact an internal part of your business. It can cost more than outsourcing, however.

Hybrid Solution

Rather than sticking strictly to one of these pricing models in the software development process, many companies opt for a combination of two or more.

For example, you may want to use a combination of in-house staff and outsourced developers for the back and front ends of the project. Your development team can be managed (and paid) in a unique way, tailored to the specific project.

This blend of solutions depends on your company’s needs and your unique vision for the project.

{Choosing Your Software Developers: Experience Vs Affordability}

Ultimately, you get what you pay for. If you factor experienced developers into your software development cost, your project is in the hands of more seasoned professionals. This may minimise issues down the line, although no project is even completely free of roadblocks.

If you’re looking to cut the price of your software development, you can use junior developers- those with less than three years of relevant experience. These developers will bring less expertise to the table, so it depends on your priorities.


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{Final Thoughts}

Hopefully, you understand how important accurate and thorough budgeting is when developing software. You must have a clear idea of your software development cost breakdown before beginning a new project, otherwise, you could be headed toward disaster.

From design to data integration, consultations to maintenance, the process can be very expensive. At every step of the way, there are troubleshooting costs to consider. This is why it is so important to establish your custom software development cost using one of the pricing methods I outlined above.

Each budgeting method has its pros and cons; while an in-house team offers stability and allows you more control of the project, a time and materials approach favours an agile development process. You can develop a custom hybrid model to match the pace and vision of your development plan.

{faqs}

With so many benefits, from saving development costs to receiving access to specialist software, software development outsourcing is more than worth it. Not only will you save money on expenses, but it will also free you up to focus on your business’ growth.

The outsourced team will handle almost all project development themselves, so you will only need to manage larger decisions. It can also help free up any other managers in your business, which any business manager can appreciate.

If you plan to work on a large software project in the future, or even just a smaller set of patches, consider hiring a software outsourcing company!

There is a range of benefits to hiring a software developer or outsourcing your project to an external development team. If you are looking to save money and worry that your business does not have the resources for a large project, outsourcing may be best suited for you.

However, if you want to ensure you have full control over a project and finances aren’t too much of a worry, an in-house software developer may be the right call.

Try to weigh up the pros and cons of each before making a final decision. It can be difficult to know exactly which is better suited to your project, but discussing possible options with your development team can be a great way to decide.

Much like hiring any external service, the first step is to find a team that is right for your outsourced software development. By using our handy guide above, you should have no issues doing this!

Once you have found a team right for you, you will want to negotiate the cost, show them what you need and discuss whether this is feasible. If possible, then a contract should be created that allows the outsourced company to handle your development for you.

The cost of outsourcing a project to an external development team will vary depending on what is required and how large the project is. Larger projects will, of course, cost slightly more than small-scale software, and the same goes for a specialist program.

Typically, you can expect an outsourced project to cost you anywhere between £20 to £75 an hour, depending on the developers’ skill. This is cheaper than hiring a full-time in-house developer, but it may not be what your company needs.

Communication during the whole process will be key to your budget. You will already have agreed on rates, but knowing whether the project is running to schedule is essential.

By being kept up to date through each step of the process, you will pinpoint any potential problem areas that may lead to costs spiralling out of control. Outsourcing does not mean an abdication of responsibility, and there will still be areas of project management that will need to be adhered to.

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