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Creating a custom software solution can be a game-changer for your business, but the ultimate question remains: how much does it cost to develop software?
The average cost for such a project varies from $5,000 for an MVP to $150,000 and above for a complex, full-fledged app. For many businesses, these numbers can be daunting and unpredictable.
The problem? Many organizations dive into software development without fully understanding the factors that drive these costs. This leads to unexpected expenses and sometimes even project delays or scope adjustments. Without a clear view of these cost drivers, creating a realistic budget plan can become difficult.
But by breaking down the specific factors influencing software development costs, you can manage the budgeting process more confidently and avoid potential setbacks.
In this blog, we’ll show you all the costs that go into such a project, some average software development cost estimations, and tips on reducing these costs. Let’s get started!
How Much Does Software Development Cost: 9 Key Factors
Software development involves planning, designing, testing, and, often, long-term maintenance. Each of these stages impacts both the timeline and the final cost.
Below, we’ll break down the nine factors that affect the cost of developing software so you can plan your budget more effectively.
Type of App
The type of app—whether it’s a web app, mobile app, or desktop software—affects the resources needed and, thus, the overall software development cost.
For example, developing a web or cloud-based CRM app costs on average $100,000.
When it comes to mobile app development, this often requires building for multiple platforms (iOS and Android), which can double the work if no cross-platform solutions are used. However, cross-platform development also has its tradeoffs related to UX, performance, and capabilities.
Web apps, while typically faster to create, still require considerations around responsiveness and browser compatibility.
Additionally, the cost depends on the platform you choose. For instance, if you use a managed platform like Salesforce or DigitalOcean, you won’t need to worry about hosting infrastructure. However, using platforms like AWS or Azure may require specialized expertise in cloud services, which can add to development costs.
You need to also consider the features and functionalities you want to integrate. For example, if you’re going for more advanced ML or generative AI software development, this will require more extensive coding, higher developer expertise, and in-depth testing, which quickly add up to the bill.
Tip:
Consider your target platforms and prioritize the features that are absolute must-haves in the initial build to keep costs manageable. You can always add extra features later as your app evolves, allowing you to expand functionality and reach new audiences without overwhelming your budget.
Complexity of the Software
The software complexity includes factors like:
- UI and UX design
- Integrations and cross-platform compatibility
- Features and functionality
- Coding language and framework
- Scalability and localization
Simple applications with basic functionality are generally quicker and cheaper to develop.
However, software with advanced features requires extensive coding, testing, and specialized expertise, increasing the development time and cost. That’s because the more complex the system, the more layers of functionality it has, making it demanding in terms of both resources and development skills.
Tip:
Break down complex features into smaller, manageable components and prioritize developing them in phases. Starting with a simpler version of more complex functionalities allows you to build on them over time as resources allow.
UX/UI Design Specifications
The key to having a successful software solution lies in creating a smooth user experience. To achieve that, you should aim for a seamless user interface that is both practical and sleek.
If you use pre-built design elements (e.g., buttons, icons, colors), you’ll reduce the overall price, but you’ll most probably sacrifice quality. On the other hand, going for custom UX/UI design services can really turn the user experience up a notch, but it comes with additional costs. That’s because highly detailed, user-centered designs typically require collaboration between designers and developers to create intuitive interfaces that stand out.
Tip:
If your software is in the initial development stage, you can aim for a more simplistic design but really emphasize user-friendliness to ensure a smooth user experience. Later on, when you have a better idea of the overall software and its key features, you can create a more elaborate design.
Cost of Software Development Team
Choosing the right software development partner is crucial. The cost of software developers is influenced by things like the structure and expertise of the team.
Think: Will you be working with an internal team, or will you outsource?
While an in-house development team offers greater control over the project, assembling one is much more practical for larger-scale projects. For smaller businesses or short-term projects, this is time-consuming and costly.
That’s why about 76% of business managers decide to outsource software projects, and most of them do so to save money.
So, if you go for outsourcing, you need to consider a few factors like:
- Pricing model: External teams usually offer fixed pricing (this would be an agreed-upon price for the whole project), hourly rate, or a dedicated team (where costs are based on the size and duration of the project, which could be more cost-effective for longer projects).
- Team location: Offshore teams based in Eastern Europe, Asia (with about 65% of IT projects going to India), or South America could offer better rates than teams located in North America. But nearshore teams have the advantage of being in the same or similar time zone, which can ease planning and project alignment.
- Team size: A standard team often includes project managers, developers, designers, and QA testers, with each role adding value but also impacting the budget. Basically, the bigger the team, the higher your costs will go.
- Team expertise: Hiring senior or specialized developers with specific expertise can raise costs, so you need to plan ahead and understand exactly what expertise you need.
Tip:
To determine the best team structure, assess your project’s requirements first. If outsourcing, start by identifying the key roles you’re hiring for, researching regional rates, and exploring flexible pricing models.
Technology Stack
The choice of backend technologies, programming languages, frameworks, and tools is what makes up your technology stack.
Popular, widely supported technologies often come with a larger pool of developers, making the software development process more cost-effective. However, if your project requires cutting-edge or niche technologies, finding specialized developers can be challenging and may increase costs due to their expertise and limited availability.
Tip:
If your project requirements allow, consider adopting CI/CD, as they can streamline the whole development process, reducing costs by up to 78%. Additionally, embracing low-code development can speed up the process up to 10 times. So, when you plan your project, discuss thoroughly these options and other best practices for software development with a software development consultant or with your development team.
Size & Scope of the Project
The size and scope of a project encompass its functionality, user requirements, and overall scale.
Smaller projects can potentially be faster and cheaper to create if they require more straightforward and simpler functionality. On the other hand, larger applications with complex integrations and high user volumes will be more demanding, inevitably increasing the final software development pricing.
When defining the project scope, think of the following requirements:
- Project goals and objectives
- Pain points you want to address
- Target audience and stakeholders
- Resource needs
- Project timeline and milestones
- Project constraints and potential challenges
Tip:
Your project scope and size should be clearly defined from the start, as this will help you eliminate any unforeseen challenges down the road. Keep in mind that the initial requirements can always be revised and changed as the project progresses.
Testing & Quality Assurance (QA)
Before your solution is deployed, it needs to go through in-depth testing and QA, which ensures the software is reliable and bug-free. However, these come at their own cost.
QA can involve multiple stages, from unit testing of individual components to system-wide testing for performance and security. This usually takes about 20% to 40% of the overall project timeline.
While automated testing can save time in the long run, manual testing is still a must for more complex applications, especially if you’re handling sensitive data and require to be 100% compliant with regulations like HIPAA or GDPR.
Tip:
As QA is an essential step of every software project, you must allocate adequate resources from the beginning. This will help you reduce post-launch issues and save on future maintenance costs.
Maintenance and Ongoing Support
Maintenance and ongoing support are usually provided by a dedicated support team, or they can be part of the software development services offered by the original dev team.
This usually includes:
- Fixing bugs
- Integrating new features based on changing needs
- Optimizing the solution’s performance
These post-launch services come with an ongoing cost, but they are necessary for ensuring optimal performance, security, and compatibility over time.
Tip:
To reduce costs at this stage, you can identify and eliminate any unused features or services. You can also determine the minimum resources you need for the software to run and terminate unused capacity.
Third-Party Integrations
Integrating third-party services (such as payment gateways and analytics platforms) can improve functionality, but this also increases the cost to develop software and adds a layer of complexity to your project.
Additionally, each integration requires time and testing for compatibility with your existing system, and it often involves third-party service licensing fees.
Tip:
You can prioritize the integrations that add the most value to your project’s core functionality and consider phasing in additional integrations over time. Taking it one integration at a time helps you add complexity gradually and ensures your budget is spread out effectively.
The Average Cost Software Development: Estimations by Project Type
Software development costs vary widely depending on the type of project and its complexity. To give you a clearer idea of potential expenses, here’s a detailed software development cost breakdown:
| Project Type | Cost Range | Time to Build | Examples |
| Simple App Development | $10,000 – $50,000 | 2-4 months | Basic fitness trackers, simple games |
| Complex App Development | $50,000 – $200,000+ | 9+ months | Real-time data apps, e-commerce marketplaces |
| Web Application Development | $20,000 – $250,000+ | 6-12 months | E-commerce platforms, SaaS solutions |
| AI/ML App Development | $75,000 – $300,000+ | 4 months – 1+ year | Predictive analytics tools, image recognition apps |
| Enterprise Software | $100,000 – $500,000+ | 6 months – 1+ year | ERP systems, custom CRM with high security features |
Complex App Development
More intricate projects take, on average, 9 months or more to complete, with costs ranging from $50,000 to $200,000 or more. These apps may feature real-time data processing, artificial intelligence or machine learning components, and custom UI/UX design.
Examples include:
- Finance and banking tools with analytics
- E-commerce marketplaces
- On-demand service apps
Uses: These apps allow the integration of advanced functionalities and support a more interactive user experience.
Web Application Development
Building a custom web application can vary significantly in cost, ranging from $20,000 to $250,000+, and can take up to a year to build.
Simple web platforms, like blogs or small e-commerce sites, generally fall on the lower end of the spectrum, while complex SaaS products with user management systems, payment integrations, and layered databases can cost substantially more.
Uses: Web applications are often designed to serve a larger audience, as they usually connect users via different platforms and devices.
AI/ML App Development
For applications powered by AI or ML, costs generally fall between $75,000 and $300,000+ and can be completed within several months to over a year (for more complex software). These apps often require specialized algorithms, extensive data processing capabilities, and customized training models.
Examples include:
- Predictive analytics tools
- Data labeling and annotation tools
- Recommendation engines
- Image recognition applications
Uses: AI/ML software has lots of useful applications, from advanced analysis to language translation, coding, and digital assistants.
Enterprise Application Development
This type of software is tailored for specific organizational needs, offering extensive integration with legacy systems, high levels of security, and data management capabilities. As such, the cost is generally on the higher end, ranging from $100,000 to $500,000 or more, with a completion timeline of 6 to 12 months or more.
Enterprise solutions include:
- ERP systems
- Custom CRMs
- Internal platforms for managing complex workflows
Uses: These applications are typically used in everyday business operations like sales, marketing, and internal communications.
How to Reduce Software Development Costs
Reducing software development costs doesn’t mean sacrificing quality or cutting corners.
Here are some practical tips to help you minimize these expenses without compromising on the end product.
Start with an MVP
An MVP is the most basic version of your software that includes only essential features you can try out on early adopters and get their feedback. Launching an MVP allows you to test your concept in the market before committing to full-scale development.
The benefit? You can reduce upfront expenses and make any necessary adjustments based on real user feedback.
Use Pre-built Solutions or Open-source Software
You can cut costs by adopting open-source libraries and tools that are readily available. This way, you can easily cover functionalities like authentication, database management, and UI components, allowing you to save considerable development time.
Pre-built solutions can also help you save on resources. However, before implementing them, ensure that they align with your project requirements and comply with licensing restrictions.
Plan Properly
Having a well-defined roadmap helps keep the project on track and within budget. If you need help with the strategic planning for your solution, you could use the services of a software development consulting firm. Consultants can help you outline project requirements, suggest cost-saving strategies, and prevent unnecessary expenses.
Here are a few things to keep in mind while planning your solution:
- Prioritize essential features: Focus on must-have features for your initial release and add additional functionalities over time based on user feedback.
- Automate testing and QA: Implement automated testing wherever possible to streamline quality assurance.
- Use cloud-based infrastructure: On-demand infrastructure scales with your needs, eliminating costly hardware investments. The pay-as-you-go model also allows more flexibility without upfront costs.
- Leverage agile development: With Agile, development is iterative, which provides room for ongoing improvements as project requirements evolve.
Choose the Right Software Development Team
Selecting the right custom software development company is crucial to managing costs effectively. For example, you should consider aspects like:
- Nearshore vs offshore team: Outsourcing to nearshore or offshore teams can be a cost-effective option. Nearshore software development teams located in nearby time zones offer easier communication at lower rates than in-house teams. On the other hand, offshore development in regions with lower labor costs can save significantly but may require additional project management to ensure smooth communication and alignment.
- Optimize communication and collaboration: To avoid any miscommunication and rework, you can use different project management tools, set clear communication protocols, and regular check-ins. This way, everyone will be in the loop, which can help you reduce delays and keep the project on track.
Conclusion
From the type and complexity of the app to the choice of technology and development team, each aspect influences the final price of your software development project. Once you have this breakdown, you can utilize different strategies, such as starting with an MVP or open-source tools, among others.
At Scopic, we offer custom software development services tailored to your unique needs and budget. If you’re ready to start a project or need guidance on optimizing your development costs, contact us today to learn how our team can bring your vision to life.
FAQs
Software development can be complex, so if you still have questions about costs, timelines, and budgeting strategies, we’ve got you. Here are the answers to some of the most common questions:
What are the hidden costs of software development?
The “not-so-obvious” costs in software development, which often receive less attention than they should, include:
- Post-launch maintenance
- Scaling infrastructure
- Additional security measures
While these expenses may be brushed off during the initial stage of software development budget planning, they are essential to keep your solution secure, updated, and capable of handling growing user demands.
How long does software development typically take?
The timeline for software development varies based on the project’s complexity and scope. Simple apps may take 2-4 months, while complex, enterprise-level software can require 12 months or more.
How can I avoid going over budget during software development?
To avoid budget overruns, start with a well-defined project scope, prioritize essential features, and maintain regular communication with your development team. Using an MVP approach, leveraging open-source tools, and setting a clear project timeline also help prevent unexpected expenses.
How much does custom software development cost?
Custom software development costs vary widely, ranging from $10,000 for simple projects to $500,000 or more for complex, enterprise-grade solutions. Factors such as project type, technology stack, and required features all impact the final cost.
About Creating Software Development Costs Guide
This guide was authored by Vesselina Lezginov, and reviewed by Alan Omarov, Solutions Architect at Scopic.
Scopic provides quality and informative content, powered by our deep-rooted expertise in software development. Our team of content writers and experts have great knowledge in the latest software technologies, allowing them to break down even the most complex topics in the field. They also know how to tackle topics from a wide range of industries, capture their essence, and deliver valuable content across all digital platforms.
Note: This blog’s images are sourced from Freepik.
