Custom Software Development Costs: What You Need to Know

By Ryan Vice | Posted on September 13, 2019

How To Succeed

There are many excellent reasons to invest in a custom software solution for your company. Whether it’s to help you automate processes and increase productivity, create new innovations that allow you to scale or for another completely unique reason, software is the hottest trend in business right now. Well, that and co-working spaces with kombucha on tap. Only one of these trends is guaranteed to have a lasting positive effect, though, giving you the freedom to grow and scale your business.

Regardless of the client or the project, we have noticed one persistent question come up again and again: can we afford this? We’ve also noticed that along with the uncertainty on cost comes a lot of confusion. How much should you pay for custom software development? The answers to this question can be just as confusing as you’d expect, but it’s important that you understand your options so your software development costs don’t spiral out of control with nothing to show for it.

For you, as the client, your goal is to keep costs down to a manageable level while still receiving the results you’ve invested so much in. By understanding all the different kinds of developers out there and the options available to you, you should be able to do just that.

What Makes Software Development Costs Soar?

Creating a software application takes a lot of work, and industry demand for developers is high right now. To make an application, a team of highly skilled engineers and programmers with a deep understanding of the business’s processes must work collaboratively together. This team also includes others such as UX designers, data analysts and Quality Assurance experts to make sure the applications looks and works exactly as the client envisioned. When you pay for the cost of software development, you aren’t just paying for a developer. Many individuals need to touch the product before all is said and done, and these costs add up.

Software development is also typically a long process, lasting anywhere from several months to over a year for the larger, more complex projects. When it is done right, there are many steps involved that go beyond simply coding. Your project will need a full discovery and design phase in which the team learns what you need, how the application will work and what it will look like for end users. It’s important that any project undergo a complete discovery phase before a single line of code is written, or the process of active development will likely take much longer and include many more versions before the final product. Post-launch support can also contribute to your software development costs, as the team fulfills feature requests and performs maintenance.

Specifically for any given project, a number of factors contribute to increased software development costs including:

  • Seniority: how much experience your developers have. More experience means more money.
  • Technology stack: the kind of technologies needed for your project. If you require a solution that is very in-demand at the moment or a less-mainstream solution that requires a specialization, that’ll likely increase cost.
  • Agreements: longer agreements tend to be less expensive than a short, one-time agreement. Most development firms prefer the guarantee of consistent work.
  • Team location: where your team is based affects the cost of hiring them. Countries with a higher cost of living and higher average wages will be more expensive to hire developers in.

The Hierarchy of Software Developers

The range of software development options is vast and full of unique offerings. Be aware of the kind of development team you’re getting involved with and how this will affect the overall project costs.

The Enterpriser: These are the people you go to if you need a giant application built. Costs for these guys can run anywhere from $500k to over $1 million. Hourly rates also run high, typically exceeding $300.

The Enterpriser’s Little Brother: These guys are a bit smaller than the giants that they look up to. Projects for companies of this size typically end up somewhere between $250k-$500k.

The Classic Middle Child: These mid-level development firms tend to create good quality applications while not being as expensive as the companies going after enterprise clients. Projects can start as low as $50k or cost as much as several hundred thousand dollars.

The Small but Mighty: These little guys tend to have a smaller operation of about 2 to 10 employees, and their clients are usually startups and small to medium sized businesses. For a project, their software development costs can be as low as $10k, but they can also specialize in more niche technologies, and that can increase costs somewhat. If they can handle the size of your project, though, they can be a cost-effective option.

The Lone Wolf: These are your typical freelancers. They come in two kinds: dirt cheap and crazy expensive, depending on their level of experience. Since their price varies as much as their level of talent, they can be a risky choice if you don’t know what you’re getting into. Freelancers tend to be paid hourly, and they have been known to disappear without a trace with all of your code if you aren’t careful. Still, if you do your homework and check out a freelance developer properly, you may find yourself an affordable and trustworthy partner.

Nearshore/Offshore Development

Another factor to consider, in addition to the hierarchy of developers, are offshore and nearshore options. They come in all sizes, and the talent pool is also much larger, giving you a much better chance of finding a rarer specialization.

Hourly rates for offshore software developers typically run anywhere from $25-$50, much cheaper than onshore options that cost $75/hour on the low end. They are definitely a cost-effective option for your projects, but without strong team management and good communication, going with an offshore option can be difficult and your application may suffer.

A Balance Between Cost and Expertise

There is one approach that can help you keep your software development costs low and be assured you receive the work and expertise you pay for. You can blend the security of investing in a US development firm with the cost-efficiency of an offshore team. By having a technical lead or project manager based out of the US with a team of offshore developers working behind them on the product design and architecture, you can have the peace of mind and easy communication you want while avoiding the skyrocketing development costs closer to home. You’ll also have the added benefit of working with someone who has experience working with developers on the other side of the world.

Vice Software combines the trust and experience of onshore consultancies with a powerhouse team of offshore developers. Over the course of many years and projects, we have honed our technologies and created a system for project development built on strong communication, accountability and transparency. To ensure we build an app that meets your business needs and doesn’t break your budget, we focus on building your MVP (minimal viable product) and add on to it after your users have provided actionable feedback.

Building custom software can help you company accomplish its business goals and reach a place of scalability, but if you aren’t careful, your software development costs can quickly get out of hand. Learn how Vice Software can work closely with your company to develop exactly what you want at the best value possible. Get a quote with us today, and start planning for the future.

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