How to Estimate Custom Software Development Costs?


How much does custom software development costs? If this is your ongoing concern these days, then this blog post is the right one for you. If you want a one-line answer for this, then to be honest custom software development costs can range anywhere between $5,000 to $100,000 and above.

Now, you may wonder that why are we giving you a range. Well, as the name suggests, the custom software development cost is heavily dependent on customization levels and some other important factors such as location, time-to-market, budget, size, and complexity, etc. Estimating the software development cost for companies that have complicated structures. In this blog post, we are discussing the closest estimates to demonstrate ‘how much does a custom software development costs? But before delving directly into the factors contributing to the software development cost, let’s learn about why custom software is relatively expensive than its OTS (Off-The-Shelf Software) counterpart; and also discuss the breakdown of components of software development cost.

Why Custom Software Is More Expensive Than Its OTS Counterparts?

Custom Software Development is referred to developing personalized or tailor-made software, right according to your business need and wants. With custom software, you get an inherent competitive advantage because your competition won’t’ know about its potential, proficiencies, and limitations.

This is not a small competitive advantage, because, with custom software, you can achieve what not! Ranging from higher production levels to shrunken production time, and from better quality to future projections, etc. These are the powers that could bring huge profits to your business. And this is the reason why software development costs lie within the higher price bracket.

Let’s try to understand it with the help of a very basic example here. For instance, you are looking for a wedding gown! You go to a designer boutique and ask them to show you their ready-made gowns, and simply pick one from their off-the-shelf collection. The gown costs you $500 because the designers have produced them in bulk under the economies of scale, and hence the costs per unit are relatively reasonable.

But, in case, if you ask the designer to exclusively design and create something precisely according to your taste, something that no one has ever worn before. In this case, the designer would choose everything from colors to pattern, fabric, cuts, design, and silhouette according to your body, style, and taste. Now, this is designing and creating something from the scratch, and every hour of hard work that he will be spending to design the outfit will solely be dedicated to your project; and so does the resource and overhead costs that will be engaged. Now, when you will ask him about the cost of the gown, his answer will be $1000 or could be more, depending on the exclusivity or complexity.

Now, we understand that software development is nothing even close to dressing designing, or sewing, the process and analogy might help the beginner understand the difference between customized and OTC software. All we want to highlight here is that customized products are more expensive or costly than ready-made solutions.

Now let’s look at the breakdown of the component that made up software development costs.

1. Scope
2. Planning (For UI/UX/Platform).
3. Human Resources Costs (task efforts, skills and expertise of software development team).
4. Costs of Physical Resources & Infrastructure.
5. Costs related to Software License Purchasing & Cloud Technologies.
6. Geographical Location of Software Development Team.

Before we jump into analyzing the software development cost, let’s have an overview of the process of cost estimation.

  • Scope

The scope of your software is responsible for a huge part of your software development cost. In other words, your software development cost is directly proportional to your project requirements. Every single constraint, deliverable, and assumption adds up to your cost. So, it is simple, the more you will flesh out your project’s scope, the more precise will be your cost estimation.

  • Design and Development

Once you have thoroughly outlined the scope of your software, it now needs designing and development. Starting with the wire-framing or blueprint, and sitemap development, the project expands gradually and move towards designing the visual elements. Software developers then start coding accordingly and transform static ideas into fully functioning software.

  • Integration with Other Apps & Systems and Data Migration

Now, when your custom software is developed, it needs to be checked for integration with external systems and apps to ensure interconnectivity among them. A large part of this stage is spent in research & development, and understanding protocols, data structure, and user authentication etc. Whether upgrading your software completely or consolidating your data from disparate sources at a single platform, a certain amount of data migration is always a part of custom software development.

  • Testing & Deployment

A rigorous and streamlines testing and deployment process is crucial throughout the software development. Software testing is crucial to ensure that there are no broken links and bugs in the program to affect production or to compromise product quality.

Read also → Why Software Development is Important for Business?

Factors That Contribute to Software Development Cost Estimation

1. Size of software

Size of your software is one of the biggest driver of software development cost and it is directly proportional to the costs too. So – the higher the no. of pages or screens in your software, the higher will be your software development cost. Usually, a small size software has more or less 20 feature pages, 21-40 in medium-sized and above 40 in large size software app. So, it’s obvious as the number of screen or feature pages increases, so does the complexity and development efforts and hence the cost will be higher.

2. Complexity

When it comes to complexity, the more features you add, the more complex it becomes. So, with the increasing complexity, the cost for software development also increases. For instance, if you want to develop a simple mobile application, you might opt for regular password/email sign-up. But if you want to have a social media sign-up then the software will require to integrate Facebook, Twitter or LinkedIn etc.

Other than the design complexity (animation & custom icons), there are other complexities too, such as data analysis and data migration complexities, and 3rd party integration complexities, etc. that must also be taken into consideration for estimating software development costs.

3. Time

Another important factor is ‘Time’ when it comes to software development costs. If your deadlines are inflexible or short, then the software development company will be needing additional time and resources to accommodate your time constraints. And, when extra working hours and resources will be engaged on your project, then your software development cost will be high.

4. Budget

Next on our list is the ‘Budget’. You simply cannot spend what’s not there in your pocket. The budget of the client is one of the major constraints when calculating software development costs. What you can do is to make a list of all the possible features and functions that you want in your app and then classify them into two categories i.e. ‘Good-to-Have’ and ‘Must Haves’.

Also, let the software development company know your budget from the very beginning so that they first accommodate your ‘must-haves’ within that budget and then add the ‘good-to-have’ if the budget permits. Otherwise, there is always a next time and you can add those features in the future software update.

5. On-Shoring or Outsourcing

Outsourcing software development to a professional software development company or developing it in-house have a major impact on software development cost. But, outsourcing software development to a professional software development company can be significantly reduced by 40%. Because there is a huge gap in the prices of software development services in developing and developed countries. In countries like China, India, Pakistan, Mexico etc. software development costs are relatively very low as compared to the European and American Region. So, when you are outsourcing software development you are getting the same quality at lesser price.

India and Pakistani Software Development Companies are gaining momentum very quickly, as these countries have become the latest attractive destination for offshore software development.

How Do We Estimate Software Development Costs at Code Creators Inc.?

Code Creators Inc. is the leading software development company in the USA and Canada. At CCI, we always begin cost estimation by conducting a detailed one-to-one meeting with the client for need analysis, to analyze their goals, and to gauge the scope of the software. The purpose is to resolve problems and find out the feature requirements.

The subsequent meeting then focuses on decoding clients’ requirement into possible software features and functionalities. A draft of business requirements in then documented, which is then verified by the client. Once the agreement between both the client and the company is achieved, then these requirements are broken down into smaller, short-term milestones along with a list of features to be achieved under the deadline.

Once a detailed analysis is complete, we provide a rough fixed cost estimate and time period that will be needed for software development. Code Creators Inc. guarantee both high-quality and on-time delivery of the software solution with the costs specified to the closest estimates.

The approach is transparent and easy-to-understand for clients. By dividing development process in stage, clients exactly know what and how much to expect when from our software development team. If you also want to leverage software development expertise of Code Creators Inc., then click here now and book a free consultation appointment.

How Much Does Custom Software Cost?

Now, comes the real question i.e. how much does a custom software development costs? The cost estimate given below would now be more understandable to you keeping the above factor in mind.

  • Compact software

If you want to develop Compact Software, it may cost between $5000 to $10,000. Compact software includes small-sized software, single-feature stand-alone, and prototype software.

  • Moderate software

Web or mobile applications are usually counted as medium sized software as they involve about 15 to 40 screens with critical features along with software remodeling and an MVP. The software development cost for medium-sized software ranges between $10,000 to $40,000.

  • Extravagant software

Extravagant software is enterprise-level software with multiple complexities in terms of features and functions, colossal data integration, and various third-party integrations etc. These type of software ranges from $40,000 to $100,000. All the costs mentioned here are specified keeping software outsourcing in consideration. Developing a software in-house may cost much more than this.

Bottom Line

Before investing any time and money in software development, you have to be very clear and precise in your requirements. These requirements must be well-documented to better understanding and clarification for all the stakeholder involved within the process. While estimating, the above mentioned contributors and driver of software development cost must also be kept in mind for precise calculations.

Code Creators Inc. is well-versed in developing custom software solutions for more than 10 years now. With a dedicated team of highly skilled and expert software developers, CCI has successfully developed software for Fortune 500 Companies in 45+ diverse industries. If you are also thinking about custom software development, then connect with Code Creators Inc. and leverage their impeccable expertise, then click here now and book a free consultation appointment.