Key Factors That Determine Custom Software Development Rates


Custom Software development rates vary based on technical expertise, technical experience levels, outsourcing experience, and industry expertise. Unsurprisingly, the most frequent questions we get asked are those dealing pricing, quotes and budgeting for software development. Software development is a service and as such, often times you cannot put a fixed price tag to it because it really depends on the specific project and most importantly, on your priorities as a client. On the other side, we understand that business owners and managers need to budget for such expenses and this is why we decided to clear a myth or two regarding software prices.

We also notice that a lot of clients get profoundly confused when attempting to decipher a quotation from a software company. In the hassle of doing business, sometimes software providers will miss a step or two when explaining what those numbers on their quote mean. Custom software development cost also varies widely depending on the customer’s requirements, hourly rates of employees, project complexity, and more. The list is very long and includes the total efforts of the team: planning and management activities, marketing research, design customization…

However, which are the most important drivers of the mobile applications development cost? So, there are a lot of factors that influence it, but the main ones are:

  1. Timeframe for delivery.
  2. Location Matter.
  3. Project complexity – app functionality
  4. Developer’s level of experience.

Now let’s take a closer look at these points.

Timeframe for delivery

There are generally accepted timeframes for software development and companies would usually add in some buffer time as well to account for any issues or delays that may arise. But sometimes, clients need to act fast because of various business conditions. In such cases, many software companies put what is known as “emergency rates” i.e. increased rate when they have to deliver a project within a very constrained timeframe.

This is because, as with any type of company, a software development agency is planning their workflow and other internal maintenance tasks ahead of time. If your software engagement warrants 20 to 30 developers for a timeframe of 2 years, you might pay a cheaper rate than you would if engagement only needed 3 to 5 developers for less than 12 months.

Mind you, committing to short-term software engagements raises the likelihood of benching developers while anticipating another project, resulting in long engagements with costlier rates. Of course, you might be skeptical about being committed to a team of outsourced software developers you haven’t worked with before. Long-term commitments offer better value overall, but it’s vital that your agreement includes a 1 to 2-month termination period.

Location Matters

It is not surprising that the different regions will have different standards when it comes to software development cost. The standard of living, local taxation, minimum wage and other sub-factors come into play. Custom software is usually generated in the location specified by the developers, but it is also uncommon for many clients to have their software developed in locations specified. Some developers might even choose to develop software in a country outside the client’s. This has cost saving measures and even provides the developer with a range of other options such as local.

Going with this logic, an app will cost differently depending on the region where you choose to develop, but “generally cheaper” does not equal “your specific app project will be cheaper” because there are other factors that come into play.

Complexity Of The Custom Software

Another aspect that should not be overlooked is the complexity of the custom software itself. If we were aiming for a bit complex software with multiple functions and interactivity, most likely we will have to pay more for its development, and the more time is needed to actually develop it.

Level of experience

A differentiating factor that must be taken into account is the level of maturity of a software development company and whether they have a solid management system in place. Surely, you can go with the cheapest company but this often means additional management costs that you should account for.

The level of experience of the developers who will be working on your project matters and there are three categories depending on experience:

Junior Developers – Less than 5 years of practical software development experience

Senior Developers – From 5 to 10 years of practical experience in software engineering

Expert Developers – Developers who have been into IT and software for more than 10 years or have a very specific knowledge – a programming language or technology that isn’t common.

Quality software companies place great importance on their internal management including adding experienced Project Managers to their teams, implementing Quality Control standards and regularly certifications by outside auditors to make sure that the final product they deliver will be in line with the industry’s best practices. Because of these additional costs, their rates may be higher but they give you a piece of mind that they will deliver a higher standard of work.

Now that we know about some of the factors that affect the cost of custom software development, it is important to take into consideration what our needs are. In the end, it goes back to the functionality of the custom software itself.

Codecreators has years of experience in this area and understand the factors that attribute to the cost of custom software. Our years of knowledge can help you evade most of the problems that surround custom software development. Get in touch with us today and we’ll make sure that you get your money’s worth in custom software development.