How much does custom software development cost? To answer this question, one should understand the primary software development cost factors.
In the estimation of development cost, you need to grasp the average cost of software development, the size and project complexity, geographic location, team composition, platforms used, hiring models employed, and UI/UX design complexity. These are the elements having a direct impact on the cost of software development.
Statista indicates the global custom software development market to reach $812 billion by 2027. It is a major growth from the market’s current worth of $593 billion. What does it mean? In short, it means more and more industries and businesses will use custom software development to go in step with innovation and gain a competitive advantage.
Now, when knowing that custom software development is something many companies strive toward, figuring out how to get high-quality software products for a reasonable price becomes a major issue. To understand custom software development costs, it is crucial to know all the factors influencing it. Let’s explore the ins and outs of custom software development pricing and understand how companies can get top-notch software products without them costing an arm and a leg.
Average Custom Software Development Cost
How much does custom software development cost? This question does not have a straightforward answer. Here, everyone would say – it all depends on various factors involved. Yet, without going into great detail, we can shed some light on the average cost of custom software development.
Knowing the cost of software development is vital for accurate budget planning. To get some estimation of the solid figure, multiple discussions are often involved. Usually, a development vendor runs through all the project requirements and then offers some custom software development cost estimates.
In general, an average cost of a simple app with low-level user interaction and low backend processing is the cheapest option. Yet, depending on the tech stack involved, the cost can range from $20,000 to $500,000. For the app we mentioned before, the price tag will be closer to $20,000 and will require about 600-700 hours to develop. In turn, if you want a multi-platform app with a broad server-side application, be ready to pay a hefty six-figure price tag. Luckily, there are exceptions. Companies offer next-gen mobile solutions for prices lower than market averages.
At this point, painting a broad picture, there are different estimations on the average custom software development pricing (see Fig. 1).
The percentiles above indicate the average custom software development cost is about $36,000. However, to understand whether it is expensive or not, it is crucial to explore this price tag from the perspective of a company’s size and the type of product it seeks.
Software Development Pricing by Size
The average cost of custom software development varies from business to business. In such a case, there are three categories to explore:
- Startups. This category of businesses does not have much budget and needs to launch products as soon as possible to seek reputational gains. While having a tailored software solution is extremely important for startups, these companies usually cannot afford products with a price tag above $45,000. This figure is most relevant when issuing a Minimum Viable Product (MVP).
- Small and medium enterprises (SMEs). For this category of businesses, streamlining is the key. SMEs can afford more expensive software products and can wait longer for them to be developed. An average custom software development cost for SMEs can go up to $100,000 and may need up to 2,000 hours to deliver.
- Enterprises. This category of businesses has a well-established reputation and often employs thousands of employees. Respectively, the cost of custom enterprise software development can be much higher than for startups and SMEs. Moreover, these companies need to pay particular attention to compliance because noncompliance can lead to hefty fines. Usually, with enterprises, contract for custom software development cost per hour averages $50 per hour, and the total cost of the project can go as high as $500,000 with an average of six months needed to deliver the product.
The price tag for average custom software development costs changes correspondingly depending on the company’s size.
Software Development Cost by Product Type
Another critical aspect of understanding the average custom software development pricing is the type of project delivered. For example, customers might need a new Customer Management System (CMS), Enterprise Resource Planning (ERP) platform, a healthcare app, a SaaS product, or an AI-based voice agent. Respectively, for each particular product type, there will be a different average cost of custom software development. To illustrate, there are several examples:
- A CMS product costs from $10,000 to $50,000.
- An ERP platform costs from $150,000 to $750,000.
- A healthcare app costs from $10,000 to $500,000.
- A SaaS product costs from $50,000 to $200,000.
- A mobile app costs from $10,000 to $200,000.
At this point, an average custom software development cost fluctuates depending on the company’s size and the essence of the project delivered. While these two key aspects grant an understanding of average budget estimates for different businesses, you need to explore specific software development cost factors to have more accurate estimates.
Nine Key Custom Software Development Cost Factors
The budget estimates a company pursues directly correlates with all the direct and indirect costs associated with product development. These are both internal and external aspects at play. Understanding these factors grants a most accurate estimation of what a custom software development pricing will be. So, without further ado, let’s explore nine key custom software development cost factors.
1. Product’s Complexity
Similarly, the average cost of custom software development depends on the size of a company and the type of product it seeks. The price tag for a particular software depends on its complexity. Are you planning to build a Lyft-like app with an existing API? Or do you want a next-gen mobile app to bring innovation to the table? Naturally, the price tag will be either higher or lower depending on the software complexity.
When saying “complexity,” one generally means aspects like workflows, screens, automation procedures, number of processes involved, and overall broadness of the product’s functionality. To illustrate, if you want an app allowing users to create different profiles, use various payment methods, and customize all of that, be ready to pay a hefty price for developing such a product. Higher product complexity requires more complex logic and a more innovative tech stack. Respectively, it means a broader team of developers and more project hours spent.
2. Product’s Size
The following cost factor in custom software development pricing is the product’s size. Different software sizes are used for other objectives and industries (see Fig. 2).
Respectively, different industries and various objectives directly impact the software size you need. Larger projects and products will cost more. In such a case, startups often come with small product sizes and use MVP for product launches. It is directed to give users something to test as soon as possible. Large enterprises employ larger teams and build end-products after extensive development and testing. Luckily for startups, there are calculators allowing them to bring forward product cost estimates quickly.
3. Target Platforms
It is safe to say that there are three key choices in terms of platform-based software development. Most of the products work with iOS, Android, or cross-platform. The more platforms your product can work with, the broader the target pool of your potential customers. It means that if you want to get more revenue from software working on different platforms, you need to face a greater development fee.
Custom software development costs depend on your choice of platforms. In short, there is an option to save on development fees while choosing a cross-platform product. However, this type of software is used in a limited number of industries. It means that a client from the financial sector is unlikely to order a cross-platform software product.
In turn, building a native app on either iOS or Android is more expensive. Yet, with a higher price tag comes exclusivity, something that companies like Apple value the most. As a result, the choice of the platform is vital for custom software development pricing.
4. UI/UX Design Complexity
The next software cost factor originates from UI/UX design complexity. With the end-user experience market rising, more innovative and complex UI/UX design approaches are being developed (see Fig. 3).
It is safe to say that a more complex and innovative UI/UX design will bring development fees higher. What is more, the role of good UI/UX is hard to underestimate. An intuitive and functional user interface is one of the key factors influencing the software’s user retention rates.
In short, UI/UX design entails all the graphic elements, for instance, fonts and buttons, and all the functionality with the visuals. Therefore, a better UI/UX means a more intuitive user interface and a more pleasing experience for people using your product. In such a case, a custom software development cost directly depends on the UI/UX you choose to develop.
5. Internal Infrastructure and Connected APIs
Occasionally, an app operating in isolation offers massive user value. More often, there are apps linked to some external system with a heavy reliance on top-notch backend processing. What does it mean? It means that many well-known software products, such as Uber, conceal their complicated background processes behind an appealing and easy-to-use interface users interact with.
It will require additional complexity within backend processes if you want to add different payment options or integrate a geolocation feature. While UI/UX design is often coined as frontend, the backend does all the heavy lifting. From the product’s stability to its security, backend infrastructure is the unsung hero in software development. Respectively, the more complex backend will add to custom software development costs.
Luckily, instead of building the backend from scratch, some backend Application Programming Interfaces (APIs) are available. Consider the following options: REST API, Firebase, Backendless, and JHipster. Using APIs is a great way to adopt a functional backend with lower custom software development pricing.
Another cost factor is the number of integrations a software product allows and requires. The major part of all products being developed requires some degree of integration with APIs or third-party apps. For large and complex solutions, integration occurs with existing enterprise legacy systems. In short, integrating with APIs and third-party apps is a cheaper option than developing everything from scratch. However, with the integration factor involved, you cannot avoid the change in custom software development costs.
7. Geographical Location
In the modern globalized world, companies look for more affordable software solutions all over the globe. Respectively, while the quality of products differs, the cost of software development in different regions also varies. Therefore, it brings forward the option of outsourcing with its different price ranges (see Fig. 4).
Keeping the aforementioned aspects in mind, based on the geographic location of your development team, the custom software development cost will be different. In short, you will pay the most to U.S.-based developers and the least to Africa-based developers. In such a case, the golden middle lies somewhere in Easter Europe, the destination offering good-quality products for reasonable prices.
8. Development Team Composition
After location comes team composition. As we mentioned before, the project’s size directly corresponds to the number of employees you need on your development team. Therefore, a custom software development pricing model you use depends on the people you have working on the project. Essentially, to build software, you will employ developers of different expertise. There are three categories of developers in this respect:
- Junior. While the categories do not correlate to a developer’s age, they correlate to the years of experience a person has. For Junior developers, it comes from 0 to 1 year of experience. These professionals can perform simple tasks under mentoring of Middle and Senior developers.
- Middle. These professionals entail from 1 to 3+ years of experience. They can deal with complex tasks and work on projects independently.
- Senior. Finally, Senior developers have more than five years of experience under their belt. They can handle any tech stack and point out project aspects funneling unexpected expenses.
As a result, the team composition brings forward developers with a different range of experiences and different hourly rates you need to pay.
9. Hiring Model
The final cost factor correlates to the hiring model you choose. We scratched the surface of outsourcing before. Now, it’s time to look at different options with various custom software development pricing aspects at play. When looking for developers, you can appeal to these hiring models:
- In-house team extension. This model entails hiring software engineers who will work in your office. It means the best collaboration yet comes at a higher price.
- Outsourcing. This model entails outsourcing a project or its parts to a software development company that will do the job for you. It means less control over product development yet comes is lower than with the in-house option.
- Freelance. This model entails hiring developers through platforms like Upwork, TopTal, and Fiverr. It is the cheapest option, yet it entails a questionable quality of services.
Choosing between different hiring models changes the custom software development cost. That is why you need to select wisely.
Custom Software Development Cost Estimate from Intetics
At Intetics, we know how to bring software development costs down. While helping companies since 1995, we managed to work out a unique approach to software development. It proved to offer a 2x better time to market and can save up to 60% of custom software development costs. How did we manage to do that? The answer is three-folded:
- We use a progressive delivery model, creating a dedicated team for our product.
- We select engaging and relevant software engineers and experts who can achieve your project goals as quickly as possible.
- Throughout the entire product journey our team is responsible for the delivery and results throughout the entire product journey.
Intetics delivers long-term organization coupled with 100 percent dedication to your project for a reasonable price. As a result, you will have no headaches and hiccups associated with logistics and operations. What is more, the Intetics Offshore Dedicated Team has worked in almost every domain. The company offers 25+ years of experience translated into unique approaches that help clients achieve business needs.
The custom software development cost depends on a number of factors. In general, it is about the size of the company developing the product and the type of product itself. More specifically, the cost depends on the project’s complexity, size, target platforms, UI/UX design, integrations, backend infrastructure, geographic location, team composition, and hiring model you choose. Taking into account all these factors grant the most accurate budget estimates.
The key question is whether you have enough time to do the heavy lifting for yourself or you choose to let the professionals do what they can do best – deliver high-quality products for pricing meeting your budget.