How to Estimate Custom Software Development Costs?

 

How much does custom software development cost? To be honest, software development costs can range anywhere between 5K and 100K or Above.

 

What is this range, you ask? Well, software development costs vary. It depends on a lot of factors. And software development cost estimation is difficult even for companies that have been in this business for decades. 

We, in this article, will take a rough attempt to showcase the process of “how much does it cost to develop software”. Also, we will provide a rough estimate of the cost that you will incur to develop custom software.  

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Do You Need Cost Estimation For Your Software Requirement?

Before jumping right onto the estimation process - let’s know we need it in the first place!
Remember those numericals where we had to find out if XX men can do a work in YY days - then how many days would it take for AA men to do it? 
You sure do! 
So that’s what estimation primarily gets you sorted with - number of developers, amount of effort and cost required to do full justice to your project needs, feasibly.
So technically, you can still proceed without an estimation, but having one will streamline the process ahead better.
 

Methods of Estimation

Let’s have a quick look at the methods of estimation before we dig deeper : 

 

Why Custom Software is More Expensive than its OTS Counterparts? 

Custom software development means developing tailor-made software according to your unique business requirements. You get an inherent competitive advantage out of custom made software because your competitors have no idea about what it can achieve and where its restriction lies. 

Read more: Do I need a custom software solution?  

This competitive advantage puts custom software development costs on the higher side of the price bracket. Let me explain why custom software development is expensive with the help of an analogy. 

You need a wedding gown! So, you walk into Kleinfeld in New York and ask them to display their readymade gowns. You loved one in particular and you buy it. It cost you, say around 500$. 

But, in case you want to wear something that no-one has worn before, you need to custom make it. So, you provide your requirements to the tailor (silhouette, fabric, color, pattern, etc) and ask him to sew a dress from scratch. What will be the cost you ask - 1000$ he answered.

Boom! 

Though software development is nothing close to sewing wedding gowns, an analogy always helps. What I wanted to point out here is custom made things costs more than ready made solutions, both for wedding dresses as well as software. 

So, what are the software costs made of then? Let’s see the breakdown: 

[1] Scope of the software 
[2] Planning for the software (Platform, UI/UX) 
[3] Efforts that the software development team puts to guarantee delivery of the software in time 
[4] Infrastructure and physical resource cost 
[5] Software license purchasing and other cloud-related costs 
[6] Location of the software development team

Before we start analyzing software costs, lets in details take a look at the process of estimating the costs. 

 

[1] Scope 

A huge part of the software cost depends on the scope of the software. Project requirements are directly proportional to the cost of software. Every deliverable, every constraint, and every assumption will add to the costs. More you flesh out the scope, more precise your cost estimation will be.

 

[2] Design and Development  

Once the scope is fleshed out, the software needs to be designed and developed. It starts with wireframing and sitemap development and gradually extends to the designers working towards visual elements. Then the developers start coding and transform the static webpage into working software.

Integration With Other Systems and migration of Existing Data

The custom software needs to be integrated with external systems in order to communicate amongst themselves. A major portion of the time is spent in RnD to familiarize oneself with the API - data structures, protocols, and user authentication, etc. 

Whether consolidating data on a single platform or upgrading to completely new software, there is always some amount of data migration included in custom software development. 

 

 

[3] Testing and Deployment

A proper streamlined and rigorous testing process throughout the development stage is crucial. Testing is basically to ensure that bugs or broken links do not creep into production and compromise product quality. 

Read more: Web development process - step by step analysis!

Now that we are familiar with the process, let's see what factors contribute to estimating software development costs :

 

[a] Size of Software 

Software size is the main driver for estimating the cost of software development. It is directly proportional to software costs. It's simple - Higher the number of screens/pages, more the effort and higher the software costs. 

A small sized software generally has less than 20 feature pages, a medium sized application will range somewhere between 21-40 and anything more than 40 pages is a large application. 

So, if you are developing a large application with more than 40 screens and other various complex functionalities, your cost will be on the higher side. 

 

[b] Complexity 

Let’s take a small example to explain this - Ron wants to develop a mobile app. He wants his users to register on the app. He can opt for a traditional email/password sign up. Or he might want a social media signup. If he opts for a social media sign up, he might want to integrate Facebook, Twitter, LinkedIn, etc. 

What happens here is the more features you add to your software, the more complex it gets. With increasing complexity, the custom software development rates also increase. 

Apart from this, design complexity (custom icons, animations), amount of data analysis, the complexity of data migration, third-party integration, etc is also taken into concern when estimating software development cost. 

Also, iterations, especially when it comes to design, adds to the cost.  

 

[c] Time 

Time is also a factor when it comes to software costs. If you have a fixed deadline in mind, your software development company will need to expand resources to accommodate your time constraints. 

When more resources will be added, your software development cost will also increase. 

Also read: How BinaryFolks estimate software development time. 
 

 

 

[d] Budget

You can’t spend what you don’t own. Client budget is a constraint when it comes to estimating software development costs. Start with making a list of all the features that you want in your app. Now divide them into two groups - “Must have” and “good to have”. 

Let the software company know your budget at the beginning of the project. Include all the compulsory features and if budget permits add the “good to have” ones. If not, add them in the next release. 

 

[e] InShoring or Outsourcing 

You developing software in-house or outsourcing software development will have a major impact on the cost of software development. Software development outsourcing can reduce your costs by 40%. 

This is because there is a huge wag gap in developed countries and other developing and Latin American countries. Countries like India, China, Ukraine, Mexico leads when it comes to software outsourcing. 

So, outsourcing software development will ensure cost cutting and a high-quality product at the same time. 

India is the leading country for outsourcing software development and has been gaining momentum as an attractive destination for offshore software development. 

How Do We Estimate Software Development Costs at BinaryFolks?

We always start with a detailed meeting where we try and analyze the goal of the software, the purpose it’s supposed to solve and the feature requirements at a high level. We then have subsequent meetings to decode the high-level requirements and break them into basic features. 

We then draft a business requirement document and get it verified by our client. Once both parties agree, we break the requirements into smaller milestones where each milestone have a list of features and deadlines. 

After a detailed analysis of the whole thing, we provide you with a fixed cost and time estimate. We guarantee both on-time delivery and quality within the costs we specify.

This approach results in transparency too. Because the whole process is divided into milestones, our clients know what to expect and when to expect and can test accordingly. 

 

So, How Much Does Custom Software Cost? 

BinaryFolks divide software into three categories :

 

[i] Compact Software -

These are the small sized software, prototypes or single-feature stand-alone software. Developing this kind of software will cost you around $5k - $10k.  

 

[ii] Moderate Software -

Medium sized web or mobile applications with more than 15 screens that have few critical features, an MVP or software remodeling. The software development cost here will be around $10k - $40K. 

 

[iii] Extravagant Software -

Enterprise software with a whole lot of complex functionalities, multiple third-party integrations, huge data migration, etc. This will range from 40K to 100K. 

*** All prices are specified keeping software outsourcing in mind. In-house development or nearshoring will cost much more. 

 

Get A Free Software Consultation !

 

Why Does Software Development With BinaryFolks Make for a Wise Chocie?

 

Bottom line 

Before you invest money and time in developing it, be very clear on what the requirement is. Document them so that it is easier for your software development firm to understand and clarify. The cost depends on the requirements, so the step is the most important. We also have some tips to help reduce custom software development costs.  

BinaryFolks has been developing bespoke software solutions for almost a decade now. We have historically never faltered on our time and cost estimate - we maintain an excellent track record in this matter. If you are thinking about custom software development, leave us a message and we’ll get back to you at the earliest. 

You can’t spend what you don’t own. Client budget is a constraint when it comes to estimating software development costs. Start with making a list of all the features that you want in your app. Now divide them into two groups - “Must have” and “good to have”.

Let the software company know your budget at the beginning of the project. Include all the compulsory features and the if budget permits add the “good to have” ones. If not, add them in the next release.