How much does a Custom Software Development Costs? Key factors!

aTeam Soft Solutions January 7, 2021

The demand for custom software development has increased as accuracy and business optimization have become the key factors in sustaining growth. With that, this is one of the most frequent questions asked by companies or business owners who are looking to develop custom software for their business or start-up – “What is the cost of custom software development?” Whether it is your growing business or you have decided to start your organization and want to scale your business better, reach more markets and increase your ROI, a software app is essential. The software landscape is rising and every modern business is wanting to create a better customer experience, to create something unique and innovative and with technologies like Artificial Intelligence, Machine Learning, Internet of things and AR/VR, enterprises are creating robust software projects. Although all custom software projects have different execution or development processes. And while there is no definite answer to what the actual cost is or a one-fit formula to know the precise cost of custom software development, we can help you determine the estimated costs of the overall development, considering the top factors which affect the development cycle and its cost.

Each project has its own requirements, decision-making standpoint and budget allocation, hence, organizations need to consider the following factors to tackle a custom software development –

  • Market-fit Product
  • Software Features
  • Deployment Platforms
  • Development Planning
  • Budget Planning
  • Execution Plan

Here, we will have a comprehensive take on how custom software development works, what factors affect its cost, and some insights about the average cost of the development cycle. But before you can understand the costs of developing a custom software, you must understand what custom software is. Let’s begin!


What is Custom Software?

Factors Affecting Custom Software Development

Average Cost of Custom Software Development

Get the Estimated Cost of Your Project

Final Thoughts

What is Custom Software?

A custom software is a solution developed specially developed for a specific organization or company, in accordance to their business requirements, which is in contrast with other broadly used mass-market applications i.e., it is different from the usual off-the-shelf solutions like Microsoft Office, which caters to a generalized user-base. Some people often get confused between a custom software and customized development. But customized development is different as it’s optimizing the existing app according to user’s or company’s requirements and new expectations. Whereas, custom software is a user-specific product, tailored in line with your business requirements like a banking desktop app or ERP software for a company.

A custom software development process involved requirement analysis, code building, software testing, and deployment. It offers a personalized experience for users while lowering the development cost and increasing ROI. Moreover, the scalability of a custom software is better than a readily built software.

Let’s move onto the factors that affect the cost of custom software development.

Factors Affecting Custom Software Development

Factors Affecting Custom Software Development

There are several things which go into a mix of total cost custom software development. Regardless of the level of expertise of the software developers you hire and the location, there are various other key factors which will determine the eventual cost of your custom software. To get clarity of that cost, you must know what impacts the development cost. In this section, we will go through a list of critical considerations that impact your project lifestyle.

  • Deployment Platform

    Software development prices may vary according to the deployment platform you choose for your software because each platform has its own specifications. If your app is for mobile devices, then it depends upon operating systems and since each one has a different number of devices that the app will be deployed for, the cost will differ accordingly. For example, Android is the most popular venue in the market as it’s captured other devices markets, apart from mobiles, like laptops, wearables, streaming tools, smart appliances etc. But it’s a massive platform and if you choose it, the scalability will escalate and you need a robust structure to have efficient performance, which will require more development efforts.

    Other platforms include iOS, Windows, Mac, Linux, Unix and Web. If you deploy a software in different native environments, the development team will increase and will cost you higher than a single dedicated team. To avoid that, you can choose a cross-platform development process. Furthermore, the tools used for the deployment of your software will also affect the cost.

  • Size of the Software & its User Base

    The size of the software and its user base affect the cost of development. Which means, its magnitude i.e., the number of modules/pages/screens play a role in determining the costs as well. The more the number of modules or screens there are, the more work will the software require and the longer will it take to develop the software.

    The size of the software user base of the solution refers to the number of end-users for that particular software. The size and user base of the software are the important factors of the development costs because the software with a large user base and a greater number of screens or modules will need to be optimized and tested more extensively. That will make the whole development and testing process more expensive, leading to the increased overall cost of the software.

  • Complexity of Software

    The complexity of the software plays a significant role in determining the cost of development. It basically refers to how complicated the logic behind your software is. If the product has complicated logic, it means the development, testing and deployment will be more challenging. Take a look at these things which can complicate the logic –

      • The complexity of the features of the software.
      • Technological complexity.
      • The complexity of software’s design.

If the software requires a complicated set of features or needs to be conditioned according to the complicated business rules, or if the development cannot be completed with the traditional technologies, the process becomes more time consuming and costs more. Take s stock trading software for instance. It requires complex real-time functionalities which take more time and effort.

The development complexity is determined by the development team, after discussing the requirements with the client. Usually, the complexity level is categorized between basic, medium and high but there are some set criteria for each category and the team evaluates it in terms of hours i.e., the time it takes to develop.

  • Development Approach

    The project’s plan includes modules which help you get a clear idea of the execution strategy and the budget, be it choosing a framework or deciding on a development approach. After that, you need the right development approach that’s fast, reliable and has fewer errors. The best approach to follow is agile development, which involves an iterative process. Most of the organizations choose agile development processes that have their tasks distributed across sprints to address feedback from stakeholders and developers.

    Agile Development Process:

  • Conception
  • Initiation
  • Design 
  • Development
  • Testing
  • Deployment

Agile development follows a cost-effective development lifecycle. How? Let’s take a look–

–  You create a roadmap which clarifies tasks, allocation, and iteration metrics in the initial stage, which reduces team effort and technical debt.

–   With a prototype, stakeholders get a peek into your product, which then leads to feedbacks and improvisations before the product hits the markets

–  With iterative sprints, every version is integrated with user feedback, which minimizes development time and bugs.

  • Integration with existing/external systems

    Nowadays, most of the applications require some form of integration external (third-party systems), like payment gateways, ERP, maps, and/or CRM. These third-party APIs help you add more functionalities to the apps. Some of these are straightforward while others can get complex and consume more time. For instance, integrating a third-party reporting system and source databases into a software.

Requirements such as these can significantly increase the software development costs. It may be due to compatibility issues. So, understanding the compatibility of third-party APIs with your software and the costs of integrating becomes very important.

  • Database Migration

    Some software projects need the migration of existing data. It’s a taxing job if there’s a large volume of data required to fit into the new systems or if major adjustments are required. This can cost you a fortune. However, you can create a backup of the existing data to reduce the costs and the risk of losing any important data during the migration.

    This is where a software company comes into the play. They help you move your data between systems, locations, formats, and include data conversion, profiling, validation, cleansing, and quality assurance. Migration is a complicated process and it’s safer to hire a software company for seamlessly migrating your data.

  • Design Requirements

    To keep the users engaged, you need attractive, creative and visually appealing designs in your software. Depending on the requirements of the design and customization, there might be a spike in the development efforts and the overall development cost of the software may increase. Elements like custom illustrations or animations make your software look aesthetically pleasing, however, there’s a high price tag as it requires more time and effort. It’s the small details that matter. Take an example of “pull-down refresh” feature animation, there’s some animation that shows up which indicates the request is being processed. But even something small like that demands custom designing effort, which adds up to the development cost.

  • MVP Requirements

    MVP (Minimum Viable Product) is a great way to receive feedback before your product hits the market. Suppose you have a great idea but you want to find out the users’ reaction and see if it can be a success or not. So, you create a beta version of the product and release it. This MVP may take up 20-30% of your total development cost but with the reviews, you would be able to understand the usability of the product and analyze what needs to be done. You would also get more time to work on the complex features of your software.

Average Cost of Custom Software Development

Average Cost of Custom Software Development

Let’s first discuss the three categories that web and mobile applications are divided into, by their complexity level –

  • Basic Applications – These can be built quite fast because their functionalities are simple. This will take approx. 500-900 hours.
  • Medium Complexity Apps – This has more complicated features and takes more time as compared to basic ones. This will take approx 900-2000 hours.
  • Complex Apps – This software is highly time-consuming as it has complex architecture. It involves complex security matters, multiple integrations etc. This software will take more than 3000+ hours to complete.

Those were the subjective categories. Now let’s move on to the pricing models of average custom software development.

Based on the Software Type

There are three types – Enterprise, Mid-Market and Small Scale, each of which affects the pricing model differently.

An enterprise-level custom software requires a team of quality developers, which may range between $100,000 and $500,000.

Mid-range software may cost you anywhere between $45,000 to $80,000.

Small-Scale software may range anywhere between $10,000 to $30,000

Based on Work Hours / Location

This pricing model varies based on the location of your technology partner. For example, the average cost of a custom software in India and asian countries will differ from that of the US or any other region. In addition, the large-scale software owners may see a spike in their overall costs as these projects take more resources and time to develop. Each region has its own average hourly rate of custom software development. For instance – in the USA, the hourly rate goes from $50-$150/hour, whereas, it could be about $20-$25/hour in India.

Size of the Development Team

Each project has a different size of the development team, which the software development companies provide based on the size of your project. If your project is vast, they will provide you with a bigger team which will have higher rates.

If you want to hire in-house developers, the cost will depend on the project type, size and scale. For instance, if your project needs a front-end developer, back-end developer, a Project manager, a QA expert, each of which costs $20/hour and the project may take 3-4 months with 8 hours a day work. Your total cost of development would be between $25000-$35000.

But if you choose to hire an offshore software development company, they’ll coordinate with your in-house team and will free you from any extra hassle of recruiting.

Fixed Price Package

A fixed price cost package is an agreement between the vendor and the stakeholders, which covers the cost of development per hour, project work statement and a detailed payment schedule. The payments are mostly offered in milestones after certain tasks are done and the project owner gives a validation.

Get the Estimated Cost of Your Project

In order to get the right software development cost estimation, it is necessary for you to provide the company that you’re hiring, with some basic information about the project. Here are the things we recommend you to share with the company/vendor –

  • Explain your idea of the product that you want to create.
  • Tell them the features that you have in mind, that you want to include in your software.
  • Share wireframes (if you have any)
  • Give examples of your competitors or their software, and the features you like of them and want to include.
  • Which functionalities you do not want.
  • Specifications (if you have any)

You will have a discussion with the vendor about the idea. A lot of vendors will help you collect the necessary data about your idea or project and help you form it better so your vision is clear. After sharing all the information about your project, you will get an estimated cost of your custom software development and you can plan your budget accordingly.

Final Thoughts

If you want to build a custom software and are wondering what the cost would be, there is no set answer for that. But there are some things that you can consider beforehand, that affect the overall cost of the software development process and determine the estimated costs. While making a budget for the project, keep in mind that there are factors like complexity level, location, type of software and development team – based on which the cost varies.

Here’s a quick list of the things that you should look for –

  • Type of software that you want to build.
  • The complexity level of your software, its features and size.
  • Your location and the software development hourly rates of the region.
  • Different hiring options: in-house team, offshore/outsourcing company, freelance developers, etc.

Consider the various factors discussed in the blog before selecting a vendor and remember that a vendor can only give you the cost estimation of your project after getting all the necessary information about the project. Therefore, having clarity of what type of software you want to develop is important. If you request a proposal to the vendor with everything sorted or in place, you’ll receive the information that you need to picture the project entirely.

How can aTeam help?

Whether you’re looking forward to turning your unique product idea into reality or to upgrading your already existing software, aTeam has got you covered. We offer customized, robust, scalable and highly secure custom software development services to carve the future of your business.

We are a team of exceptionally skilled software developers and have developed dozens of software for over 75+ companies. Our team will analyze your business needs and help you develop and implement any kind of software that will improve your company’s efficiency, generate better revenue and take your company to the next level!

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Bijin Azeez July 13, 2018