According to Statista, revenue from software applications in 2021 increased by almost 30% compared to the previous year, and amounted to 273 billion dollars. This resource predicts that this income will exceed $400 million in 2025.
These statistics demonstrate the significance of software development and the benefits it brings to the business.
In addition to high profits, custom software development guarantees your brand’s uniqueness, operations security, and hitting your needs.
Which trends in custom software development should we expect in 2023?
- Cloud services growth;
- Artificial intelligence adoption;
- Web 3.0 implementation;
- Attention to Blockchain.
When it comes to converting an idea into reality, the question arises: “How much does software development cost?” Let’s figure out what affects the cost of development and how to calculate your budget.
What Are The Main Factors That Affect Software Development Costs?
Type Of Software
Depending on the type of software, custom software development costs can start from $10,000 and reach over $200,000. What software types exist and what are their different prices for development?
1.) Industry-Oriented Software
Each industry has its own specifics. For example, fintech requires reliable payment system development, the medical industry demands health records or diagnostic software, and for the automotive industry there is a need for navigation and/or autopilot functions.
2.) Software For A Specific Purpose
These solutions help businesses manage their resources: ERP (enterprise resource planning), CRM (customer relationship management), and Operational Management software.
3.) Technology-specific Software
Over the past decade, a number of new technologies have emerged. They have significantly changed the way to run and manage businesses. Solutions that have adopted AI (artificial intelligence) or IoT (Internet of Things) are a great example.
Software Features
The more features you want to implement in the software, the more expensive the development will be.
Business of Apps states that a simple app would cost about $20,000, for a medium-sized project you would have to invest approximately $50,000, and the budget for the software development of a complex application starts from $72,000.
To reduce your software development costs, you should prioritize the features you want to see in your final product. That’s why you should consider starting with an MVP creation to test your idea first.
UI/UX Design
The general appearance of the interface, namely buttons, combinations of colors, fonts, and icons, won’t affect the cost of software development significantly.
But sophisticated animation and graphics can. In order to stand out and develop your brand, you need to invest money in quality UI design.
Your customer’s impression of using your services will depend on how simple and clear-cut the navigation will be.
That’s why if you want to retain users, think over a well-structured UX design, which may cost more but bring better results.
Software Platform
Your target audience possibly uses different platforms such as Android, IOS or the Web. To reach more potential customers, it is necessary to develop software for all kinds of platforms.
To do this, you have to hire separate specialists to work on different versions of your software.. To save money, you may build a cross-platform application that will have a single code base and work with both Android and IOS.
Cooperation Model
There are three different cooperation models that may work for your business:
1.) In-house Team
You can independently search for employees, conduct interviews, and hire full-time employees.
Advantages: reliability, compliance with corporate culture, responsibility.
Disadvantages: a long recruitment process and regular outgoing payments such as salary, even when there are no tasks for the team to work on.
2.) Freelancers
There are a lot of freelance platforms such as UpWork that offer a wide choice of developers and at all possible rates.
Advantages: the ability to find a developer for any budget and the high speed of hiring.
Disadvantages: unreliability and the lack of confidence in the competence of the freelancer.
3.) IT Outsourcing
You can cooperate with contractors to effectively handle all of the IT activities or you can extend your team with additional experts.
For example, if you decide to create a Machine Learning algorithm for your supply chain solution you can power up your team with the needed expertise and hire Python developers.
Advantages: fast hiring process, payment for specifically performed work.
Disadvantages: possible mismatch of culture and values, and less control compared to running an in-house team.
Development Team’s Location
Depending on the location of the team, developers rates can vary greatly. For example, to get developers from North America you have to invest not less than $100/hour.
In comparison, developers from Eastern Europe charge $40-50 per hour. You can pay even less, around $25 per hour, if you choose programmers from South Asia, such as India.
But when choosing your team, pay close attention to the price-quality ratio.
Development Team’s Size
The size of the team depends on the complexity of your project. For a small project, in addition to developers, you have to involve at least a project manager and a tester.
If you’re building software of moderate complexity, consider adding a business analyst to this list. For a large project, it would be better to have a UI/UX designer, an architect, and a devops on board.
How To Calculate The Costs For Your Software Project?
Every project is different and there is no magic calculator that will estimate the budget for software development.
But there are some tips that will help you to get a fast and precise estimation when you work with a development team:
- Communicate your company’s values, vision, and goal.
- Provide as many details and requirements as possible.
- Send examples highlighting the specifics you want to see on your project.
- Control every step of the process and share your opinion with your team.
Conclusion
To sum up, software development costs can start from $10,000 and exceed $200,000 and more. Of course, the budget depends on various factors.
To calculate software development costs, you have to take into account the type of software, its complexity, the cooperation model, and the developers team’s size and location.
For example, the cost for an eCommerce website would vary from $20,000 to $70,000, a basic CRM system costs approximately $100,000, and the price for a complex application such as Booking is about $300,000.
FAQs
How Much Does Software Development Cost?
Software development costs may start from $10,000 and can be more than $200,000.
What Determines The Cost Of Software Development?
The cost of software development depends on the size of the project, the number of features, team location, the platform and type of software you choose.
How Do You Price A Software Development Project?
To estimate the cost of software development projects, you have to explain your vision, give details about the application, and send examples.
