How Much Does Custom Software Development Cost?

Any company looking to develop custom software is no doubt interested in understanding how much it will cost. However, the question doesn’t have a straightforward answer. 

Various factors have to be considered. At best, you’ll only be able to get is an estimate. The reason being that custom software development is a project in itself, and like any other project, there are always hidden costs and the possibility of delays. 

This post, nonetheless, answers the question of, ‘how much does custom software development cost?’.

Average cost of software development

The average cost of software development depends on various factors, such as the complexity of the software being developed, the industry it will be catering to, the scope of the software, the design aspect, and so on. 

It’s always a good idea to first determine the type of software you’re looking to develop. Once you have that, it can serve as a good starting point. For instance, let’s take a look at various industries and how much software for that industry would generally cost:

Healthcare: An EHR platform can cost you anywhere between USD 300,000 – 400,000. 

FinTech: A financial planning app will cost around USD 80,000 – 100,000, whereas a forex trading app would cost around USD 100,000 – 150,000.

Marketplace App: Such an application will easily cost you around USD 50,000 – 60,000. 

Logistics: A fleet management application would cost you around USD 100,000 – 150,000. 

Content Management System (CMS): A CMS will cost you around USD 6,000 – 10,000. 

Software as a Service (SaaS): The development of a SaaS product will cost around USD 125,000 – 250,000. 

Enterprise Resource Planning (ERP): An ERP system can cost you anywhere from USD 500,000 – 625,000. 

As you can see, there’s no straightforward answer to what the cost of software development is. It depends on various aspects. The figures quoted above are also estimates that may go up or down depending upon which features you want to add or not add, what kind of integrations you need, and what kind of design you’re looking for. Not to mention, the speed of development will also play a huge role in the cost of development. 

Average cost of custom software development

Custom software development cost becomes even trickier to determine. While software development for an industry might still have many standard features (thereby helping us to provide a quote), custom software is personalized to meet your needs. Therefore, breaking down its cost or simply providing a quote without understanding what’s needed is difficult. 

However, we can provide you with certain ranges depending upon the complexity and size of the development project. 

For instance, custom software development for a simple software with basic features and functionality will cost USD 20,000 – 65,000. 

Conversely, the cost of mid-sized projects that entail more complexity and features would be USD 60,000 – 140,000. 

Finally, for enterprise software or large-scale development projects, the custom software development cost comes down to USD 100,000 – 500,000. 

Software project estimation defined by team type

The cost of custom software development also depends on the type of development team as well. 

What follows is a table that will help you understand the difference in pricing of custom software development based on the team type that you’re using:

Disclaimer: The development cost used here is a benchmark cost and should not be used to calculate your custom software development pricing. 

Local Development Team (US)

This is when a software development agency is based in the US or your region of operations. You’ll be outsourcing your custom software development to them. 

In-House Development Team

When you have the necessary skills and team members within your in-house team, and you assing the custom software development to them. 

Freelance Developers

This is when you hire freelancers to work on the project. Such engagements are contractual and generally cater to a specific scope of the entire custom software development. 

Offshore Development Company

This is when you hire a development company based in a different country than yours. When executed properly, this is one of the most cost-effective options. 

What are the key factors that affect software development costs?

When it comes to custom software development cost estimation, it is important to keep in mind the key factors that affect it:

• Software Type
• Development Team Size
• Software Complexity
• Project Size
• Platform
• UI/UX Design

Software Type

You might need to develop different types of software, including software integration, new software development, software modification, and web development. 

Software integration involves integrating a ready-made module or package into your business process. 

New software development involves asking for software to be developed from the ground up based on your particular needs. 

Software modification is where you request an upgrade to your existing software. 

Finally, web development is when you request a new custom website or application for your business. 

Each software type requires a different kind of skill and possibly a different development team. Therefore, it plays a crucial role in answering the question: how much does custom software development cost?

Development Team Size

The size of the development team also plays a vital role in the cost of custom software development. The team must include a project manager, front-end developers, back-end developers, DevOps engineers, UI/UX designers, software architects, database experts, and SQA specialists. 

Their exact numbers can be calculated once the project’s scope has been finalized. Still, these roles are essential to ensuring that your custom software development project is completed on time and without bugs. 

Software Complexity

The extent of your custom software’s complexity will be a decisive factor in determining its cost. Software complexity includes various aspects such as customization level, number of features, intricacy of features, number of screens, integrations, etc. 

The more features you want to add to your custom software, the more complex it becomes (and more costly). 

Project Size

This goes without saying, but the size of your custom software development project is directly related to its cost. A smaller project would cost less, whereas an enterprise-level project would require a much larger number of resources and would cost much more as well. 

Platform

The platform on which you choose to run your custom software will also greatly affect the cost. For instance, an iOS app would cost more than an Android app. 

Each platform has its advantages and users. Therefore, it is important to understand and discuss them with your development team to ensure that you’re not missing out on anything.

UI/UX Design

How your software is received by its intended target audience is greatly dependent on its user interface (UI) and user experience. That’s why companies allocate an appreciable chunk of their development budget toward this key factor. 

The cost of the UI/UX design may increase or decrease depending on the complexity and size of your custom software. However, you should not skimp on this. 

Hidden cost of custom software development

Many companies make the mistake of not factoring in the hidden cost of custom software development when they are busy creating a budget for it. Since these costs are generally not calculated or factored in initially, they can become a potential problem in the future. 

Maintenance And Support

If you want to create custom software that runs seamlessly and offers an amazing user experience, then you need to consider regular maintenance and support costs. 

These include the cost for fixing security vulnerabilities, upgrading software, removing bugs, offering technical support, and more. 

Marketing Cost

If you’re building custom software for a particular audience, it stands to reason that you would also need to market it to them, right? That’s an additional cost that you must keep in mind when you’re doing custom software development cost estimation. 

How to estimate your project’s custom software development cost?

There are different ways of estimating the cost to develop software. We’ll briefly discuss some of them below:

Bottom-Up Estimating

For a large project, you begin by breaking it down into smaller tasks or assignments. Once that is done, you can schedule sprints comprising these smaller tasks. The sprints can help you determine the number of resources and time required for each task. As a result, you can assign costs to these sprints and then add them all up to get a fair estimate of your custom software development. This is one of the common practices when it comes to software development cost estimation. 

Top-Down Estimating

If you have a fixed budget for custom software development, you should use this approach. This particular approach helps you define the scope based on your budget. A good way to understand this approach is to understand that it helps you answer the following questions: What can we achieve within this budget?

Three-Point Estimating

You’ll be using a triangular estimation method that involves using certain values. The formula is given below:

E = (P+S+ES) / 3

E is your estimate, P is a positive estimate, N is a negative estimate, and ES is a random assumption based on the market price. 

Some other approaches of custom software development cost estimation include parametric, analogous, and t-shirt sizing agile estimation. 

Coding Crafts: Your Partner For Custom Software Development

As you can see, the custom software development cost varies based on a variety of variables. Why not reach out to Coding Crafts and let us not only develop a custom software that caters to your needs but also take care of all of this? We’ve got years of experience, and our entire process is transparent. Additionally, since we’d be operating as your offshore development team, you can rest assured knowing that you are opting for the most cost-effective option out there. Get in touch with us today for your first consultation!