Are you considering building your software but wondering about custom software development costs?
You are not the only one. This question is tricky even for experienced software-building giants because the cost really depends.
The primary reason is that custom software development services provide endless opportunities to implement your ideas. You get to choose how your software looks, behaves and does. In addition, custom software offers the highest data security since you are the only one with access to the code.
You can also incorporate your business growth plans into the architecture of your custom tool to expand its functionality easily over time.
But how much does it cost to develop software that combines all the best features?
In this blog, we will investigate the aspects constituting custom software development pricing and explain the estimation process at Syndicode.
Average cost of custom software development
Unfortunately, little research exists to provide a definite answer to the question of “How much does custom software cost?”
A quick look at some well-known digital products shows a broad range of initial costs:
- The first version of Facebook (Thefacebook) was created for $2,000;
- Airbnb’s founders spent over $30,000 before they could raise investment;
- WhatsApp launched after securing funding of $250,000;
- The initial investment in Instagram was $500,000;
- Dropbox required $1.2 million before it could launch;
- Canva, as we know it today, went live after a $1.5 million investment;
- Microsoft spent over $1.2 billion on Windows 10.
As you can see, a solution’s complexity and innovativeness have a direct impact on how much it costs to develop software. Additionally, factors such as errors from insufficient planning and poor quality assurance can significantly inflate the initial estimates.
To provide you with some numbers to refer to in your decision-making process, here’s a rough estimate of custom software development cost based on the project’s scope and complexity.
| Project size | Estimated cost | Project example |
|---|---|---|
| Simple (up to 6 months, 1–3 specialists in the team) | up to $50,000, depending on the team’s rates and development specifics | A custom website having the following features: – Trendy look in accordance with the brand’s visual style; – Product catalog; – Product search; – Shopping cart; – Payment method; – Content management system (WordPress); – Basic analytics |
| Medium (up to 12 months, 4–6 specialists in the team) | $50,000–$200,000 | A custom marketplace with automated order processing and reporting |
| Large (ongoing development, 5–10 specialists in the team) | Starting at $200,000 | A unique solution built from scratch with incremental development of new features |
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Contact usFactors that influence software development price
We already touched on that earlier, but let’s discuss in detail what can make your project more or less costly. Knowing these factors will help you avoid mistakes in planning and estimation and stay within budget.
Besides, you will be able to ask your development partner, “How much does it cost to develop the software I have in mind?” and evaluate the reasoning behind their answer.
Target platforms
The number of platforms targeted and their diversity significantly impact the time and cost of custom software development. Here are some key points to consider:
- Developing for a single platform on mobile (iOS or Android) allows the team to concentrate on optimizing the application using native tools and languages, such as Swift for iOS and Kotlin for Android;
- Cross-platform development often reduces costs compared to creating two separate native apps due to the use of a shared codebase. However, it may lead to higher costs later for performance optimization or platform-specific adjustments, which are necessary due to differences in device hardware and operating system capabilities;
- Web app development generally costs less than native app creation because web apps run within a web browser, which removes the need for platform-specific modifications;
- The cost of developing progressive web apps (PWAs) is similar to web apps but includes extra factors like offline functionality, background processing, and hardware integration via APIs;
- The cost of developing desktop applications (for Windows, macOS, Linux) varies greatly. Native desktop applications typically require more resources and time, especially if they need to support multiple operating systems;
- Hybrid apps embed a web application within a native app shell, potentially decreasing the cost of software development. This is because developers write the main application as a web app while still distributing it as a native app. Yet, hybrid apps may need additional resources for performance and integration testing to ensure a consistent user experience across all devices.
Read also: How to build an online marketplace?
Complexity of the software solution
This is a no-brainer: the more work required to achieve project goals, the higher the cost.
However, the challenge often lies in precisely defining what the project should accomplish, especially with innovative projects that involve exploring what works and what doesn’t.
For example, a login functionality could be a simple form with fields for username and password. Alternatively, it might use two-factor authentication or even allow users to log in with their Google account.
While all these options serve the same purpose—user authentication—each requires different amounts of time to implement and demands progressively more skills from a developer, increasing the cost of custom software development.
How feature complexity impacts cost
| Feature | Implementation | Est. timeline | Est. cost |
|---|---|---|---|
| User authentication and authorization | Simple form with fields for username and password | 5–8 days (from scratch) | $1,000–$4,000 |
| Login form with two-factor authentication (2FA) | 11–17 days | $2,000–$8,000 | |
| Login form with 2FA, OAuth authentication, and single sign-on | 19–29 days | $4,000–$14,000 |
That’s why we insist that even MVP development involves a thorough discovery session to clearly define what will be implemented and how it will be done, thereby minimizing custom software development costs.
During a discovery session, you can expect the following:
- Clearly defined project objectives;
- A detailed list of specific deliverables;
- An inventory of resources required to complete the project;
- A timeline for the project, including milestones, deadlines, and critical paths.
Read also: How much does it cost to build a custom mobile app?
Technology stack
The choice of programming languages, frameworks, databases, and tools significantly influences the cost of a custom software development project, albeit indirectly. Here are the key factors:
- Developer availability: popular technologies such as JavaScript, Python, or Java typically have a larger pool of developers. This availability can lower costs due to competition. On the other hand, niche or newer technologies may have fewer available qualified developers, leading to higher costs because of their scarcity;
- Development speed: certain technology stacks, like Ruby on Rails or Django for Python, provide pre-built code and functionalities. These features can reduce the amount of code developers need to write from scratch, lessening labor hours and costs. This also applies to tools used for debugging, testing, and deployment;
- Scalability: SaaS development using technology stacks for cloud platforms, which inherently support scaling, may be more costly upfront. Yet, it tends to save money over time by allowing for resource adjustments without significant reinvestment.
- Maintainability: technologies known for easy maintenance due to strong community support and thorough documentation, such as React or Angular, also help decrease custom software development costs long-term;
- Licensing fees: opting for open-source technologies usually costs less compared to proprietary solutions, such as some Microsoft technologies or specialized database systems;
- Integration capabilities: some stacks integrate more smoothly with existing systems. For example, a .NET stack may be more suitable in an environment already utilizing other Microsoft products and services, ensuring compatibility and minimizing integration costs and potential issues.
Read also: How to choose the right tech stack for your project?
Design requirements
When budgeting for the visual components of your software project, consider these crucial aspects:
- Complexity of UI design: advanced graphics, animations, and interactive elements take more time and expertise to develop, thus increasing custom software development prices. In addition, custom UI designs can significantly boost user engagement and satisfaction but are pricier than using pre-designed templates;
- UX design complexity: effective user experience design relies on extensive user research, including usability tests, interviews, and surveys. These activities are vital for crafting an intuitive product but require more resources and time. Additionally, complex user workflows necessitate more in-depth prototyping and testing phases to ensure usability;
- Cross-platform compatibility: designing software to provide a consistent experience across various devices and platforms adds to the workload, as a designer needs to consider different screen sizes and orientations;
- Accessibility features: implementing additional design standards and testing for compliance with regulations enhances accessibility but also increases the complexity and cost of the design phase;
- Branding: integrating the software’s design with existing company branding (colors, logos, fonts) can range from straightforward to complex, depending on the branding guidelines and the desired level of integration;
- Design documentation, such as wireframes, style guides, and design specifications, is essential for clearly communicating the design intent to the development team. While its creation takes time, poor or unclear design specifications can lead to increased development time due to confusion or the need to correct errors.
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Write to usIntegration with other systems
Integrating software with other systems is essential in most business environments. Here are key factors that can influence the overall cost of custom software development:
- Compatibility: differences in data formats, protocols, or technologies can complicate integration, requiring additional tools or middleware to bridge these gaps;
- Number of systems: each additional system to integrate often brings its own set of challenges and requirements, which can increase the complexity and cost;
- APIs: systems with well-documented, modern APIs are generally easier and less costly to integrate. If existing APIs do not meet the requirements, your development team may choose to develop custom APIs. Yet, this is likely to increase the project’s initial and ongoing maintenance costs;
- Maintenance: custom or complex integrations, like a custom CRM, often demand greater maintenance efforts, subsequently raising custom software development costs.
Read also: How to build a custom LMS?
Data migration
Transferring data between storage types, formats, or computer systems is a critical aspect of many custom software development projects. It’s especially often requested in learning management system development or when updating legacy software.
Here are the key factors to consider when estimating how much it costs to develop software:
- Data volume: larger datasets require more resources to transfer and can extend the time needed for migration, thus increasing costs;
- Data quality: data stored in old systems often needs cleaning and standardization. This requirement can add considerable time and expense to a migration project;
- Business logic integration: if business logic needs to be embedded or adjusted during migration (for example, integrating new calculation rules or workflows), it can significantly raise the complexity and cost;
- Downtime: database migrations often require downtime, during which systems might be partially or fully non-operational. This downtime can have direct financial impacts, especially for operations that depend on continuous data availability, such as banking systems or huge retail platforms.
Development team structure
The composition, expertise, roles, and management of a team significantly affect both the team’s efficiency and the cost of custom software development. This explains why software development costing a specific amount at one provider may cost differently when estimated by a different team.
Consider these aspects:
- Team size: larger teams may work faster but also drive up costs due to higher salaries and overheads. Conversely, a smaller team might be more cost-effective upfront but could take longer to deliver the project, potentially increasing total costs over an extended timeline;
- Expertise levels: including senior developers in the team may raise upfront salary costs but save money in the long run due to their efficiency, experience, and ability to prevent or quickly resolve complex issues;
- Team composition: teams with members who can perform multiple functions (e.g., a developer who also manages database administration or a QA specialist with security testing expertise) can reduce the necessity for a larger team, thus lowering the overall cost of software development;
- Specialized roles: certain projects may require specialized roles, such as data scientists or security experts. Although these roles may increase costs, they are often justified by the substantial value they add in terms of product quality and market fit.
| Role | Average annual salary (USA) |
|---|---|
| Project manager | $56,873–$137,633 |
| Software developer | $66,147–$168,056 |
| UI/UX designer | $56,640–$189,641 |
| QA engineer | $32,152–$111,542 |
| DevOps engineer | $85,661–$182,847 |
| Business analyst | $54,938–$129,076 |
Location of the development team
The location of the development team plays a crucial role in determining not only direct costs, such as salaries, but also indirect costs, which include communication and operational efficiency. Here’s how:
- Regional wage differences: labor costs vary significantly across different countries and even within regions of the same country. Typically, countries like the United States, Canada, and Western European nations have higher wage standards compared to Eastern Europe, Asia, or Latin America;
- Talent availability: some regions boast a rich pool of talent in specific technologies supported by local educational institutions, tech hubs, or industries. This can reduce recruitment costs and lessen the need for extensive training. Conversely, in tech-heavy locations, competition for skilled developers may drive up salaries, while in regions with lower demand, wages may remain more moderate;
- Time zone differences: teams located in time zones closer to the client’s location typically enable smoother communication and quicker responses to queries or issues. While it’s entirely possible to work with significant time zone differences, it demands extra management effort;
- Cultural differences and language barriers can affect the effectiveness of communication, understanding of the project, and ultimately, the efficiency of the development process. Overcoming these barriers may require additional resources or adjustments in project management practices;
- Legal costs: different countries have varying laws regarding data security, privacy, and employment, which can introduce additional compliance costs. The ease of enforcing contracts and the stability of the legal environment also differ by location, potentially impacting risk and associated costs.
Software engineer’s hourly rate in top popular hiring locations
| Country | Average hourly rates |
|---|---|
| United States | $50–$150 |
| India | $20–$45 |
| China | $30–$60 |
| Germany | $30–$80 |
| United Kingdom | $30–$70 |
| Canada | $35–$65 |
| Brazil | $35–$55 |
| Poland | $40–$60 |
| Ukraine | $45–$60 |
Development methodology
Different methodologies approach planning, executing, and managing the development process differently. Each has its own set of practices that can either increase efficiency and reduce costs or lead to higher expenses if not managed correctly.
Here are key methodologies and their impacts on custom software development costs:
| Methodology | Characteristics | Cost implications | Best for |
|---|---|---|---|
| Waterfall | Sequential; Clearly defined requirements and scope | Predictable costs and timelines; Risk of overruns if changes are needed; Testing might be costly | Projects with very clear, fixed requirements where predictability is more important than flexibility |
| Agile | Iterative; Emphasizes collaboration and small, rapid releases; Requirements can evolve throughout the project | Flexible and prevents costly reworks; May incur ongoing costs that are hard to predict; Reduces wasted effort | Projects where requirements are expected to evolve |
| DevOps | Focuses on CI/CD; Aims to bridge the gap between development, operations, and QA; Emphasizes automation and rapid deployment | High initial setup costs; Reduced downtime and faster recovery; Lower long-term costs | Projects that demand high uptime and need tight collaboration between development and operations |
Technical maintenance of your software
Upon release and deployment, a software product needs oversight to ensure it continues to run smoothly and securely. This also helps the software adapt to changing business needs and technological landscapes.
Therefore, be prepared to include routine updates and upgrades, bug fixes, and performance optimization in the total cost of software development.
Start your project off on the right foot
Have your project requirements clearly defined and aligned with your business objectives and market expectations. Hire a business analyst to avoid overspending.
See servicesAverage cost of custom software development by type
We analyzed the price ranges shown in Google search results for the query “How much does it cost to build custom software?” Here are the average values for different software types.
Note that these are very rough estimates, but they can serve as a reference if you have no prior experience with custom software development.
| Custom software type | Average price |
|---|---|
| Content management system (CMS) | $50,000–$450,000 |
| Customer relationship management system (CRM) | $95,000–$650,000 |
| Enterprise resource planning system (ERP) | $45,000–$400,000 |
| Marketplace | $40,000–$500,000 |
| Software-as-a-service (SaaS) | $60,000–$150,000 |
| Learning management system (LMS) | $75,000–$500,000 |
| Minimum viable product (MVP) | $20,000–$150,000 |
How to make your own software development cost estimates?
If you feel confident enough, you may try and estimate how much it costs to develop your software independently. Here are the basic steps to follow:
- Define the scope and requirements. This involves conducting meetings with project stakeholders and collecting all functional, non-functional, and business requirements. Next, you should prioritize and outline what is included in the project and what is out of scope.
- Create tasks. Break down the project into smaller, manageable components and identify which team members will handle each component.
- Estimate time and resources. Use historical data, expert judgment, or estimation techniques such as Planning Poker to estimate the effort required to complete each task in terms of person-hours, person-days, or person-weeks. Then, determine what and how much resources are needed for each task, considering the skills and expertise at hand.
- Calculate costs by multiplying the estimated effort by the cost of the resources, including salaries. Add costs for infrastructure, tools, licenses, and other overheads necessary to support the development process. Finally, include a contingency budget to cover unexpected costs or overruns based on the project’s risk assessment.
- Consider integration, testing, and deployment costs.
- Add costs for maintenance and support.
- Summarize and document the estimation process, assumptions, and any expected financial impacts in a detailed report for stakeholders and decision-makers.
- Get approval from stakeholders and use the estimate as a baseline for tracking and managing project costs.
Cost estimation methods
Here are the top commonly used methods for estimating the cost of custom software development:
- Analogy method uses the actual cost of previous, similar projects as a basis for estimating software development costs. It’s effective when there’s a strong similarity between the current and past projects. This method is quick but relies heavily on the availability and accuracy of historical data.
- Expert judgment involves consulting experienced individuals who use their knowledge to estimate costs based on similar projects they’ve encountered. This method works best when historical data is scarce or the project involves new technologies or concepts that haven’t been widely tested.
- Bottom-up estimating involves estimating the cost of individual tasks or components of the project and then adding them up to get a total project cost. It’s one of the most accurate ways to estimate software development costs. However, it won’t work if there’s no detailed information about the project’s requirements.
- Three-point estimation provides three figures: the best-case scenario (most optimistic), the most likely scenario, and the worst-case scenario (most pessimistic). It’s useful for projects with significant uncertainty and risk as it helps accommodate uncertainty and refine estimates as more information becomes available.
Typical issues related to poor cost estimation
- Cost overruns often result from overly optimistic estimates, which arise when the complexity of a project is underestimated and potential complications or the need for specialized skills are not fully accounted for.
How to avoid this: Involve all relevant stakeholders in the estimation process to ensure no critical information is missed and the needs and expectations of different parties are accurately assessed. Additionally, use multiple estimation techniques to reduce bias.
- Project delays usually occur when risk analysis isn’t included in the cost estimation process. Without a buffer for potential issues, any minor change or obstacle might lead to significant cost increases.
How to avoid this: Identify potential risks and create a risk matrix along with contingency plans. Typically, it’s recommended to allocate about 10–20% of the total custom software development cost for these risks.
- Scope creep is a common issue in custom software development. It occurs when additional features and functionalities are added without corresponding adjustments to the budget and timelines.
How to avoid this: Invest time in thoroughly understanding and documenting all project requirements before beginning the estimation process. Clearly define what is included in the project’s scope and what is not to prevent scope creep.
- Increase in total cost of ownership arises when non-development costs such as project management, communication, training, deployment, and maintenance are overlooked.
How to avoid this: Involve stakeholders from all relevant departments early in the estimation process, not just the development team but also business managers, marketing, customer support, and any other departments that might be impacted by the project.
Consider having estimates reviewed by an external expert or consultant for an unbiased perspective.
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See servicesCost estimation process with Syndicode
Syndicode is a custom software development company and a full-cycle digitalization partner with almost a decade of experience. We specialize in custom marketplace development but recently have been expanding the range of our projects as demonstrated by our rich portfolio of successful cases.
To streamline communication and swiftly provide initial cost information to our clients, we break down the estimation process for custom software development costs into several steps. Here’s how we approach it:
- Consultation. During the first contact, we collect all the details about the client’s project, explore available capabilities, and discuss technical limitations. Our presales team uses different methods, like questionnaires, workshops, user stories, etc., to capture the requirements and identify pain points.
- Estimation. Our experts use a mix of estimation techniques to create a preliminary cost estimate. This process involves close collaboration between our sales and delivery teams to ensure a well-rounded perspective.
- Proposal presentation. Our team presents the cost estimate to the client, detailing the suggested technical implementation. We provide arguments for why this approach is the best solution and explain the various components of the cost, ensuring that all the information is clear to the client.
- Quote refining. Once the contract is signed, we enter the discovery phase. Our analysts conduct thorough market research and refine the list of features to be implemented, prioritizing essential elements. They also clarify the resources needed and detail the rough implementation plan into specific tasks. Based on this comprehensive analysis, we refine our quote to provide a more accurate estimate of software development costs.
So, how much does it cost to develop software?
How much does it cost to develop software? A quick Google search will tell you that average software development costs start at around $40,000 and go as high as the sky. While ranges this wide may look intimidating, remember that they describe all kinds of projects, from the smallest restaurant menu app to the Airbnb marketplace.
Besides, even building an Airbnb-like website, you can go modest and create an MVP with all the basic functionality minus the high-tech. Or you can add an ML-powered search and two-factor authentication to a restaurant menu. Both will affect the final cost of custom software development.
Therefore, an accurate estimate can only be made after the project requirements have been determined and deadlines set. That’s why our business analysts tend to ask plenty of questions about your idea and vision to provide you with an accurate estimate. They also do their research to mitigate the risk of exceeding the software development budget.
Frequently asked questions
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How to calculate the cost of custom software development?
When calculating software development costs, evaluate several factors: the software’s size and complexity, UI/UX design, the makeup of the development team, custom software development rates, and the platforms the software will operate on. The first step in estimating costs is to gather and analyze requirements. This involves an analyst identifying the key phases of the project, such as design, development, testing, and pre-launch activities. Each phase is then divided into stages, with the necessary resources for completion assessed. The next step involves identifying any risks that could impact the price of custom software development or project duration. Finally, add up everything and receive the total cost.
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How do costs compare between in-house and outsourced software development?
Outsourcing software development is typically more cost-effective than building and maintaining an in-house team. Our estimates suggest you could save about 15-30% by choosing to outsource. The main cost differences stem from overhead and recruitment expenses. When you outsource, the vendor handles the recruitment of skilled workers and ensures they have good work environment. Of course, these expenses are factored into their pricing. Yet, since software development companies often manage multiple projects and tend to operate in larger offices or employ remote workers, the cost distributed across clients is lower than what you would incur managing an in-house team and its facilities independently.
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How to reduce custom software development costs?
To save on custom software development, consider outsourcing to other countries, reduce the scope of your project, and don’t overlook testing. Thus, outsourcing to vendors in Eastern European countries like Poland, Romania, Slovakia, Czech Republic, Ukraine, Bulgaria, Hungary, or Moldova can significantly lower the cost of custom software development—by about 40-50% compared to the estimated cost of software in the U.S., Australia, and the UK. The quality of work is comparable due to similar levels of skill, experience, and language proficiency among developers. To reduce the scope of your project, focus on essential features and eliminate non-essential ones. This way, you’ll minimize the work required from designers and developers, saving costs. As for testing, while it may seem counterintuitive, investing in testing and timely error detection can prevent costly fixes and reworks in the future, ultimately saving money.
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Which engagement model helps reduce the cost of custom software development?
The choice depends on your project’s specifics. For projects with well-defined requirements that are unlikely to change, the fixed-price model is the most cost-effective, as it limits scope creep. If your project’s requirements are not clearly defined, the Time & Material model may be more suitable. This model allows you to pay only for the time spent and materials used, which can result in savings if the project requires less time than initially estimated. For longer projects with the potential for evolving requirements, the dedicated software development team model is the most beneficial. It ensures consistent quality and enables you to scale the team up and down based on project needs.
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How to manage the scope of a custom software development project?
The first crucial step in managing the scope of software development effectively is to clearly define the project’s objectives and expected deliverables. Document in detail what is included in the project and what isn’t. Next, divide the scope into smaller, manageable parts. Assign these parts to specific team members, clearly defining their roles and responsibilities. Make sure to implement a change control system. This system should outline how to handle change requests, who is responsible for reviewing change proposals, evaluating their impact on the project’s schedule, costs, and resources, and who approves them. Track work progress using project management tools such as JIRA, Asana, or Microsoft Project. Set up a schedule for updates to catch and address scope creep as early as possible. Conduct regular scope review meetings and educate stakeholders on the impact of scope changes on project resources, timelines, and custom software development costs. Finally, do not underestimate the importance of quality assurance. It ensures that deliverables meet the required standards and specifications outlined in the scope. Quality assurance also prevents scope creep by ensuring that features or functions not originally planned are not added unofficially.