How Much Does Software Development Cost?

Hieu Nguyen

Hieu Nguyen

How Much Does Software Development Cost?

How to build good software with the best balance between price and functionality? You probably ask this question at every software development meeting. Developing software is a major investment that contributes directly to your business’s bottom line. This article lays out 6 key factors to help you get a cost estimate for your software needs.

6 Key Factors Influencing Your Software Development Costs

There are several components comprising the overall costs of your software. A rough estimate would set you back between $3,000 to $250,000. The wide difference comes from the project scope (types, sizes, and complexity), the chosen platforms, the level of custom UI/UX design, the demands for back-end infrastructure, the hiring models, and the developers’ locations in the world. Read more to see which price range is right for your software.

Scope

The scope of the software, and its development costs, depend on several factors: the project size, required features, and your business development needs.

Size

Roughly speaking, the project size takes into account the size of the software and the size of the user base. The size of the software is measured by the number of screens or pages it has. The size of the user base is the number of end-users it is expected to serve.

Software development cost key factor - Scope

The project size varies according to your company’s needs - whether you’re a startup, an SME, or a big enterprise.

Small projects involve minor changes such as bug fixes for existing software, or developing a brand-new basic app. The basic versions are known as Minimum Viable Products or MVPs. Startups often require an MVP with only the essential features to generate a user base and boost their reputation. The features usually include a simple login interface, standard email subscription template, and simple or ready-made design elements.

Medium to large projects has requirements varying from a stand-alone integration or solution to several integrations into multiple systems, a database component, security, and extra functionalities. You may need this if your business is an SME. An SME often requires scalable software development to streamline internal processes and automate daily tasks. The project requirements would have the basic features plus additional ones, for example, payments, social media logins, data analytics, notifications, third-party integration, etc.

Enterprise projects require high security and reliability to enable the millions of tasks and thousands of employees involved in the daily operation of a large enterprise. Moreover, high security is essential to defend the system against hackers. These projects include an app with versions for multiple platforms, third-party integration, and a strict standard of protecting users’ personal data. Some other features include offline mode and video streaming capabilities.

The table below provides a quick rundown of the project scope, price range, and time estimates for 4 main types of software solutions scaled to their sizes. The simplest solution is software modification, and the most complex is developing new software.

  Small Medium Large Enterprise
Software Modification $3k-$10k
1-2 weeks
$20k-$50k
2 - 6 weeks
$80k-$150k
2-6 months
$100,000+
4+ months
Web Development $10k-$30k
3-6 weeks
$20k-$60k
4-8 weeks
$60k-$150k
6-18 months
$80,000+
3-6+ months
Software Integration $15k-$40k
2-6 weeks
$50k-$80k
2-6 months
$70k-$100k
6-12 months
$80,000+
6+ months
New Software $25k-$60k
4-8 weeks
$50k-$100k
3-8 months
$100k-$250k
6-18 months
$125,000+
8+ months

Sourced from SphereGen..

Common features

You should also consider the features to be included in the software. The more features you want for your software, the more time and cost it needs to build. It is beneficial to know the additional costs when you need to change the scope of your project. See the table below for a cost and time breakdown of some common features.

Feature Approximate Cost Average Time
Login/Registration $1100 - $1700 20 hours+
Payment options and integrations $2500 - $5000 50 hours+
Navigation $250 - $500 10 hours+
Offline mode $1000 - $2000 40 hours +
Media content From $1000 20 hours+
Customization $1500 20 hours+
Chat messaging $2000 - $4000 80 hours +
Data encryption $650+ 16 hours+
Audio or video streaming $2300+ 56 hours +
Multi-language support $350 - $750 15 hours

Common software solutions

Another quick way to estimate the costs is to look at a few common custom software solution packages and their basic costs. The majority of businesses use at least one of these packages. Of course, there are off-the-shelf solutions that you can purchase or subscribe to, such as WordPress for CMS, or Shopify for eCommerce. But if your business needs a custom solution, then the following table gives an overview of how much it costs.

Name Purpose Basic Cost
Content management system (CMS) Create & update content $20,000 - $50,000
Customer Relationship Management System (CRM) Gain & keep track of customers
Manage vendors and partners
$100,000 - $600,000+
Enterprise Resource Planning Systems (ERP) Manage daily operations $100,000 - $500,000
eCommerce Solutions Promote and sell products $20,000 - $70,000
Supply Chain Management Solution (SCM) Manage supply chains $100,000 - $300,000
SaaS products Cloud-based, subscription-funded solutions $25,000 - $100,000+

Note that the costs listed are for a basic package with the essential features only. More custom-built features will amount to a higher total.

Platform

Which platform do you want your app to work on: iOS, Android, or the web? This choice mainly applies to mobile apps operating on 1 or both platforms: iOS or Android platforms. You can choose between building a native app or a cross-platform app, which is a choice between going for 1 single platform or both.

Native App Cross-platform App
1app for 1 platform. User base limited to chosen platform. 1 app for 2 platforms simultaneously. Maximized user base.
More expensive. Need to write 2 codebases for 2 platforms. Cheaper. Write 1 source codebase for both platforms.
Better functionality:
- Faster
- Better performance
- Better UX - more user friendly
Functionality and design may suffer

This choice isn’t relevant to web apps because most web development languages are independent of the platforms. That means you can develop a web app that works on any system - Windows, macOS, or Linux.

UI/UX Design

Do you want to engage your users to keep using the software because they enjoy its aesthetics and ease of use? UI/UX design can be pretty pricey, but it is a critical element in retaining a loyal user base. An app with an effective UI/UX design is user-friendly. This design incorporates everything from the colors, icons, fonts, buttons, audiovisuals, and navigation, making the software a pleasant and straightforward experience for your target audience. The costs of custom UI/UX design depend on the complexity of the custom artworks, animations, testing, and redesign.

Back-end Infrastructure and Connected APIs

The back-end infrastructure handles many background processes that enable the app to function smoothly. Every interaction with the app needs to be processed, from logging in, updating information, and modifying the settings, to more specific functions such as uploading images or searching for a location on a map. Furthermore, data protection has become increasingly crucial for businesses and users, so the developers need hours to ensure data privacy compliance in every stage of development.

A more extensive app also requires integration with third-party services and systems, so purchasing APIs or having custom-built ones would strengthen the functionality of your software.

Hiring Model

How do you want to work with the developers? Do you want their exclusive expertise, or just their service on a less intensive scale? There are 3 hiring models: in-house, freelancing, and outsourcing.

An in-house team can guarantee the highest service quality but also demand the most time and money to hire, train, and invest in resources. At the other end of the spectrum is freelancing. Freelancing is the cheapest option, but the quality of work may suffer due to lack of motivation, unreliability, and poor communication.

Outsourcing provides the best of both worlds. It costs less than building an in-house team from scratch while allowing access to quality-assured developers. There are 3 outsourcing models:

Fixed-rate or project-based: a development team works with you on a short-term project with clearly defined goals, and a timeline that can’t be changed. This can be cost-effective but at the expense of flexibility and quality.

Hourly rate: you have the flexibility to hire a developer or a team, paying for the people-hour and resources needed for development. In exchange, the total cost may be vague, and you don’t have complete control over the personnel.

Dedicated team: You will receive exclusive access to a development team and fully dedicated resources from the outsourcing company, so the expertise and quality of service are better guaranteed.

Read more about Software Development Outsourcing.

Depending on the project’s scope, a development team can have 3 to 12 or more people. A team consists of 4 key roles: a project manager, developers, a QA tester, and a UI/UX designer. Medium to large projects need additional roles, such as business analysts and database engineers.

Developers’ Locations

When you decide on the outsourcing model, you also have a choice of developers worldwide. Their location is a significant factor in reducing your costs. Developers based in the USA and Western Europe charge much higher hourly rates than those from other places. It would help if you also considered time zone, cultural differences, and language barriers that can influence how you communicate with the outsourcing team, which may ultimately affect the total development time.

Here is a table of the average hourly rates worldwide, considering the developers’ work experiences.

Region Hourly rate
Junior
Hourly rate
Mid-level
Hourly rate
Senior
North America $80-$100 $120-$127 $140-$150
Western Europe $35-$45 $45-$55 $50-$80
Australia $70-$150
Eastern Europe $25-$35 $30-$40 $40-$50
South America $25-$35 $35-$40 $35-$50
Asia $20-$30 $25-$35 $35-$45

Asia is the most cost-effective region to hire developers. Click here to see why Vietnam is a good choice in Asia.

Summary

6 key factors influencing your software development costs

Investing in brand new software or modifying an existing one is a significant expense for any business, and the process can be overwhelming with so many factors to consider. It is wise to start this process with the discovery phase to lay out a clear set of goals and scope for your software. Scoping and setting goals enable you to know clearly what your software needs so that you can give the development team succinct instructions based on your requirements.

Ultimately, the total price comes down to the amount of people-hour and the complexity of the technology involved. Contact Orient Software and use our extensive expertise and affordable pricing to create a custom solution with the best balance between quality and cost.