How Much Does Custom Software Development Cost In 2024?

Businesses need custom software to meet their unique needs and business processes. Custom software offers scalability, enabling companies to adapt their software according to their goals. It helps them gain a competitive advantage by streamlining operations and enhancing customer experience. Custom software can integrate tailored systems and tools, helping businesses maintain a smooth operation and data flow across the organization. Likewise, some companies might require custom software dedicated to fulfill their personalization, security, or cost-effective needs.

Since the need for custom software development varies from business to business, the cost is not universal. So, the most generic answer to the question we are often asked “How much Does custom software development cost?” is an estimated range between $5,000 to $700,000.

Then, we analyze and calculate its exact cost based on some major factors that impact the cost of building custom software, such as project scope and complexity, team size, and development methodology. Other influencing factors include the development team’s location, the number of features and tools, and maintenance and support services.

Key Takeaways

1. Average cost of developing a custom software range from $5000 to $700,000
2. Average Cost of Developing Simple Software range from $5,000 to $15,000
3. Average Cost of Developing Enterprise Level Software range from $150,000 to $700,000
4. Average Cost of Developing Mobile App range from $10,000 to $300,000
5. Project scope , Team size, Methodology, Tech Stack, Location, and Maintenance affect the price of building custom software.
6. Fixed price Model, Time and Material Model and Dedicated Team Model are 3 Custom Software Development Cost Estimation Approaches
7. Careful planning, Right Developer, Agile Methodology, Open source tech stack, Leveraging Cloud Computing and CI/CD are 7 Strategies to optimize custom software development cost

Custom Software Development Pricings: Based on Types

Since the type of software you want dictates the cost to develop it, we look at three major categories of software and pricing they usually follow. Whether you are building a simple software or a large-scale enterprise software, you will have to allocate resources. However, the major difference would be the number of resources consumed which will decide the pricing. Rest, we discuss what determines the software development price in each case, and what you can expect to incur.

• Simple Software

These applications often serve specific, narrow functions like basic data management or simple automation tasks. As a result, building simple software or small-scale web development projects follow straightforward pricing structures due to its limited functionality and scope.

Tools and platforms used for simple software development are generally more affordable and accessible, which keeps costs relatively low. Additionally, the testing and deployment phases are less intensive, which keeps the overall cost low and more predictable.

The use of open-source technologies eliminates licensing costs and the simplicity of the project allows for a more streamlined development process, minimizing the need for extensive project management and iterative testing cycles.

Maintenance and updates for simple software are also typically less complex and expensive, which further lowers the total cost of ownership (TCO). Here is what you can expect when building these simple applications:

• Enterprise-level Software

Enterprise-level software development involves a more complex and often multi-faceted pricing strategy due to its scale and the comprehensive needs it must meet.

The development process requires a significant investment in time and resources, with teams of software developers, project managers, and quality assurance specialists working together. The use of high-end technologies and infrastructure, such as cloud services and advanced databases, contribute to a higher overall cost.

From a technical perspective, enterprise-level software demands rigorous planning and architecture design to ensure scalability and reliability.

Complex coding, data management, and security protocols to protect sensitive information, sophisticated integration functionality make it a cost-intensive exercise. Typically, this is what you can expect to incur when building an enterprise software:

• Mobile App Development

Mobile app development costs vary widely depending on the app’s complexity and platform (iOS, Android, or both).

Simple apps, such as those with basic functionalities like note-taking applications tend to have lower development costs. Maintenance and updates, though necessary, are usually less intensive and thus lower in cost compared to more complex apps.

Conversely, complex mobile apps with advanced features, such as social media platforms, eCommerce, or apps requiring extensive backend infrastructure, follow a more intricate pricing model.

Complex projects demand a big team of developers, UI/UX designers, and QA testers, which contributes to higher average costs. And like all other projects, API integrations, real-time data processing, and advanced security measures add to the complexity and cost. In general, this is what you can expect to incur:

Factors Influencing Software Development Costs

These are the factors that you must strictly pay attention to before attempting to get cost estimates for you software development project:

Project Scope and Complexity

Software development costs are dictated by factors like the number of lines of code (LOC), the number of screens, and the complexity of algorithms. A project requiring extensive LOC will demand intricate logic, which in turn creates a need for significant time for development and debugging.

A software project with extensive lines of code (200000 LOC) inherently demands more development time and testing. Supporting various user roles such as admin, user, and guest demands different access levels and functionalities. And also, integrating third-party services like Google Maps API or Stripe for payments adds complexity.

Team Size and Expertise

A well-structured software development team, consisting of multiple front-end and back-end developers, will incur significant payroll costs. The skill levels of the developers, ranging from junior to senior, and their specializations, such as UI/UX design or database architecture, affect the budget.

In addition to these elements, project management roles, like Scrum masters or product owners, add to the overhead. Even activities like daily stand-ups and bi-weekly sprints contribute to the overall cost.

Development Methodology

Different software development methodologies exist and your choice decides how much you will pay, because a development methodology impacts costs through its structure and adaptability.

If your project requires Agile methodologies like Scrum or Kanban, you must be ready for iterative cycles, such as 2-week sprints. While it will offer flexibility in handling changes and continuous delivery of features, it will also lead to more manageable and predictable costs. On the other hand Waterfall method, with its sequential phases, offers detailed upfront planning but will incur significant rework costs if changes are required later.

Technology Stack and Tools

The choice of technology stack and tools directly influences development costs, especially considering factors like code complexity and screen design. Adopting cutting-edge or less mainstream technologies might necessitate hiring specialized developers, which will inflate costs.

Then there are technologies that require paid licenses, subscriptions, or usage fees and add to expenses. Also, if you are integrating features such as AI-powered recommendation systems, you will need access to special tools. All these considerations affect your overall cost for technology stack, which you must keep dynamic to accommodate new tools and technologies.

Location and Outsourcing

The geographical location of the development team and the decision to outsource can significantly affect costs. The cost of hiring developers varies from region to region. For example, hiring developers in North America or Western Europe tends to be more expensive, with hourly rates ranging from $75 to $150. In contrast, developers in Eastern Europe or South Asia charge lower rates, typically between $25 and $50 per hour.

Outsourcing also involves selecting the right vendor and establishing clear agreements on deliverables, timelines, and quality standards. You can also choose to go for a hybrid approach, where you outsource front-end development to a team in Eastern Europe while maintaining a core team in-house to handle critical backend systems. This strategy helps balance cost savings with maintaining control over essential project components.

Maintenance and Support

Regular bug fixes, which might be scheduled weekly, and new feature rollouts, often done quarterly, require a dedicated team. Likewise, compatibility updates to adapt to new operating systems or technology standards necessitate continuous development effort. Next come security updates which are pivotal and involve regular vulnerability assessments.

And then hosting costs, whether on AWS, Google Cloud, or Azure, contribute to recurring expenses. Additionally, cost is incurred for providing robust support services, including 24/7 customer support and dedicated account managers.

What Are The Cost Estimation Approaches?

Understanding the different cost estimation approaches for developing software is crucial. They allow business users to choose the model that best aligns with their project needs. We understand how based on different engagement approaches, the project costs are estimated.

Fixed-Price Model

Here the project cost is determined upfront based on a detailed understanding of the project scope and requirements. The model provides a clear, predetermined cost, making it easier for clients to budget effectively and manage financial risks. It’s best suited for projects with well-defined requirements and minimal likelihood of scope changes, where the deliverables are clearly outlined.

Time and Materials Model

Here, the estimation process is more adaptive and iterative. Initially, a rough estimate is made based on the project scope and expected duration. As the project progresses, costs are continuously estimated and adjusted based on actual hours worked by developers, materials consumed (such as software licenses), and other resources utilized. Regular reporting and updates provide transparency on progress and expenses, allowing for ongoing adjustments to the budget as project requirements evolve.

Dedicated Team Model

The estimation process for this model focuses on calculating the monthly costs associated with maintaining a dedicated team of developers. Often it includes salaries, overheads, and any additional expenses related to the project. The estimation typically begins with determining the required team size and skill sets based on the project’s complexity and expected workload. Costs are then estimated based on the anticipated duration of the project and the monthly compensation for the team members.

What Are The Cost Optimization Strategies for Custom Software Development?

You are definitely going to incur some cost when developing a custom software. However, you can create opportunities for yourself to optimize those costs if you follow these strategies.

1. Careful Planning and Requirement Gathering

Always start by methodically mapping out the software development journey from start to finish. By meticulously analyzing project scopes, stakeholders’ expectations, and potential risks upfront, you can accurately forecast resources, budget, and timelines. You will prevent costly surprises and also prioritize critical tasks. When clarifying requirements, validate assumptions, and prioritize features based on their impact and feasibility, and have clear communication channels to mitigate misunderstandings.

1. Choosing the Right Development Partner

Seek expertise from a professional partner who understands your business domain and operational challenges. It should act as a guide and handhold you from start to beginning. Partnership with the right development company matters. It mitigates project risks that a mediocre implementation may bring in. Next, it accelerates development cycles and leads the project in the right direction, and also builds a strong knowledge repository to assist future endeavors.

1. Adopting Agile Methodologies

To incrementally add value to your application, select the best applicable agile methodology. Break down your project into smaller, manageable tasks or sprints, adopting a practice that supports adaptive planning, early delivery, and rapid responses to change. Agile is 3.6 times cheaper as compared to traditional methods. If you are working with a third-party software development services provider, participate in this process. Ascertain that it offers transparency while making sure that evolving business priorities are effectively getting addressed throughout the development lifecycle.

1. Utilizing Open-Source Technologies

Bank as much as you can on open-source technology potential. It can provide you a saving of up to 87% compared to proprietary tools. Open source is the best recourse for availing community-driven innovation and building cost-effective solutions. By harnessing widely adopted frameworks, libraries, and platforms, you will avoid some significant costs, and also get guidance from experienced professionals from across the globe.

1. Leveraging Cloud Computing

Cloud computing is essential as it offers scalable infrastructure and on-demand services that optimize operational efficiency and flexibility. By migrating applications and data to cloud environments, you straightaway eliminate hardware investments, and also improve scalability to meet fluctuating demands. Also, enterprises that adopt cloud computing reduce energy costs by 30% to 60%. So, it’s not just restricted to the cost of hardware or infrastructure.

1. Continuous Integration and Continuous Deployment (CI/CD)

Encourage CI/CD practices so as to make your developers capable of frequently merging code changes into a shared repository, triggering automated builds and tests to detect issues early. CI/CD can reduce your cost by 40% to 70%. You achieve this significant saving as CI/CD establishes automated pipelines that validate code changes, perform comprehensive testing, and deploy updates seamlessly and deliver reliable software iterations frequently.

Conclusion

The cost of custom software development hinges on a range of factors and we looked at each of them. Set clear objectives and maintain open communication with your development team. While the initial cost may seem substantial, the long-term benefits of the solution will outweigh the expenses.

Offering cost breakdown, this discussion aimed to serve as a generic cost estimation framework which you can subject to your custom software development project. So, estimate the cost today, and in case you encounter any difficulties, connect with our experts.