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Software development costs - everything you need to know + Free Estimation

12-07-2022 15 min read

Software development costs - everything you need to know + Free Estimation

Businesses worldwide are increasingly focusing on the end-user, who is accustomed to the fact that solutions are perfectly adapted to his needs. Therefore, ready-made software is increasingly being replaced by custom software development. By building our software from scratch, we have complete control over it. That means we can precisely define what elements should be in it, what goals it should meet, what it should look like, etc., which ultimately positively affects the user experience who will use the solution.

We are a software development company that has been operating on the market for over 12 years. During this time, we have had the opportunity to develop software for over 100 businesses from all over the globe. Therefore, we know perfectly well that custom software development never has one fixed price, and the cost is always influenced by a multitude of factors that we will present in this article. In addition, you will learn what spreads there are when it comes to custom software, and you will have the opportunity to estimate the cost of developing your software for free!

Let's start with how much custom software development costs on average in a given type of business.

The average cost of software development based on size

To illustrate how much custom software development costs on average, we divided the market into three segments - Startups, SMEs, and Enterprises. We decided to take this step because each of these three types of business generally needs different software sizes and thus a different budget or timeline. You will be able to identify with a given segment and know how much more or less it costs to develop an application for a business like yours.

The average cost of software development based on size

Startups

Hearing the word startup, we immediately think about an innovative solution that will quickly enter the market and outclass the competition. Therefore, startups mainly use custom software development services and not off-the-shelf solutions. It's just that the ideas behind their projects are so fresh that the software available on the market does not meet their requirements.

Considering the fact that these types of companies are focused on rapid growth supported by investor financing, we can assume that the software needed by a startup will be the MVP version of the product. If you are currently thinking about creating a Minimum Viable Product, head out to our article "Build your MVP (Minimum Viable Product) the right way - step by step guide by mDevelopers", where we promptly desribe how to create one from scratch. Therefore, the time required to develop such an application will vary between one and two months. The cost of producing an MVP from start to finish is from $ 25,000 to $ 50,000. There is a lot of space between these two numbers, but this is due to many factors that we will mention later.

SMEs

According to World Bank, SMEs represent about 90% of worldwide businesses, which is perhaps why we often help create solutions for such companies. In this case, MVP is not enough, and SMEs often look for fully ready solutions that, once released, will not have to have subsequent iterations. Our experience shows that custom software development, in this case, takes from 2 to 6 months and consumes a budget of $ 60,000 - $ 100,000.

Enterprises

Enterprise is the largest type of business in our segments. Most often, Enterprises employ tens of thousands of people worldwide and are well known in their public domain. Therefore, custom software created for this type of organization must be highly scalable, thought-out, and secured in the best possible way. Enterprises' software development costs start at $ 100,000 and generally have no cap. When it comes to time, creating a custom software solution takes from about 6 months to even several years.

The average cost of software development based on complexity

The average cost of software development based on complexity

We presented the average software development cost breakdown regarding the size of businesses. The average cost can also be broken down regarding the project's complexity, and then it will look like this:

Simple software

- has only core features

- simple UI design

- without third-party integrations

- most often is an MVP of an app

Time ~ 1-2 months

Cost ~ $25,000 - $50,000

Medium complex software

- has all the features that the client requires

- the highest quality UI design, together with the brand book

- integrated with needed third-party systems

- is a ready-made app

Time ~ 2-6 months

Cost ~ $60,000 - $100,000

Highly complex software

- has all the features that the client requires

- UI design matched the company's guidelines

- integrated with needed third-party systems

- is a ready-made app

- prepared to serve thousands of users

- highly scalable

- security following the highest standards

Time ~ 6 months - a couple of years

Cost ~ $100,000

What other factors influence the software development cost?

What other factors influence the software development cost

The size of the company or the complexity of the solution are just two of several dozen aspects that affect the final cost of the software. This section will focus on four aspects that we believe have the most decisive influence on the final number seen on the invoice.

Type of software

Custom software development is a vast field, which includes both simple CMS for one website and highly complex mobile applications that must serve millions of users worldwide. Our clients usually start cooperation with us when they want to create: a SaaS app, E-commerce solution, or Mobile app. Therefore, we will show how the costs are distributed using the example of these three types of solutions.

SaaS app

SaaS applications are taking the market by storm. Compared to traditional software, which you had to download on your hard drive, SaaS applications operate in the web browser environment, meaning they are web applications. All the app's data is stored in the cloud, allowing fast updates without user actions. The most common type of monetization of such apps is the subscription model.

SaaS can be leveraged by businesses from any industry and any size, so the price range is quite broad, as it starts at the level of $60,000 and ends at the level of even a couple hundred thousand dollars.

E-commerce solution

E-commerce solutions are the choice of businesses that are based on selling their products and want to get a new sales channel. According to Statista, "In 2020, over two billion people purchased goods or services online, and during the same year, e-retail sales surpassed 4.2 trillion U.S. dollars worldwide." Businesses that need more complex solutions than off-shelf ones, like Magneto or Shopify, frequently choose Custom E-commerce development, as it can be ideally suited to their needs and architecture.

As such solutions require hundreds of hours of work, their cost starts at $50,000.

Mobile app

Mobile app development is the service we sell the most. Nowadays, people spend about 4 hours a day in front of smartphones, as they became our main addiction. That is why more and more businesses choose to develop their own mobile application

Mobile application development is an extensive topic. We know it from experience because we created simple mobile apps such as the emoji keyboard and very complex solutions such as an application for our client UJJI. A mobile app's average software development cost ranges from $25,000 to several hundred thousand dollars.

Platform

Continuing the theme of mobile applications, a factor that also influences the final price is how the application will be made. We can choose from native development and cross-platform development.

Native development allows you to create one application ideally suited to the platform on which it is to run (iOS / Android). Such a solution is produced using native languages ​​such as Swift or Kotlin. Native development is associated with better UX, full compatibility with the platform, and the highest performance, but it is much more expensive than cross-platform development.

In the case of cross-platform development, languages ​​and frameworks such as React Native, Ionic, and Flutter are used. These solutions significantly facilitate the development process because one code can become the basis for two applications operating in different environments. It is a much cheaper solution, and if you choose a trusted software development partner, it does not have to be much less performant than natively created applications.

If you are wondering why we did not even mention web applications in this section, it is due to the fact that these web applications are independent of the operating system and, therefore, will work regardless of the platform they are run on.

Of course, you can also create a hybrid application if we are talking about platforms. Imagine if your favorite web apps could take the form of a native app. Hybrid applications do just this. They're essentially Web Apps that have been put in an easy-to-use native app package. Such a solution is not often used because it is associated with relatively poor performance since hybrid apps are written in web programming languages ​and are then enveloped in an embedded web browser control. The cost of hybrid development is similar to cross-platform development.

UI/UX Design

The application is not only the code but also a design that will attract the user and make them stay with the application for longer. Design in the case of software products consists of UI and UX design.

UI (User Interface) design is responsible for the entire layer visible to the user, illustrations, buttons, animations, graphic style, etc. UI designers' time costs money, and depending on the complexity and amount of work needed, it can significantly affect software development pricing.

UX (User Experience) design is responsible for the software project's conceptual design so that the application's use is as intuitive and transparent as possible. As part of UX design, user journey maps, mockups, low-fidelity prototypes, and many more are created, which allow you to test whether users are satisfied with navigation in the application, even before writing even a single line of code.

Well-designed UX and UI design make users want to use the application, and there are no situations in which they get frustrated and go to the competition. Therefore, it is worth considering the related costs in your budget and when choosing your software partner, check whether he has such services. Manufacturing all elements in one company is much cheaper than outsourcing individual components to external companies.

The team

The aspect that most influences the software development cost is the team that is supposed to work for you. After all, it is people's time that you pay for. However, it is not that simple because the cost of a software development team's work depends on many factors such as seniority, your needs, hiring model, or location. We have described all these aspects below.

The seniority of software developers

When you start a project, you can decide which developers should work on it. In our industry, they are divided into three categories - Junior, Middle, and Senior.

Junior developers

Junior developers have approximately one year of experience and, in most cases, know only one technology/framework. Therefore, they most often work in a team with more experienced colleagues. As they are just learning, the stakes for their time are the lowest, but their performance is also not the highest. When choosing a junior developer, you should also hire a more experienced dev who would be able to support the junior in case of problems.

Rate ~ $40

Experience - 0-1 year

Middle developers

When choosing a Middle developer, you can be sure he will perform the tasks entrusted to him. Middle developers are more experienced than Juniors and can perform complex tasks without any guidance. As they develop, they also learn about new technologies in which they can work, which is why most often, Middle dev knows more than one programming language/framework.

Rate ~ $50

Experience - 1-3+ years

Senior developers

Senior developers are a way to go if you want to ensure that the best developers are working on your project. Their extensive experience means that they know several programming languages/frameworks and are able to propose solutions that will speed up the development and guarantee the highest quality of the application. Choosing a senior developer is the best solution if your application is to contain elements that have not been created before.

Rate ~ $60

Experience - 3-5+ years

Of course, choosing the right developer depends on the specifics of the project you want to create. As we mentioned, senior developers are an ideal solution for complex applications that will contain completely new and custom elements.

Middle developers will be able to build an application in which there will be no need to carry out complex integrations or introduce completely innovative solutions.

On the other hand, junior developers can be a solution if you want to build a simple application with limited functionalities. Choosing the proper seniority is very important, so it is worth considering it before starting a project.

Type of people you need

The software development process involves many people from various departments. In the case of mobile development, the development team will include:

  • Mobile developers, who will be responsible for writing the code.
  • UI / UX designers, who will be responsible for building the visual layer of the application and designing the user experience.
  • QA engineers, who will be responsible for testing the application and ensuring that it does not have any bugs.
  • Project managers, who will be responsible for project management so that it runs in a well-planned manner, and team management.

These are just a few roles that will be needed to develop the app, and each specialist needs to get paid. In the case of web development, there is also the creation of two separate codes for the backend and frontend. Of course, the size of the team and the types of people needed should be proposed by the custom software development company with which you will want to create your project. The more complex the project, the more people and money you will need.

Hiring model

Nowadays, companies decide on one of the three models when it comes to hiring people for their software project - In-house, Outsourced, and Freelance. Each of them is described in detail below.

In-house

This is a model where you hire all the professionals you need directly to your company on long-term contracts. It is associated with a considerable advantage: the possibility of ongoing control of the entire development process. In addition, your HR department will undoubtedly make every effort to ensure that the people who join your company meet all the requirements.

This model is the most expensive in terms of costs because you have to find and train new employees and provide them with appropriate working conditions, equipment, etc. It is a good solution when you want to develop an internal-use software, as it will be developed within your company structures.

Freelance

Freelance is a model where you hire a specialist through a platform such as Upwork or Toptal. It is the cheapest option, but it comes with its dangers. Namely, when you hire a freelancer, you basically have no control over his work, and there is a high probability that the software he created will not meet your requirements or needs.

Outsource

This is a model where you hire specialists from software development companies. Hence, you pay them as long as the project lasts, and then your paths may diverge. Thanks to this model, you can hire a developer to make a small module of your software, as well as get a dedicated team who will be responsible for building the software from start to finish.

What's more, by choosing to outsource, you can be sure that the costs will be lower than in the case of the in-house team because you do not have to pay for recruitment, equipment, or office space. This is all on the side of the software development company from which you hire your developers. In addition, nowadays, where remote work is a full-fledged work model, you can employ specialists from another country or continent where the rates are lower.

Location

If you chose the Outsource model, the aspect that strongly influences the cost is the location of the software development company you would like to work with. We have prepared the map below to illustrate best how location affects the hourly development cost.

Location

How do we at mDevelopers estimate custom software development costs?

As we mentioned at the beginning of the article, we are a software development company with over 12 years of experience. Over the years, we have been part of brilliant projects and produced over 150 of them in total. That is why we have extensive experience in software costs estimation. If you would like to estimate your software projects, head to our contact form and send us your application, and we will be more than happy to provide you with a Free Estimation! The entire estimation process at mDevelopers is presented below.

How do we at mDevelopers estimate custom software development costs

Free Consultation

If you fill out our contact form, our CEO will contact you within 24 hours and propose a date when we could meet at Free Consultation. During the consultation, in which both our CEO and CTO will participate, we will get to know each other better, and if we find a thread of understanding, we will arrange another meeting.

Looking for details

At the second meeting, we will want to learn as much as possible about your project. So if you have any materials related to it (written app idea, list of features, initial designs, etc.), it is worth preparing them so that we can understand your project as much as possible.

Estimation preparation

Once we have all the information we need, our CTO with over 15 years of experience in the IT industry will take care of the initial estimation of the software development costing. It is worth noting that if you do not have any materials yet, and only an idea for the application itself, we have Discovery Workshops on our offer, the deliverables of which are:

  • Description of product goals and functionalities
  • Low-fidelity mock-up
  • Preliminary cost & timeline estimate
  • Architecture adapted to your KPIs
  • Defined tech stack
  • Definition of the target audience
  • User flows, user stories
  • Product roadmap
  • Product feasibility report

Presenting the offer

Once the estimation is created, we will show it to you and explain in detail where the given costs come from and what can be done to save some budget without limiting the project.

Summing up

As you see there is dozens of factors that influence the end cost of a project. That is why it is worth choosing a software development partner in a smart manner in order not to overpay. Learn how to do it with our "Choosing the right software partner - guide (2022)" article! If you want to get estimates for your project, don't hesitate to contact us; we will gladly use our experience and knowledge to dispel your doubts and uncertainties.

About the author

Milo Miszewski - Chief Executive Officer

Milo founded mDevelopers in 2010, bringing his over 10 years of sales management, B2B solutions, and business relations. Milo acts as the general director, as well as a mentor and advisor. In everyday work besides managing the company, he supports the sales department in networking and building relationships.

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We’ve been in the business for over 12 years and have delivered over 200 mobile and web projects. We know what it takes to be a reliable software partner.

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