Software Development Cost | Factors Affecting & How to Reduce It

Thinking of developing custom software for your business?

That’s a great idea!

Custom software development was valued at $429.59 billion in 2021, and it is expected to get even bigger, with a CAGR of 11.7% from 2022 to 2030.

Just imagine how many businesses like yours are hiring developers to get a custom software build.

So, this is the right time to modernize your business and unlock its true potential with the help of technology.

Wondering how much would it cost?

Now that’s a question that needs an entire blog to be answered correctly.

So, in this blog, we will talk everything about software development cost. How much should you expect custom software development to cost you? What are the factors affecting the cost? What costs should you consider in software development? And what are the average cost ranges?

However, kindly acknowledge that the cost ranges mentioned in the blog are rough estimates for the general purpose of only having an idea about the costs. We have come up with these numbers based on our experience as one of the leading software development services. It might vary depending on your software requirements. The cost of developing software varies greatly as it depends on multiple factors, which we will discuss later.

For now, let’s assume you just want to know how much it costs to have software developed. So, for the sheer purpose of market research, let’s quote a figure for you.

The average cost of software development lies between $10,000 to $600,000. We know it’s quite a big range. But as we discuss the factors affecting the figure, you will understand why it is such a wide range.

However, to break this wide range, let’s group software based on their types. This will give you a better judgment of what to expect before budgeting your software idea.

Customer Relationship Management Systems (CRMS)

The customer relationship management software/system helps an organization store and manage customer information. Moreover, it helps them communicate with customers easily on multiple channels.
A CRMS has features like

• customer profile
• contact management
• email integration
• lead management
• booking
• appointment scheduling
• reports and dashboard
• customer complaint management

These are features just to understand what CRMS is. Not every CRMS has all of these.

The average cost of developing a CRMS is between $150,000 – $700,000.

eCommerce Software

Want to open an online store?

If yes, then eCommerce software is what you want. This type of software helps you sell your products online to worldwide customers. Taking your store online makes you reach a wider customer base. But, as your business grows, managing multiple orders and the business gets hectic. That’s when eCommerce software becomes the savior.

An eCommerce software consists of features like

• Order delivery management
• eCommerce platform integration
• Multiple channels management
• Inventory management
• Reporting
• Financial Integration

These features help you manage your entire eCommerce business from one software only.

The average cost of hiring eCommerce development services is between $30,000 – $80,000.

Human Resource Planning Systems (HRMS)

This type of software is generally for larger businesses. It helps you to manage your employees by enhancing productivity and transparency. It enables you to focus more on more important business operations and leave the daily tedious tasks on the software.

With an HRMS, you can deal with

• administration paperwork
• payroll automation
• employee information management
• SOPs
• recruitment
• employee portal
• performance tracking
• employee training and induction

The cost of creating a custom HRMS depends on the features needed and the number of employees in the organization. Thus, it varies a lot for small businesses and large organizations.

This software may also be called an enterprise resource planning (ERP) system, as both have a lot of features in common.

The average cost of developing an HRMS/ERPS is between $90,000 – $550,000.

SaaS Software

Software as a service is a software with a subscription pricing model. This software needs regular subscriptions and assists the customers. These are generally web-based software. For example, Trello and Slack. And some examples of an on-premise SaaS product are Adobe Photoshop.

As you can understand from the examples, SaaS products are of all kinds. And therefore the cost varies a lot.

Moreover, this type of software uses cloud storage; therefore, we must comply with cloud data management and make it more secure against cyber threats.

The average cost of SaaS software development is between $30,000 – $90,000.

Supply Chain Management Software

Striking a balance between supply and demand is much more difficult than you think. You must assume the future market situation and make decisions based on experience. It has a lot of risks involved, and your business is at stake. Especially if your business has to deal with vendors for raw materials, resources, and customers to sell your product or services.

Thus, supply chain management software helps you analyze the market and make data-driven decisions. Artificial intelligence (AI) powered supply chain management software helps you effortlessly bridge the gap between supply and demand.

The average cost of developing supply chain management software is between $170,000 – $400,000.

So these were a few types of software with their prices.

Now, if you want to know more about the software development cost factors, let’s discuss them.

Factors Affecting Software Development Pricing

No custom software development company will be able to send you a quote without knowing these factors. And if they are, they might be bluffing.

So, below are the most important factors in deciding the price for developing your software.

What Is the Scope of the Software?

The first question a software developer might ask is the software’s scope. The scope of any software tells you all about the software in detail. Deciding the scope of the software is similar to defining the area of a construction project. It includes the requirements, the objective, and the deliverables.

In other words, the scope defines what to include and what not to in the software.

This makes the software developers understand the things mentioned below.

• The size of the software.
• The technology they need to use.
• On what platforms will the software be?
• Is the project worth taking or not?
• Will they be able to justify the project if taken?

So, once the software developers are ready to take on the project, the next big thing they’ll ask you is what the next factor is all about.

What are the Features of the Software?

The software features are a major factor that decides the custom software development prices. Because the time to develop a feature is subjective to its complexity, and most software developers change hourly.

For example, a messaging feature would take a lot more time to be developed for software than a dashboard for the same would take. Moreover, if you want to have a messaging feature, you must have a contact dictionary too. Thus, every feature adds-on complexity to the software.

And the more complex it is, the more time and effort it needs to be developed.

Thus knowing all the features will help you accurately project the estimated development cost.

How do You Want to Build the Software?

There are three ways to get your software developed.

• Hire an in-house software development team
• Out-source the software development
• Hire freelance programmers

All three of them have their advantages and disadvantages. It’s your call what you would prefer the most for software development.

If you can’t decide which one to pick, let’s help you by comparing all three methods.

These major factors cover everything that affects the software development costing.

Now, let’s talk about the costs of the same.

Costs in Software Development Process

Although the cost structure for every project is different, there is a general practice for custom software development costs.

UI/UX costs

First comes the UI/UX cost for software development. Every software must be designed for the best user interface and user experience. It defines how the software looks and how it interacts with the user. Therefore, it includes the design and wireframe of the software.

The better the UI/UX design of the software, the easier it will be for the user to use the software.

Database Costs

Once you are done with the design, you must buy a database. Either on-premise or cloud database. This is where all the software data will be stored. Moreover, depending on the size and scope of the software, you need to pay for the data management too.

Developing Costs

Now that you have UI/UX and a database for the software, you need to pay for the actual development. This includes choosing the building architecture, building a model, and constructing the code.

Testing Costs

Most software development companies forget to inform about the testing charges. The testing team comes into the picture when the development team calls it done. The testing team runs simulated data and points out bugs and areas of improvement if any. And it gets back to the development team.

This is an iterative process that takes multiple cycles to develop software that runs perfectly.

Launching Costs

When the testing is done, and the software is ready for use, it needs to be launched by the development team.

Team Cuilding Costs

To ensure that all of the above stages get completed on time and match your requirements, you need to hire a team of the right people.

Depending upon the scope and size of your project, you need to decide on the members of the team. Generally, it includes

• project managers
• designers
• developers
• testers

The roles mentioned above are mandatory for every project. What varies is the number of team members. Other than that, you might need to include DevOps/SRE engineers and different roles as well if the software requires it.

How to Reduce the Software Development Cost

The IT industry is all about finding innovative solutions, and the software development cost is no exception. We have a few tricks to help you cut down the cost of developing software.

So, if you are running on a budget, here is how you can reduce the total cost.

Choose Geographical Location Strategically

The geographical location of your development team matters a lot. Developer team from different country charges different fees for developing the same software.

So, here is a quick chart for the average cost of software development based on location.

Build an MVP First

Before building the entire software, build a minimal viable product (MVP). The MVP consists of only the core features needed to make the software functional. And don’t confuse it with a mock-up or a prototype. The MVP is a complete product, just with the fundamental features.

Launching an MVP helps you gather rich feedback from actual users about the touch and feel of the product. This process makes you save time.

Delegate the Repetitive Tasks

Doing it all alone might seem affordable, but the time it takes is worth more than the money you pay for delegating the work. It gets things done quickly and saves you from troubleshooting one challenge at a time. Also, it keeps you less occupied on the small tasks so that you can look ahead to predict the upcoming challenges.

Conclusion

“Time is money.” It can’t be more relevant than it is for the cost of software development.

The software development cost boils down to the time it takes from conceptualization to launching the software. You need to find a perfect balance because if it takes too long, remember you are paying hourly. And if you want it sooner, you need to pay for extra resources.

So, think it through before you hire a development team.

And if you don’t have enough time for that, simply hire Xekera Systems. We have one of the most experienced software development teams that have worked on more than 600 projects and served clients from all over the globe.

We assure you to get your software up and running with all your requirements.

Now that you have sorted the custom software development, are you wondering how much it costs to build an app?

Well, we are a one-stop solution for all digital solutions. So what are you waiting for? Reach us now!