6 Ways to Estimate the Cost of Developing Software
Posted by Ann-Marie
3 minute read
To stay competitive in today’s marketplace companies of all sizes are investing in custom software solutions to increase efficiency and productivity. How do software companies work out how much to charge?
As an entrepreneur, founder or business owner, you need to know what something is going to cost. However, estimating the cost of bespoke software development is not always as easy as it appears. Building custom software is a great way to improve the efficiency and innovation within your organisation but it does come with questions – how much will the development cost, and can your company afford it? Should you hire a freelancer or the local software company? Or maybe you should take the “safe” route and hire one of the giants!
Six things to consider when costing your software development
1. The complexity of the project
We can determine the complexity of the project by the different features required and how complex the code is and how long it will take. For example, complicated real-time data analytics with multiple permission levels will require different resources than, let’s say, a fitness app with a calorie calculator.
2. Project Size
Typically, a project size is based on the number of screens; a screen is a page, a popup or anything that a user sees when they make an interaction. So a “login” page and a “change password” – are two different screens with different functions. The more screens the software has, the more the project will cost.
3. The Design
People are visual creatures, so design becomes a vital part of software development cost breakdown. UI/UX design can attract users’ attention and engage them. This process itself can be quite complex depending on how extravagant you want the elements to be. The best designs are not created perfectly from the start, they are developed after several consultations with the client and many redesign cycles. Iterating designs can take quite a lot of time depending on the app type and its complexity.
4. Supported Platforms
You need to take into account how many platforms you want your software to work on. If you want a mobile app, do you want it to work on iOS or Android ? Maybe you require a cross platform solution. Desktop apps have their own nuances, as do purely web-based services. All of this will affect the price. So, if you want your application to work cross platform and have a desktop launcher, be ready to spend more money and cooperate with extra developers.
All technology stacks are not equal, some software applications can be written with a single technology, while others require front-end development to be done in one programming language, the back end in another. They all still need to work together seamlessly. This correlates with the complexity of the project since different features often require different technologies. Some projects require complex deployments to allow for scaling, pushing up the cost further. (Keep it simple is always best here…)
6. Ongoing Maintenance
You have the ongoing running costs. For example : hosting cost of the servers, databases and API subscriptions. You may chose to manage this yourself, or you might ask the supplier to do it for you. The thing about software is that it is never truly complete. There is always the need to add new features, improve the performance, and fix unnoticed bugs, bear this in mind for future costs.
Two methods used to price Software projects
Fixed-price pricing model
This is when a price is set in advance for a pre-agreed set of functionality and services. In this model, the development process is adjusted to only cover the cost and time estimates generated from the information that the client has provided. The specifications, budget, and the date of delivery are fixed. The detailed specifications allow you to get exactly what you need, and the deadlines that are set in advance, ensure that your project is delivered on time. Which in the long run makes estimating the cost of software development easier.
Time and material pricing model
This is where you (the client) pays the Software developer’s costs, usually on a daily rate per programmer. In this contract, the time, scope, and budget are estimated but still flexible and agreed upon with the clients on a regular basis. Payments are settled within set intervals – for example, every month. The main advantage of this model is that it allows you to quickly alter the requirements and change the work plan without incurring any high costs. You will also be able to see the results of all the stages of development and constantly monitor the work of the team. This boosts the chances of you getting the exact solution you wanted.
We have a two stage pricing process, which will help make estimating the cost of bespoke software development simpler.
To help us to complete this step, we will need to know only some basic information about your project idea ( e.g. I want an app for connecting tutors to students like and it has a login, a sign up, a search, a payment portal .. , and it has 20 screens). From this we can consider all the vital features for MVP and time required for their development. Rough estimation usually takes us 2-3 working days.
This step is called Planning Phase, for instance during this stage, we will work closely with you in order to find out all of your precise requirements and user flows. With all this information we can make individual project specifications. Detailed estimations will cover the actual developer, designer and project management costs broken down into days. We will look deeper into the ongoing hosting costs to provide a better idea of monthly costs. The detailed estimation will take from 5 working days to 2 weeks.