How Much Software Development Costs
The Short Answer
A lot of businesses want to know more about the cost of software development before they even start planning out their projects.
There are no fixed prices as each project is different and the final sum depends on many factors. In this article, we will discuss them in detail and the way they influence the budget. We’ll also cover the possible options when it comes to custom software development costs reduction.
Let’s start with the short and simple answer. The most straightforward way to estimate the possible cost of the project is to follow this formula:
Project Resource x Project Time = Project Cost
It looks pretty easy, but each of these two parts has several aspects to consider. Now, we’ll focus closely on resource cost factors that impact software development pricing.
Resource Cost Factors
The first part of the formula is Project Resource Cost, which mainly considers the hiring and all employment-related costs, such as:
- Size of the team;
- The seniority of developers;
- Hiring model;
- Region of hiring.
Size of the team. Depending on the scope and complexity of the project, you might need one-two developers or a full team. If it is something simple, as building a site, the team can be quite small. But if you want to release a custom mobile app on both iOS and Android, you’ll need more developers, designers, and testers. When you consider the cost to hire a software developer, you need to multiple it on the number of employees needed. While deciding on the size of the team, a business needs to understand that the smaller it is, the longer it might take to finish the project. So it is always great to find a reasonable balance.
The seniority of developers. To know how much does a programmer cost, you need to consider their experience and level of skills. There are junior developers, with 0 to 2 years of experience, middle developers with 2 to 5 years of experience, and senior ones with more than 5 years of experience.
And software development cost estimation depends on what qualifications you are looking for. Juniors usually know one programming language or framework and often require guidance or help from colleagues. They also might take longer to finish tasks due to a lack of experience. Middle programmers can work independently. Senior developers have high expertise for the most advanced tasks; they can offer advice on the best technologies and the most effective solutions.
Probably, a team would have several professionals of different levels for maximum productivity. Their salary rates are different according to their skills. For example, in the USA an average monthly salary for a junior programmer is $5,340, for a middle it is $6,000, and for a senior programmer will cost around $10,130.
Hiring model. The next factor that influences the software development budget is the hiring model a company chooses. It also has a significant impact on the way the project is managed. Overall, there are three main models when it comes to software development, namely:
- In-house team. In this model, a company hires and forms its in-house team to work on the solution. The main advantage is that you have easy control of any stage of work, any issue can be easily resolved, and the permanent employees usually share more motivation for the project. But the downsides are also quite important. It is the most expensive model that also takes the longest as hiring permanent employees is a daunting task. Such a team has no scalability and flexibility. A company will have to provide all the physical resources, office, computers, and pay all employee-related costs, such as healthcare, for example. Overall, it is not a sustainable model for a business that just needs to release one project. It is more suitable for companies that have software development as their core or as a constant necessity;
- Freelancers. It is quite simple and the most affordable model when it comes to software development cost. The main advantage is the flexibility of such cooperation and low prices. But cooperation with freelancers comes with a lot of risks regarding the quality and delivery of services. Freelancers also work for several clients and you might not book the same professional the next time you need them;
- Outsourcing. This is by far the optimal model when it comes to the average cost of software development and timely delivery. It is helpful for startups and mid-size businesses as well as huge corporations. In such cooperation, you just delegate the development to a professional, whether it is an already established team or the one hired specifically for you. It is a scalable solution as you can change the size of the team at any stage of the project. Usually, all the employee-related issues and disbursements are covered by the outsourcing agency. And you get to work with experienced professionals while you can focus on the core of the business. The cost of software engineering will also depend on the region you choose to outsource from.
Region of hiring. It is not a secret that software development prices and salaries depend on the country you choose for cooperation. Different countries have various economic levels and it provides an opportunity to find excellent professionals for a lower price.
Nearshoring has the least financial benefits as neighboring countries usually have fewer differences in price. You can start by comparing how much does a programmer cost in Ukraine, Mexico, or Germany for a start. Remember that it is important to consider not only the salary rates but qualifications and recommendations. In this article, we give a comparison table of average salaries so you can estimate software development costs based on the region.
Project Time Factors
The second part of the formula is Project Time Factors, such as:
- UI/UX Design;
If there is a need for data migration it will be another task to add. How much does software development cost is also influenced by the new client’s requirements? For example, if in the development process you’d like to add new features, each one of them will set a deadline further.
Testing. Testing can be done after each set of tasks is complete or at the end of the whole project. It truly depends on the management methodology the team uses, like Agile or Waterfall. But the main concern is always the same – testing is the insurance of quality control and usability of the product. And the same logic applies here – the most complicated solutions require more time for testing, debugging, or possible improvements.
Mobilunity’s Practices to Reduce Development Costs
1. Choosing a cost-effective region to hire developers
As mentioned above, custom software development rates are one of the main contributors to a project’s budget. And the only way to cut this factor without compromising on the quality of the workforce is to choose an outsourcing destination wisely.
Some companies might think that working with distant destinations is inconvenient. Although some inconvenience might occur, the financial benefit is too good to miss on. And outsourcing agencies have experience in providing service in the most comfortable way for a client.
The main outsourcing destinations for the IT industry are:
- Asia and the Middle East (India, China, Philippines);
- Eastern Europe (Ukraine, Poland);
- Latin America (Chile, Mexico, Argentina).
These regions reduce the cost to develop software significantly usually due to the developing character of the economy. There are many agencies and companies that work exclusively with international partners and provide high-quality services.
To have a better understanding of what range we are talking about, look at the comparison table below.
- Workforce proficiency level in general. Many international ratings show the expertise level of programmers by country. Of course, it is general, but it is illustrative of the quality one might expect. Usually, the cheapest prices mean lower quality, so it is better to select the middle;
- Data Security. Software development often deals with sensitive data and corporate information. One of the best practices in such a case is to learn about digital security measures in the country. For example, if you are working with the EU businesses or citizens, your partner must be GDPR compliant. For example, Ukraine is GDPR compliant, which makes it a desirable destination for many companies. It ensures not only the security of your sensitive data but also the security of the future solution users.
- English proficiency. It is a necessary thing when it comes to direct communication and easy project management. You’ll need to set requirements and control development, so good English knowledge is crucial for fruitful cooperation;
- Time zone. It is not as essential, but one must consider the time difference when choosing an outsourcing destination. It is usually more convenient to work with partners who you can easily visit, there are direct flights, and time zone offers the opportunity to have daily meetings;
- Education level. Check out the education level in a particular country to make sure that you can hire the best professionals. The programmers need at least a BA degree;
- Similar business values and ethics. It is quite helpful to work with people with a similar mentality and business values as it makes communication a breeze. It also ensures that you can adopt the same development or management methodology and cooperate most productively.
2. Choosing a model that requires more engagement but saves budge
The second way to cut average software development costs is to choose the most effective hiring model. In this part, we’ll discuss and compare three models, such as an in-house team, traditional outsourcing, and dedicated development team (outsourcing but not to an existing team, but hiring a team for your project in another country).
We’ve dwelled on the in-house model, so let’s focus on two types of outsourcing mentioned. How much does custom software cost in this regard? Usually, working with a preexisting team takes less time on preparation and hiring. After all, the team is ready to work. But the main downside is that you do not have control over who is in the team and how their qualifications and knowledge are suitable for the project.
While hiring a dedicated development team might be longer and take some costs on help from an agency, it helps to find the best professionals for your product. And it gives you more control over the team as well.
Here is a comparison table on how these three models can influence the average cost of software development.
|In-house||Dedicated Development Team||Traditional Outsourcing|
|Team recruitment||Needed, takes the longest||Needed, takes time, but with the professional help it is not too long||Not needed, the outsourcing service provider company has its team set up|
|Office and equipment provided by||You||Usually by hiring an agency, but the cost is included in the contract||Service providing company, but the cost is included in the price usually|
|Project management||You need to hire or designate a project manager for the team||You hire PM with the team||Is designated by a service provider from their staff|
|HR management||Needed hugely on all stages||Needed usually in the beginning, when the team is hired||Is taken care of by the service provider|
|Cost||The highest as all the disbursements and management is on your side||In the middle, it is lower than the in-house team, but can be a bit higher than traditional outsourcing. But you get the team literally made for you.||Usually the lowest, but it comes with less flexibility and more risks|
Software Development Costing FAQs
Mobilunity Is an Excellent Provider of Ukrainian Dedicated Development Teams
Mobilunity is an experienced Ukrainian company that helps international businesses to find the perfect dedicated development teams. We have been doing it for more than 10 years now and know exactly how to find the top Ukrainian talent for any IT software development product.
We have more than 40 happy clients all over the world with hundreds of released products. We value your time and always treat the clients’ needs as a top priority. So if you want to hire a team of Ukrainian skilled developers that are designed specifically for you, Mobilunity is exactly what you need.
Here is a simple image to show how it works. We will use our cost reduction methods to make sure that every client gets the optimal software development cost for the highest quality of services.
Do you want to know more about the software development costing of your project? Are you ready to hire the best dedicated team? Contact Mobilunity!