How much does it cost to develop new software

The cost of software development depends on various factors. The complexity and size of the project, the technology used and even the geographical location of the developers. All these aspects are reflected in the final price.

Factors that affect the cost of software development

1. The complexity of the project

This is defined by the logic of the software and the number of various features it has. Note that not all features have the same cost to implement. Push notifications and video calls, for example, are completely different in price due to the complexity of the code and the time required. Complicated real-time data analysis with multiple permission levels will require different resources than, say, a fitness app with a calorie calculator.

How much time and money do the different elements of software development cost?

To provide a frame of reference, here are some of the common characteristics of software development, along with their approximate time and cost (based on $25 per hour):

  • Research: $300 to $500 over 12 to 20 hours

  • Push notifications: $625 to $875 over 25 to 35 hours

  • Connection: $750 to $1125 over 30 to 45 hours

  • Modify the profile: $1125 to $1500 over 45 to 60 hours

  • Payments: $1,500 to $1,875 over 60 to 75 hours

  • Calls: $6,500 to $9,250 over 260 to 370 hours

These numbers can vary greatly depending on the company and even individual projects. These are only rough indications of what to expect at this hourly rate. Some teams don’t even use such estimates and only assess on a case-by-case basis.

2. Size

Before describing software size, we must first understand the definition of a screen in this context. A screen is a page, an open menu, or anything that a user sees after performing an interaction. For example, a “login” page and a “change password” page are two different screens with different functions. In this context, it becomes quite simple. The more screens the software has, the more the project will cost.

Typically, smaller apps have 10-25 and cost upwards of $75,000. Large projects with more than 50 screens can cost $250,000 and more.

3. Design

The custom design makes your software unique and simply enjoyable to use. The days of bright lime green text on a black background are long gone (although this is certainly an aesthetic used to this day). UI/UX is what makes the app user-friendly. That’s what the “U” stands for.

This process itself can be quite complex depending on how extravagant you want the elements to be and how many iterations it will go through. The best designs aren’t created perfectly from the start. They are developed after several rounds of feedback-redesign. Moreover, the number of high-quality custom images will further increase the price.

4. Supported Platforms

Consider 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, etc. Maybe you need a cross-platform solution. A desktop tool has its own nuances, just like pure web services. All this is reflected in the price.

5. Technology

Tech stacks aren’t equal either. Some applications can be written in a single API. Others require front-end development done in one programming language, back-end in another, and they must work together seamlessly. This correlates with the complexity of the project since different features often require different technologies.

6. Development Team

The number of people working on your project is directly correlated to its cost. It’s the same principle if you were paying for a dedicated team. The time of every developer, QA engineer and project manager costs money. It’s that simple.

The type of team matters a lot when it comes to cost for software development. If your organization already has a dedicated IT team, you’ll need to spend a lot less money building software. However, ongoing salaries can add up and cost more in the long run. Not to mention that many teams do not have the necessary knowledge or there are simply not enough people available. In this case, you can increase your staff with a dedicated team. There is outsourcing. This is the most expensive option, but the quality of the project you receive will also be higher.

7. Their location

The location of the development team also has an influence on the price. The prices differ radically. In the United States, you can pay up to 5 times more for the same work done elsewhere. The key is to strike a balance between cost and quality. We have made an analysis of the Russian and Israeli markets which you can consult in more detail.

8. Routine maintenance

The problem with software is that it is never really complete. There’s always the chance to add new features, improve performance, and fix unnoticed bugs. This is the advantage of the time and material payment plan that we will discuss later in the article. You don’t have to wait for the final product to request changes.

There’s a saying in the industry that you have to triple all the costs. This is largely the result of people choosing the fixed price payment model when they don’t have a clear project vision in mind. The product they get is different from what the customer envisioned and then they have to spend more.

The best payment model for software development

Since we mentioned payment models in our previous point, it makes sense to explain them in more detail. The two most common are fixed price and time and material. Which one is best for you largely depends on the size of the project and defining your needs and requirements.

A fixed price

This option is best suited for projects with clearly defined requirements that are not subject to change. In short, you pay all development costs upfront. This may work for many clients, but carries more risk. It’s easy to lose control and communication with the team will be limited. Moreover, it is not uncommon to face delays when working on a large project. This model is best suited for small, simple projects.

Time and material

This is the more flexible method of the two. Payments are made gradually and not in a lump sum in advance. According to the agreement, the customer can pay every two weeks, every month or according to the period that he prefers. This approach allows for greater control of the team and the development process as a whole. The customer can see the project each time the payment is made. This way it is possible to check the reports, request additional features and make other suggestions.

A client’s software development story

While researching for this article, we remembered one customer’s story, so we reached out to them for their perspective. Here’s what they told us about their experience.

“I got burned on the fixed price model. It was really my fault. I guess that’s why you shouldn’t rush trading decisions. I have a bit of experience in software development, we had a dedicated team helping us create an ERP system. When finished, I was thrilled. I wanted almost all of my software to be custom. I had big ideas and little patience. After the success of my previous business, I saw no reason to wait. In fact, I even hired the guys from the company I mentioned earlier.

So there I was, with what I thought was a clear vision of the project asking to develop it. Out of all the payment options, I chose the fixed price one. I had enough money, I had an idea, so I didn’t even think about it. I trusted the guys and didn’t want to control their process. In the end, I got the software I asked for.

The tool they created worked perfectly, but it lacked the main features I wanted because I thought they were a given of my requirements. The details are more complex than that.

Luckily, I was on budget and could afford to do it properly. We discussed the issue with the developers and came to an agreement. We were going to use the tool they had made as the basis for the one I wanted. This time I chose the time and material option.

Every two weeks the guys would show me what they had done. I could play with it, test things and most importantly make suggestions and guide the direction of the project. It wasn’t a problem that I thought it might be. It didn’t take long and I enjoyed the discussions.

In the end, I got not only the software I wanted, but better. The experts on the team came up with additional features that they knew I could use. They explained the costs of everything and were overall very transparent. That’s why if I ever need to order more software, I know how I’m going to spend my money and where it will go.

The bottom line

Now that you have a better understanding of software development costs, your resources won’t be wasted. Transparency is the key to a successful partnership. We value our customers and aim to make their experience as easy as possible.

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