There is hardly any industry that looks for good software development services. The numbers support that. Namely, Statista reports that the global custom software development market will reach a staggering $812 billion by 2027, which is $300 billion more than the current market’s value. With the booming market, companies looking for software development consider two key factors – quality and cost of software development.
Finding the balance between the two ensures the best product for the most reasonable price. That is why businesses look for software developers from all over the world. Yet, regardless of the vendor you find, it is critical to know what factors compose software developer costs. Further, we explore the average price of software development and show how aspects like the company’s size and the project’s complexity play a central role in what you will pay for custom-developed software.
Average Cost of Software Development
The range in cost of software development can be pretty broad. In a nutshell, if you are looking for a simple app with a generic user interface and choppy backend processing, you will pay about $20,000. The price tag can reach $500,000 or even more if you plan to get state-of-an-art software. It depends on the number of hours invested in the project. While the cheapest option can be delivered in about 600 hours, the high-quality products may take a couple of years of developers’ work.
The evidence dictates that the average cost of software development revolves around $36,000. However, you need to understand that this is not a constant. The product’s price depends on what you expect, what you need, and what you can afford. Many factors are involved, and the company’s size is one of them.
Software Developer Costs by Company’s Size
The cost of software development depends on how small or big your business is and what your budget is. To get you a general idea of how different businesses’ size impacts the cost, let’s consider the following examples:
- When a startup looks for software development, such a company does not have a massive operating budget. In turn, it must launch its product at once to capture the market niche and get as big a customer base as possible. Startups generally cannot afford highly personalized to their needs software products. That is why they often operate with Minimum Viable Products (MVPs). On average, companies of this size cannot go beyond $40,000 – $50,000 in software development costs.
- When small and medium enterprises (SMEs) consider getting new software, they most often focus on streamlining their processes. Unlike startups, these companies have bigger budgets and can wait longer for developers to deliver the product. In such a case, the cost of software development for SMEs can reach about $100,000 – $150,000 and take about 2,000 – 2,500 hours to complete.
- Finally, there are the most prominent players – enterprises. These can afford a lot and invest years in receiving top-of-the-line software products. While SMEs value streamlining and startups need to deliver their product to the market as soon as possible, enterprises need to consider many more variables, including compliance, reputation, and scalability. In such a case, for companies of such size, software developer costs can surpass $500,000 and take an average of a year in terms of development.
The above numbers suggest that software development costs vary from company to company. The logic is simple – smaller businesses cannot afford more sophisticated software and need products that can provide some profits at once. In turn, larger companies look for software to distinguish them from competitors and ensure long-term success.
Cost of Customer Software Development Based on Project Type
Taking a company’s size out of the picture, it is time to look at the factor of project complexity. The cost of custom software development directly depends on what type of software developers deliver. Respectively, you pay one price for a simple mobile app and another for enterprise software.
Considering the average hourly rate software engineer receives about $55 per hour, one can determine how much a particular product costs based on how many hours it takes to be developed. It will cost about $30,000 to develop a Customer Service Management (CMS) system starting from the simplest projects. For mobile apps, the cost can fluctuate from $20,000 to $300,000, depending on the features. A SaaS-based software costs about $100,000 and can reach up to $200,000. For healthcare software, you can pay up to $500,000, depending on the integrations. Finally, enterprise-level software can get as high as $800,000.
Here, the same logic applies to the company’s size factor. The more complex the project, the more developers’ hours it takes to be developed. The simpler the project, the more low-cost it is, with fewer features.
Key Factors Affecting Average Cost of Software Development
Apart from the company’s size and project complexity, some additional factors impact the cost of software development. Notably, to get a better grasp on these aspects, it is vital to distinguish them based on the type of software development. Namely, there are the following domains:
- Mobile software. In this realm, the development cost depends on your chosen platform, for instance, iOS or Android, potential integrations with social media and CRMs, and different device hardware features, for example, GPS and NFC.
- Web-based software. Within this domain, the project’s price relies on the tech stack developers choose, whether the software will operate on desktop and mobile, and particular UI kits. Any of these and many more factors can be used to drive down costs.
- Universal factors. Regardless of the software you choose, the software developer’s costs depend on location. For example, an hourly rate for a software engineer in Romania is way lower than a developer in Australia, a cooperation model chosen, the number of developers involved, and the required post-development services.
Putting all the pieces together gives an image of the cost of software development. Respectively, there are always opportunities to juggle the factors above to save costs.
Conclusion
Software developer costs depend on how small or big your company is and how complex the software you want to get. Besides, when budgeting for a project, you need to estimate how long it will take, how many developers and other experts you are going to need, whether you will use freelancers or in-house talent, and what post-dev testing and maintenance procedures you need. As a result, accurate planning and budgeting grant the best estimation of the cost of software development.
