Custom software development costs – delve into influencing factors

Businesses across various industries are increasingly turning to custom software development to meet their unique requirements and improve customer experience. However, the cost associated with developing custom software solutions is an aching concern. There is a sea of factors that can impact custom software development costs. That’s why we publish the following guide to help businesses picture which aspects impact the estimation cost of your software development.

Overview

Custom software encompasses a wide range of applications and is not limited to specific industries. It can include tailor-made solutions for various sectors, such as banking applications, enterprise resource planning (ERP) software, e-commerce platforms, and many more.

Therefore, cost of custom software development can vary widely depending on the complexity of the project. On average, small projects can range from $10,000 to $50,000, while medium-sized projects may cost between $50,000 and $250,000. Large-scale enterprise projects can exceed $250,000 and extend into the millions.

6 factors influencing custom software development costs

1. Platform requirements

The choice of platform, such as web or mobile can impact development costs due to variations in programming languages and expertise required.

For a web app or a hybrid app, the development team will need expertise in web technologies such as HTML, CSS, and JavaScript. Those apps can function cross-platform and access through browsers on different devices. This approach reduces development costs by using existing web development frameworks and a reusable codebase.

On the other hand, a mobile-based application requires different versions for iOS and Android. Since each platform has different languages that need specific skills, developing and maintaining different codebases for each operating system increases effort and costs.

2. Technology stack

Certain technology stacks are considered more complex or specialized, requiring a higher level of professional knowledge and potentially leading to higher development costs. These technologies may include blockchain and AR/VR.

Custom software utilizing blockchain involves working with smart contracts and cryptography. As many companies are struggling to recruit skilled blockchain developers, the scarcity of blockchain developers and the need for expertise in decentralized systems can increase development costs.

AR/VR is an emerging technology powered by a comprehensive tech stack and platforms, such as Unity 3D, Unreal Engine or Deep AR. AR/VR development requires a deep understanding of 3D graphics, physics, and user interaction design. The complexity of creating immersive experiences can easily shoot up the development costs.

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3. Project scope

The scale of the project, including the number of functionalities, interactions, or integrations with third-party solutions or other internal systems, directly affects the development effort and associated costs.

Small-scale projects often have basic features and short development time, lowering the costs. Given an example of a simple mobile application that allows users to create and manage to-do lists. It may include features such as adding tasks, setting reminders, and marking tasks as completed. The development team can consist of a few developers, a designer, and a project manager, enabling them to deliver the results in a few weeks, depending on the team’s resources. The cost of a small-scale project commonly falls within a lower range, from a few thousand dollars to tens of thousands of dollars.

However, large-scale projects with extensive attributes and integration with third-party applications need to invest more time and resources, resulting in higher costs. Consider a large-scale Fintech software, it requires in-depth domain knowledge and robust security measures. Advanced functionalities like account management, payments and investments, and integration with external financial institutions need to be deployed to improve user experience. The development process extends over several months to a year due to the integration with banking APIs and compliance requirements. Such projects cost from hundreds of thousands to millions of dollars.

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4. UI/UX design

The complexity of UI/UX design might vary depending on the desired user experience and branding needs. Balancing the needs with the available budget is critical for creating a visually appealing and user-friendly application while staying within budget constraints.

In a simple UI/UX design, your app may have a clean interface with straightforward navigation and standard buttons. This helps reduce the time-to-market and associated costs. (More about design cost)

In the case your app aims to provide a highly immersive experience, with bespoke animations and interactive elements, the UI/UX design sophistication increases. This level requires more design stages and specialized expertise and can be expensive.

5. Development team location

The geographical location of the development team, onshore, offshore or nearshore outsourcing can influence the cost of development due to variations in labor rates and overhead expenses.

For example: A company in South America has three options for the development team’s location: North America, Europe, and Asia.
If the company chooses a team located in North America, it can expect higher labor costs due to the higher wages in this region. The hourly rate in those countries can go up to $250/hour.

On the other hand, it can benefit from lower labor costs by outsourcing in Europe compared to North America. European countries like Poland, or Romania have a pool of skilled developers who offer competitive rates. Those software companies charge $80-$100/hour.

Outsourced developers from locations with lower living costs in Asia, such as Vietnam, India, or the Philippines, provide similar services at a reasonable price. Labor costs in these locations are significantly lower than in North America and Eastern Europe, with hourly rate ranging from $20-$50.

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6. Hiring models

Choosing hiring models for the development team, such as in-house or outsourcing, can have a knock-on effect on development costs based on factors like labor rates, infrastructure setup, and project management overhead.

If the company establishes its in-house team by recruiting full-time employees, it will bear expenses such as employee salaries and overhead costs.
Alternatively, staffing services would engage a vendor to handle the project. The company only has to pay for its services on a project or hourly basis, avoiding the long-term commitments and overhead costs associated with an in-house workforce.

Ekotek custom software development cost estimation

Ekotek is a leading outsourcing IT firm specializing in custom software development services. By providing global clients with custom software development services since 2018, Ekotek has managed to optimize our resources and processes to be able to offer our clients the best possible rate.
Our team is based in Vietnam, offering the advantage of cost-effective labor and a large pool of skilled professionals. With over 180 tech specialists, we are confident in providing over 250 projects at competitive pricing.

By employing the agile development method, we can cut the project’s required time and resources in half. Moroever, the majority of engagements model is project-based, which means the cost for clients is fixed based on the agreed-upon scope and deliverables, minimizing the risk of unexpected additional costs. Our transparent pricing approach ensures that clients can budget effectively and have a clear understanding of the associated expenses.

Conclusion

Custom software development costs are influenced by a multitude of factors that should be carefully considered during the planning stages. By understanding and accounting for these factors, businesses can effectively budget for their custom software projects, minimize cost overruns, and achieve successful outcomes.

Ekotek engages in a detailed discussion with the client before providing a cost estimation. Our cost estimation is tailored to the objectives of the client, creating alignment between the expected deliverables and the associated costs. If you are looking for a quote for your business software, feel free to contact Ekotek. We are eager to offer consultation and estimates that will contribute to the success of your project.