Budgeting for Success: Strategies for Managing Software Development Costs in 2024

These days, custom software development has become more popular than ready-to-use software. Custom-made software is flexible, scalable, and provides a more personalized experience. They streamline operations, leading to improved consumer experience that usually off-the-shelf software solutions cannot. However, software development cost is always a concern when companies/organizations decide to go for custom software development.

As per the studies, the software development market is expected to reach $1039 million by 2027 and the global population of software developers is expected to reach 28.7 million by the end of 2024. It shows how each industry is leveraging software development.

In this blog, we will discuss the essential factors in deciding the cost of software development, a step-by-step procedure to determine custom software development pricing, the average custom software development cost, and much more.

So, keep reading.

Before we dive deep into software development costs, let us first understand what custom software is.

What is custom software?

Custom software is a unique product that is different from ready-to-use software, such as Microsoft Office, that caters to all user bases. Custom software comes with unique features that cater to your business requirements. For example, a customized banking desktop application or CRM is custom software.

Here are the steps that a custom software development process includes.

  • Requirement analysis
  • Coding
  • Testing
  • Deployment

Custom software development provides a personalized experience for users by reducing development costs and increasing ROI. The best thing about custom software development is it offers better scalability than ready-to-use software.

Now that you know what custom software is, let’s move to the next section, which highlights the advantages of properly planning a software development budget.

Average Custom Software Development Cost

Nowadays, mobile and web apps are the highly demanded types of software. To get a rough idea of custom software development costs, let’s concentrate on these kinds of software.

First, we will concentrate on the complexity factor and based on it here are the approximate software development costs.

Simple application$40,000 to $120,000
Medium Complexity application$120,000 to $200,000
Highly Complex application$200,000 to $30,000+

Average Custom Software Development Cost By Type

Let’s take a brief overview of custom software development (approx) cost by type. Here we will consider CMS, CRM, eCommerce solutions, SaaS products, ERP systems, and supply chain management solutions.

Customer Management System (CMS)$20,000 to $50,000
Customer Relationship Management (CRM)$100,000 to $600,000+
eCommerce Solutions$20,000 to $70,000
SasS Products$25,000 to $100,000
ERP Systems$150,000 to $500,000
Supply Chain Management Solutions$100,000 to $300,000+

Average Custom Software Development Cost By Size

Custom software development costs are different for each size of business. Here we will consider the approximate cost of custom software development for startups, small to medium enterprises, and large enterprises.

Startups$30,000 to $450,000
SMEs$70,000 to $100,000
Large Enterprises$100,000 to $500,000+

What are the advantages of effective software development budgeting?

Accurate software development budgeting plays a vital role in software development project success. By proper planning and strategic resource allocation, budgeting offers financial stability and improves overall project efficiency.

Let’s check out a few benefits of software budgeting.

  1. Proper Resource Allocation
    You must do a proper project requirement analysis to decide on a software development budget so you can allocate resources optimally. Thorough analysis can prevent overspending, control wastage, and ensure that resources are allocated when they are needed most.
  2. On-Time Project Completion
    As you have defined clear financial guidelines, there are low chances of unexpected resource shortages or expenses. So you/your team can complete your project on time if you are not ahead of the schedule.
  3. Risk Mitigation
    Proper budgeting lets you handle unexpected events without taking any risk for the project’s financial stability.
  4. Clear Stakeholder Communication
    As you have set clear budget guidelines, it will help in practical discussion regarding project priorities, goals, trade-offs, etc.
  5. Financial Transparency
    While deciding on a budget, you should note down all expenses. So, you and your team can track progress against the budget and identify the risk patterns, inefficiencies, and areas where you can make improvements.

Now that you know the benefits of budgeting, let’s check out a few key factors that can affect the cost of custom software development.

What are the key factors that affect custom software development costs?

To get a clear picture of software development costs, you must know the factors that impact costs. Here we have listed these factors in a tabular form.

Platform & Technology StackThe platform choice, such as Android, iOS, etc., significantly impacts the development cost of the software. For custom software development, different technologies have different levels of complexity, licensing costs, and scalability. If you go for open-source technology, the licensing cost will be lower. However, proprietary software can cost you a lot.
Project Scope & ComplexityThe software project scope includes features, requirements, and functionalities. If the project scope is extensive and complex, it can lead to higher costs. For example, building a simple mobile app will cost less than developing a complex, customized enterprise-level solution with various integrated modules.
Development ApproachYour development approach greatly affects the software development costs. You should go for the development approach that is reliable, fast and has fewer errors. For example, Agile development is such an approach that almost 95% of organizations use due to its iterative process nature. So you can get feedback at each stage. This approach offers a cost-effective development lifecycle.
Team SizeAnother factor that affects the development cost is team size. Costs will be high if you go for a larger team with diverse skill sets and experience. In custom software development, other than developers, you should consider the cost of specialists who do UI/UX designing, project management, QA testing, DevOps specialists, etc.
TimeframeThis is the crucial factor that directly affects your budget. If the project development timeframe is longer, it will require more resources and increase operational costs. Extra resources are needed if tighter deadlines lead to higher expenses.
In-house development & outsourcingIn-house development or outsourcing can also impact your software development cost. If you go for in-house development, it can cost you high infrastructure and personnel costs. Conversely, outsourcing your requirements can save you costs as you will use external resources and expertise.
Rules & ComplianceIt has strict regulatory and compliance standards if you want to develop software for industries like healthcare, finance, and government. So, it will increase the development cost because you will need additional security measures, documentation, and development to meet these standards.
Support & MaintainaceGenerally, post-development support and maintenance are often ignored when planning the budget. However, it is a vital factor. Regular support and maintenance involve regular updates, bug fixes, and user support. All these need ongoing resources and investment.
Development Team’s LocationYour development team’s geographic location can highly influence the custom software development pricing. If your development teams live in regions where the cost of living is high, they would demand high salaries. So, it will impact the budget allocation.

So, carefully analyze and address all these factors. It will help you develop custom software that perfectly aligns with your project’s scope, goals, and requirements. However, keep in mind that each custom project is unique. So, you must decide on the budget that fits your business requirements.

Now that you know which factors affect the software development cost, let us discuss some strategies to determine and minimize the software development cost.

Which Strategies Can Help Determine & Minimize Software Development Cost?

Here are a few tips and tricks that you need to follow.

  • You should partner with an end-to-end offshore software development company like Pranshtech Solutions, which has a skilled and seasoned development team. We build custom software at affordable rates. We even offer for free 30-minute consultation call so contact us to schedule it.
  • Prioritize the requirement gathering and analysis phase. It will help you decide on the software development cost and understand the requirements well. So, the time-to-market and costs will be decreased.
  • Ensure the software developer company you are hiring follows the MVP approach to build your software. This approach helps understand user behavior and identify bugs, and it has more chances of the idea being accepted in the market. Besides, you will get user feedback so you can easily modify functionalities and deliver solutions based on it.
  • You can hire dedicated developers from Prashtech Solutions if you plan to go for the in-house development option. We have an experienced software development team that can develop your software on time and within budget. To get a quote, connect with us today.

Hopefully, you now understand how to determine and estimate software development costs.

Concluding Remarks

Determining custom software development costs requires careful consideration of various factors, from the complexity of the project to ongoing maintenance. Therefore, you need to define clear objectives, summarize technical requirements, and understand the project’s scope. It will help you to determine an accurate cost estimate. An accurate cost estimate can lead to a smoother development process and provide you with custom software that perfectly aligns with your business goals.

So, if you want an overall cost estimation for your custom software project, connect with us today. We offer affordable custom software solutions without compromising on quality. To learn more about our services, contact us today.