What does the development of custom software cost?

by Meike Müller

The question of costs is usually asked at the beginning when planning a custom software, but this cannot be answered right at the start. Because many factors play into the calculation of the costs. Only when these have been determined by you and your team, the amount of the costs can be estimated approximately. Which factors you should determine beforehand and how the costs of a custom software can be calculated, we want to break down in this article.

That expects you in this article:

What are the cost factors in software development?

Complexity or difficulty of the entire project

Scope and number of functions required

Creative and meaningful UI/UX design

Creation of the design

Third party software integrations and possible licensing costs

Migration of various data

Rights of use

Time required for the project

Costs of additional project participants

Additional training

Maintenance costs

How can the costs be calculated?

Our tips for low costs

Your service provider for software development

What are the cost factors of software development?

The cost range of a custom software can be very large, because it depends on different factors when calculating the costs. After all, it is also a very individual software solution, which accordingly has an individual price. Thus, it is not possible to directly determine how high the costs will be in the end before the start of a respective project. For a better estimate, you should consult your software development service provider in detail and plan the individual items that the software project should contain. This will facilitate the pricing as well as the subsequent programming. The following factors play a role in the calculation of the price:

  • Difficulty of the project
  • Number of functions
  • UI/UX design and creativity
  • Design creation
  • Software integration
  • Data migration from existing systems
  • Rights of use
  • Time or duration of technical development
  • Project participants
  • Additional training to explain the software
  • Maintenance costs incurred afterwards

The difficulty of the software development project

We start with the first point that is critical to the ultimate cost: the complexity of the project. What challenges will the software development staff face? Will new, perhaps unfamiliar technologies or programs have to be used? Is there a need to use complex security systems and safeguards? All these aspects can affect the cost of the project. In particular, software projects that require a lot of security effort also take more time.

It is also best if you build in scope for unexpected problems and developments of the project. Because during the programming it can always be that new ideas for improvement appear, the competition sets a new trend or a problem arises that could not be considered before.

Number of functions of the individual software

A crucial point for the cost determination is the number of functions, which the individual software is to have later once. More functions mean at the same time higher costs for the entire project. It makes sense therefore to define the functions at the beginning. The more complex the single function, the higher the cost of a single function, because extensive functions require especially much time in development and a more difficult design.

UI/UX design and creativity

The intuitive use of the finished custom software is of great importance. After all, your employees or your customers should be able to find their way around and use the software right away. The goal is a positive user experience and this can be ensured by a thoughtful design. So, you definitely need to keep in mind for calculating the cost of a custom software that you also need to pay a UI/ UX designer. Depending on what technologies are used, such as motion design or Adobe, this can add to the financial weight.

You then plan with the UI/UX designer how fonts and colors should look, for example. Any extra request will cost more, of course.

Design creation

Design creation directly affects two points. On the one hand, it is also, design-technical aspects, which we have already described under the last point "UI-/UX-Design and the creativity". On the other hand, it also refers to the design of the code, i.e. the software architecture. The code must be structured and documented in a meaningful way so that changes can be made afterwards. If the design of the code is to be structured and tidy, the effort for the software developers is naturally also greater. This in turn is then reflected in the costs.

Third-party software integrations and licensing costs

Depending on what kind of software is being developed for you, it may be that additional third-party integrations need to be built in. This usually also costs something, but is usually cheaper than a completely new development. This happens, for example, when files have to be exchanged between systems, payment options have to be integrated and so on. The cost of licenses should also be considered when planning the budget for software development.

Data migration

One factor that is often forgotten is the migration of existing data. For example, if you already use a software or system in your company that contains important data, it must be somehow saved and transferred to the new custom software. If the volume of data is particularly high, it is of course not worth transferring it manually. So, for the transfer, custom scripts are also needed to automate the whole process.

Time is also required to properly utilize this data in the new software. How should the data be stored, has all the data been transferred correctly, and where should it be used and played out? These questions must also be answered by the software developers and are therefore reflected in the costs.

Rights of use of the individual software

So that you can use the software developed by the programmers of a software agency, there may be additional costs for the so-called rights of use. The rights of use can be assigned by the author of a code to you or to several users in terms of time and quantity. If it is an individual software, you can also ensure that only you receive the rights of use. Depending on the software agency, there are additional costs.

Time frame of the software development

Once all tasks and functions of the future software have been discussed, your software development service provider will give you an estimate of how long the project will take in man-days. Normally, software agencies charge by the hour. This will give you an idea of how long the project will take and how much it will probably cost you. Of course, you will only get this information when you are already deep into the project and not for your planning.

Resources of the project participants

Another cost point is that not only the software developers and designers of a software agency are involved, but also additional contact persons from your company. These must be included in your cost planning for queries, updates and so on. How high the costs are for the individual project participants depends, of course, on their position and experience level.

Software training

Once the programming of the software is finished and the new system is completely ready, it may also be necessary to train all employees. This is so that they can use the software properly and are informed about all the functions. Maybe you can do the training yourself and then only indirectly bear the costs of the employees spending their time in training. Sometimes, however, it makes sense for the external programmers who were involved in the software development to take over the training. The cost of the final training is also included in the software offer.

Maintenance costs

After the software has been completed by the service provider software development, there may be times when updates need to be run. Servers or third party applications need to be updated and brought up to date every now and then. This service is offered by many software agencies and is booked under maintenance and monitoring.

How can the costs be calculated?

As mentioned above, the costs of software development are charged by the hour. So first you have to sit down with the programmers of your software agency and determine all important functions of the software, so that the programmers can give a realistic time estimate. Then all you really need to do is multiply the number of hours by the hourly rate.

Furthermore, you add the costs of all other project participants, the costs for licenses and other software integrations, for the design and so on. At the end you will have a pretty realistic sum of your total costs. But keep in mind the point we already touched on above: Not everything always goes according to plan, unexpected tasks come up for the development team and this results in additional costs.

Our tips to keep software costs as low as possible

Depending on the scope of the software, it may be that there are relatively high costs in the development. In any case, it will be worth it, because you will optimize, simplify and automate work processes and you will probably save a lot of time. In addition, the individual software is tailored exactly to the needs of your company and therefore maximally efficient. However, if your budget is still limited, you can also start with a simple software, for example. What are the most important features you want your software to cover and which features are just nice extras? Focus on the features you can't do without.

Another point that can save time and thus costs is to let the developers decide on the technical details. These are, for example, the system environment and software components. That's where the programmers know best and can make a choice that suits them best and that they can work with the fastest.

Your software development service provider

As a rule, companies choose external developers for self-contained software projects. Often it is not worthwhile to hire own developers for a single project. For this reason, the listed cost points are also mainly based on the cooperation with an external software agency. If you are still looking for a professional team of developers to take care of the development of your custom software, you are welcome to contact us for a first non-binding consultation. We are looking forward to support you with words and deeds.

from 20.01.2022

Hello, my name is Meike. I take care of the EXWE back office and am responsible for our social media channels. All of our articles are meant to make your life easier and help you make decisions. Nevertheless, it can happen that something remains unclear, so: If you have questions about this article you can easily reach me at +49 231 93149827.

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