If you want to calculate the cost of software development, we recommend that you consider the cost factors listed in the article when analyzing your business requirements. If you are already looking for an IT outsourcing provider, ScienceSoft’s experienced development team is at your disposal.
The question “How much does it cost?” is often asked in the world of software development. You have probably already noticed that the cost range between individual vendors of custom software solutions is extremely wide. This gives rise to a few more questions: “Why is the spread so wide?” and “What can I actually expect when implementing my project?
In the following blog post we explain which factors influence the costs of software development and how outsourcing can contribute to cost optimization.
Software development: 6 cost factors at a glance
- Project Complexity
- Scope of functions
- UI/UX Design
- Data migration
- Human Resources
Project complexity describes the environment in which your software is developed. Which key figures can be used to describe your project as complex and therefore expensive?
- Uncertainty: There is always the possibility to make changes in the agile development environment, which can be caused by user feedback, activities carried out by your competitors, changes in the customer budget or even changes in strategy, etc. For example, has developed a mobile app for a world leader in image processing, which our team adapts to regular changes in business requirements.
- Novelty: This is the use of the latest technologies (AI, Blockchain, AR/VR). As in an AI-based app that we developed, which allows to analyze MRI scans and localize brain tumors.
- Safety aspects: The development of a software with high safety requirements requires more development effort and compliance with special regulations during the development process. Thus, we have placed special emphasis on security during the development of the Android app for private text conversations.
Scope of functions
One of the biggest cost drivers in software development is the number as well as the complexity of the functions to be implemented, which define the functional scope. The formula is very simple: the more functions are desired, the higher the costs for software development should be. Extensive functions often require a complex design of the software architecture, which is also associated with an increased price.
Good software must not only offer extensive functions, but also be intuitive to use and flexible enough to deliver positive user experiences. UI and UX designers ensure this. Prices for UI/UX design vary greatly depending on the scope of the desired functions and their complexity. Another factor that can have a huge impact on software development costs is the inclusion of complex technologies such as 3D modeling or motion design. For example, our development team has created a catalog for the ER-based visualization software that consists of numerous and diverse realistic 3D furniture models.
Integration of the software
Common examples of this are:
- Integration with third party services, for example, to extend payment options or to enable the exchange of files with other systems;
- Integration of two or more business applications such as ERP, CRM, Supply Chain Management, Business Intelligence and HR.
- Integration with AI, AR/VR, Blockchain, IoT.
In some cases, integration is easy, for example, when your software integrates with popular third-party services such as PayPal. On the contrary, integration with legacy systems is more complex and requires more effort for analysis, planning and review. You can read our case study about how to integrate real-time supply chain data into an e-Collaboration platform.
Migration requires a customized approach to migrate data smoothly from one system to the other because two different systems store data differently. For this reason, it is necessary to convert data into the appropriate format and then transfer it to another system. This process can consist of the following steps, which also affects the cost of software development:
- Define rules for the conversion.
- Prepare custom scripts.
- Perform tests.
- Make any necessary adjustments.
It must be taken into account that one more factor accounts for a significant portion of the costs of software development – human resources. Each software project involves different stakeholders, which vary according to their roles (BAs, PMs, architects, developers, testers, designers, etc.) and experience levels (junior, middle or senior). The hourly rates depend directly on these variables.
Calculate software development costs
The simplest formula for calculating the total cost of a software project is time expenditure x hourly rate. Let’s start with time estimation. Taking into account the factors mentioned above, we have divided the software to be developed into three groups according to its complexity and created rough time schedules for each of three development projects.
Time expenditure depending on the complexity of the software
To estimate the costs, you have to multiply the number of hours by the average hourly rate of all project participants.
To reduce costs in software development, several companies turn to an outsourcing service provider. It is not only about the costs around the development of a software, but also about other costs that are connected with the in-house software development:
- Costs for personnel recruitment, hiring and management.
- Costs for fringe benefits and payroll tax.
- Costs for workstations, IT infrastructure, software and hardware support and more.
- Costs for training.
When choosing an outsourcing service provider, you must take into account that average hourly rates of software developers vary by country. Hourly rate for a software developer in comparison.
Note: Although outsourcing is a major contributor to reducing software development costs, you should be aware that outsourcing activities can generate hidden costs. If they are not efficiently organized and managed, they can drive up the price of your project.
How reducing costs?
A comprehensive business analysis helps us to determine detailed project requirements. This allows you to avoid developing unnecessary software components and to invest only in what really meets your requirements. We follow an MVP approach, which makes it possible to reduce software development costs by 10-30% while maintaining the high quality of the software. Our team uses ready-made components and services (open source and commercial). We rely on the microservices architecture, which allows to develop independent modules in parallel and ensures a faster time-to-market. Sophisticated project management with established processes and project metrics, expertise in more than 10 industries and the use of agile methods help us to eliminate even hidden costs in outsourcing.