The Cost of Custom Software Development: All Price-Changing Aspects in 2023
Updated 21 Feb 2023
You’re probably here to learn about custom software development cost. Pricing is a crucial factor for anyone who intends to build something digital. Though, it’s not that easy to estimate its cost. The price of custom software development may vary from $50,000 to $300,000 and even more. A vendor has to know solution type, target platforms, and clearly defined set of features to provide you with a detailed estimate.
Business domains you need to develop your app in are also the important factor of defining the final app price. So, average custom software development prices for different applications are equal to (according to the some following prominent industries given below):
- Healthcare - from 75,000 to 250,000+,
- Logistics - from 50,000 to 250,000+,
- Fintech - from 90,000 to 300,000+
We tried to give you comprehensive costs of software development services and to explain the key factors influencing the final price in this article.
Average Cost of Software Development
In our experience, mobile and web applications are the most demanded kinds of software. Let’s focus on them.
Web and mobile apps can be roughly divided into three categories by their complexity level:
- Basic apps (approx. 500-700 hours). They can be built quite fast, but their functionality is quite simple.
- Medium complexity applications (approx. 700-1200 hours). This software has more complicated features.
- Complex applications (1200+ hours). The software of this level is time-consuming to engineer due to complex architecture, security matters, multiple integrations, etc.
Discover the cost to develop a mobile app for your business reading our article
Of course, the categories above are rather subjective. So I would like to provide you with the approximate cost of custom software development for different kinds of apps so you could see the whole picture. The prices are based on the average rate in our region (Central Europe) — $45 per hour.
|Type||Platform||Approximate time (hours)||Approximate cost ($)|
Basic marketplace app
Basic e-commerce app
Booking app like Airbnb
In order to roughly count the software development price, it’s necessary to provide the company with some basic information about your project. For example, the business domain you'll develop your app in, will also influence the final price. Below, we've provided rough price examples for some of the leading industries for you to consider.
- Healthcare - from 75,000 to 250,000+,
- Logistics - from 50,000 to 250,000+,
- Fintech - from 90,000 to 300,000+
We generally ask clients for the following:
- Idea. For example, you want to create an app like Tinder. So, you explain your idea to company's technical specialists and they develop a Tinder-like MVP for you.
- Feature list. It’s important to discuss some vital features that have to be implemented. It’s also good to have the description of every feature (e.g. a map with pins, detect user's location etc.)
- Wireframes. The engineers would be grateful for your vision of design.
- Examples of the competitors’ apps or websites. Instances help you show developers what functions you adore and don’t like.
- Design. There can be just the ideas of what you like.
- Specification. (If you have one.)
A lot of vendors help their clients to collect all necessary data as well as our company. So you can just come up with the idea and we’ll do the rest.
Factors of Software Development Pricing
Such factors as the number of platforms, complexity of architecture and animations may completely change the final price of software development.
All these factors should be considered and double checked beforehand.
The first factor that can change custom software development prices is the platform of choice. Modern IT world provides three popular platforms for software development and, of course, the software development price quote will vary according to the platform. Do you want an Android or iOS app? Or maybe all you need is a web application? There are some points that need to be considered.
Cannot decide what platform to cover first? Find out our insights: iOS or Android - what to start from?
For example, if you already have an iOS app, it’s impossible to convert it into Android application and vice versa. It happens because these platforms take over different programming languages, have unlike SDKs and require different development tools. So, if you want your application to work on two or even more platforms, be ready to spend more money and cooperate with different developers.
Type of Software Project
The next factor that affects the cost of custom software development is the type of project. There are 4 in total:
- Development of new software - a creation of a custom solution from scratch with an individual approach.
- Modification and improvement of software - here you can include an upgrade of existing solution.
- Integration of software - this operation includes various measures for the implementation of ready-made software into existing business processes.
- Web development - a creation of websites and web applications for business.
Each of these types has a different software development team composition and requires a different amount of effort and development time. Accordingly, the final price will also be different.
Another nuance that affects software development cost is the size of the future project. The larger the project, the more hours will be spent on working with it. In software development, there are usually 4 levels of projects:
- Small. A fairly small project that is limited to only minor changes, be it user interface settings or bug fixes.
- Medium. These projects are a bit more work-intensive, but they still have tangible results and are often stand-alone solutions or integrations. The category of medium-sized projects can be classified as simple mobile applications or web interfaces to existing systems.
- Large. Large and complex projects that may require integration with multiple systems, a database component, and security and logging functionality. Large projects include the development of a multi-platform application, complex business systems, and much more.
- Enterprise. This is the last and largest project level with high safety and reliability requirements. For example, to this level of the project you can include the development of an Uber-like application that works on all platforms, has many third-party integrations and imposes extremely strict requirements on the security of users' personal data.
People are visual creatures, so design becomes a vital part of software development cost breakdown. UI/UX design is able to attract users’ attention and engage them. Developing design can take quite a lot of time depending on a website type and its complexity.
Development, its complexity and time is one of the many price-driving factors for custom software development cost. The first thing for you to know is that there are two web development types: front-end and back-end. Front-end or client-site is everything that users can see and interact with. As for back-end or server-side, it's like an engine for the app. For example, when a user clicks the registration button, the app first connects to the server to check the data and then returns a value to the user (e.g. wrong credentials, a user already exists, registration successful). That’s where back-end starts to work.
It’s necessary to consider that the development of iOS applications typically requires 20% or ever 30% less time compared to Android. It happens because there are much more devices run on the Android platform. So, the software development time estimation will vary depending on the chosen version of OS. (as one of the influencing factor).
Quality assurance services are extremely important for the development process. It’s vital to test every component of the software in order to prevent or solve any possible bugs. The cost of testing in software development always depends on the complexity of your project.
Technical Factors that Affect Price
3 Other Factors That Affect the Custom Software Development Costs
There are some non-technical factors that should be considered because they can also affect the final price. There most important of them are hiring options, staff experience, and region where the developer is from. Let’s find out more about them.
1. Seniority of Software Developers (Staff Experience)
Software engineers are often divided into three categories by their knowledge, skills, and working experience. There can be junior, middle, and senior software engineers.
Software Developers Seniority
Usually, these developers have just started their working path and still require support from more experienced colleagues. As a result, they work in a team of more qualified developers and are able to perform only simple tasks. These developers often know only one programming language or framework, as a result, they are unable to work fast enough. So, it’s better to think well before hiring the developer with such a skill set.
Year of experience: 0-1
The more engineers work, the more experience they gain. Middle developers can work on the project independently and deal with complex technical problems.
Year of experience: 1-3+
This category of programmers can provide you with the most effective variants for developing your project (e.g. different programming languages, how the feature should work to cause fewer bugs, etc.). Offering these options, they are able to explain the advantages and disadvantages of choosing each of them. But be advised that these specialists can raise costs of software development significantly.
Year of experience: 5+
If you need any help in finding or interviewing software developers, drop us a line and we will assist you.
As you understand, custom software development rates may differ depending on the engineer’s level. So, think twice about what developer is required for your project. If your product is quite simple (e.g., a landing page or a simple app), the junior software developer is able to conquer this task. However, if you want more complicated features (e.g., payment integration), you have to hire a more qualified developer. The more complex your project becomes, the more skilled engineer you need.
2. Hiring Option
Modern IT market provides quite a lot of opportunities for hiring a good software developer. The most popular of them are freelance developers, in-house teams, and outsourcing development companies.
Each of these options has its benefits and drawback that we will discuss below.
Software Developer Hiring Options
Freelance software developers
There are a lot of reliable platforms where you can hire freelancers. As you understand, this variant is the cheapest but not the most trustworthy. There is almost no opportunity to control the freelancer’s work. Furthermore, nobody can guarantee that your project will be finished and you will be satisfied with its quality. Having no assurance, you may face a lot of bugs in your project and just waste money.
In-house software developers
Engineers create the software in your own office, so you can follow all the development stages. You can contact the employees at any time and, as a result, any possible bugs will be solved faster. However, hiring in-house developers is always time-consuming and requires considerable investments in salaries, taxes, hardware, and software. To find your perfect developers for the in-house team it is always better to search through professional platforms like LinkedIn or Glassdoor. These websites have all the necessary information to fulfill your search.
Outsourced software developers
Hiring outsourcing companies for creating certain software has quite a lot of benefits. For example, there are many offshore companies from all over the world, so you can hire developers from anywhere. As a result, you can choose affordable contract software development hourly rates because they vary depending on the region. The main drawback you may face is a time zone difference. If your development plan consists of hiring outsource developers, you can find them using websites like Clutch and GoodFirms. These platforms collect information about various IT firms from different parts of the world.
Couldn’t find dedicated developers? Read our guide on hire dedicated developers.
In our experience, in-house developers or offshore software development companies are the most suitable variants. Choosing one of these options, you are fully protected and can be sure about the quality.
3. Location (Region)
Nowadays there is a tendency to completely different rates on software development depending on a region. For example, the most expensive development services are in the US and Australia. However, such countries as Estonia provide qualified services for less. Let’s look through software development cost per hour from different regions.
|Region||Junior Developer||Middle Developer||Senior Developer|
How Do We Estimate Software Development Cost at Cleveroad?
Our team has tried a variety of approaches for estimation software project. Eventually, we’ve come up with a simple yet trustworthy two-step framework:
A rough (or approximate) estimate is thought to be the most accurate amount. Its precision can range from 75 to 25%. This information should not be considered as a contract with set terms and conditions. It is given to a customer just for informative purposes.
The objective of the rough estimate is to inform the customer about the amount of money to expect as well as to outline the general phases of product development.
When a customer is unsure whether or not they will collaborate with the software development team, this assessment is factored into the initial stage of the cooperation.
A detailed cost estimate is the most exact one in project management, with about 100% accuracy. It is carried out with the participation of all developers who will be actively engaged in the product development.
Detailed estimates are based on thorough description of the forthcoming software platform, including wireframes, specs, and other documentation. Our managers will offer a thorough assessment within two business days if a customer approaches us with a ready-made paperwork package.
Estimation Process at Cleveroad
If you need to have precise software development estimates for your project, here, in Cleveroad, we can assist you.
Cleveroad is a competent software development organization based in Central Europe. Since 2011, we've been assisting startups and enterprises of all kinds in acquiring a wide variety of IT services and customized software products. They improve workflow efficiency, address business issues, and aid in the acquisition of competitive advantages.
We assist startups, small businesses, and large corporations in achieving their objectives and bringing ambitious ideas to reality. Collaborating with us, you'll obtain a wide pool of services, including:
- A free project estimate from our Sales Managers with no hidden costs or charges
- A complimentary consultation with one of our Business Analysts about your project
- Non-disclosure agreements (NDAs) execution per request
- On-demand services (e.g., custom software creation and updates, as well as the modernization of legacy systems)
- A team that can easily adapt to new requirements and modifications rapidly
- Assurance and control of product quality at all stages
Drawing the line, it’s important to understand that custom software development cost estimation is much more complicated than it seems from the first point of view. There are a lot of technical and non-tech factors that need to be considered beforehand. But an experienced software development company can help you solve all the arising business issues.
It depends on the region of the world where you hire developers. In North America, the average hourly rate for middle software engineer ranges between $120-127, $50-65 in Western Europe, and $40-50 in Central Europe.
Rate of a software development company depends on its location. The average hourly rate for a middle software engineer in North America ranges between $120-127, $50-65 in Western Europe, and $40-50 in Central Europe.
The average hourly rate for a middle software engineer in North America ranges between $120-127, $50-65 in Western Europe, and $40-50 in Central Europe.
Project complexity, number of platforms to develop for, seniority of software developers (and their number in a team), hiring option (freelancer, in-house employee or outsourced team), and location.