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Calculating the Cost of Software Development Part 1: Factors Affecting Cost

When it comes to developing software, often the first thing that companies want to know is, “how much will it cost?” Miscalculating the cost of software development is one of the major causes of software development project failure, and can have a huge impact particularly on small-to-medium sized businesses. As such, it is vitally important to determine how much you need to spend on software development. 

Software development costs however, can vary greatly. Survey findings suggest that the average cost can be between US$20,000 to US$250,000. This vast difference in average cost as well as timeframe make it difficult to ascertain the actual cost beforehand, but knowing the specific factors that affect cost can greatly help in getting at least a reasonable estimate.

Factors Affecting the Cost of Software Development

These are some of the major factors that affect software development cost:

  • Complexity. Mobile and web applications are often the most sought after kinds of software. These can be categorized according to complexity, and the level of complexity affects the overall cost. Simple apps require the least amount of time and technical features and as such, will cost a lot less than complex apps. The more features you need and the more complex and/or comprehensive the app design, the longer it will take to complete and the more it will cost. You can expect tens of thousands more for a complex app, especially if you work with a project-based company.
  • Platform. The cost for creating an app for any one platform (Android, iOS) is relatively the same. But making an app that will work for multiple platforms will cost more. It will involve twice the amount of work, different development tools, and different developers.
  • Project size and type. Development projects can range from small ones that only require minor changes to existing software; to large and complex ones that require integration to multiple systems; to even enterprise level projects that require an entirely new and custom solution. Of course the bigger and more difficult the project, the more it will cost.
  • Design. This involves not only the visual aspects of the developed software solution, but also the user experience. Both are critical and detailed aspects of a software solution, and can impact overall development cost depending on whether you opt for set templates and standard items, or a more custom design and experience.
  • Development Team. More than just the size of your software development team, there are numerous aspects about your dev team that can affect overall development cost. These include your team’s size, location, and structure. This also includes the quality and expertise level of your developers.

Having built hundreds of remote software development teams for over 12 years, we’ve learned that building a solid team is foundational to keeping your costs down and producing the best output. In our next installment of this topic, we’ll talk more about the team-related factors that can affect average software development cost, and what options you can take to get the best value for money and keep your development costs down.

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