How Much Does It Cost to Develop Software? Well, software development cost estimation varies and can be challenging as it largely depends on the specific needs and budget of your business.

Furthermore, calculating software development costs can be tricky and software development prices vary largely from company to company, onshore or off-shore etc.

The software development cost can range from as low as £40,000 to as high as £235,000!

By 2026, the global revenue for enterprise application software is projected to hit around £380 billion.

By early 2023, Apple iOS developers had collectively earned a remarkable $253 billion globally.

Although software development costs can vary widely, the demand continues to rise because software provides businesses with the tools to expand their customer base.

Here, we will outline the factors that influence software development costs, helping you make well-informed decisions.

Things to Consider with Software Development Costs?

Estimating software development costs helps you understand the financial investment required to create the software programs or tools your business needs.

The average cost of software development varies, influenced by factors such as team size, expertise, technology stack, developer location, and the type of application needed.

Typically, you might expect to pay between £40,000 and £200,000 for standard software development projects.

However, developing system configuration management software can range from £80,000 to £240,000.

While these figures may seem high, breaking down the costs will provide a clearer understanding of the investment involved.

Software Development Cost for SaaS

The cost of developing SaaS (Software as a Service) solutions typically falls between £12,000 and £240,000. This range is affected by several factors, including the developers’ skill levels, the chosen technology stack, and the specific requirements of the project. Utilizing cutting-edge technologies can further influence the overall expense.

Creating a standout SaaS product involves more than just basic functionality; it requires custom features and innovative tech stacks. These elements are essential for differentiating your software in a competitive market, and they also contribute to the higher costs associated with SaaS development.

Off-the-Shelf Software VS Custom Software Development Costs (Comparison)

While off-the-shelf software solutions might seem less expensive at first glance, they often lead to higher expenses over time. These pre-packaged products usually come with recurring subscription fees and update costs that custom software can potentially avoid.

Here are a few examples of ongoing subscription costs for popular off-the-shelf software:

• Microsoft Office Suite: £47-£63 annually
• Sage Accounting: £470-£1,273 annually
• Zoho CRM: £11-£190 annually

Considering another popular option, Oracle, the costs can be quite substantial:

• Oracle Times Ten In-Memory Database: £8,262 for an upgrade and license
• Secure Backup License: £2,767
• Processor License: £37,557
• Integration Products: £13,837-£86,185
• Blockchain Processor License: £37,557

These examples highlight that pre-made software solutions are not always the most economical choice in the long run. To better understand custom software development costs, it’s crucial to consider various factors that influence pricing.

Before finalizing your budget, it’s important to weigh the differences between off-the-shelf and custom software. Delve deeper into the comparison to make an informed decision.

What to Look for in Custom Software Development

Custom software development is tailored to meet your specific business requirements, ensuring you get exactly what you need. Here are key factors to consider when opting for custom development:

1. Flexibility and Scalability: Custom software is designed to grow with your business, offering the flexibility to adapt to changing needs and scale as necessary.
2. Tailored Features: Unlike off-the-shelf solutions, custom software includes features and functionalities specific to your operations, improving efficiency and user experience.
3. Integration Capabilities: Custom solutions can be seamlessly integrated with your existing systems, ensuring smooth operations and data flow.
4. Cost Efficiency: While the initial cost may be higher, custom software can be more cost-effective in the long run by eliminating the need for recurring subscription fees and reducing the expenses associated with unnecessary features.
5. Support and Maintenance: Custom software providers typically offer dedicated support and maintenance services, ensuring your software remains up-to-date and effective.

Software Development Project Costs by Type

When estimating the cost of a software development project, it’s important to recognize that expenses can vary based on the type of software being developed. Here are several types of software development projects to consider when calculating costs:

1. API Development: Creating interfaces for software applications to communicate with each other.
2. Backend Development: Building the server-side logic, databases, and application integration.
3. Database Development: Designing and managing databases to store and retrieve data efficiently.
4. E-Commerce Websites: Developing platforms for online selling, including shopping carts, payment gateways, and inventory management.
5. E-Learning Platforms: Creating systems for online education, including course management, content delivery, and student assessments.
6. Embedded Systems Development: Developing software for hardware systems, often for specialized devices.
7. Frontend Development: Crafting the user interface and experience of a software application.
8. Hybrid Software: Developing applications that work across multiple platforms using a single codebase.
9. Mobile App Development: Creating applications for mobile devices, both iOS and Android.
10. Native Mobile Software: Developing mobile applications specifically designed for a particular operating system.
11. Software Tools Development: Creating utility programs that assist users in performing specific tasks.
12. Video Game Development: Designing and programming interactive entertainment software.
13. Web Application Development: Building software applications that run on web servers and are accessed through web browsers.

Understanding the type of software development project you’re undertaking will help you better estimate the associated costs and plan your budget accordingly.

Software Development Cost Breakdown

Understanding the key components that contribute to the cost of software development can help demystify the final price and make it a more justifiable investment.

A £120,000 price tag for software might seem overwhelming, but breaking down this figure into smaller, understandable fragments can clarify how it develops.

Key Factors Affecting Software Development Costs

Before diving into the detailed breakdown, let’s highlight the main factors that influence the cost of software development:

1. Project Complexity: More complex projects with advanced features and functionalities require more development time and expertise, thus increasing costs.
2. Development Team: The size and experience level of the development team play a crucial role. Highly skilled developers charge more, but they also bring expertise that can lead to a more efficient development process.
3. Technology Stack: The choice of technologies and tools used for the project can affect the cost. Cutting-edge technologies might require specialized skills, adding to the expense.
4. Project Management: Effective project management ensures the project stays on track and within budget, but it also adds to the overall cost.
5. Maintenance and Support: Ongoing maintenance and support post-launch are critical for software longevity and performance, contributing to the long-term cost.
6. Design and User Experience: Investing in a good design and user experience can increase development costs but can significantly impact user satisfaction and adoption rates.

Detailed Cost Breakdown

1. Initial Consultation and Requirements Analysis:
   • Identifying project requirements and scope.
   • Cost: £5,000 – £15,000
2. Design and Prototyping:
   • Creating wireframes, mockups, and prototypes.
   • Cost: £10,000 – £20,000
3. Development:
   • Frontend and backend development, including coding and integration.
   • Cost: £60,000 – £90,000
4. Testing and Quality Assurance:
   • Ensuring the software is bug-free and performs well.
   • Cost: £10,000 – £20,000
5. Deployment:
   • Launching the software and setting up the production environment.
   • Cost: £5,000 – £10,000
6. Maintenance and Support:
   • Ongoing updates, bug fixes, and support.
   • Cost: £10,000 – £25,000 annually

Breaking down the costs in this manner helps to see how each component contributes to the overall budget, making the investment seem less daunting and more justified.

Factors Related to Software Development

Several crucial factors determine the cost of software development. Here are five key elements that significantly influence the price of your software development project:

App Type and Software Complexity

The type of application (e.g., mobile app, web app, enterprise software) and its complexity play a significant role in cost. Simple apps with basic features are less expensive, while complex systems with advanced functionalities require more time and expertise, thus increasing the cost.

User Interface (UI) and User Experience (UX) Design Sophistication

Investing in sophisticated UI and UX design can drive up development costs. A well-designed interface and a seamless user experience are critical for user satisfaction and engagement but require additional design and development resources.

The Hiring Model

The way you hire your development team also impacts costs. Options include in-house development, outsourcing to a software development company, or hiring freelance developers. Each model has its own cost structure and implications for quality and control.

The Collaboration Model

How you collaborate with your development team can affect costs. Agile methodologies, for instance, involve iterative development and constant feedback, which can lead to higher initial costs but result in a more refined final product. On the other hand, traditional models might be less expensive initially but could lead to higher costs due to potential rework and less flexibility.

The Pricing Model

The chosen pricing model—fixed price, time and material, or milestone-based—directly influences the cost. Fixed price contracts provide a clear budget but might limit flexibility. Time and material models offer more adaptability to changes but can lead to higher overall costs. Milestone-based pricing can balance both predictability and flexibility.

Let’s dive deeper into why these factors influence software development expenses more than others:

• App Type and Complexity: More complex applications require more resources, time, and expertise.
• UI/UX Design: High-quality design enhances user satisfaction but involves more design iterations and testing.
• Hiring Model: In-house teams offer more control but come with higher overhead costs, while outsourcing can be more cost-effective but requires careful management.
• Collaboration Model: Agile methodologies may have higher upfront costs but reduce risks of costly changes later.
• Pricing Model: The choice of pricing model affects cost predictability and flexibility, influencing how costs accrue throughout the project lifecycle.

1. App Type and Software Complexity

The cost of software development significantly varies based on the app type and its complexity. Here’s how these factors come into play:

Minimum Viable Product (MVP) vs. Full-Fledged App

An MVP is designed with the most basic features and functions, serving as a prototype to test the app idea before launching a more comprehensive version. MVPs are cost-effective and provide a foundation for future enhancements.

• Examples of MVPs: Some simpler projects, such as Love Island and MyHaBeats, successfully operated without needing extensive evolution or improvement. These cost-effective apps scaled their features as requirements changed, demonstrating that starting with an MVP can be a prudent approach.

In contrast, developing a complex, multi-platform app with extensive features can be significantly more expensive. Apps that require advanced functionalities, support for multiple operating systems, and numerous features listed in the requirements document can drive up costs.

• Examples of Complex Apps:
  • Social Media Apps: Features like geolocation and mapping increase development costs.
  • E-Commerce Apps: Integrating multiple payment options and secure authentication adds to the expense.
  • E-Hailing Apps: Implementing secure backend protection for user data requires significant investment.

The complexity of the app, combined with the type of functionalities it offers, directly impacts the cost of development.

Platform and Coding Type

The platform on which you launch your app also influences the budget. The cost of developing a mobile application depends on the number of platforms and the type of coding used.

• Hybrid Apps: Developing a single-code hybrid app that works across multiple platforms is usually more cost-effective because developers code the software once.
• Native Apps: Platform-specific applications can be more expensive if launched across multiple platforms. Native app development for each platform can cost more, but it might offer better performance and user experience compared to hybrid apps.

Cost Breakdown by App Complexity

The cost of developing an app varies significantly based on its complexity and the features it includes:

• MVP (Minimum Viable Product): An MVP includes basic functions and prototype features, with costs ranging from £20,000 to £50,000.
• Simple App: This type of app has a basic user interface (UI) and limited features, costing between £40,000 and £80,000.
• Moderate App: A moderate app includes a standard UI and some advanced features, with development costs estimated between £70,000 and £150,000.
• Complex App: A complex app features an advanced UI, multiple advanced features, and support for multiple platforms. The cost for such an app ranges from £150,000 to £300,000 or more.

Understanding these distinctions helps clarify why costs can vary so widely based on app type and complexity. By starting with an MVP and progressively enhancing it, businesses can manage development costs more effectively while ensuring the app meets evolving user needs and market demands.

2. UX and UI Sophistication

Another crucial factor in the cost of software development is the sophistication of the user interface (UI) and user experience (UX) design. Poor UX and UI designs can cause users to lose interest in your product, negatively impacting its success.

However, investing in sophisticated UI and UX designs can significantly increase development costs. The UI encompasses every graphical aspect of your product, including:

• Animations: Dynamic visual effects that enhance user engagement.
• Artwork: Custom illustrations and graphics.
• Branding: Consistent visual identity across the product.
• Buttons: Interactive elements that users click or tap.
• Colours: Strategic use of color schemes to improve aesthetics and usability.
• Design: Overall visual layout and structure.
• Fonts: Typography used throughout the product.
• Icons: Small graphical elements representing actions or items.
• Logos: The symbol or emblem representing your brand.

On the other hand, UX design focuses on the accessibility and ease of use for customers, ensuring that the product is enjoyable and straightforward to navigate.

These costs are directly tied to how intuitive and pleasing the product will be for users. A well-designed UI and UX can significantly enhance user satisfaction and retention, but it requires skilled designers.

• UI Designer’s Salary: The average salary for a UI designer is £39.31 per hour.
• UX Designer’s Salary: The average salary for a UX designer is £41.74 per hour.

Investing in high-quality UI and UX design is essential for creating a product that users will love, but it comes at a higher cost due to the specialized skills and time required.

3. Hiring Model

The hiring model, also known as the sourcing model, significantly influences the final cost of your software development project. Whether you opt for an in-house team, a dedicated freelance developer, or an offshore software development team, each choice comes with its own set of cost implications.

Average Software Development Costs by Sourcing Model

For a basic-to-average project, the costs can vary widely depending on the sourcing model you choose. Here are some general insights:

1. In-House Team: Hiring a full-time, in-house development team can be expensive due to salaries, benefits, and overhead costs. However, it offers greater control and immediate communication.
2. Freelance Developer: Working with a freelance developer can be cost-effective for smaller projects. The costs are typically lower, but managing and coordinating multiple freelancers can be challenging.
3. Offshore Development Team: Offshore teams can offer significant cost savings, especially for larger projects. The lower cost of living in different geolocations translates to reduced development costs. However, potential drawbacks include time zone differences and communication barriers.

Factors Influencing Development Prices

• Development Team’s Experience: More experienced teams generally command higher fees but can deliver higher-quality work more efficiently.
• Salaries and Benefits: Full-time employees require salaries, benefits, and other overhead costs, which add to the overall budget.
• Geolocation: Developers based in different regions have varying rates. For example, UK-based developers generally charge more than developers from regions with lower costs of living.

Pros and Cons of Different Sourcing Models

In-House Development Team:

• Pros:
  • Greater control over the project
  • Easier communication and collaboration
  • Alignment with company culture and goals
• Cons:
  • Higher costs due to salaries, benefits, and overhead
  • Limited to local talent pool
  • Longer hiring process

Local UK Development Teams:

• Pros:
  • Proximity allows for face-to-face meetings
  • Easier to manage and communicate
  • High-quality standards
• Cons:
  • Higher costs compared to offshore options
  • Limited availability of specific skills

Freelance Developers:

• Pros:
  • Cost-effective for smaller projects
  • Flexibility to scale up or down as needed
  • Access to a global talent pool
• Cons:
  • Potentially less reliable
  • Requires more management and coordination
  • Quality can vary significantly

Offshore Development Teams:

• Pros:
  • Lower costs due to cheaper labor
  • Access to a broad range of skills
  • Flexibility to work around the clock
• Cons:
  • Time zone differences can hinder communication
  • Potential cultural and language barriers
  • Quality control can be challenging

Understanding these models’ benefits and drawbacks can help you make a more informed decision about which sourcing model fits your project’s needs and budget.

4. Collaboration Model

The collaboration model is a crucial aspect of your software development project, encompassing not just the type of team you hire but also factors like developer geolocation, experience, and specialized skills. These elements significantly impact the overall cost of your project.

Geolocation and Developer Salaries

The geographical location of your development team can greatly influence costs. Developers’ salaries vary widely across different regions, and this can have a major impact on your budget.

Average Monthly Salaries by Geolocation:

• United States: $8,000
• Western Europe: $6,000
• Eastern Europe: $4,000
• India: $2,500
• Southeast Asia: $2,000

Developer Seniority

A developer’s level of experience and seniority also affects their salary. More experienced developers command higher wages, regardless of their location.

Monthly Earnings by Developer Seniority:

• Junior Developer: $2,000 – $4,000
• Mid-Level Developer: $4,000 – $6,000
• Senior Developer: $6,000 – $8,000+

Specialized Skills and Technical Expertise

Developers with specialized skills or expertise in certain technologies often have higher salaries. This is particularly relevant for custom software development projects that require niche skills.

Average Monthly Salaries for Tech Specialists:

• Frontend Developer: $5,000
• Backend Developer: $6,000
• Full-Stack Developer: $7,000
• DevOps Engineer: $7,500
• Data Scientist: $8,000

Impact of Team Size and Skills

The size and composition of your development team will also influence costs. A larger team with more specialized skills will be more expensive than a smaller, less specialized team. However, the complexity and requirements of your project will dictate the necessary team size and expertise.

Key Points:

• Project-Specific Needs: Some projects may require highly specialized developers, while others might benefit from a more generalist approach.
• Team Composition: Balancing the number of junior, mid-level, and senior developers can help manage costs while ensuring the necessary expertise is available.
• Specialist vs. Generalist: Deciding between hiring specialists for specific tasks or generalists who can handle a broader range of tasks is crucial for budgeting.

Ultimately, the collaboration model you choose, influenced by factors such as location, seniority, and skill sets, will significantly shape your software development budget. Understanding these variables helps in planning a more accurate and feasible budget for your software project.

5. Pricing Model

Software development companies and freelance developers often propose various pricing models. Choosing the right pricing model is crucial for managing your budget and aligning with your project’s needs. Here are some common pricing models offered by developers:

1. Competitor-Based Pricing: Developers set a budget to compete with your top competitors, ensuring your project is competitive in the market.
2. Dedicated Team Model: You pay each team member’s hourly rate for the time they spend working on your project. This model provides flexibility but can lead to higher costs if the project duration extends.
3. Fixed-Price Model: This model works with a fixed project scope, deadline, and budget. It’s suitable for projects with well-defined requirements but can be rigid if changes are needed.
4. Flat Rate Model: Often used for off-the-shelf development, this model adheres to a specific budget, making it easier to manage costs for standardized projects.
5. Freemium Pricing: A tiered model offering free entry-level functions with regular paid packages for advanced features. This is common for SaaS products.
6. Hourly Rate Pricing: You pay an hourly rate for the developers’ time. This model offers flexibility but can be unpredictable in terms of total cost.
7. Penetration Pricing: New developers might offer lower rates to build their reputation. This can be cost-effective but carries risks related to experience and quality.
8. Per-User Pricing: The cost is based on the number of users of the software product. This model is scalable but requires accurate user predictions to manage expenses.
9. Milestone Pricing: Payments are made at set intervals based on project milestones. This model ties payment to progress, which can help manage cash flow and ensure accountability.
10. Time and Material: You pay for the time spent and materials used during development. This model provides flexibility for changing requirements but can lead to higher costs if not well-managed.

Choosing the Right Pricing Model

Not all pricing models are suitable for every software project. Here are some considerations for selecting the appropriate model:

• Complex Projects: Avoid penetration pricing for complex projects as it may not provide the necessary expertise and quality.
• User-Based Pricing: Only use per-user pricing if your business analysts can accurately predict user numbers.
• Dedicated Team Model: Ensure the team has the required skills and experience to justify the hourly rates in the dedicated team model.
• Experienced Developers: Trusted and experienced software development companies typically offer flat-rate, dedicated team, fixed-price, hourly-rate, or milestone pricing models. These models provide a balance of predictability, flexibility, and accountability.

By carefully evaluating these pricing models, you can choose the one that best aligns with your project requirements, budget, and risk tolerance. This selection will play a crucial role in the successful execution and financial management of your software development project.dicated team model.

A trusted and experienced software development company typically offers flat-rate, dedicated team, fixed-price, hourly-rate, or milestone pricing models.

Software Development Costs Breakdown

Understanding the development process involves breaking down various costs to get a clearer picture of the budget. While primary factors significantly impact your software development budget, several other elements also influence the overall price.

Requirements Engineering

Requirements engineering involves business analysts who use tools to gather and analyze requirements, ensuring the software product aligns with your business needs and objectives.

• Average Cost: Business analysts typically charge around £34.21 per hour, while project managers charge about £36.21 per hour.
• Tools: Using tools like Requiment can aid your in-house team in gathering and analyzing requirements efficiently, with pricing models available on a monthly or annual basis.

Requirements engineering also includes information architecture, structuring and presenting the software’s components. Online tools for requirements gathering offer guided processes, demo videos, output reports, and task-generation capabilities.

Enterprise Resource Planning Systems (ERPs)

ERPs are essential software solutions for managing company operations, including human resources and accounting.

• Average Cost: Developing ERP software costs around £7,116 per user, with costs increasing based on the number of users and the project management team involved.

Customer Relationship Management (CRM)

CRM development helps businesses manage and analyze customer interactions and relationships.

• Average Cost: CRM development can range between £31,627 and £55,348. Data analysts, earning around £29.87 per hour, might be needed for designing data management aspects.

Forbes reports that CRM pricing post-development ranges from £20 to £318 per user per month, reflecting ongoing subscription fees for external systems integration.

External Systems and API

APIs and external systems integration add to software development costs, especially for features like geolocation and mapping.

• Average Cost: The average hourly rate for an API developer is £45.61. Additional hidden costs may arise from monthly API charges.

Technology Stack

The cost of the technology stack varies depending on the frontend and backend components used.

• Frontend Technologies: Includes CSS, HTML, and JavaScript, with front-end developers earning around $51.68 per hour.
• Backend Technologies: Involves databases, frameworks, operating systems, servers, storage, and user authentication. Backend developers charge approximately £45.61 per hour.

Cloud hosting generally costs more than traditional servers due to infrastructure differences. Here’s a comparison of monthly tech stack pricing:

• CDP: £95 to £1,582
• CRM: £13 to £36
• Data Enrichment Tools: £26 to £44
• Email Software: £10 to £30
• Marketing Automation Tools: £59 to £945

Advanced Technologies

Incorporating advanced technologies like blockchain can increase development costs due to high demand for specialized skills.

• Average Cost: Blockchain developers earn about £55.59 per hour. Blockchain app development ranges from £4,000 to over £159,000.

Quality Assurance and Software Testing

Quality assurance (QA) spans the entire software development lifecycle (SDLC), involving various testing techniques to ensure the product meets functional and non-functional requirements.

• Testing Techniques: Acceptance, agile, backend, compatibility, integration, functional, load, performance, security, system, unit, and user testing.

Test automation tools can reduce development costs by 20% and expedite the testing process.

Software Deployment

Deployment costs include installing hardware, creating user guidelines, and possibly training users.

• Average Trainer Salary: £26.23 per hour, with costs depending on the number of users and employees needing training.

Software Support and Maintenance

Ongoing support and maintenance are crucial for software longevity and performance. This typically involves an annual fee for bug fixes, updates, and requirement changes.

Software Licenses

Licenses for the software and integrated technologies add to the budget. For example, Frontline Systems licenses range from £695 to £790 per year, depending on the subscription length.

Software Reliability

Ensuring robust, consistent, and valid coding takes time and effort, contributing to higher costs. Reliable development practices lead to better quality and fewer long-term issues.

Tips to Reduce Software Development Costs

1. Use Agile Project Management: Manage costs with incremental payments and flexibility.
2. Break Tasks into Smaller Actions: Track hours spent on each task for better cost management.
3. Set Clear Expectations and Communicate: Ensure mutual understanding and visual representations of requirements.
4. Monitor Extra or Hidden Costs: Be aware of web hosting, domain names, SSL certificates, and other potential hidden expenses.
5. Hire Dedicated Developers: Focus on quality assurance and optimal results with experienced developers.
6. Start with an MVP: Test your idea with a basic model before scaling up based on feedback.

Conclusion

Software development costs depend on your business requirements, sourcing model, developer experience, and several other factors. Custom software development is a worthwhile investment, tailored precisely to your needs. Contact us today for a custom solution.

Software Development Cost FAQS

What Are the Costs Involved in Software Development?

The cost of software development includes expenses related to requirements engineering, technology stacks, developer rates, advanced feature expertise, platform numbers, and licensing. The average cost ranges from £40,000 to £230,000.

How Much Does It Cost to Develop a Mobile App?

In the UK, the cost of developing a mobile app can range from £3,500 to over £950,000. This variation depends on factors such as the app’s size, complexity, features, tools, mapping, and platform choices. Discover more about the costs involved in app development in the UK.

How Much Does Custom Software Development Cost?

Custom software development can be more economical compared to off-the-shelf solutions. For example, Oracle’s off-the-shelf options can cost up to £85,000 just for integration products, whereas our custom software development offers competitive prices without excessive integration charges.

What Are the Software Development Costs in the UK?

Software development costs in the UK differ based on several factors. Use our cost estimation tools for custom software projects to understand UK pricing better. Factors like software complexity and the technology stacks for backend and frontend development play a significant role in determining the cost.

Why Are Software Development Projects So Expensive?

The cost of a software development project reflects the level of expertise and experience of the developers. High-quality software developed by seasoned professionals with over 30 years of experience ensures reliability and performance. If you value expert craftsmanship, meet our team of experienced software engineers and dedicated developers. Contact us today to see how our professionals can help.