How to Calculate Software Development Costs
Tags: How To, Dedicated Team Model, Outsourcing Developers, Software Development, App Development Cost

One of the main questions that worries anyone who decided to develop a software product is how much it costs. It’s not surprising. Proper financial planning helps to avoid many problems, evaluate your capabilities, and forecast the next steps for bringing the product to the market. In this article, we will consider the basic aspects affecting the development price, and also make a plan on how to calculate the cost of your project.

Factors affecting software development cost

Ok, many factors determine the cost of software development. It’s impossible to set a fixed price for services, so the price is set based on the developer’s rate per hour and the number of hours spent on development. But these are not the only factors. Among other non-obvious aspects affecting how you should estimate software development costs are:

Type of software and its complexity

Of course, the cost differs depending on the type of software product you want to create. Mobile app or website? Digital wallet or exchange? It will require a different number of hours and specialists to develop each of these types of products. Complexity is an even higher factor which directly depends on the requested functionality. To create a software product, you first need to build its architecture based on requirements. After that, it becomes clear how complicated the development is, how long the process will take, and which specialists will you need. Remember the simple rule: the bigger number of screens you have the more work will be performed before the release.

Development time

The type and complexity of a product affect the development process time, which is fundamental in pricing. The lighter the project, the faster it’s completed, and the less it costs. Much depends on the technology needed to create a product. For example, you want to create a mobile application. It’s hard to say right away how much it will cost to develop because there are several types of mobile applications. So, if you want to create a native app for several operating systems, the development will take efforts multiplied by two because under iOS and Android it will be necessary to create two different apps. Or you can order the development of a cross-platform hybrid app that will work on different devices. In this case, you will spend less money but will have some limitations in functionality. As you can see, development time directly affects the price, but even more factors affect the time itself.

Read more about how to choose the type of mobile app in our article All You Should Know Before Developing an App.

Location and the type of development team

The development cost also depends on the type of development team. If you want to hire an in-house developer, then you will need to provide him with a workplace, equipment, and a social package, and this is an additional cost. Therefore, outsourcing and outstaffing are so popular in the world, when you can either simply delegate a project to a third-party team or temporarily hire remote employees to work on your project.

Developer rates also vary by region. It’s well known that in Eastern Europe and Asia, development is cheaper than in Western Europe and America. Of course, sometimes a low price can mean low quality, but a high rate can also not be unambiguously called the key to success. You can significantly reduce the cost of software development by choosing developers from Ukraine, Poland, and Slovakia, who are considered the best regarding price and quality.

The seniority of software developers

Different software products require specialists of different seniority levels. Traditionally, developers are divided into Junior, Middle, and Senior.

Junior developer is a specialist with a minimum experience of up to 1 year who can develop simple products.

Middle developer has 1–3 years of experience and can independently solve complex technical problems.

Senior developer with 5+ years of experience thoroughly owns the development process, knows how to implement complex features, and works with large-scale projects.

If you have a project with simple functionality, then why do you need to involve a Senior specialist on it? The more experience the developer has, the more expensive his services.