Custom Software Development Budget: What Shapes It Cost?

According to recent research conducted by Gartner, the anticipated yearly surge in IT spending on software solutions for 2024 is predicted to hit 14%. This highlights the ongoing inclination of businesses towards investing in diverse IT solutions to maintain competitiveness. Software development entails meticulous planning to align with the business model and customer expectations. Given the intricacy and attention to detail involved, understanding how software development cost is formed is a common query.

Building efficient software that brings value to the intended audience necessitates a development team comprising professionals with diverse expertise. Consequently, the elements influencing development costs vary depending on your objectives.

How Much Does it Cost to Develop Custom Software?

Industry estimates peg the cost of custom software development $20k-$500k on average.

Every software development team operates with its unique methodologies and processes, segmented into stages like development milestones. Consequently, you’ll likely encounter a wide spectrum of prices when soliciting quotes for your custom software project. Initially, this might tempt you to gravitate towards more economical options. It is OK if you safeguard your business’s financial health.

However, the pivotal points can significantly influence the final outcome. Researching the average cost of custom software development through online resources or consultations with industry professionals can offer insights.

Yet, to garner a more precise understanding of costs, obtaining a personalized quote tailored to your specific project is indispensable. Hence, a discussion with experts and companies within the field is advisable. They’ll not only attentively consider your project concept but also delineate the objectives you aim to accomplish with the software, elucidating the requisites for your custom software creation.

Custom Software Development Costs: Where Does Your Project Stand?

This serves as the foundation for grasping the average cost of software development. In the initial dialogue, our experts will inquire whether you’re in the ideation phase or if you’ve already formulated a scope or prototype, even if only sketched on paper. A comprehensive analysis of factors and critical aspects ensues, determining elements such as the team’s size and requisite expertise.

Feel free to reach out to our OS-System team to initiate discussions about your idea!

Activities Shaping Custom Software Development Costs

Now, let’s discuss 4 main development phases that influence your final custom software costs.

Research & Initial Planning Phase

A study conducted by McKinsey and the University of Oxford found that large IT projects tend to surpass their budgets by an average of 45%. Remarkably, certain projects witness significant overruns, soaring to as high as 200% or even 400%. One of the primary catalysts for these overruns is inadequate planning.

Software creation commences with the crucial research, planning, and strategy phases, commonly known as the discovery phase in many development teams. At OS-System, we emphasize this initial stage, which aims to comprehend the client’s objectives for the custom software and assess their existing assets, whether it’s just an idea or already formulated designs.

Typically, 10-15% of the software budget is earmarked for this pivotal stage, as it lays the groundwork for the entire development. Ensuring clarity and alignment among all stakeholders is paramount during this phase, as any misinterpretations or delays can greatly impact the final project costs. Therefore, it’s a prime opportunity to address uncertainties, ask probing questions, and foster cohesion among development teams.

Design Creation

Similarly, 10-15% of the software budget is allocated to the design creation stage, which holds immense significance in shaping the user experience. 83% of individuals prioritize a “seamless experience across all devices”. The interface design is pivotal in captivating users and providing them with an enjoyable, intuitive experience that encourages repeated usage. However, not all development teams prioritize effective UI design practices

At OS-System, we embed a culture that prioritizes user experience, recognizing it as a driving force behind innovation and the delivery of high-quality products. With a track record of over 150 projects, we’ve demonstrated the pivotal role of UI and UX design in facilitating seamless navigation and enhancing conversion rates.

Software Development

Subsequently, the project progresses to the development phase after completing the wireframe and interface creation stages. Detailing the costs of custom software development necessitates careful consideration during this phase, as every feature and detail influences the process and, consequently, the costs. 

Some features, such as push notifications, user registration and login, geolocation, synchronization, and payment integrations, serve as foundational elements across various software. Approximately 60% of the software budget is allocated to frontend development, backend development, and QA testing. This ensures a robust and high-performing software solution.

Testing and Implementation

Upon completion of the development process, rigorous testing is imperative to prevent failures and dysfunctional pages. An exhaustive analysis ensures that the product aligns with all specified requirements.

This stage’s duration hinges on the developed application’s type and complexity. Engaging Quality Assurance professionals to conduct meticulous checks ensures adherence to the client’s standards and specifications, contributing to the variability in costs.

Factors Influencing Higher Costs in Custom Software Development

Numerous factors, including intricate features and the necessity for numerous integrations, can escalate the cost of custom software development.

Moreover, the nature of the intended application greatly impacts costs. For instance, straightforward applications facilitating data collection and fostering client-company communication may require 3–6 months for completion, with an average cost ranging from $15k to $40k.

Conversely, robust applications entailing multifaceted functionalities and integration with modern APIs may necessitate 12–20 months for development, with an average cost of $100k. These figures provide a foundational understanding of costs for large-scale projects in the market.

For example, software akin to Uber could incur an initial cost averaging $50k-$65k, escalating to $200k upon launch. Similarly, software such as Ikea, leveraging augmented reality technology alongside various features and integrations, may demand costs upwards of $100k.

Can Software Development Be Expedited and Cost-Efficient?

After gaining insights into the cost dynamics of software development and its intricacies, it’s natural to explore avenues for expeditious and cost-effective development.

Creating an MVP is a prudent strategy, especially for startups and nascent digital enterprises endeavoring to optimize financial resources. Essentially, an MVP represents a streamlined iteration of a digital product developed with minimal time and cost.

An MVP, primarily aimed at validating the software’s concept, serves as a litmus test with the target audience to gauge its market acceptance and iteratively enhance its features. Leveraging agile methodologies, our OS-System team specializes in delivering MVP projects within up to 60–70 days, offering an enticing opportunity for affordable custom software development.

Request Your Quote with OS-System

Eager to delve deeper into the specifics of app development costs tailored to your business? Given the unique nuances of each project, custom software development costs vary significantly. Nonetheless, they are often more affordable than anticipated, facilitating the digital transformation of your business. We’re poised to address any inquiries and guide you through the custom software launch process.

Let’s embark on this journey together!

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