How to calculate software development cost is a question being asked both by startup owners and IT professionals.
After all, the proper estimation of time and effort to develop an application is a key to evaluating your software idea and its cost-effectiveness. Without calculation of software development cost it’s quite difficult to align the budget and assign other needed resources.
This article is dedicated to both IT professionals who worked on other software projects in the past and to people who want to start their software development journey. You will learn about the factors that make up the price of software development and about the method to determine the cost of software development.
Why do you need to estimate software development cost?
The software development cost estimation process will give you answers to many concerns including technical aspects and edge cases. Moreover, the detailed calculation will tell you what you can afford. Possibly you will need to postpone some functionalities and split the development into phases to get funds and customers feedback in the meantime.
Let’s start by explaining why you need to calculate software development cost. First, if you’re a startup owner, you are an expert in your domain, but often you do not know much about software development. You may have an excellent idea, but that’s not enough to make a plan to develop an app to base your business on. To release a high-quality product you need to have funds. If you want to fund the development on your own, you would like to know how much you will spend. And if you go with investors, they would like to know how you manage their money. Therefore, you need to calculate the software development cost.
What do you risk with bad software development cost estimation?
You need to face it. Bad software development cost estimation can be a reason for a project’s failure. At some point you can run out of the resources to continue development. Your application can be in a state that doesn’t allow the release of it. However, even if you release the software it may not be profitable because of lack of the features or low-quality.
If you do not calculate software development cost correctly, you also risk missing deadlines. It can have a serious consequences affecting your business. If you are a startup owner you risk disappointment of the community awaiting your product and investors dissatisfaction.
What makes up the price of software development?
You need to know what makes up the price of software development. There are plenty of factors that influence the process of creating software. Different decisions on some aspects may cause drastic changes to the price of the software you plan to develop. Let’s take a look then on some of these factors.
Number of features
The more functionalities and use cases you plan, the higher the cost of software development will be. That’s definitely one of the main factors affecting the price. An application offering multiple features is demanding to design from UI/UX perspective as the app needs to be consistent. Many functionalities also require a well-designed software architecture.
To keep it short, you will need to engage experts to be part of the development team. In Scythe Studio, we provide consulting and architecture designing services and we also offer UX/UI designing services.
Project stage and completeness
The software project can be developed into a various completeness levels. Those levels are important for various project stages. To give you some examples, the application for which you calculate software development cost, can be proof of concept (PoC), prototype, minimum viable product or market ready app. Development of software project to a more advanced stages will require more time and resources. Therefore the price will be higher.
Proof of concept (PoC)
This is a stage of the software development which will tell you if your idea is even feasible. The software at this stage doesn’t need to be pretty. The goal is to discover if the features you plan are possible to implement in the application.
This stage is a form of product visualization. It is often used to conduct surveys among future users and to present ideas to decision makers. Prototypes are crucial to design the look and the feel of the app matching users requirements. Often it is too late to make a significant changes in the application’s user interface and user experience when the app is released with many features implemented. Therefore, it’s worth doing a prototype of your software. In Scythe Studio we do it either by creating interactive design prototypes in tools like Figma or we develop a software without any logic and connectivity just to present the look and flow of the app.
Minimum viable product (MVP)
The software product as a minimum viable product offers a limited number of features, but it is usable and ready to release. The application at this stage is an invaluable source of feedback from the real market. It is often a key moment for many products. It will help you decide further project development. This stage requires involving software developers, project managers and QA specialists.
Market ready application
As the name of this stage stands, the software developed into this level is complete. It has majority of the features implemented, but even after the release the product needs support and maintenance. Every application needs updates and continous development to stay on top and satisfy users. You can expect that software development cost estimation will be highest at this stage.
Complexity of the project
The software project can be complex for various reasons. It can be complex because of the feature set complexity. It indicates the level of complexity and the difficulty of features implementation. That may be caused by advanced business logic or by unusual requirements.
The another reason is technology complexity that is the case when software needs to be developed with unconventional or innovative technologies.
The last reason for the project’s complexity is design complexity. It refers to both user experience and user interface designing challenges. For instance, if your software cooperates with an external device, designing user’s flow will be more demanding. Also application can have a completely customized design with plenty of animations or it can follow native and default look that doesn’t require almost any UI designer engagement. The decisions you make on this topic definitely affects the cost of software development.
You have three ways to get resources essential to develop an application. You can either use your in-house employees, outsourced specialists or freelancers. All of these options have their own pros and cons. However, we will compare these options in deep in one of the next blog posts as that is a topic that deserves detailed decomposition.
For now, let’s say that freelancers would be probably the cheapest way, but you will need to manage their work on your own which you may find a challenge. On the other hand, in-house employees are trusted and used to work in current team, but they can be busy with other projects or they will lack needed skills. In such case you will need to either train your current employees or hire new ones which is a challenge nowadays.
Outsourcing specialists or ordering holistic software product development from an external company is a good solution when you need to start a project immediately or boost development. This option is not as cheap as engaging freelancers, but it costs comparably to maintain an in-house team.
Software development often needs tooling. It refers to all the tools that are required while development. Many of applications such as project management software (e.g. Jira), code hosting software (e.g. GitLab), coding IDEs (e.g. WebStorm) or software for designers (e.g. Figma) have free plans, but depending on your needs and team size you may need to subscribe for paid options. This may not be a huge cost, but that’s also affecting software development cost. Especially if you develop software in-house or with freelancers. If you order a software project from an external company you rather do not pay for any paid applications used during development. Software houses use their favorite tools anyway.
If you application will use a third party APIs, SDKs or web servers for storage and calculations, you need to also include them in software development cost calculation. For example if you develop an application using Google Maps, you will need to pay for requests your application makes to the Google Maps API.
Number of platforms to support
The another factor affecting the price of the software development is the number of platforms to support. If you develop a mobile application, you would rather prefer to release your app to as broad audience as possible. Thus, you need your application to work on both iOS and Android. You may also want your software to work on desktop platforms such as Windows, macOS and Linux. Finally, you can consider making an application working on embedded devices. The more platforms you want to support, the higher the price of software development will be.
If you are planning to support multiple platforms, consider Qt Qml development as a base for your software development. With the Qt framework you can make significant savings as code written once can be deployed to all platforms.
Finally, let’s explain why hardware is one of the factors influencing the cost of software development. Some of the software projects require to handle connectivity with external devices. That is the case when your app needs to control an external device or get some data from it. The connectivity is usually handled through Bluetooth or local network connection. Therefore, software developers will need to have those external devices in order to implement properly and then test application. You can learn about the egoo.health – project like that in which Scythe Studio was involved in.
Some of the projects require to develop software that will run on top of embedded devices. That is the often case for medical, military, automotive and electronic industries. For such projects you will also need to think about the hardware to be used during the development phase.
Software cost estimation method
Let’s face it. You will need to spend some time to calculate software development cost properly. Of course, it will depend on the project’s complexity, but you may find it difficult especially if you never worked on any IT projects in the past. Nevertheless, it is a must to have a good estimation.
If you are a project manager and you have a team with all the skills to develop the project, you are in a privileged position. Your team members are experts with the knowledge to estimate the time they would need to finish requested features. Then you as a manager, will need to combine estimations from team members and add a risk factor. You will also need to put work needed to be done on the timeline as various parts of the project can be developed in parallel.
One of the most popular software cost estimation methods is making a detailed features list (possibly categorized and divided into stages or milestones), estimating each feature and calculating the final cost. This method is called bottom-up estimating.
For every feature you should think about optimistic, realistic and pessimistic scenarios. Some tasks can go smoothly and some tasks can turn out to be really problematic. Moreover every feature needs to be tested and also some time will be spent on administration like chatting about feature’s details. Remember to include that in the estimation.
How does Scythe Studio’s software projects estimation process look like?
If you do not have a team capable of implementing software for you, you need to request estimations from custom software development companies. A good software house will ensure that they fully understand your requirements and your concept for application’s development. They will ask many questions about the details of the features, use cases, target audience and other important aspects.
Software development estimating takes time and it requires taking people away from their usual work. Therefore, getting an estimation from many companies comes at a cost. Fortunately in Scythe Studio you can get a free quote based on a detailed estimation. It is free despite the fact that true experts spend their time on it.
Let us explain how we estimate software projects for our customers.
First, you need to send us a brief. This is a document that you need to start the process and receive the estimation. Often you have a presentation that presents the idea for the application and that would be enough. Send it to us as it rather often covers the points we would like to know from a brief. Do not worry if you do not have a brief. Contact us to get a free brief template, fill it and send back.
We organize an online meeting between you and Scythe Studio’s representative. The goal of this meeting is to understand your needs and requirements better and to get to know each other. On such a meeting we try to gather as much details as possible about the software you plan to develop.
If the brief was detailed enough, one of our UX/UI specialists join the meeting to make an interview with you.
After a meeting, we have enough information to prepare a work outline listing the features and key aspects of the planned software development. You need to confirm the outline to ensure that it correctly reflects your requirements.
At this stage, our designers, analysts and software developers make estimations based on the work outline. We follow bottom-up estimating method to get a proper estimation and to be able to propose a timeline for the application’s development.
The result of previous stage is presented to you in a form of rough estimation. That will give you a clear picture of how much the particular feature will approximately cost. In the estimation from us you will find variants for our software development service. Variants include different sets of functionalities and activities, various advancement of UI design project, further maintenance and much more.
Project scope revision
After you receive a rough estimation you can make changes to the scope of the project depending on your priorities, budget and phases proposed by us. You can change your mind regarding features to include in the software or regarding UI design.
At the final stage, we will send you a free offer to develop your application. After we calculated software development cost for you, you are now able to make a decision if it is a good moment to launch the project or not.
It is not an easy task to estimate software development cost. As you just learned, there are many factors that make up the price of the application’s development. Nevertheless, it is still necessary to have a good and as detailed as possible estimation. Having one, helps you ensure the project’s scope and cost.
If you have a great idea for a software project in mind, do not hesitate to contact us in order to receive a brief and then free estimation.