How to calculate the costs of custom software development?

General info & statistics

Custom software is a user-specific product that is designed to meet the needs of each business user and differs from standard off-the-shelf software such as Microsoft Office that serves a common purpose for all businesses. It’s development involves several steps such as requirements analysis, code development, software testing and finally deployment.

Benefits of custom software development

Individuality and efficiency

Special software developed from scratch for the needs of a particular business is unique and has nothing superfluous. It is adapted to existing business processes and allows you to quickly connect new ones. The interface is designed specifically for employees or clients of a particular customer. All this allows you to work in the system as efficiently as possible.

The Product Rights
After the implementation and testing of the IT tool is completed, the customer receives the source code of the software and exclusive rights to own it. This allows you to use the development for your own purposes, for example, to sell or rent.

The Free licensing
In the case of custom development, you do not need to pay for licenses. Any new features or users can be easily enabled at no additional cost.

The Easy growth
As businesses grow, there is often a need to scale software. Custom development makes it easy and simple.

The Ease of maintenance and modifications
Support or modification of a boxed solution is entirely up to the developer. With custom software, you won’t have to deal with bugs, system crashes, or outdated tools, as there will always be a dedicated team ready to help.

The Software vendor independence
A company that pays to develop custom software owns all intellectual property rights and source code. She can transfer work on the product to another contractor at any time.

Disadvantages of custom software development

Development from scratch requires a large budget, which varies depending on the specifics of the order and the set of functions.

The Project timeline
The project may take several months to complete. The situation can also be complicated by a long procedure for agreeing on the IT architecture and testing, but this guarantees the absence of any risks.

How is price determined and what does it depend on (software size, complexity, etc.)

How is price determined

First way – general assessment

For the beginning you can hold a face-to-face meeting in which all responsible persons, including customers, should discuss the purpose of the software and its main functions at a high level. Your team can then decipher those high-level customer requirements and break them down into core features.

The next step is to provide your client with an implementation plan to review. Once he/she agrees, you can break down the requirements into smaller milestones, each with a list of specific features and deadlines. After this detailed analysis, you can provide your client with a fixed time and cost estimate.
You must remember that you must make sure that your team meets deadlines and that the cost of software development does not exceed what you overestimated. In addition, you, as a customer, must track the stage of the project, know how this or that software product will be delivered, and what features it will have.

Second way – template for estimating the cost of software development

You will find it easier to refer to software development costing templates if you are not sure which cost factors to consider. There are four main cost components in software development projects – development, project management, quality assurance and design. Each of these is critical to the success of any software project, but they account for a different proportion of the total costs. Here is an approximate distribution of costs for these factors: 

Total software development cost = 63% development + 15% project management + 15% quality assurance + 7% UI/UX design

Now you must remember that these simple estimates are not always correct for every project. The actual cost of a software development project can vary greatly from this cost sharing depending on the nature of each project and its specific requirements.

What does the price depend on (software size, complexity, etc.)

The Software size
Software size plays an important role in determining software development costs. This is usually the number of screens, pages, or modules that the software has. Typically, a small app has no more than 20 screens, a medium app has between 21 and 40 screens, and a large app has more than 40 screens.
There is no doubt that the process of optimizing and testing an application with about 40 screens and many complex features requires more time and effort than the processes of a small application. So the more screens/modules you want your software to have, the higher the cost you have to pay.

The Complexity
Complexity is one of the main factors determining the cost of a software product. It refers to the level of complexity of the software logic. Following are the three elements that make up the complex logic of the software.
Feature set complexity: The software requires a set of complex features driven by complex business rules.
Technological Complexity: Software is technologically complex and can be developed without the use of traditional technologies.
Design complexity: Software should have customizable fonts, icons, images, etc. However, do not miss the opportunity to design because UX/UI linearly affects the usability of your software product.
In fact, the higher the complexity of an application, the more difficult it will be to develop, test, and deploy.

Platforms Android / iOS / Blackberry
Software development costs may vary depending on software deployment platforms. Since each of the publishing platforms has a different number of devices on which the software product will be deployed, the costs that you must invest in each of them will also be different.
For example, the cost of developing an application that can run on Android, which is currently the most common platform, is higher than that of the iOS or Blackberry platforms. This is because your apps need to be compatible with different versions of the Android operating system and different screen resolutions.

The System integration
Data integration and migration requirements also drive software development costs. Nowadays, most applications have integration features to connect to third party systems including cards, ERP/CRM, payment gateway, etc. which are not always easy to develop. Consequently, software development costs may increase.
Likewise, some software products or applications require data transfer functionality to transfer information. Satisfying this requirement can take a lot of time and effort, especially if it involves integrating a large amount of existing data into a new system or making some significant adjustments.

The Development team
The cost of software development is also affected by the number of people working on your project. It is relatively easy to understand that the time and effort of every project manager, developer, UI/UX designer, and other contributors is worth money.
When it comes to the cost of software development, the type of team you have should also be considered. Regardless of which software development methods you choose: in-house, offshoring, or outsourcing, it will affect project costs. For example, outsourcing may be more expensive, but it ensures the quality of the software product.

Checklist

Why your business should invest in custom software development: all the benefits

There are many reasons why your business should invest in software if you haven’t already.
The following are just some of the benefits you can get from using one of the best programs available on the internet:

√  Automation of everyday tasks
√  Improved work management
√  Simplified Decision Making
√  Enhanced performance
√  Enhanced data security
√  Increased sales potential
√  More reliable data
√  Best Customer Service
√  Acceleration of some processes (for example, hiring)

What software will a business owner need?

Depending on the size and goals of your company, you, as a business owner, may or may not require certain software.
However, the following tools are essential for any type of business:

√  Security Software: Protects servers, laptops, mobile devices, and networks from unauthorized access, viruses, intrusions, and more.
√  Project and Team Management Software: Allows you to plan, organize and manage all your projects and collaborate seamlessly with your team.
√  Accounting Software: Gives you the ability to manage and track all your financial transactions.
√  Payment Transaction Software: Allows you to easily and quickly request, receive and send money.
√  Sales, Marketing & PR Software: Tracks relationships with your customers throughout the sales funnel and gives you the tools to strengthen relationships with them and increase sales.
√  Connector Software: Allows you to centralize all your applications on one platform and create automated workflows with a few clicks.
√  Customer Service Software: Allows you to provide effective support to your customers through live chat, tickets, knowledge base, FAQ sections and more.
√  Document management software: allows you to easily collaborate with your employees and create, manage and edit all documents in real time.
√  Recruitment Software: Allows you to easily manage and automate some of the hiring process.

Nine best software for business owners

This section lists the best software solutions on the market. In particular, the list contains one of the best software tools available for each of the software categories mentioned above.

SEON
SEON is an anti-fraud software that protects your online business from scammers.
As fraudsters constantly change their attack methods, this AI-powered software provides intelligent anti-fraud protection tailored to your business.
It flags VPNs, TOR users, and dangerous locations and analyzes IP addresses to see where users are actually logging in from in seconds.
In addition, it checks cross-domain links and analyzes social media profiles to identify fake users.
Its Sense platform also recognizes device IDs, virtual machines, and web browsers to verify user identities.

SLite
SLite software allows you to create a company wiki and makes it easier and faster to communicate and collaborate with your remote team.
Using this software, you will have no trouble importing, organizing and finding all your documents. All teammates can access them and submit their first ideas, get feedback, plan or write final documentation.
With its drag and drop editor, you can create tables, galleries, add mentions, embed files from external sites (like Google Drive) and code snippets, and sketch website maps.
You don’t have to start from scratch as Slite provides you with ready made templates.
It also has an app version, so you can access your team’s work from any device, wherever you are.

Quickbooks
Quickbooks is an easy-to-use online accounting software that tracks expenses and prepares your business for taxes.
It streamlines all your financial information, eliminates manual data entry, and automates tasks such as bookkeeping, invoicing, time tracking, sales tax management, budgeting, and inventory management.
It simplifies bookkeeping by providing up-to-the-minute cash flow information and generating income statements or balance sheets instantly with a few clicks.
The software allows you to set up accounting with integrated tools such as inventory management, time tracking, and cloud payroll.

Square
Square is a payment software that allows you to send, request and receive financial transactions. In addition, it allows you to manage and pay your team (salaries, benefits, permits, timesheets, etc.).
Its dashboard makes it easy to manage all transactions from one place, whether you’re online, in a store, or both.
Square has a feature that allows you to keep track of all your sales, which can also be useful for spotting trends.
You can also connect your Square account to third party apps like Mailchimp, Fomo, Poptin, and more.

Hubspot
Hubspot Software includes all the tools you need for marketing, sales and content management.
With its marketing software, you can increase traffic, convert more visitors, and run massive full scale inbound marketing campaigns.
Some of its features include:
Email marketing
Forms
Social Network Management
Landing pages
Contact management
Advertising on Facebook, Instagram, Google and LinkedIn
Traffic and conversion analytics
Using this software, you can put all your marketing tools and data on one easy-to-use platform, saving you time.
In addition, Hubspot has many third-party integrations to extend its functionality, such as Gmail, Google Calendar, Databox, and more.

Zapier
Zapier Software brings all your apps together on one platform to automate your day to day workflows.
It allows you to sync over 3,000 apps such as Trello, Slack, Flodesk, Klaviyo and many more.
Using its easy-to-use and user-friendly editor, you can easily create workflows without the involvement of a developer. Plus, you get access to thousands of pre-built workflow templates that you can start using right away.
With its automated system, you can save time and increase the productivity of your online business.
In addition, Zapier can automatically track all your data and organize it in one place.

HelpScout
HelpScout customer service software, you can support your customers in a flexible and scalable way.
It allows you to create, manage and organize:
With HelpScout, you can organize all your support requests in one place to make collaboration easier. You can also use features such as automated workflows, collision detection, and saved responses to help customers efficiently.
Live chat. You can embed chat on your website to answer questions and resolve issues in real time.
Knowledge base. With the Beacon tool, you can create informative articles that you can post directly on your website to help your customers.
This software helpdesk meditation also allows you to integrate over 50 applications that will make your daily workflow more efficient and familiar.
It also gives you detailed reports on your team’s volumes broken down by channel, busiest hours, and trending topics among your clients. You can sort all this data with advanced filters and export it.

Google Workspace
Google Workspace is a document management solution designed for productivity and collaboration.
Google Workspace provides customizable email for your business and includes several collaboration tools such as Drives, Appointments, Calendar, Sheets, Sites and many more.
With it, you and your team can simultaneously work on the same documents, make and review edits, communicate via the built-in chat and leave comments.
Every time you change a file, it is saved automatically and you can view the version history to see who made the change.
In addition, you can access shared calendars and see when your employees are available for meetings and video conferences, as well as send automatic email invitations.

Fresh team
Fresh Team is a HR software that allows you to handle recruiting, onboarding and employee information in one place.
It reduces your recruiting workload by automating routine tasks, storing employee data securely, and tracking rest times.
From its dashboard, you can post your job listings to different job boards and see the data they posted and the candidates who applied.
With a few clicks, you can make all hiring considerations and send documents to sign, forms to fill out, and files to distribute to successful candidates.
It also provides you with useful HR information such as hiring times, candidate pipeline, employee turnover, retention, and more.