When businesses consider building custom software, one of the first questions that arises is: how much will this cost? The truth is, the cost of software development can vary dramatically based on a number of key factors. To provide some clarity, we’ve drawn on insights from our co-founder, Anton Kozyritskiy, who shared his expertise in a business.com interview late last year where he breaks down the primary elements that affect software development costs and explore the payment models that businesses can choose from.
Factors that Affect Software Development Costs
According to Anton, one of the biggest influences on software development costs is the type of project.
“A web application and a mobile app may have overlapping elements, but their complexities and required resources can be very different,”
he explains. For example, a simple web dashboard might take significantly fewer resources than a multi-platform mobile app with native features.
Another crucial consideration is the project’s scope and scale. A minimum viable product (MVP) designed for testing market interest will require far fewer features and time investment than a fully-featured enterprise solution. Defining the project scope early on helps businesses avoid scope creep—a common pitfall that can inflate costs.
Additionally, the size and makeup of the development team can affect costs. Larger teams can deliver results faster but may also increase the overall budget due to the coordination required between roles like UX designers, backend engineers, and QA testers.
Anton also highlights technology choices as a key cost factor. Whether your project relies on open-source tools or licensed software can make a significant difference in both initial and ongoing expenses. For businesses seeking scalability and reliability, working with a trusted dot net agency can offer long-term cost benefits through robust frameworks.
Comparing Payment Models
Choosing the right payment model is another critical decision that impacts the total cost of custom development. Anton notes that the two most common approaches are fixed-price contracts and time-and-materials agreements.
“A fixed-price model provides predictability”
Anton explains. This approach works well for projects with well-defined requirements and a clear timeline. However, it may lack flexibility if new features or changes are needed mid-project.
In contrast, the time-and-materials model allows for more adaptability. This model charges based on the actual hours worked and materials used, making it ideal for complex projects where requirements may evolve over time.
“For long-term partnerships or projects with evolving needs, time-and-materials often provide better value and transparency.”
Anton adds. Ultimately, the best model depends on the nature of the project and the business’s priorities. Companies that value strict cost predictability may prefer fixed pricing, while those prioritising flexibility and customisation may lean toward time-and-materials.
Ample Tech has a different approach, a full service subscription for all your software development needs. Pay for a month, get all the development you need, and then continue or cancel your subscription. It works like your Netflix subscription, if you want a month, you can pay for a month, if you want 8 months, you can cancel after 8 months, no lock in contracts to keep you in place.
We’ve found that our customers have faced these similar challenges without an optimal solution to solve it until now.
Local vs. Offshore Teams: What You Need to Know
Geography plays a major role in software development costs. Development rates can vary significantly depending on where the team is located. Local development teams often come with higher costs but offer easier communication, shared time zones, and local market knowledge.
“Offshore teams can offer significant cost savings”
Anton points out. However, businesses must consider potential challenges like language barriers, cultural differences, and coordination across time zones.
A hybrid approach that combines local project management with offshore development can provide the best of both worlds—cost efficiency and seamless communication.
Budgeting for Ongoing Maintenance
The initial development cost is just one part of the equation. Businesses must also plan for the ongoing maintenance of their software.
“Software is a living product”
– Anton Kozyritskiy
Over time, updates for security, compatibility, and performance improvements are essential. Budgeting for maintenance can help businesses avoid unexpected costs and ensure that their software continues to perform optimally.
Factors such as user feedback, feature updates, and third-party software integrations can all influence maintenance costs. Having a clear post-launch plan can help mitigate surprises and keep software performing well.
Strategies for Managing Software Development Costs
There are several strategies businesses can use to manage their software development expenses without compromising quality. One key approach is to prioritise features through a phased development plan, focusing first on high-value features and deferring non-essential ones.
Anton also advises businesses to invest in thorough project scoping and prototyping. “Clear documentation and wireframes reduce ambiguity and make it easier to stay on budget,” he says.
Working with an experienced dot net agency that offers transparent reporting and regular progress updates can also help businesses stay informed and avoid hidden costs.
Finally, considering the long-term value of software investments can help shift the conversation from upfront costs to overall return on investment (ROI). When businesses view their software as a tool for growth, they’re more likely to make decisions that balance costs and long-term benefits.
Understanding the true cost
Unlike quoting for other things where prices are relatively fixed, understanding the true cost of software development requires a comprehensive look at the project’s needs, the chosen payment model, team location, and maintenance requirements. By considering these factors upfront and working with a trusted partner, businesses can avoid costly surprises and achieve their software goals.
If you’re considering custom development and want expert guidance, contact our team today to see how we can bring your project to life – on time and on budget.
