How to Estimate The Software Development Cost?

Author image By Manish Patel  |  Tuesday, February 27, 2024 12:58 PM  |  10 min read  |   370

How to Estimate the Software Development Cost?

Summary: The blog makes you understand the factors affecting the cost of custom software development. While referring to this blog, you will also learn about the types of projects and the factors of measuring the cost of software development. Read this entire blog to know more details.

When the business firm or startup business thinks of developing software, the only question that sparks the mind is what would be the cost of developing software? And how much time will it take to develop the software?

The boundaries that the majority of clients face while working on projects are defined by two questions: “Can I afford this?” and “Is it possible to complete it promptly that meets my expectations?”

The goal of almost every software development sales meeting is to find the answers to such queries. Customers frequently are unaware of the variables that influence software development costs. Customer transparency is lacking in the estimation process, and the software development cost estimates are subject to variation.

Based on our analysis of the software development services market, we have determined that these two questions and their replies are the main points of every sales meeting we have with our clients.

More specifically, our clients are unaware of the factors influencing the typical software development cost. Custom Software development rates might vary, and many vendors are still ignorant of the estimated procedure.

Let us begin by checking on several types of software development cost estimation:

What are the Basic Requirements to Calculate the Cost of Software Development?

An experienced app development company like Concetto Labs, will assist their users at every stage from outlining the project objectives to discussing software development revenue streams.

1. Project Objectives

During the initial meeting, it is important to clarify the project goals to estimate the cost of software development. Defining a defined objective will help you create software that is worthwhile and economical. However, talking about the ultimate objectives can keep the development team concentrated and on the same page. It takes less time to develop software and provides greater cost optimization, thus the more well-defined the final objective is.

2. Target Audience

Identifying the target market is one of the most important stages in developing software that works. The people who are interested in your services or products typically make up your target audience. You may obtain a good understanding of your target market by carrying out a thorough competition study, market research, and trend analysis. The entire amount of time and work required to identify the target market will ultimately impact the software’s total cost.

3. Software Type

One of the most important tasks to help you estimate the time and cost of software development is choosing the software type. The software comes with a higher price and takes longer to complete the more features and complications. You will be able to make progress in the business if you have well-integrated software with various features to attract.

What Will be the Average Cost for Developing Custom Softwares?

Software development costs vary because of several issues that are addressed below:

Software development typically costs between $15,000 and $700,000.

Now let us classify software according to its categories to narrow down this vast variety. Before you budget your software idea, this will help you make a more accurate assessment of what to expect.

1. Customer Relationship Management System (CRM)

A firm can save and manage client information with the aid of a customer relationship management system or software. Additionally, it facilitates their easy multichannel consumer communication.

Features of CRMS include:

  • Customer profiles
  • Contact Management
  • Email Integration
  • Lead Management
  • Booking Solutions
  • Appointment Scheduling
  • Dashboards and Reports
  • Customer Complaint Management

The average cost of software development is between $2,00,000 – $ 5,00,000.

2. E-Commerce Software

E-Commerce software facilitates your online product sales to clients across the world. By opening an online store, you can reach a larger audience. However, when your company expands, handling various orders and commercial demands becomes demanding. E-Commerce software steps in to save the day at that point.

Features of E-Commerce Software are:

  • Order delivery management
  • E-commerce platform integration
  • Multiple channels management
  • Inventory management
  • Reporting
  • Financial Integration

It is possible to run your entire e-commerce company with just one piece of software due to these features. Software development for e-commerce businesses typically costs between $40,000 and $90,000.

3. Human Resource Planning System(HRMS)

Usually, larger businesses prefer to use a human resource planning system. It facilitates personnel management by increasing transparency and productivity. It allows you to delegate the everyday tiresome chores to the software and concentrate more on the crucial business processes.

Using an HRMS, you can manage following tasks

  • Administration paperwork
  • Payroll automation
  • SOPs
  • Recruitment process
  • Performance Tracking
  • Employee Training and Induction
  • Employee Portal
  • Employee Data Portal

The customized features and team size determine the exact cost of developing a custom HRMS. This software is also known as an enterprise resource planning (ERP) system.

An HRMS/ERPS typically costs between $1,00,000 and 660,000.

4. SaaS Software

Software that has a subscription price structure is known as software as a service. This software helps users but requires recurring subscriptions. Usually, these are web-based applications such as Slack and Trello. Adobe Photoshop is one instance of an on-premise SaaS solution.

The examples make clear that SaaS solutions come in a variety of forms. As a result, prices vary greatly.
Additionally, as this kind of software makes use of cloud storage, we have to adhere to cloud data management regulations and strengthen its security against online attacks.

SaaS software development typically costs between $70,000 and $1,00,000.

5. Supply Chain Management Software

Achieving equilibrium between supply and demand is far more challenging than one may imagine. You have to make decisions based on experience and assume the state of the market in the future. Your company is at risk, and there are numerous hazards involved. particularly if your company deals with suppliers for resources, raw materials, and clients to offer goods and services.

As a result, supply chain management software facilitates market analysis and data-driven decision-making. Supply chain management software with artificial intelligence (AI) capabilities makes it easy to close the gap between supply and demand.

Creating supply chain management software typically costs between $170,000 and $400,000.

Which are the Types of Software Development Estimation Cost Available?

Which are the Types of Software Development Estimation Cost Available?

Understanding the size of the software development you will be working on is a prerequisite to selecting the appropriate methodology for custom software development rate estimation. There are 3 types of software based on the level of technical challenges.

1. For Basic Software Development

Basic software offers simple features and fixes: it could be a simple script or plugin that addresses a particular issue. Developers typically employ ready solutions to create projects of this kind. Regarding features, this software offers a basic range of features including email subscription, simple login, and much more. These software programs cannot handle tons of data and have a basic design. The development of these projects takes almost 2 months.

The approximate cost range for basic software development is between $20,000 and $70,000, depending on the degree of modification.

2. For Medium Complexity Software Development

This software has more features than the basic one, including private chat, payment integrations, analytical solutions, and much more. Developing medium-complexity mobile apps or websites also requires a well-planned UI.UX design that can adapt to different form factors of devices. Development for this software takes up to 6 months.

The approximate range of costs for software development is $30,000 to $100,000.

3. For Highly Complex Software Development

These software products come with advanced design and technical assistance after launch. High-complexity software also offers a wide range of features such as data encryption, video content support, and support for third-party services. Furthermore, multi-tool compatibility and optimum performance are prerequisites for complex solutions. The process of developing highly complex software takes more than 6 months.

A complex-level software development project might cost between $200,000 and $400,000.

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What are the Factors that Affect Cost of Software Development?

What are the Factors that Affect Cost of Software Development?

While developing your software development, you will discover that various factors affect the cost of software development. The project’s complexity will undoubtedly affect costs, but there may be other considerations as well. Let us check the other variables that impact software development costs.

1. Software Size

Software size is the most important factor to be considered in software development cost. The number of screens or pages in the software determines its size, and the possible number of expected users determines the size of the user base. Specifically, depending on your business niche, the project can be small, medium, or large.

Type of Software Cost of Development 
Small Size Software Development $20,000 – $70,000
Medium Size Software  $30,000 – $100,000.
Large Size Software $200,000 – $400,000

2. Developer’s Team Size

The only significant aspect that can directly affect the cost of software development is the number of your development team members. To complete certain software development tasks, your development team needs at least three roles; a developer, a project manager, and a QA tester. The software development team’s geographic location will determine the hourly rate of developers which will also have an impact on the total cost. However, the requirements should match your project. Based on your project’s size and nature, you can select from the below roles:

  • Project Manager
  • UI/UX designer
  • Business analyst
  • Architect
  • Database expert
  • QA tester
  • Developers
Geographical Region Hourly Costs for Junior Developer Hourly Costs for Senior Developer Hourly Costs for Associate Software Developer 
Asia $30-$40 $30-$50 $50-$70
North America $110-$120 $130-$150 $130-$150
South America $50-$55 $50-$70 $70-$110
Europe $40-$45 $40-$60 $70-$130

3. UI/UX Design of the Software

To succeed in the market, developing custom software with a well-defined UI/UX design strategy is imperative. Enhancing user agreement and retention is possible with a fluid software design. Nevertheless, addressing the distinct requirements of customers necessitates several testing steps, which may impact the price of developing software from scratch.

4. Type of Development Team

The kind of team you have enlisted to create the unique software also affects the cost of software development. For example, you have the option of using an internal development team, recruiting independent contractors, or just outsourcing your project to a specialized software development company. Check out the advantages of every type of development team.

Software Development Type Costing Quality  Communication  Time Frame
In-House Developers Highly Expensive Delivers high-quality product Hassle-free with corporate culture Long-Term
Outsource Developers Affordable cost and optimizable Product quality considers access to skilled resources effective communication with the help of dedicated developers Long-Term
Freelancers Most Economical  Compromised product quality due to lack of expertise Freelancer is not a part of a dedicated team.  Short-term

5. Features

The features included in custom software affect the total cost of software development. The software with more features will cost you more than the one with the fewest features. Furthermore, you must understand that your custom software can stand out from the competition and help you achieve a competitive edge in the market if it has a well-defined feature set.

6. Tech – Stack

A strong toolkit and cutting-edge technologies like AI/ML Development, data analytics, and metaverse Development are required to create unique software that will differentiate your company from the competitors. However, depending on the location, development team, and other factors, the cost of incorporating various complicated technologies can alter.

7. Cost of Maintaining Software

The software must receive regular maintenance and updates to support its general growth in the dynamic digital ecosystem. Proactive post-release actions are necessary to guarantee software runs smoothly and performs at its best on all platforms. The cost of software maintenance includes investments made to provide software upgrades and integrate new technologies in response to market demands, as well as costs expended to guarantee a bug-free software experience.

8. Platform

The software development you select has an impact on cost estimation as well. For example, you should think about using major platforms like Windows, iOS, and Android if you want to create something similar to an Uber application. Well-known online apps provide database middleware, third-party app integrations, and multiplatform operating systems.

9. QA and Testing

Although it does not always happen at the beginning of the project, unexpected errors happen frequently. Issues can arise with testing and verification, quality assurance, and production at any point in the workflow. Establishing procedures is crucial to avoid problems throughout development, particularly when collaborating with various stakeholders on different teams.

How to Calculate the Time-Frame of Software Development Cost?

If we divide the project sizes into medium, small and large categories to help with estimation of software development time.

Project Size Small Medium Large  Enterprise
Development time Weeks Weeks Months Months
Software Modification 2-3 3-7 3-7 5+
Software Development 4-7 5-9 7-20 6+
Software Integration 3-7 2-7 7-14 7+
Developing from scratch 5-9 3-8 7-19 8+

To get the exact time frame and cost of software development, it is better to consult Concetto Labs for accurate decisions.

How Can Concetto Labs Help With Software Development Cost?

Our professionals are skilled in developing and introducing innovative digital goods that offer exceptional returns on investment. We deliberately created our custom software development services to meet a variety of corporate needs.
We use cutting-edge technologies like blockchain, IoT, cloud, DevOps, data science and analytics, and more to grow and streamline your organization sustainably. Our 24-hour support, agile process development, robust data security and protection measures guarantee cost savings, better customer service, faster delivery times, and a competitive edge in the rapidly expanding sector.

Our information technology consulting services begin with a thorough consultation process where we collaborate closely with you to comprehend your unique needs and evaluate the project’s feasibility. We ensure to build a custom software solution that meets all of your company’s requirements.

We can assist you in providing a straightforward and trustworthy two-step cost estimation framework:

1. Rough Approximation

For informational purposes, we provide our clients with an accurate offshore software development cost estimate, which is extremely close to the preliminary estimate. Informing the client about the broad phases of the project, the tasks involved in software development, and the anticipated outcome is the aim of rough estimating. This estimate has a 50–75% precision range, but it’s only an average software development cost; it’s not the ultimate cost that the terms and conditions stipulate.

2. In-depth Approximation

All of the actively participating members of the development team put their heads together to create a more accurate and detailed estimate of the cost of software development, which is what the client receives. The kind of software being built, the tech stack being utilized, the features being added, and the complexity of the design, including wireframes and other specifications, are all taken into account when estimating the cost of offshore software development.

If the client lacks clarity, our staff works within the provided estimate and makes every effort to make it as convenient as feasible.

Discuss Your Requirements to Know the Exact Cost of Developing Customized Software

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Concetto Labs, a software development company specializes in developing software of any size. To complete complicated software projects, we truly think that software craftsmanship, teamwork, and efficient communication are essential. This enables us to create sophisticated, high-performance Java apps that can quickly analyze enormous volumes of data. To expand their teams with seasoned individuals, we also give our clients the option to recruit developers through outsourcing. Our software development services thereby support the expansion of our clients’ businesses. Our areas of expertise are fintech software development, e-commerce software, and travel software. Furthermore, with our Open-Source Low-Code Platform, we are elevating low-code to a new level.


1. How to Calculate Development Cost?

The first step is to break down the project in smaller activities. Every task has an estimated cost and set of resources required. To determine the project’s overall development cost, these estimations are then combined.

2. What is the Necessity of Cost Estimation?

The practice of projecting the amount of money and other resources required to finish a project within a specified scope is known as cost estimating in project management. Estimating costs takes into consideration all project requirements, including personnel and materials, and computes an overall sum that establishes the project's budget.

3. Which are the four basic steps in software project estimation?

The four basic steps in software project estimation are as follows:
  • Ascertain the dimensions of the product that is currently in development.
  • Calculate the project's total financial requirements in US dollars or the local currency.
  • Calculate the number of person-hours needed for the necessary time and effort.
  • Calculate the schedule in terms of months on the calendar.

Author image

Manish Patel

Manish Patel is a Co-Founder of Concetto Labs, a leading mobile app development company specialized in android and iOS app development. We provide a one-stop solution for all IT related services.

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