In today’s business climate, is it difficult to transition into a digitally-first environment? In actuality, 70% of leading companies in the economy use their software to differentiate themselves. But the off-the-shelf solutions typically don’t meet the requirements since they lack the flexibility to adapt to specific workflows. Businesses prefer custom software that can be expanded and integrated seamlessly with the existing software. This has highlighted the importance of developing custom software that allows businesses to have customized solutions that meet their specific needs.
According to Statista, the revenue generated by the custom software development market is expected to reach £179.90 billion in 2026. The market is projected to expand by an annual rate of 6.87% (2024-2028) and will reach £234.70 billion by 2028. The reason for this is the increasing importance of customized programs that facilitate the creation of new products in a continuously changing digital landscape.
The most common question that business owners have is: What is the Custom Software Development Cost?
It can range from £10,000 to £300,000 or even more, based on the size and complexity of the group’s location. But there are other factors to consider before deciding on the price.
This blog will address the custom software development cost and the key factors that affect the price. We’ll also discuss the hidden costs and average cost of making various types of software and will also assist you in cutting costs.
What is Custom Software Development?
Custom software development involves the creation of custom software specifically created to meet the requirements of a company, as opposed to standard software applications that are designed to serve general customers. Think about custom development for retail, healthcare and mortgage companies that require customized software to improve their workflows and the customer experience.
Companies are seeking customized software solutions for diverse reasons, like increasing efficiency, creating more revenue sources and addressing specific industry issues. With the USA witnessing a significant increase in technology adoption, there is a demand for development companies that can design and develop custom software.
Custom Software Development Cost
In a nutshell, the custom software development cost can vary. Based on our experience, custom software solutions usually range from £100,000 to up to £400,000, depending on the project’s complexity. Smaller programs can cost from £100 to £200,000. Medium-sized apps could fall in the range of £200,000 to £400,000. Only enterprise-class and large applications will cost upwards of £400,000.
There are various types of software available; therefore, understanding the scope of your business is necessary for estimating the cost. The software you choose to build for your needs could vary from a simple calculator that you can use on your phone to a billing system for businesses capable of accommodating thousands of customers. There aren’t two custom-built software solutions that are the same. To know the place your project might be, consider the seven most important elements that impact the cost of a project the most.
How Much Does Custom Software Development Cost? 7 Key Factors
The custom software development cost will be based on several key factors. We will look at them in the next paragraphs.
Software Size
This is a straightforward one. When the number of pages or screens expands, so will the amount of effort required to create the project. The expense for custom engineering is bound to increase the degree of complexity of your project.
To figure out the number of pages you’ll need to purchase, think about what the visitor will see on their first visit to your website. The total price will comprise all screens displayed for every click or menu choice.
Smaller applications usually have between 10 and 25 pages. Mid-sized ones typically contain between 25 and 40 pages and larger applications could include more than 40 pages.
Software Complexity
Complex logic consumes more time in programming and testing. Does your program perform a lot of analyses, such as scoring and crunching? Do you have a hidden recipe for your company, with various variations and subtleties?
Another thing to think about is scaling the software to meet the needs of a growing business. Think about custom software for a longer-term commitment to your company. Planning strategically before and during development could increase the price of your project.
Complexity is also reflected in the amount of code. Although smaller programs are comprised of only a few thousand lines, more advanced software generally needs tens of thousands of code lines, with some business software requiring as high as 100,000 code lines. This could impact the timeline and result in a costly cost.
Creative Design
You can select your colors, fonts and images. You can create custom animations and illustrations designed to add some shine.
If you think about the cost of developing your software for customers, consider how this process can affect the style of your home. There are numerous extravagant designs, beautiful options and everything else in between.
What is the budget you must set aside to cover this project? Because design costs can make up 15% to 25% of total cost, making sure you have at least £15,000 to £30,000 set aside to cover this stage is crucial.
Integration With Other Systems
Integration with external software adds several unknown variables to the equation. It’s unclear how another system allows information to be entered or left or what obstacles need to be overcome to ensure integration.
Integrations can be straightforward, but sometimes they can be a challenge. Most integrations, such as payment platforms like PayPal or Authorize.Net, are extremely easy to install. Other integrations, like less well-known systems, can be more challenging and may cost more money than custom software development.
Migration of Existing Data
Do you have data stored in your existing system that must be migrated to the new system? It’s necessary to migrate data when there’s more data than you can enter manually. Moving data is similar to using a customized script that takes data from an old computer, erases it and transforms it into a format that can be integrated into your new computer.
The steps are fairly easy. But this can add costs and time to your custom software development services.
Who’s Making Your Software
The primary cost that comes with the software program you choose to use is the compensation of engineers, software developers and designers who design new software. Since the pay of these professionals can vary from nation to nation, this is an important aspect to consider when you are planning your customized engineering solutions.
Hourly rates for developers located in the United States can range between £50 £250 in accordance with your experience. If you’re trying to lower expenses, developers from areas such as Eastern Europe, Asia or India might offer rates ranging from £20 to £80 per hour.
Despite the various costs, U.K. based developers are the most sought-after option for businesses. This is due in part to the similarities in time zones, as well as the absence of communication obstacles and the ability to work with people individually.
Designing to Budget
Software, similar to building homes, can be constructed within a certain budget. It’s possible to have the kitchen for the butler and the basement built in a brand new home. However, if the extras aren’t within the budget you have set, it is sensible to leave them out of the original design.
After the initial design and estimation of costs are complete, a few possibilities are incorporated or removed until you reach the desired amount. Let’s suppose your budget for a custom-designed software development is between £100,000 and £400,000. It could include it if you are hoping to increase it by £15,000.
Average Custom Software Development Cost By the Type of Software
The first step in reducing the costs for developing custom software is to identify the costs associated with the program you’d like to create.
Costs for particular types of software are easier to determine, as well as the functionality you’re looking for and the amount of work needed to develop both the back-end and front-end will have a significant impact on the budget. The estimates will vary based on the kind of software you want to develop. Here are a few typical estimates for various types of software.
Content Management System (CMS): CMS manages and maintains content on websites without needing manual code modifications. CMS-based applications such as WordPress or Drupal can cost anywhere between £20,000 £50,000.
Software as a Service (SaaS): The price of SaaS applications is contingent on the features they offer. For instance, Slack or Salesforce could cost between £20,000 and £500,000.
Enterprise Resource Planning (ERP): ERP software requires extensive integration with APIs from other systems and typically requires significant customization to meet specific business needs. The development of the ERP system, like Microsoft Dynamics 365 or Oracle Cloud ERP, could be more expensive than £100,000.
Price of Client Relationship Management (CRM): The cost of CRM programs varies according to your needs. A reliable CRM platform could be as cheap as £ 100,000, but CRMs with a variety of options and features that can be customized, such as Salesforce or Hubspot, may exceed £600,000.
eCommerce Site: A store built using software such as Magento Commerce would likely cost you between £20,000 £70,000. There are many online stores, including Land Rover’s website, Graze and other successful websites built using Magento. These are excellent examples of eCommerce sites that are customizable and showcase what you can do by using the software.
Marketplace App: A customer-facing marketplace like Airbnb might cost around £75,000.
Dating App: A dating app like Bumble may cost about £45,000.
Social Media Applications: Social media applications such as Instagram and Twitter are priced differently, depending on the features you need. A typical estimate is £60,000-£300,000.
It’s crucial to consider that the initial price of your product may be less than these price ranges (or at least lower) if you start with a minimum viable product (MVP). An MVP allows you to determine the product’s marketability before investing large sums of money in features that the market doesn’t need.
Custom Software Development Cost by Business Size
Every company needs software to compete in a competitive environment and stay ahead of the curve. We will therefore review the costs of developing custom software for businesses of various sizes.
Startups Software Development
Startups are companies that are just beginning their journey to market and they don’t have huge budgets. They also focus on the most innovative ideas they can offer to help establish an identity.
So, startups pick MVP development to develop their project to incorporate all required details in the software to address the problem they’re addressing in the market they intend to appeal to.
After the software is launched, it can be upgraded with additional features that you want. If you’re having difficulty understanding the procedure, contact a reputable company for custom software development. They can assist you right from the start of your venture.
SMBs (Small to Medium Sized)
According to the market study by Forbes, there are 33.3 million small companies within the US. This is a staggering amount and every business is trying to adapt to the latest trends in custom software development; however, why shouldn’t smaller or mid-sized companies be left out? They’re also determined to streamline routine business processes, such as the management of data, in-built communications and the integration of various aspects within their business.
This is why there is a requirement for software that manages all of this in one place.
An approximate estimate of the expense to create software that will control the growth of a company can be anywhere between £70,000 £100,000. It is essential to be aware that these estimates are just estimates and are not substantiated. Based on the research, the average cost can be found here. It can be reduced or increased based on the particular project’s needs.
Enterprise Level Software Development
We are moving towards established businesses that are operating on the market. They’re well-known and have lots of work to do both externally and internally. In this instance, we can be referring to any healthcare institution with a chain distributed all over the world. There’s a possibility that they have many customers who use software for healthcare or use software to oversee the operations within the organization and must change their practices to improve their services, which is exactly what we’re discussing.
In addition, adding new features or updating the software utilized by this business could cost between £90,000 and £200,000. Due to various reasons, the security of data and its management are crucial when it comes to these situations, along with other elements to consider when designing their strategy.
If you aren’t sure about the price, it’s possible to find an established company for the development of custom-designed software. They can provide exact estimates based on the scale of your business.
How to Estimate Custom Software Development Cost Accurately?
Calculating the development costs for custom software requires careful planning and an in-depth understanding of the most important elements. The process can be broken into manageable steps that will provide you with an accurate estimation of the amount you will need to invest and will avoid any surprises.
Understand the Project Scope
Identifying the scope of your venture is vital. Start by identifying the main goals of the software and its capabilities. When you define your business’s goals and objectives, you will be able to enable developers to determine the amount of time, resources and budget required. This will help avoid over-budgets for custom development in the future.
Contact a Reliable Software Development Partner
Selecting a qualified development partner is essential. Choose a company that has experience and knowledge of the specific software you need. A reputable business will provide unambiguous and transparent pricing for the development of custom software and ensure that the project is within the budget you have set.
Divide the Project into phases.
Sequentially planning the project – starting with the planning stage, followed by prototyping, development and testing – gives you control over cost. Each phase of the project can be budgeted independently, allowing for greater flexibility and better prices for software development.
Estimate the Time and Resources
Calculate the time needed for development, what size your group is and the tools you will need for each phase. Your estimates will impact the total cost.
Calculate Costs
The process of determining the total cost is much simpler if you have estimates of the resources and time. Make sure that all components that are involved in development, like testing, are included.
Consider Integration
If your software is customized and requires integration with existing software or third-party vendors, be prepared for additional time and expenses. Integration may pose a challenge to the development process.
Add Contingency Buffer
Set aside 10% of your contingency fund. Unexpected technical problems can happen with this cushion and it can help you avoid exceeding your budget.
Maintenance and Support
Support, updates and maintenance are vital for keeping your software operating. Plan for future maintenance as part of the development costs to ensure the software’s long-term sustainability.
How to Reduce Software Development Costs?
It is possible to reduce costs for software development, without sacrificing quality, if you consider the right questions and follow efficient techniques. Here are some strategies you can apply to lower the cost of development:
Outsourced Development Tasks
To dramatically cut costs, outsource software development to countries with lower labor costs, such as Eastern Europe or South Asia. However, when you make this decision, be sure to select trusted partners that meet strict quality standards to ensure no costly adjustments later on during the process.
Be Clear on the Requirements
It’s normal for unclear requirements for a project to result in the scope being expanded and the development taking longer. To stop this from occurring, make a list of the goals and features of your application initially and regularly update it. This will ensure that programmers are on the right track and avoid miscommunications and extra costs.
Use Agile Development Methodologies
The Agile method lets you continually improve your development process and get feedback regularly from all parties. Finding issues earlier in the development process can reduce rework and speed the time to market while increasing cost control.
Focus on Minimum Viable Product (MVP)
An MVP that has essential features will allow you to launch faster and at a cheaper cost. Based on feedback from users, unnecessary features can be added later. This reduces costs and helps align the final product to market needs.
Automate Testing
It is vital to test before the development phase begins to discover issues before they require costly solutions later on in the development process. This is accomplished by automated test procedures, which speed up quality assurance while reducing manual labor. This results in a process that is efficient and cost-effective.
Negotiate Fixed Development Costs
If possible, select fixed-cost contracts to avoid unexpected budgetary overruns. Be aware of charges for maintenance and support before launch to ensure stability in costs over the long term and avoid unexpected expenses after the launch.
Choose a Proactive Development Team
Engaging with skilled developers who provide constructive feedback and suggestions can help you avoid errors. A team that is engaged and conscious of the goals of the business will result in an improved product and reduce unnecessary expenses during development.
Hidden Costs in Software Development
Hidden costs for software development can dramatically impact the timeline and budget. Costs for maintenance, third-party integrations and security upgrades usually go unnoticed at first, but they can add up over time. Failure to plan for unexpected expenses could cause a delay in the financial burden or an increase in the quality of software, which can negatively impact the overall performance of the software.
Cloud Hosting and Infrastructure Costs
Hosting costs must be included when you design your budget.
Servers to host your application have regular charges. If it’s email servers that push notifications as well as analytics or integrations, all require hosting and monthly fees. Many businesses use cloud services like AWS that charge based on usage.
The cost increases when your company expands. Increased users translate into more storage, bandwidth and computing costs. Furthermore, the management of cloud servers requires dedicated personnel who incur additional operational costs. If budgeting isn’t properly established, these costs will affect the overall viability and profitability.
Third-Party API Licensing Fees
A lot of software applications depend on APIs supplied by third-party providers to deliver essential functions such as geolocation processing, payment processing, as well as authentication and analytics. While APIs can accelerate development, they also come with licensing fees.
Certain APIs are charged based on the volume of requests received, whereas some utilize a tiered price system that is based on usage. The absence of API costs in your budget for software development can result in unexpected financial burdens and impact the viability of your business.
Software Maintenance and Post-Launch Support
Maintenance of software, as well as post-launch support, can significantly impact costs due to various factors over time. As a general rule, you should expect to shell out about 20% of your initial development cost annually for these support services. If, for example, the cost of developing software was £50,000, then you need to set aside around £10,000 to assist the project. Below, we’ve given an estimate of the annual cost for the most commonly used services.
Reduce Software Development Costs with Bestech
As a leading custom software development agency, our company employs the two-step method of estimation. When we begin our collaboration, we will provide a rough estimate of the project’s potential cost. The timeline and costs will be revealed later on in the course of our collaboration. We will conduct a thorough examination of the project and break down the project’s requirements into stages.
Through our iterative approach, we ensure that your final product will meet your requirements. Flexible iterations enable our engineers to enhance the initial deliverables they create, assisted by the real-time feedback of users and your suggestions. Our team’s flexibility allows us to adjust to changing demands, which results in lower costs and reduced overall development costs.
Conclusion
Cost analysis software that is custom-designed requires a consensus on the types of decisions that should be made regarding the cost of investment. Each cost is a mix of the scope of the project, the team’s expertise and the selection of various designs of technology, as well as design, integrations, maintenance expenses and other aspects. Be sure to include any additional costs, as well as the cost for various software types.
A clear objective for the project, along with prioritizing all the crucial aspects, can help with managing costs and ensure that the application will function without a hitch. Bestech can help you navigate the process of developing software and achieve your business objectives. Get in touch with our experts today to start your journey to success!
FAQs
What are the costs for custom software development?
The costs for developing custom software encompass the total costs associated with creating software, including salaries for developers, infrastructure design, test management and post-launch support. The scope, complexity and structure of the team determine costs.
Are custom-made programs expensive?
Custom software development can be an expensive investment. There are a variety of ways to calculate the cost to fit your budget.
What is the cost of creating custom software?
The cost for custom development depends on factors such as the complexity of the project and features, the specifications for features, the locations of development and the technology stack. On average:
- Small applications: £20,000 to £50,000
- Mid-sized solutions: £50,000-£80,000
- Enterprise Systems: £80,000-£150,000+
How do you control the costs of custom software development and cut down on budgets that are over-budget?
Stay in touch with your developers’ team. Review the progress of your project regularly by prioritizing key functionalities and features and consider adopting an agile development approach to reduce costs.
