How Much Does Software Development Cost?

Figuring out the software development cost is crucial before you start building one. After all, businesses are meant to be profitable, and the cost of building a piece of software or app needs to be reasonable.

In this article, I will explore the topic of software development costs. You’ll get to know:

• valuable insights to help you understand how much you'll need to invest in developing a custom app.
• factors that contribute to software development costs
• how to estimate the investment required for your custom app

My name is Stan Burenko, and I have been working as a Biz Dev Manager in the software development industry for over 10 years. Throughout my career at Uptech, I have done dozens of project cost estimations for our clients. I know how valuable each dollar is for early-stage startups and help invest them in software development wisely. I also worked with established companies, like GOAT and Dollar Shave Club, and know how to reduce software development cost without compromising the quality.

Whether you are a startup looking to launch an MVP or an established enterprise aiming to enhance your software, understanding the software development cost implications will empower you to make informed decisions and optimize your return on investment.

Read on and find out how much you’ll need to invest in developing software product.

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Average Cost of Software Development

When you question IT firms how much software development costs, you often get the typical answer of ‘it depends’. For startup owners, having a vague answer isn’t helpful for budget planning, yet it isn’t hard to put down a solid figure without detailed discussions.

There are many factors that determine the cost of building a piece of software. A development agency would need to run through the project requirements with the client before providing a cost estimate. 

Obviously, a simple app that requires very little user interaction or backend processing will be cheaper to develop. Meanwhile, a complex application that involves financial transactions, heavy interaction, and connected to external systems will be much more expensive to develop.

Software development cost isn’t merely about the scale or complexity of the app. If you’re building a simple app but with dozens of different screens, the cost may rival those of more complicated apps. 

Ultimately, it comes down to the people-hour and the technology stack involved in building the software. Based on our experience, the ballpark range of software development costs is between $50,000 to $250,000. The lower price tag fits a simple app that takes less than 700 hours to develop. If you’re building a multi-platform app with a server-side application, the fee is likely in 6 figures.

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For example, a simple social media app for one platform may cost $50,000. However, building the same app for the web, Android and iOS, will cost approximately $137,000 with 2,750 hours of development. If you’re building apps like UberEats, expect a figure of around $150,000 for 3,000 hours of work done.

If we speak about the average MVP price for a delivery app, it will be around $150,000 for 3,000 hours of work done. However, there are always details affecting the final price.

It comes down to the people-hour and the technology stack involved in building the software. Based on our experience, the ballpark range of software development costs is between $50,000 to $250,000.

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Software Development Cost: 6 Main Factors That Make Up the Price

As it turns out, the average cost of software development fluctuates over a wide range. The technicalities and nature of the app play a role in determining the cost of development. However, other non-technical factors could make a difference in your budget.

Here’s the complete checklist.

App Type And Complexity

Are you trying to build an Uber-like app? Or a simple app that doesn’t need backend processing? Your choice can greatly affect the cost for the entire development process. Building a simple app is fairly easy, and it doesn't take much effort to get it done. Meanwhile, an Uber-like app requires complex algorithms, tech-stack, and intense backend processing.

Naturally, building an app like Uber will cost more than creating a simple app that’s just displaying your business’s latest catalog. The rule of thumb is, the more user interaction is needed, the more expansive the app should be. An Uber-like app allows different user categories, with each having access to different profile editing rights. 

A complex also means there’s more customization needed. Customization is a tedious process where developers write new codes to provide the functionality required on the app. It also means rigorous testing of the custom modules, which also results in a higher software development cost

Platforms

Chances are, your target audiences are on different platforms, and that means building a different version of the app for web, Android, and iOS. Developing an app for multiple platforms means forking out more for the development fee. You’ll need to hire different teams of developers to work on the different versions of the app.

There are occasions where you can save in development fees by building a cross-platform app. A cross-platform app is deployable on both iOS and Android with the same codebase. However, cross-platform apps save time if an experienced team is working and might not save time on some types of products, while developing financial software with graphs and dashboards, streaming, etc.

That leaves you on building native-app for each platform, which is more expensive. A native app built for iOS can’t be reused for Android and vice versa. Some startups chose to focus on a single platform initially and only work on other platforms when they have achieved some degree of success. Clubhouse, which started as an Apple-exclusive app, is an excellent example of that. 

Complexity of UX/UI Design

It often happens that users  ignore  an app after using it for a while. Most often, the reason is bad UI or navigation. User experience is key to user satisfaction, and a high retaining rate after the app is launched. Therefore, it isn’t surprising that startups focus on custom UX/UI design in the app.

UX/UI design involves graphic elements like buttons, fonts, icons, and colors on every interface. It’s also about how easy it is for the users to perform specific tasks on the app. It requires much effort from the developers to ensure that the app is visually pleasing and ensures a satisfactory user experience.

Those efforts translate into software development costs for startup owners. You’ll be paying for all of the custom artwork, animations, testing, and redesign to ensure that the app is built with the best UX features.   

Back-End Infrastructure and Connected APIs

Any app that adds massive value to users often operates in isolation. Such apps are often connected to external systems and require heavy backend processing. Uber is an example where complicated background processes are hidden from the simple-to-use client interface.

Features like geolocation, mapping, and choices of payment options attract users to the ride-hailing platform. Developers also go to great lengths to ensure user data is protected on the backend. These features require time or money to implement, and they contribute to the development cost. 

If the app requires heavy data-crunching on the server part, it’ll be more expensive to build the respective modules. Also, the server-side application may also need to interact with external systems. Using off-the-shelf API could reduce development costs, but if a custom data-exchange API is to be built, there’s no choice but to pay for it. 

Geographic Location

Depending on your location, the cost of software development differs. This is particularly true if you’re based in the US or Western European countries, where the hourly fee of developers averages around $100 per hour. The expensive hourly rate means you’ll need to bear a higher software cost.

There are, however, some regions where you can get software built for a much lower rate without compromising the quality. The Eastern European region is a favorite IT outsourcing region with many proven developers. Ukraine, particularly, offers an affordable rate of $45 per hour.

You can get an even cheaper rate in countries like China and India, but you’ll need to be mindful of the cultural differences and timezone. It’s easier to work with developers who speak the same language, and it isn’t too hard to have a real-time conversation.

Outsourcing app development is a wise desicion and can save you a significant sum. Check out our complete guide to outsourcing app development cost to make a data-driven decision.

Hiring Model

The collaboration model also affects development cost. When you’ve decided on a developer, you’re often presented with 3 different hiring options, fixed-rate, hourly rate, or dedicated team. 

Fixed-rate means that you’ll be paying a determined sum for clearly spelled out requirements. While you know precisely how much you’ll be paying the developers, there isn’t much room for changes during the development.

Meanwhile, the hourly-rate model offers more flexibility when it comes to accommodating evolving requirements. You pay for the people-hour and resources used in development. However, the total cost is vague, and you don’t have full control of the development team. This model works well for fledgling startups. 

Established startups have found the third option, the dedicated team, an attractive collaboration model. The IT agency will assign developers to the startup, where the latter will be paying for the developer’s salary during their service. You receive exclusiveness from the developers, which can result in shorter development time.

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4 Ways to Reduce Software Development Cost

Our goal at Uptech is to help develop products that make an impact while making the process accessible and transparent. With over 150+ projects under our belt, we have firmly established that a systematic approach to software development doesn't have to be daunting.

In fact, there are always opportunities to reduce the final cost of software development. Below, I share 4 ways you can effectively reduce the software development cost of your project. At Uptech, we understand the importance of optimizing costs without compromising on quality. So, by implementing these strategies, you can be sure to make your development journey more cost-effective and stay efficient.

Embrace Open-Source Software

Leverage open-source software components and libraries to reduce software development costs. Open-source solutions often provide robust functionality, security, and community support without licensing fees. However, every time we use them, our team is mindful of licensing requirements and ensures compliance with any open-source licenses used.

Minimize Third-Party Integrations

Integrations can bring a lot of value to a software project, but it's essential to consider the software development costs and potential complications that come with them. Whenever we decide to integrate a third-party service, we make sure it directly contributes to the core functionalities and adds real value to the final product.

However, here's a cool thing: integrating some third-party services can actually save us money! Let me give you a couple of examples. When we were working on a mental health app, we wanted to include a chat feature. Instead of building it ourselves, we found a ready-made chat service from a third-party provider. It worked like a charm and saved us a ton of development time and costs.

The same goes for fintech products — instead of creating our own payment system, we integrate with trusted platforms like Stripe or PayPal. It's a win-win because we get secure and reliable payments without the hefty expenses of building everything from scratch.

By carefully selecting which integrations to use, we strike a balance between saving money and delivering a top-notch software solution. Our aim is always to make smart choices that add real value to the project while keeping the costs in check.

Implement Agile Project Management

Agile project management methodologies, like Scrum, are super helpful! They let us break down your project into bite-sized tasks called sprints. This way, we tackle the project in smaller, more manageable chunks.

We at Uptech practice Agile, and what's great about this approach is that it's iterative. It means you can get regular feedback, adjust, and reprioritize as needed. By working in these short cycles, we minimize the chances of costly rework. Instead, you can stay focused on the important stuff and deliver high-value features.

Simplify the design

By keeping the design clean and straightforward, you can cut down on development complexity and reduce software development costs significantly. We had some cases where we streamlined the user interface and removed unnecessary features or functionalities, which reduced development time and cost.

You can simplify the design or app’s functionality at some stage of development, launch faster, and only then polish the app with all the rest. Again, it’s about interactive development.

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Software Development Cost Estimation at Uptech

We recognize that no two different businesses are the same and therefore, all apps are unique. However, startups and business owners need to know how much it costs to build the software to facilitate budget planning.

At Uptech, we have a systematic process to provide a cost estimate for our clients. After registering your interest with our company, our team will:

1. Contact you to discuss your idea in detail. We’ll be asking specific questions on your app idea. We’ll also consider your business requirements, goals, and size.
2. Determine the resources needed based on the information we gathered.  is then used to determine the resources needed.
3. Furnish you with an estimate along with the architecture diagram within 5-7 days.

Once you’re agreeable with the cost, we’ll move on and present several options for building the app the best way.

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Summary

Getting a precise software development cost requires much deliberation between the developer and the client. Besides that, there are non-technical factors that could affect the cost of building an app or software. What’s important is to have a clear idea of the app in mind and reach out to the right developer. 

Our team is ready to explore your app idea and furnish you with a favorable cost. Get in touch now.