Software development cost estimation process simplified

Sudeep Srivastava June 21, 2022
cost of software development

One of the most challenging things to do in custom software development is determining how long and how much amount it will take to deliver a new software product. But the question is, should it be so hard? 

Software development cost estimation is inherently tricky, keeping the fact that “no projects are the same” in mind. Every product development is unique in what it sets out to achieve; it’s unique in the myriad of parameters that form its existence. 

Another substantial factor in custom software development is understanding cost and duration in making strategic business decisions. Whether you are a startup or an established enterprise, know that the timing, return on investment, and benefits you make can either make or break your software development

Your software development project cost may vary from $10,000 – $200,000 depending on the certain other factors that we are going to talk about. 

Not just the cost range, there are certainly hundred more questions to answer when talking about custom software development cost estimation. This is probably why we are here to help you explore the agile software development cost estimation process. 

Before this, you might want to look at the ultimate guide to software development for a thorough perspective. 

Let’s start with the basics and then talk about specific requirements to estimate the average cost of software development.

Factors that affect software costing

To calculate the cost of software development; understand that it majorly depends on three significant factors:

Factors that affect software costing

Let’s take a detailed look at these factors. 

1. Type of software project 

From a high level, the typical custom software development arrangements tend to break down into the following details: 

  • New software development – New software including custom software development
  • Software modification – The process of enhancing existing business software 
  • Software integration – Adding a custom code to add the capability for integrating existing software into other processes. This would include plugins and packages such as “Office” and manipulating data flowing between an inventory system and an accounting system. 
  • Web development – Custom web-based software development 

Each software development comes with a different team makeup and requires an additional amount of development effort. 

Understanding the type of software development for your project is the first step towards estimating development cost and categorizing software development cost breakdown. This comes in handy in the final estimation when you combine the type of your project with the size of the project development team. 

2. Size of the project

The next critical factor is to determine the size of a project. The project size is typically correlated to the features and functionalities of the product you are building. This means the more complex your project is, the bigger the size of your project will be. 

  • Small-sized development

 A small software project development usually needs a few minor changes. Typically, changes such as bug fixing and making tweaks to the user interface come into small software development. Here, client interaction is usually limited. 

Approximate Software development cost range – $10,000 – $50,000 based on modifications

  • Medium-sized development 

Here the engagements are more substantial than just a small tweak and have a well-defined scope of deliverables. Typically medium-sized software development deals with a single source of data. Projects like small mobile application development, enhancing the web interface to the existing inventory system, or upgrading the UI/UX interface of the current website or app would fall under this category. 

One prominent example of medium-scaled development can be Appinventiv redefining UI/UX strategy for Domino’s to increase its mobile app conversion. Here, the external requirements for client interaction are more precise and robust. 

The interaction would also include a few design sessions, milestone sign-offs, and weekly check-ins. 

Approximate software development cost range – $30,000 – $100,000

  • Large-sized development

These solutions include complexity and depth. Large-sized software development asks for a broad database, integrating multiple systems, and addressing logging and security features. If your project has to be maintained and scaled in the future, two common steps would be designing an underlying framework and module-based systems. 

On the other hand, a multi-party application development well-versed with numerous platforms (Android, iOS, web) would also fall in the large software development category.

Below are a few prominent examples of large sized development: 

Appinventiv developed Vyrb, a voice assistant application for social media for an eyewear brand that helps send and receive audio messages via Bluetooth wearables. Such full-fledged application development stands under large-sized software development. 

Appinventiv also helped in expanding KFC’s mobile presence globally by developing an end-to-end app that enables real-time order tracking and doorstep delivery across Egypt and Middle East. 

Adidas is one of the largest sports merchandise brands with a broad and diverse product portfolio. Appinventiv helped Adidas reach its extensive user base in Saudi Arabia and Qatar by expanding its web centric services to mobile through a dedicated application. 

The client interaction here is super robust, i.e., milestone agreements and extended design sessions, daily calls with the technical team followed by weekly status meetings, and more. 

Approximate software development cost range – $80,000 – $125,000 as per integrations

[Also Read: Cost to develop and maintain a mobile app]

  • Enterprise-sized development 

Enterprise-sized software development is probably the most extensive and most complex project usually built on underlying frameworks. They have higher security, error handling, and more rigorous logging since the entire enterprise process is digitally transformed. Data integrity and security are paramount to such business-critical applications. 

There is no exclusive exhibit; however, the support systems designed for enterprise-level development are resilient and can manage 2-3 concurrent faults in the core infrastructure without creating a user impact. 

Coming to the client interaction, the process is fully integrated. Enterprises usually prefer outsourcing rather than in-house teams to design and architect their business-aligned software due to deadlines and easily met requirements. 

Here are some of the instances for enterprise-sized development: 

Appinventiv developed an enterprise-level ERP solution for the largest furniture retailer, IKEA. The objective was to ease the in-store onboarding to give users the real-time status of product availability and store consumer information. Know how much an ERP software development project costs.  

Appinventiv also transformed a leading telecommunications enterprise into a customer-centric enterprise through its data analytics solutions. From data formatting to customer product optimization, the enterprise level data management solutions upgraded the entire business database of the company. 

Large enterprise data also needs to be protected using advanced crypto-centric banking solutions. Appinventiv developed and integrated crypto as a mainstream source of daily transactions for Asian Bank. The blockchain solutions not only helped the bank widen its horizons but also increased customer engagement extensively. Know how much blockchain app development costs.

Approximate software development cost range – $100,000 – $200,000 based on the type of software developed

Explore our services

3. Development Team size (As per project) 

Once your project is defined in terms of types and size, the only substantial factor that can directly affect your software development cost is your development team size. Your development team requires at least three roles – developer, a project manager, a QA tester to perform certain tasks in software development.

However, the requirements should be well aligned with your project. Below are the roles you can choose from according to your size and type of the project: 

  • Project manager 
  • Business analyst 
  • UI/UX designer
  • Architect
  • DataBase expert
  • Developer 
  • QA tester 

The other factors that might indirectly strike your budget are:

  • Technologies used
  • The number of platforms utilized
  • Target group size
  • Post-maintenance cost
  • The experience of your development team 
  • The geographical location of your development team

Now, how can you determine the time and cost of software development using the above factors? 

How to estimate software development time?

Below is a rough flowchart of the software development time estimation based on the above mentioned factors: 

Soft modifications in the project 

  • Small- 1-2 weeks 
  • Medium- 2-6 weeks 
  • Large- 2-6 months 
  • Enterprise- 4+ months 

Web development 

  • Small- 3-6 weeks
  • Medium- 4-8 weeks
  • Large- 6-18 months
  • Enterprise- 10+ months

Soft Integration 

  • Small- 2-6 weeks
  • Medium- 2-6 weeks
  • Large- 6-12 months
  • Enterprise- 6+ months

New web/app development

  • Small- 6-8 weeks
  • Medium- 9-12 weeks
  • Large- 6-18 months
  • Enterprise- 8+ months

Get accurate cost estimation

How to estimate software development cost with Appinventiv? 

The most straightforward approach to estimating software project cost is 

Project resource cost * Project time = Total project cost 

However, at Appinventiv, our software development experts come up with a two-step framework that is simple and reliable. 

Rough estimation 

The rough estimate is very near to the accurate software development cost estimate that is given to our clients for informative purposes. The objective of rough estimation is to inform the client about the general phases in the project, tasks in software development, and the expected result. The precision of this estimate ranges from 25–75%; however, it is just an average cost of software development and not considered as the final cost bound by the terms and conditions. 

If the client is unsure, our team works on the given estimate and tries to make it as convenient for the client as possible. 

Detailed estimation

A detailed cost estimate is a more precise and  accurate software development cost estimation given to the client, carried out by all the actively engaged development team members. This estimate is based on the software platform, used technology, and tools, including wireframes and other specifications. 

Expert key tips for making accurate software development time and cost estimates

So, with all this in mind, it is concluded that making estimates is hard. To understand how much custom software development costs, your best bet is to seek professional guidance to guide you with the right software development cost estimate with a technical mindset. 

Below are some essential tips for making estimates that you must implement in the initial phase of software development.

Expert key tips for making accurate software development time and cost estimates

1. Breakdown the work

When you break down the bigger tasks into smaller ones, you get a clear picture of your requirements. This way, you are more likely to figure out additional software development-related questions. How can you break down larger tasks? 

Here is an example : 

Large task – building the front page 

General estimated time – 8 hours 

Post breakdown task and time:

  • Creating a CTA section- 4 hours 
  • Latest updates section- 2 hours 
  • Adding service and solutions section – 6 hours 
  • Adding contact us page- 5 hours

As you can see, you get a detailed picture of every small task that could not have been completed within 8 hours. 

2. Ask questions: do not assume 

Task descriptions that you get or assign are vital in estimating software development time and cost. It’s always important to ask your development team how they are going to work on your project. Asking questions makes communication better, and you will gain a broader perspective on how the software development cost is justified with the process. 

3. Confine with your development team

Making accurate estimates is a common challenge since, most of the time, you and your development team might not be on the same page with time and cost. The crucial part here is to confine with your development team. 

Believe that your outsourced development team wants to deliver the best possible solutions for your project. For better understanding, you can always approach your project manager with the questions:

  • Is there a task or process entirely new for the team that requires time? 
  • Does the team have all the necessary information needed to complete the project? 
  • Are the team members well aware of your project expectations? 

[Also read: Outsourcing tips from industry experts for efficient software development]

4. Don’t forget the things you usually ignore

The actual development process has to be kept in mind for efficient software development cost estimation such as: 

  • Initial set-up
  • Revisions 
  • Testing 
  • Bug fixing 
  • Deployment 

The above processes are inevitable in estimating cost of software development. 

How can Appinventiv help you with custom software development cost estimation? 

Appinventiv specializes in building and launching the most competitive digital products with the next-gen custom software development solutions. Our services range from software consulting, where our team of experts understand your needs and check the feasibility of your project, to developing a full-fledged software solution; we provide end-to-end software development services.

Connect with us to digitize and upgrade your current business process.

THE AUTHOR
Sudeep Srivastava
DIRECTOR & CO-FOUNDER
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