What Is the Cost of Software Development?

The cost of software development

The cost of software development is defined by the logic of software and its features. Note that not all features have the same cost of implementation. Push notifications and video calls, for example, have vastly different costs because of the complexity of the code and time required. Complicated real-time data analytics with multiple permission levels will require different resources than, say, a fitness tracker app with a calorie calculator.

To provide a frame of reference, here are some of the common features of software development. Also listed are the approximate time and cost of implementing them (based on a rate of $25 per hour):

• Search: $300 to $500 over 12 to 20 hours
• Push notifications: $625 to $875 over 25 to 35 hours
• Login: $750 to $1,125 over 30 to 45 hours
• Edit profile: $1,125 to $1,500 over 45 to 60 hours
• Payments: $1,500 to $1,875 over 60 to 75 hours
• Calls: $6,500 to $9,250 over 260 to 370 hours

Applications are also a cornerstone of business in recent years; the cost will depend in part on the software included in your business’s mobile app. The average costs of app creation are as follows:

• A minimum viable product: $5,000 to $20,000
• A simplified app: $10,000 to $60,000
• An average-scale app: $60,000 to $150,000
• A complex, full-scale mobile app: $150,000 and above

These numbers depend on the company and even the individual projects. These are just rough guidelines of what to expect at this hourly rate. Some teams don’t even use such estimates and evaluate purely on a case-by-case basis.

There are many different kinds of software besides those consumers regularly interact with. Depending on your business, you may require software packages such as some of the best PEO (professional employer organization) software and CRM (customer relationship management) software. You can either develop these systems internally or subscribe to them through a third-party system, which can also vary in cost. Weigh the pros and cons of each option before determining which would be best for your company. [Read more about the business cost of keeping software updated.]

Factors that affect the cost of software development

The cost of software development can vary widely depending on a variety of factors — from the number of screens and custom design elements to the complexity of technology and choice of development team. Each decision impacts the final budget.

“What’s crucial to understand is the total cost of delivery and ownership — focusing solely on resources and hourly rates can be misleading,” said Humberto Moreira, principal solutions engineer at Gigster. “A higher-quality team might appear more expensive initially but often delivers better outcomes with fewer overruns, resulting in lower total project costs.”

Here’s a breakdown of the key factors that influence software development costs:

1. The size.

Before describing a software’s size, we first need to understand the definition of a screen in this context. A screen is a page, open menu or anything that a user sees after they make an interaction. For example, a Login page and a Change Password page are two different screens with different functions. In this context, the size factor is straightforward. The more screens the software has, the more the project will cost.

“Complexity varies significantly between different types of projects. For instance, a standard e-commerce store or a simple 10-page website is relatively straightforward,” Anton Kozyritskiy, co-founder and CEO of Ample Tech Australia, said. “However, costs rise dramatically when incorporating complex features like API integrations, advanced search algorithms or multi-cloud services.”

In general, small apps have somewhere in the range of 10 to 25 screens and run upwards of $75,000. Larger projects with 40-plus screens can cost $250,000 and up.

2. The design.

Custom design makes your software stand out and more pleasant to use. Long gone are the times of lime green text on black backgrounds, although that certainly is an aesthetic used to this day. UI/UX is what makes the application user-friendly — that’s what the “U” stands for.

The design process can be complex, depending on how extravagant you want the elements to be and how many iterations it will go through. The best designs aren’t created perfectly from the start. They are developed after several feedback and redesign cycles. In addition, the number of high-quality custom images will drive the price up.

3. Platforms supported.

Take into account how many platforms you want your software to work on. If you want a mobile app, do you want it to work on iOS and Android? Maybe you require a cross-platform solution. A desktop tool has its own nuances, as do purely web-based services. All of this will be reflected in the price.

“Web applications tend to be more cost-effective because browsers follow open standards,” Kozyritskiy said. “Mobile apps, on the other hand, need to comply with Apple and Google’s store policies, adding layers of development effort and complexity.”

4. Technology.

The stacks of technologies aren’t equal, as well. Some applications can be written in a single application programming interface (API). Others require front-end development done in one programming language, the back end in another and they need to work together seamlessly. This correlates with the complexity of the project since different features often require different technologies.

However, some technology can benefit your budget to create the exact software your business needs. “Companies are reducing software development costs by embracing trends like low-code/no-code platforms, cloud-native development and AI-powered development tools,” Kozyritskiy said. “These technologies enable faster development, reduced infrastructure costs and automated quality control, all of which streamline the process and cut expenses.”

5. The development team.

The number of people working on your project directly correlates with its cost. It’s the same principle if you are paying for a dedicated team. The time of each developer, QA-engineer and project manager costs money. It’s as simple as that.

The type of software development team you have affects their cost. If your organization has a specialized IT team already on the payroll, then you will spend substantially less money on software creation. However, their ongoing wages can add up and cost more in the long run. Not to mention, many existing teams don’t have the necessary knowledge or enough people available.

In that case, you can augment your staff with a dedicated team or outsource business processes. Outsourcing is the most expensive option, but the quality of the project you receive will also be higher. When choosing your software development team, ask them relevant questions about the development process and the software itself.

6. The team’s location.

The development team’s location also has an influence on the price. Rates differ drastically depending on where the team is based. In the U.S., you can pay more for the same job done somewhere else. The key is to figure out a balance between cost and quality.

In addition to the option of hiring internationally for your team, consider the time difference. Moreira explains how certain roles need to work at the same time to accomplish your desired software.

“It can be beneficial to employ a hybrid approach where certain roles, particularly project and project managers, operate in a time zone aligned with that of power users or key stakeholders for optimal communication,” he said. “More broadly, and especially for larger teams, a ‘follow the sun’ development model, where one team’s work-in-process can be relayed to another team in a different timezone, allows for continuous progress while maintaining quality standards.”

7. Ongoing maintenance.

Software is never truly complete. It’s always possible to add new features, improve performance and fix unnoticed bugs. This is the benefit of a time and material payment plan that we’ll discuss later in this article. You don’t have to wait until you get the final product to request changes.

“Successful software isn’t a one-time investment,” said Moreira. “We recommend businesses plan for ongoing maintenance costs of 15 to 20 percent of the initial development budget annually. This ensures the application remains secure, compatible and aligned with evolving business needs. Regular updates and feature additions should be planned quarterly to maintain alignment with evolving needs.”

There is a saying in the industry that you should multiply all costs threefold. That’s largely the result of people choosing the fixed-price payment model when they don’t have a clear vision of the project in mind. The product they get is different from what the client envisioned and then they need to spend extra.

The best payment model for software development

The two most common payment models are fixed price and time and material. Which one is more suitable for you largely depends on the size of the project and how defined your needs and requirements are.

Fixed price

This option is better suited for projects with clearly defined requirements that aren’t subject to change. “The choice between pricing models directly correlates with requirement clarity,” said Moreira. “Fixed price works best for well-defined projects where requirements are unlikely to change.”

In short, you pay the entire development cost upfront. Fixed expenses can work for many clients but have more risks attached: It’s easy to lose control, and communication with the team will be limited. Also, it’s not uncommon to face delays when working on a large project. This model is more suitable for small and simple projects. “They offer cost certainty, but flexibility can be limited, which may become costly if project needs change,” advised Kozyritskiy.

Time and material

This is the more flexible method of the two. Payments are made incrementally instead of in a lump sum upfront. Depending on the agreement, you can pay every two weeks, every month or whatever time period is preferred. This method allows more range in the direction you’ll choose to continue the development in.

“This approach allows for iterative development, adapting to changing requirements,” said Kozyritskiy. “The trade-off is that costs can become less predictable, so clear communication and regular budget oversight are critical.”

This approach allows for more control over the team and the development process as a whole. You can see the project whenever the payment is made. This way, you’ll be able to check the reports, ask for extra features and make other suggestions.

“Time and materials are ideal for projects with evolving requirements or businesses needing the flexibility to adjust scope based on user or market feedback,” Moreira said. “Focusing holistically on deliverables and outcomes rather than hourly rates when evaluating costs leads to better outcomes.”

Maximize ROI in software development

In today’s competitive landscape, strategic investment in software development is crucial. Understanding cost factors — such as project complexity, design, platforms, technology and team structure — allows businesses to make informed choices and align development with their budgets. With clear requirements and a skilled development team, businesses can create scalable, user-friendly solutions that support long-term growth.

Amanda Clark and Andrew Kurilo contributed to this article.