As the software development market continues to grow rapidly and steadily, so do software development costs. In 2022, IT spending on enterprise software worldwide reached around $783 billion, increasing by 7.1% compared to the previous year. In 2023, this spending is forecasted to amount to around $856 billion.
This puts a strain on the market. 46% of IT companies in Europe and North America name increases in product costs as one of the main challenges they face when purchasing new hardware, software, or services. Furthermore, 22% of such companies also add insufficient budget to accomplish company goals to the challenge list.
We at Mind Studios know that spending more doesn’t necessarily mean spending wisely. We’ve worked on a fair share of projects, creating software for health and fitness, food delivery, and other industries. Our experience allows us to quickly understand how to optimize costs for development without compromising the quality of an end product. Read further to learn more about this!
Average cost of software development
How much does software development cost? The numbers start at $10,000 and could reach $300,000 and above. The final price is determined by a variety of factors, the most basic ones being the product’s type and complexity.
Such solutions have the simplest functionality and often a limited number of features. Despite that, they can be quite fast and perform well on the market.
Some companies use such products as their minimum viable product (MVP). Doing so allows them to understand the real demand for a product among their target audience.
Medium complexity software
Such tools have all the basic features and several advanced ones. They can grow, develop, and get updated with extra features in the future, and also can perform well as they are.
Software like Spotify is the most demanding in terms of technical complexity, security measures, set of features, and a number of platforms supported. While it is the most costly and time-consuming to build, the results can pay off greatly.
Below you can find the average software development costs for basic, medium complexity, and complex solutions.
|Web and mobile apps||$60,000||$120,000||$250,000|
Factors that influence software development costs
Custom software development cost is also affected by other factors, such as the type of platform, the team’s size and location, and many more. Some of these factors are more flexible. For instance, you can decide to work with developers from another country and therefore save costs.
Some, however, don’t offer that much space to navigate the budget as they largely depend not on your preferences but on what your target audience needs. For instance, if the research shows that your target audience prefers Android devices, it wouldn’t be wise to focus on iOS development even if it might take less time.
You can create a web, mobile, or hybrid tool, but you have to make this decision wisely. Each supported platform adds to the overall cost of software development. While creating the multi-platform solution would seem like the most flexible and convenient option, this would also be the most expensive one.
Furthermore, it’s not possible to design a mobile app for Android and then adjust it to create an iOS version. These platforms use a different tech stack, so you have to either build your software with both iOS and Android in mind or later develop a version for the second platform from scratch.
So if your budget for software development is limited, you can focus on the platform most of your target audience already uses and expand to a different platform later, after you see how your tool performs.
UI/UX design helps the software look up-to-date and attract the users’ attention. It also defines how long the users will use a tool. If the interface is too complex or the navigation isn’t straightforward, your audience might abandon your software.
Statistics support this. According to Zippia, a bad mobile experience annoys 48% of users. 85% of them also want their mobile experience to be as good as a desktop one.
Bad design results in poor user experience, which, in turn, affects final software development costs. But how to find out which solutions would be the best for your project and your budget? You can gain some insights from our article about best practices for mobile UX design.
Integration with other systems
Software seldom operates in an isolated environment. Things like payments, geolocations, credit checks, and other systems have to be integrated into a tool safely and securely.
However, not all such services are equally easy to integrate. While it’s relatively effortless to work with the most widespread solutions, such as PayPal, it could be immensely difficult with a less popular or older system. Naturally, in the second case, it will add to the total software development cost.
Some projects also require the development and implementation of custom APIs — for instance, to enable a more secure data exchange. Such solutions cost more than the existing ones, but at the same time, they allow you to offer an improved and unique experience to your users.
Software development process doesn’t necessarily end after the product’s launch. If you’ve been working with an external team to build a tool, you might want to have them on standby in case potential troubles emerge or you decide to implement new features. The duration of the support also affects the final cost of custom software development.
To many companies, especially small ones, using a support service they don’t need all the time might look like the most cost-savvy option. After all, if your product doesn’t experience any difficulties, this means that you’re paying the support team just in case something goes wrong.
Knowing that, we at Mind Studios designed a prepaid support model. After we launch new software, we offer the client to purchase a package that contains a certain amount of supported hours. These hours are credited to the client’s balance.
Each time a support case emerges, we track the time our experts spent on solving it, and subtract this time from the balance. If a balance is about to expire, we contact the client again offering them to purchase a new support package. This way the client spends their money only when they really need our support.
Team expertise and location
Location can be a massive game-changer for those looking for ways to optimize software development pricing. This is especially true if your company is located in the US, where the hourly software developer wage usually reaches $80-$135 in small NYC companies and up to $150 in California. On the other hand, hiring a Ukrainian software developer costs $40-$55 per hour depending on their level of expertise.
Speaking of expertise: if you cannot afford to work with senior developers in your country, worldwide hiring can solve this problem too. International professionals can also bring new tech ideas and insights to the table.
How Mind Studios estimates software development costs
Mind Studios has been working with international companies for 10 years already. During this time we’ve tried using different approaches to estimate software development costs until we’ve come up with the current one which we believe to be the most efficient and beneficial for the clients.
This process consists of 3 stages:
1. Contacting the client
After a client fills in our contact form, we reach out to them. During the first consultation, we try to gather as much data about the project as possible. For instance, we ask the client about their requirements and expectations, platforms, features, and other crucial things.
2. Evaluating the project
With all the data collected, we can move to the cost evaluation itself. To do that, our team decomposes the project, dividing it into several stages, evaluates each of them, and creates a proposal.
The proposal contains all the essential information about our development process. We describe it in detail with the main focus on the discovery stage: what we will do during it and what result we expect to receive. We also give the estimated price range for the project’s development.
3. Discussing the proposal
We reach out to the client once again to present our proposal and discuss it. If the client likes what they see, we immediately move to resource planning. If the client has additional questions (like how to optimize software development costs), we try to answer them in detail and offer several solutions.
For instance, if the estimated price is too high, we can evaluate the project once again to assemble the MVP that would meet the client’s budget.
Best practices for software development cost optimization: Mind Studios' experience
One of the main challenges of cost optimization is how to make it work without compromising the quality of the end product. We want to share some of the insights that we accumulated during years of collaboration with different clients. Hopefully, they'll help you achieve the best results with the existing resources.
Provide maximum details at the presale stage
Clients want to know the precise cost to develop software as early as possible. However, this rarely happens at the presale stage.
Why so? Because when you build something from scratch, the level of uncertainty is quite high. As you already understand, many factors affect the final price, and some of them largely depend on the results of the discovery stage and market research.
Still, while the initial cost can be subject to change, you can help make it more accurate by providing as much information about the project as you can. The clearer your vision is, the easier it will be for the company to estimate the price range.
Prioritize the initial scope of work
If you have a limited budget, you need to make sure that it would be spent on a product that will pay off. To do that, we at Mind Studios suggest starting with a smaller version of a product that, however, still solves the target audience’s problem. This will prevent you from spending money on something that won’t be in demand among users.
You can start by building a tool with minimal functions, showing it to the target group, and collecting feedback. If everything goes well, you’ll continue developing the product. If you want to save more costs, you can test your idea even before the development: create clickable interactive prototypes in Figma, select the target group, and collect the first feedback.
Consider starting with the discovery phase
Sometimes a client realizes that even the estimated custom software development price is too high for the budget. Still, a project needs to be completed.
What to do in this case? We at Mind Studios offer the following to our clients: they can purchase the discovery phase only, without committing to design and development yet. As a result, they get a detailed business model, finalized business vision, and thorough market research. Then they can use this data to contact investors or organize crowdfunding to increase the budget and return to us with more funds to allocate.
We also help our clients find the right investors by matching them with a network of people interested in supporting tech projects, helping to prepare pitches, and even offering CTO as a service.
Mind Studios as your tech partner
Here’s what Mind Studios’ Head of Business Development Anton Baryshevskiy says about the company’s goals:
Mind Studios’ main task is to help your projects succeed. That’s why we do our best to help clients validate their ideas, and come up with a clear understanding of the target audience, and a working business model. Just like our clients, we want to be sure that the product is truly valuable and solves users’ problems.
Because of that, we always encourage open communication and are happy to suggest some improvements if we believe that a project’s idea at its current stage needs further polishing. Some of our clients came to us with certain ideas, which, as the discovery phase showed, required revision. The clients reviewed them and came back to us with a whole new project that we developed successfully.
If you’re looking for a tech partner that doesn’t encourage you to spend more just for the sake of it and instead roots for your project’s success, turn to us! Mind Studios will help you evaluate your idea, understand how much software development costs in your particular case, and how to make the most of your product with the existing budget.
How much does it cost to develop a software? Well, the price isn’t set in stone. While it’s possible to estimate costs for building a product of a certain type and complexity, the final numbers might differ from these estimates.
This happens because the cost of developing software is affected by various factors. Some of them are easier to predict and calculate, while some require additional research, idea validation, and target audience exploration.
Due to that Mind Studios suggests focusing on prioritizing your costs rather than looking for ways to cut them. By knowing where to allocate funds first and what can wait, you’ll be able to spend your budget wisely, receiving the best possible result.
If you’d like to rely on our experience, don’t hesitate to contact us for the budget estimation.