How To Estimate Cost Of Software Development?
Software development is unfortunately one of those things that’s very hard to estimate correctly. There’s a lot of things that factor into the total cost of software development projects like the development team, custom software requirements, additional integrations, deadlines etc. So you can see why it would be hard for a software development company to provide you with a fixed-price cost estimation. But as a client it is completely understandable why you would want to know the cost to develop your project. So, to make this process easier for you, here’s our team’s perspective on estimating software products and what can you expect from a similar company.
How To Estimate The Software Development Cost For Different Projects?
When it comes to software development, there’s no clear classification of the projects’ size. It is very subjective, so you should take our opinion with a grain of salt, because other companies and development teams might see it differently. With that said, there are a few key distinctions that will help you and the development team to better estimate the project cost.
Different Software Development Cost Estimation Methods
What your cost estimation will look like largely depends on the estimation method a certain development team or company uses.
Time & Material Cost Estimate
Within the IT industry it is most popular to use the Time & Material method which is basically a pay-as-you-go model, in which you will be billed based on the amount of work hours of the team. This cost estimation method is the best when it comes to custom software with a big project scope. It enables you to stay agile with your budget and to adjust the scope accordingly to your needs as you go.
Fixed-Price Cost Estimations
But there’s also some companies who use fixed-price estimation method, which means that they estimate the cost at the beginning of the project and there’s no adjustments to be made later. While this approach is certainly useful when it comes to smaller software products, it also requires a very well defined scope. With a fixed-price estimation you also need to keep in mind that the risk costs are factored into the estimation, in case anything goes wrong. Depending on your specific project, this method might also not be agile enough for you. In case you need more features or designs, you will need to renegotiate your entire contract, which is not a low-effort task.
How Software Size Impacts The Costs?
As we already said, the estimate largely depends on the size of your software project. Of course, there’s no universal measure that categorizes software into small and big products, but based on our experience we can more or less categorize the software products our team works on. So, here are three different sizes of projects:
The first type of projects is the most basic, small projects. Those include landing pages, small eCommerce stores built using engines like WooCommerce or Shopify or small (4 to 5 page) websites. These don’t require much custom software work and there’s usually very little custom design. They also don’t involve third-party integrations or other add-ons (cloud, databases etc.). Those are the quickest and cheapest projects to develop and the team will consist of a designer, either one full stack developer or two developers (one for frontend and one for backend) as well as a project manager. Quality Assurance is usually much less extensive and doesn’t contribute much to the overall project cost. Basic, smaller projects usually take 1 to 2 months to complete.
Moderately Complex Projects
The next type of software projects are the moderately complex ones. Those include web apps, cross-platform mobile apps etc. Unlike the basic project type, there’s more custom design involved and more attention is focused on the UI and UX. There’s also usually a few third-party integrations (like payments) involved. The team for a product like this will most likely consist of a UI/UX designer, two or three developers, a project manager and a Quality Assurance specialist. Depending on the company you work with on your software product, there might also be a business consultant to help create a detailed project plan and define the key features. A project like this will likely take from 4 to 6 months to complete.
Highly Complex Projects
Lastly, the are products that are highly complex and contain multiple features, screens etc. Those include native mobile apps, with custom design, development and multiple third-party integrations as well as high-complexity cross-platform mobile apps, web apps and desktop apps. Products like this have extensive scope with a long list of features. The team members for a project like this will usually be either two UI/UX designers or a separate UX designer and a UI designer, a researcher, more than 3 developers as well as a minimum of two quality testing specialists. A project like this will likely take more than 6 months to complete and, depending on the actual complexity, can even take years to develop.
Estimation Based On Software Project’s Size
As you can see, there’s a lot of factors that determine whether the project is “big” or “small”. And every project will require different information to estimate the cost. Sometimes the design is already prepared, sometimes the project management is on your side and not the agency’s, sometimes there’s already a launched product that needs a few new features. However, when it comes to estimating software development costs, it usually boils down to hourly rates, project team members and how much time each requirements will take them to complete. If you can more or less place your project into any of the categories above, you can use our description of the project team and estimate the number of hours in the time frame we provided it will take them to develop your new software product.
Key Software Development Costs To Take Into Account
When estimating the cost of software development, there’s multiple factors that you need to consider. Here’s the key ones that will greatly influence the estimates you get:
As we discussed above, the size of software will definitely influence the cost and time it will take to complete its development. To best assess the size of your software, the development agency will need a comprehensive list of project requirements and a detailed scope with all the key features. Even if it’s a high-level list, it still provides quite a lot of insight into what you want to develop. If needed, the software development agency might offer you scoping sessions before they start working on a cost estimate for you, to better understand the requirements.
The next key factor that will influence the project costs is the complexity of your development project. It can be a bit tricky here, because there’s several different areas of the project that can be complex. First there’s the most obvious one – feature complexity. This means that the software will have multiple features that branch out into smaller features etc. Then there’s design complexity which means your project will require a lot of custom software design work and that, obviously, takes a lot of time. And lastly, there’s tech complexity which is pretty self-explanatory. Some projects might not even have that extensive of a scope but still be considered complex if they require using advanced, niche technologies.
The next big part when it comes to the overall software development cost is the design. Both UX and UI can take quite some time to complete, especially for a bigger software project. First the team needs to conduct high-level research of the market, customer needs, user behaviors, competitors etc. Then they will move on to more in-depth research including user interviews, mapping out the customer journey and more. After that there’s UX design (wireframing, prototyping, testing) and UI design. All this will take some working hours, in case of bigger products (for example a social media mobile app or a marketplace) it may take around a month. This is a big cost for your business and will need to be included in the estimation.
Up next we have the software development team. Depending on the type of your project, the time frame it needs to be completed in etc. the number of developers, testers, designers and other team members will be different. And each of them will contribute to the overall number of working hours of the team, therefore influencing the estimation and your budget. Keep in mind that not all the team members will be involved at all times during the development process. For example – developers will not be needed at the very first stages of the project, while the designers will be crucial at this stage of developing software.
5.Platform / Technologies
Lastly, something very important that factors into the software cost estimation your business gets, is the platform for which the software is developed as well as the development technologies used in the project. When it comes to developing software, there’s many different options you can choose from, but sometimes your specific software project will require niche, complex tools and technologies which can increase the overall software costs. Some experts are simply harder to recruit and because of limited availability, their rates are higher. For example an experienced Flutter software developer is very hard to find, because the technology is so new. Depending on your specific software needs, business objectives and budget you can adjust the software costs by making some changes in your tech stack.
If you’re looking for good software development partner for your business to work with you on your software project – contact us and let’s get your development process started!