How to Estimate Software Development Costs: Breakdown, Analysis, Examples

Rates here are just as high as in the US and Western Europe , and the time difference is noticeable. Because of that, the Australian tech pros work for the local entrepreneurs almost exclusively. The most famous outsourcing centres in Asia are India, China, Vietnam, and the Philippines. Developers here usually have a decent knowledge of English and usually have extensive experience working on international projects, which is always a plus.

In 2023, developing a mobile-friendly web app is considered a must. However, if the client is 100% positive that the software will be used only on desktop devices, there really is no need to invest in responsive design. However, if the business owner wants to make the final product be as accessible as possible, it is better to pay for a responsive design that looks good on PCs, laptops, tablets, and smartphones. It depends on the region of the world where you hire developers. In North America, the average hourly rate for middle software engineer ranges between $ , $50-65 in Western Europe, and $40-50 in Central Europe.

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This way, marketing, sales, and customer service teams can access real-time user data and use it to improve their work efficiency. And teaming up with the right software development team like DECODE can help you get the best return on your investment. Notice how Android development costs more than a similar iOS app in North America. The exception is in Eastern Europe, where the difference is negligible. If you hire a software developer from a large agency, you will pay an hourly fee plus the cost of the software package.

software project costs

Make a difference, gain confidence and knowledge faster and accelerate your product with the best market fit. Just reducing the custom software development cost in itself is far from being an indicator of project success. Having a huge competent talent pool and minimal time difference from the countries of Old Europe, this region is now turning into an IT hub. Because its moderate hourly rates ($25-50) and excellence of performance make it ideal as far as the price/quality ratio of software development is concerned. Ukraine, Poland, Romania, Hungary, and the Czech Republic stand out among the rest, offering a broad gamut of services by qualified developers fluent in English. The project’s scope and complexity are related to the number of functionalities, their intricacy, and customization level if it goes about building a new solution.

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The truth is, without a detailed understanding of the project’s technical requirements, the best anyone can do is guess. In this case, software development cost analysis is performed according to the resources spent by your contractors . If you understand that this pricing model meets the specifics of your project, please contact us to get a budget calculation. Whichever of the proposed solutions you choose, we recommend that you consider our guide on how to calculate software development costs and what affects its formation.

software project costs

To verify the viability of their digital product, startups reach out to software development companies to create a Minimum Viable Product or an MVP. The average cost of MVPs is lower than a full-fledged solution since MVPs include a basic set of functionality. Native and hybrid mobile applications also come with different price tags. Thus, platform-specific solutions are more expensive, while hybrid applications cover multiple operating systems with a single code base.

Key Cost Components of Software Development Projects

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.

These specialists may be needed to coordinate some aspects, but there is no need to be in the office full-time. When you have a more or less accurate understanding of the time frame for your project, you can choose this method. All you have to do is to multiply the cost of resources spent on development by the time it takes to create it.

How to improve your software cost estimation skills?

Agile Approaches, for instance, require more frequent iterations and testing, while Waterfall methodologies require longer development cycles and higher costs because of their inflexibility. Are you starting a software development project and looking for ways to accurately estimate the cost? The software development cost estimation process can be daunting, especially when you consider that 45% of software projects are over budget while delivering 56% less value. You may be wondering how to make sure that you don’t fall into that same trap. We’ve been outsourcing IT development for over nine years, serving clients ranging from startups to Fortune 500 companies. With our outsourcing software development services, you can quickly move outstanding programming products into the hands of your customers.

  • People are visual creatures, so design becomes a vital part of software development cost breakdown.
  • DevOps involves the intelligent consolidation of areas of responsibility.
  • SaaS solutions have become a quite popular model of digital product delivery across various industries.
  • Thus, custom software development price starts at around $50K for a relatively simple tool like a check-in app.
  • If you want your new software to be enjoyed, you can’t ignore the user experience.
  • As you can see, there are different ways to estimate the project, and some are way less reliable than others.

Usually, software development cost estimation is carried out by counting the hours spent on work. Regardless of the complexity of your software product, you will need to do some level of research to help you define exactly what it is you want to build and how you want to build it. While every software development project will require some level of research and planning, the scope of work can vary significantly. Overall, this cost estimation method is flexible, allowing a development team to scale up or down the work required based on how detailed they need their estimate to be.


For example, if you already have an iOS app, it’s impossible to convert it into Android application and vice versa. It happens because these platforms take over different programming languages, have unlike SDKs and require different development tools. So, if you want your application to work on two or even more platforms, be ready to spend more money and cooperate with different developers. Such factors as the number of platforms, complexity of architecture and animations may completely change the final price of software development.

software project costs

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’ll be paying for all of the custom artworks, animations, testing, and redesign to ensure that the app is built with the best UX features. If you are in the middle of a software project and not sure how to manage the changes and issues you are seeing, then feel free to reach out to us. We are not the right fit for all projects, but we are happy to have a conversation and see if we can help answer any questions you have, and get your project back on track. To manage your project costs after it’s over budget or near that point, you have several options to consider.

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