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Software Development Cost: How To Effectively Measure & Manage It?

Author: Innotech Vietnam
Date: 09/11/2022

In the customer-focused software development industry of today, companies have to make solutions that are customized to the requirements of their users. To acquire a competitive advantage and win over clients, more and more firms are choosing to create custom solutions rather than pre-made ones.  


But before you begin a software development project, it is essential to calculate the cost it may take. In this post, we’ll take a look at the average spending on software development and point out the factors that drive up the total cost. 


software development outsourcing cost


Average Software Development Costs 


Before we get into the specific factors that affect software development costs, let’s take a look at the typical features, types of projects, etc. How much does it cost to build software in 2022, and what are the most popular custom software solutions? 


CMS (Content Management System) 


In order to better serve their customers, some businesses choose to develop a custom CMS. A content management system (CMS) is a useful tool for creating and modifying information including blogs, press releases, and videos. You might choose a ready-made platform like WordPress or Magento, but building your own may provide more advantages. While many popular content management systems (CMS) allow for some degree of customization, a custom software solution has much more potential for growth and financial benefit. Custom software development is especially useful for companies that have just introduced innovative services or products. 


To construct a simple CMS platform from scratch, including design, a few special features, setup, and so on, you may expect to pay between $20,000 and $50,000. 


CRM Systems (Customer Relationship Management Systems) 


Tools in customer relationship management (CRM) systems enable organizations to maintain contact with existing customers, attract new ones and coordinate with third parties such as vendors and business partners. There are literally hundreds of customer relationship management (CRM) solutions available today. However, a custom-made CRM system may be the best option for businesses with distinctive management styles or customer groups. In addition, CRM systems are often quite an investment for a big firm due to their scalable price structures.   You may be able to get a software solution that works exactly for your business and your budget by running a custom software development project. 


Developing customer relationship management software usually costs about $100,000 for a platform with the bare minimum of capabilities plus some special features. Large and comprehensive customer relationship management systems, such as Hubspot, Salesforce, Freshsales, etc., may cost $600,000 or more. 



ERP Systems (Enterprise Resource Planning Systems) 


Business processes like accounting, compliance, supply chain duties, project management, procurement, etc., may be simplified with the use of an enterprise resource planning (ERP) system. A ready-made answer may do for a startup, but as a business grows, the number of routine responsibilities also rises. Also, the sooner you begin adopting an ERP system, the sooner you will receive the system’s many advantages. Growing companies, particularly those operating in less competitive markets, might benefit from having access to a customized ERP platform. Covering your gaps with a scalable solution that’s been adapted to your specific demands and goals will free you up to concentrate on developing the actual product. 


Depending on the number of features and the size of the business, the price of developing ERP software may range from $100,000 and more. Large companies’ massive data loads need more sophisticated capabilities from their ERP systems. As a result, developing such a solution might cost anywhere from $200,000 to $600,000.  


E-Commerce Software Development  


With eCommerce software, companies can build online stores to offer digital and physical goods to customers. Incorporating an e-commerce platform into a company’s website allows customers easier access to the company’s offerings. Existing eCommerce systems like Magento, OpenCart, Shopify, and WooCommerce will work for many companies, but others may need custom software development. The flexibility and independence of a custom e-commerce platform are especially useful for businesses with unusual architecture or complicated needs. 


The price for developing a successful eCommerce website using a major eCommerce content management system (CMS) like Magento, OpenCart, Shopify, or WooCommerce may easily reach $20,000 to $70,000 and more.  Everything is dependent on the required integrations, extent of customization, etc. 


Designing a fully customized eCommerce software system may cost somewhere from $50,000 for a fairly simple product to hundreds of thousands of dollars for more complicated solutions. 


SCM Software (Supply Chain Management Software) 


Many different people and organizations, including suppliers, vendors, retailers, distributors, manufacturers, and consumers, are involved in the supply chain management (SCM) process. Starting with the raw components, the process continues until the customer purchases the final product. Supply chain management (SCM) software is developed to improve and automate SCM processes with the ultimate goal of improving performance and, ultimately, profit. 


Average costs for SCM software development range from $100,000 to $300,000, with higher prices for more complicated applications. 


Software as a service (SaaS)  


The popularity of SaaS (Software as a Service) programs has skyrocketed in recent years. SaaS-based applications may be used for a monthly or annual cost and are accessible from any device. These applications are often stored in the cloud, where they provide users with the highest levels of safety and convenience. Considering the wide range of use cases for SaaS in the corporate world, it’s difficult to put a price tag on it. 


Prices for creating software for SaaS might be anywhere from $25,000 to $100,000 or more. 


Software development cost of famous apps 


Let’s look at some figures based on instances of developing the most popular mobile applications.  

  • Uber: $80,000 – $100,000 
  • Tinder: $60,000–$80,000 
  • Tiktok: $80,000 to $100,000 
  • Slack: $100,000 – $120,000 
  • Zoom: $80,000 – $110,000 


software development outsourcing cost


Software Development Costs Factors 


It turns out that the typical cost of making new software might vary from a few thousand to several million dollars. The complexity and scope of an app are two critical factors that affect its development cost. And there may be other non-technical elements that affect your budget as well. 


Here is a list of these factors: 


Software Complexity and Type 


Is it your goal to create a service that competes with Uber? Or maybe a small program that doesn’t rely on server-side logic? Which option you choose will have a major impact on the overall budget for the project. Constructing a basic app is a clear and simple task that requires little time or effort. Meanwhile, developing an app at level of Uber takes a sophisticated algorithm, technology stack, and substantial server resources. 


Unsurprisingly, the cost of developing an app similar to Uber will be more than that of developing a basic app that just displays your company’s most recent inventory. A useful rule of thumb is that the more involvement from the user, the more features the app should have. In an app that operates like Uber, users may be placed into several groups with varying levels of profile editing capabilities. 


There will also be a higher need for individualized service in a complex. It’s a time-consuming process since developers have to build new codes to add the desired features to the software. It also necessitates additional testing of the customized modules, which adds to the overall cost. 






If your users are spread over a wide range of operating systems, you’ll need to develop separate versions of your app for the web, Android, and iOS. More money has to be spent on app development if there are many platforms. You’ll have to form many software development groups to handle the various software versions. 


Developing for many platforms might sometimes help you save money on software development. Cross-platform software uses the same set of files to run on many platforms, such as iOS and Android. However, designing financial software with graphs and dashboards, streaming, etc., may not be a time saver in a cross-platform software development process. Therefore it’s important to have a skilled staff on hand. 


This leaves you with the more costly option of developing native apps for each platform. In other words, you can’t use an app designed for iOS on an Android device and vice versa. Some new businesses choose to build their base on a single platform before expanding to others. The app Clubhouse is a nice example of this since it was originally only available for iOS devices. 


UX/UI Design Complexity 


People tend to stop using an app once they’ve used it for a long. Ineffective user interface design or navigation is usually to blame. The success of a mobile application depends heavily on the quality of its user interface and the loyalty of its first user base. As a result, it’s not shocking that new businesses emphasize customized UX/UI design in their apps. 


Graphical components like buttons, fonts, icons, and colors are an integral part of UX/UI design. A lot also depends on how simple it is for users to achieve certain goals inside the app. The software development team must make sure the app looks good and provides a good experience for users. 


The founders of a new business have to pay for all of this work. To provide the finest possible user experience (UX), you’ll be expected to foot the bill for any and all custom artwork, animations, testing, or redesign. 


Back-End Infrastructure And Connected APIs 


The majority of software doesn’t run well on its own. Such softwares often need extensive server-side processing because of their dependence on other services. A good example of this is Uber, where the user interface is deceptively simple but the underlying infrastructure is complex. 


Riders are drawn to the service because of its convenient tools for navigating to their destination and making a purchase. As important as it is to preserve users’ privacy, developers also take measures to secure their data behind the scenes. Each of these additions adds to the overall price of a software development project. 


It will cost more to develop the necessary components of the software if it demands heavy server-side data processing. The server-side program may also have to communicate with other computer networks. A custom data-exchange API must be paid for, although development costs might be reduced by using a ready-made API. 


it outsourcing cost



Geographic Area Of The Software Development Project 


Costs associated with acquiring the services of software developers might vary widely depending on location. Especially if you’re located in the United States or Western Europe, where developer hourly rates average approximately $100. With such a high hourly rate, the cost of the program will be far more than expected. 


But there are places where you can have software developed for far less money than elsewhere, and the quality won’t suffer. Many reputable developers may be found in the eastern European area, making it a popular choice for IT outsourcing. For example, the hourly cost in Ukraine is about $45 dollars. 


In nations like Vietnam, you may get an even better deal, but you’ll need to be aware of the time zone and cultural variations. It’s much less of a burden to have a team of dedicated software development professionals to help you 


If you choose carefully, you may save the cost of developing the software by a considerable amount. 


Hiring Model 


Did you realize that selecting the right collaboration model may help reduce funds? After settling on a developer, you’ll likely have the choice between a fixed rate, an hourly rate, or a dedicated team. 


With a fixed rate, you may expect to pay a certain amount for specific services. Even if you’ve already agreed on a fixed price with the developers, there’s not much space for adjustment once work has begun. 


Hourly pricing, on the other hand, maybe adjusted more easily to meet shifting needs. You have to pay for the time and effort put into software development. The whole cost is unpredictable, and you lack absolute control over the development staff. This method is effective for young businesses. 


The third option, the specialized staff, is a particularly appealing cooperation model for well-established firms. The IT firm will hire developers to work for the startup, and the company will pay the bill for their services. You’ll have the developers’ complete attention, which might cut down on the development time


To Sum Up  


It takes a lot of back-and-forth between the software development team and the customer to meet an exact price for software development. The cost of developing an app or software product might also be driven by many tech and non-tech elements. The key is to define a clear vision for the software and then find the right vendor to make it happen. 


If you have an excellent concept for an app, our team will examine it and provide you with a reasonable price. Send a message right now. 


We’re here to help and answer any question you might have. We look forward to hearing from you.