How to Estimate the Custom Software Development Cost & Its Breakdown Aspects - Rising Max

How to Estimate the Custom Software Development Cost & Its Breakdown Aspects

Steve Brown (Technology Advisor)

July 13, 2021

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When you got to work today, how long did it take you to get there? Is it certain that getting there tomorrow will take the same amount of time? No, I doubt it. The amount of time necessary will vary depending on your route, traffic, weather, and a slew of other factors. The change could be minor over a short distance. However, if you have to go to a different city or nation, your expenses can skyrocket.

Your commute time, on the other hand, is entirely your responsibility. Accurate time/effort calculations are significantly more important in any professional activity where a large number of other people or processes rely on your ability to complete things on time.

We promise to deliver high-performance software at affordable cost to achieve business goals faster.

According to several sources, software engineering is one of the top services handled by outside contractors and custom software development company, with global contract values ranging from $63.5 billion to $159.1 billion. Knowing the projected time/budget before the commencement of any collaboration is critical for firms in this situation. Hiring a contractor or an agency without a clear understanding of the cost-benefit analysis would be a risky proposition.

Software engineering, on the other hand, is a difficult field of study. It frequently necessitates substantial investigation and novel solutions. As a result, making any assumptions about the average cost of custom software development or the length of one or more engineering tasks is extremely dicey.

We do 30-40 estimates per month on average for how much it costs to outsource software development and totaling 500 estimates per year. We have established our own way of quoting software engineering work as a result of our extensive experience in this field. We discuss all components of the software development cost estimation process, as well as the approaches we normally employ, in this document. But first, let’s describe the estimation of the custom software development cost in the software development life cycle.

The Short Answer For Custom Software Development Cost & Breakdown

As per my personal opinion, there are several custom software projects falling in the $30,000 – $100,000 in order to design and develop the application. 

Biggest Impacts On Software Development Cost

We all are aware that the small applications range within the 10-25 screens, 25-40 screens are there in the domain of the medium ones and more than 40 in large applications.

In general, the cost of small applications may vary from $25 to $50k, whereas medium applications cost around $50 – $80k and the larger applications are up to $100k. 

Software Development Cost Also Depends Upon Complexity

Over here, the complexity completely depends on the extra time taken for coding and the final testing of the application. For instance, if the application tends to have a lot of heavy analysis, crunching of numbers, or scoring, or there is the involvement of some secret sauce consisting of a lot of permutations and alterations. Then you can easily assure that your application has been verified on the terms of complexity. In fact, complex software projects can easily cost up to more than $20,000 as well. 

Impact of Creative Designing in Software Cost 

We would like to suggest a budget in order to cover up the interactive design of your application. The budget should be $8,000- $16,000 for a few repetitions of feedback and re-designing. 

Software Development Cost When Migrating or Calling Existing Data

Every application has the challenge to be unique in its own way. And to acquire this challenge many companies put an extra effort to figure out the scripts, translation rules, and many rounds of tests and adjustments. This will automatically add up the cost to the project and that would be on an hourly basis as well. Giving you an estimate of the cost on an hourly basis could be $15 to $25k. 

How Much Does A Financial Software Development Cost?

Without any doubt, it is understood that the future of Fintech is much brighter as compared to other industries. There are several factors on which the cost of an app depends such as the type of platform, developer’s salary, and many more.  Typically, the cost to develop Fintech app ranges from $20,000 to $1,00,000. The cost of financial technology software is broken down into:

  • The development cost of a financial application with basic functions and a simple UI on a single platform is approximately US$20,000 to US$40,000.
  • The cost of building a top-notch banking application with advanced features ranges from US$40,000 to US$70,000.
  • The development cost of creating feature-rich financial and banking applications for Android/iOS with complex UI will reach around US$70,000-125,000.

According to Different Regions, We outline Here the Cost Breakdown of Custom Software

  • In the US: $70 to $100 per hour
  • In Europe-based developers: $60 to $100 per hour
  • In India: $25 to $50 per hour

According to the stages, software development costs is, 

  • Documentation (40-45 hours – $1000 to $2000)
  • UI/UX design (60 Hours – $1500 to $3000)
  • Front-end and Back-end Development (400 Hours – $10,000 to $ 20,000)
  • Testing & Debugging (80 Hours – $2000 to $4000)

How Much Does Education Software Development Cost

Based on the features and functionalities, the basic educational software or app can be prepared for about $50,000. If you want it to work on both iOS and Android platforms, the total cost of educational software is between $40,000 and $60,000. However, the final cost may be slightly different from the above amount, depending on the number of additional advanced features you want the developer to build. 

You need to hire the best educational application development companies that have extensive expertise in transforming common ideas into commercially successful projects.

Automotive Software Development Cost 

The software development cost for the automotive industry lies between $30000 to $60000. If we go with agile methodology then the average hourly rate would be ~$25 per hour.  

Healthcare Software Development Cost 

There’s no universal way to find out the software development cost for the healthcare industry. The important thing is that your application solves your business problems and brings value to your customers. You can execute a project with a full-stack engineer for only US$20,000, or you can join a 40-person team of engineers, testers, designers, and managers at a cost of approximately US$400,000 per month. It depends on the logic of your application, the number of platforms on which you publish it, and the number and complexity of integrations.

Healthcare software development company can help you manage dispensing, improve patient care, and monitor medical claims.

Software Development Life Cycle

Software systems have become increasingly complicated over the last few decades. At the same time, there isn’t a single industry or field of expertise that hasn’t been affected by technology. As a result, it became necessary to codify the software development process and establish a common model for managing its life cycle.

To define the significant stages and tasks of a software development process, there was the introduction of the very first formal project management framework known as the Software Development Life Cycle (SDLC). This cycle also helps to give an estimate for the average cost of software development and explains an approach to pursue the information regarding the integrated systems in a well-structured and in deliberate manner. 

Emphasizing it more there are a total 6 stages in the software development life cycle, let us have a look at each of them one by one- 

1. Planning 

It is the initial stage of the cycle that interests the preliminary requirements supported by the analysis, research, basic project vision, and scope of the project. The significant roles in this stage are customers, sales representatives, and business analysts. The outcome of this stage would be the understanding of clients’ needs, basic project road map, and technical recommendations required for the project. 

2. Analysis

In this stage, analysis is being held where the identifying of the project goals and functionality is done. Keeping the goals in mind all the technical specifications and requirements are finalized. Plus, all the potential challenges are found along with their solutions without interrupting the workflow. This stage of the software development cycle includes key roles of customer and development team comprising project managers, business analysts, technical experts. The end result of this stage gives out completely functional and design specifications, the work breakdown structure of the project, and the average cost of custom software development. 

3. Design

The third stage of the SDLC cycle is designed where the creation of basic system architecture and visual design is performed. The whole process is put in implementation by the development team comprising architectects, project managers, and UI & UX experts. The development team makes sure to draft the complete system architecture and the final design of the product. At this stage of software development, one can easily calculate and answer how much does software development cost. 

4. Implementation 

In this stage of the SDLC, the process of software development initiates and that to by the development team only which includes software engineers, QA engineers, project managers. There is a complete functioning of the software product with a fully-featured integration. 

5. Testing 

The whole purpose of this stage is to check the quality of the software development process or it acts as a quality assurance check of the product. This stage includes all the software engineers, QA engineers, project managers and also user experience is kept in mind. After this stage a finalized software product is created with the necessary quality. 

This paradigm works best for projects that are well-defined, have clear needs, and have a small scope of work with low complexity. Typically, these projects are utilized to tackle a secondary business problem or automate a specific internal process. It could be a basic tool or a landing page that streamlines a company procedure. A fixed-price collaboration approach is possible in this scenario since the effort is stated and the consequences are predictable.

The standard SDLC has a lot of drawbacks despite being a simple and easy approach. One of them is the high level of uncertainty that happens early in the software development process. Therefore, it might be the ideal way to calculate the average cost of custom software development.

Moving ahead we have  tried to give you a full pricing on software development services in this post, as well as explain the important aspects that influence the ultimate software development cost breakdown.

How Much does it Cost to Outsource Software Project: Different Cost Breakdowns

There is no precise classification of project size when it comes to software development. Because it is highly subjective, you should take our advice with a grain of salt, as other firms and development teams may have different perspectives. With that said, there are a few crucial characteristics that will enable you and the development team in estimating the project cost more accurately.

1. Material & Time Cost 

The Time & Material technique, which is essentially a pay-as-you-go model in which you will be invoiced based on the number of work hours of the team, is most common in the IT business. When it comes to custom software with large project scope, this strategy is the best to calculate the average cost of custom software development. It helps you to be flexible with your budget and adapt the scope as your demands change.

2. Fixed Price Software Development Cost Breakdown

However, some organizations utilize a fixed-price estimation strategy, which means they estimate the cost at the start of the project and don’t make any revisions thereafter. While this strategy is effective for smaller software products, it also necessitates a very tightly defined scope.

When using a fixed-price estimate, keep in mind that risk charges are included in the estimate in case something goes wrong. This strategy may or may not be agile enough for you, depending on your project.

If you require additional features or designs, you will need to renegotiate your entire contract, which is a time-consuming process.

Software Size Impacting The Costs 

As previously said, the cost is mostly determined by the scope of your software project. Of fact, there is no common metric for dividing software into small and large products, but we can roughly categorize the software products our team works on based on our expertise. So here are three different project sizes:

Basic Project

The most basic, simple undertakings are the first category of projects. Landing pages, small eCommerce stores created using engines like WooCommerce or Shopify, and small (4 to 5 page) websites are examples of these. These don’t necessitate a lot of custom software development, and there’s usually very little custom design involved. They don’t use third-party integrations or other add-ons, either (cloud, databases, etc.).

These are the quickest and least expensive projects to construct, and the team will include a designer, one full-stack developer, or two developers (one for frontend and one for backend), and a project manager. Quality Assurance is typically significantly less involved and contributes little to the overall project cost.

Slightly Complex Projects

The moderately complex software projects are the next level of complexity. Web apps, cross-platform mobile apps, and so forth are examples. Unlike the basic project category, there is more bespoke design involved, and the UI and UX receive more attention. There are frequently a few third-party integrations (such as payment processing) involved as well.

A UI/UX designer, two or three developers, a project manager, and a Quality Assurance specialist will most likely make up the team for a product like this. Depending on the IT consulting companies in NYC you can deal with a business consultant or hire to assist in the creation of a detailed project strategy and the definition of critical features.

Immensely Complex Projects

Finally, there are items that are quite sophisticated and have numerous features, screens, and other components. Native mobile apps with custom design, development, and many third-party integrations, as well as high-complexity cross-platform mobile, web, and desktop apps, are among them.

This type of product has a broad reach and a big list of features. For a project like this, the team will typically consist of two UI/UX designers or a separate UX designer and UI designer, a researcher, more than three engineers, and at least two quality testing specialists. This project will most likely take more than 6 months to complete and depending on its intricacy, it could take years.

UI/UX Design

The design is the next major component of the overall average cost of custom software development. Both UX and UI, especially for a larger software project, can take a long time to finish. The team must first do in-depth research on the market, client needs, user behaviors, rivals, and so on.

Then they’ll move on to more in-depth research, such as user interviews, customer journey mapping, and so on. Then there’s UI design and UX design (wireframing, prototyping, and testing). All of this will take some time, and larger projects (such as a social media mobile app or a marketplace) may take up to a month. This is a significant expense for your company, and you’ll need to budget for it.

Deployment Platform

Software development costs vary depending on the software’s distribution platform, as each platform has its own set of requirements. If the application is for a mobile device, the operating system is the deciding factor. Is it only available for iOS? Or is it Android? All of these factors must be taken into account when determining the cost of software development.

The software development cost for each deployment platform will differ since each deployment platform has a different number of devices for which the application will be deployed. Android has a much larger number of devices than iOS, producing an Android app will always be more expensive than developing an iOS app.

Similarly, if you want to create an app that can compete with well-known apps like Uber, you’ll need to develop it for all of the major deployment platforms, including Android, iOS, and Windows. This means you’ll need a lot more money or we can also say this way you can also have an estimate for the cost of software development.


Looking solely, it’s critical to recognize that estimating the cost of custom software development and software development cost breakdown and must say it’s far more complicated than it appears at first glance. There are numerous technical and non-technical issues to consider before proceeding.