How much does Software Development Cost?


How much does custom software development cost? Custom software development is the creation of software systems for a single specific user or group of users inside a business or organization. Therefore, developers design custom made software to meet your company’s specific needs. On the other hand, the more typical commercial factory-ready software works in a general way.


Generally, a contracted third party or internal group of developers creates custom software only for that specific entity. In addition, they don’t package custom software for sale in a broader market.


In this article, we will address one of the first questions every customer asks. How much does custom software development cost? It is a difficult question to answer as there are many variables that affect the cost of custom software development.



How much does custom software development cost? The two types of business software


BluCactus-How-much-does-custom-software-development-cost-The-two-types-of-business-softwareSoftware applications are an important and key element for all modern businesses looking to come up with ways to optimize their processes while generating more revenue.


Essentially a manager or CEO can choose between two general types of software. The first of these two types of software include factory-ready solutions based on predefined module sets. The second is custom software featuring fully customizable applications that are adaptable to your business’ needs.


It’s a fact that personalized programs have much greater potential in terms of return on investment, so let’s find out how much custom software costs. In this post, we will analyze the components of cost and the factors that affect prices.


How much does custom software development cost? What is custom software development?


Custom software development is the creation of unique software solutions for your business. Custom solutions are usually more expensive than ready-to-use software options because they have different development steps that consider the customer’s needs.


BluCactus-How-much-does-custom-software-development-cost-2-Developing-custom-software-requires-a-detailed-plan.Developing custom software requires a detailed plan.


Custom software development is the design of software applications to specifically address the needs of these users better than commercial factory software. 


Normally, an external developer creates custom software only for a specific business.


An internal group of developers can also develop custom software. This is the reason you won’t find custom software packaged for resale.


BluCactus-How-much-does-custom-software-development-cost-3-The-cost-of-software-customization-versus-the-cost-of-factory-software-solutions.How much does custom software development cost? The cost of software customization versus the cost of factory software solutions


It’s crucial to realize how two types of software differ in terms of cost.


Compare the definitive characteristics of factory-made software and custom software:


BluCactus-How-much-does-custom-software-development-cost-4-Factory-applications.Factory applications


Factory applications include universal combinations of the most popular modules.


Multiple clients get factory applications without unique customization or only with a few minor changes.


Normally, these applications have the initial license price. They might also include monthly fees based on the number of users. In addition, they can involve additional expenses in updates, technical support, training for the staff and customization.


Custom software



Applications of this type are unique in that developers create them exclusively for the use of a specific organization. They come with previews, extensive research, MVP release, testing, and more. Customers can define which modules they want to add or remove depending on their needs or business objectives. Custom software often features only one big payment that includes all expenses.


The second type of software is potentially more profitable than factory applications. This is because managers see how much the company has to spend from the start and can be sure that there are no pitfalls with the implementation.


Custom applications generally include support, training, and upgrade costs in the final price. So this is the main question: how much does custom software development cost considering all of its benefits?


How much does custom software development cost? What affects the cost of custom software?


BluCactus-How-much-does-custom-software-development-cost-6-Software-Size.Software size


The more screens the software has, the more work you will have to do to develop your application. Therefore, it will be more expensive to deliver. Small apps range from 10 to 25 screens, the medium size is in the range of 25-40, and the large size is more than 40.


What do we mean by screen? What constitutes a screen? In general, a screen would be everything the user sees when they first access their app, and then every single screen behind every button click, link click, or menu click.


A screen for viewing customer information and a screen for editing customer information are two different screens, although they display the same information.


BluCactus-How-much-does-custom-software-development-cost-7-The-complexity-of-the-software.The Complexity of the Software


Complicated applications mean more coding and also more testing time.


What happens if your custom software application performs a lot of heavy analysis, scores, or numerical calculations? What if your “secret code” has many nuances and a variety of permutations?


Your application is likely to have some complexity that requires special attention from the development team. This might increase production time and also the costs.


BluCactus-How-much-does-custom-software-development-cost-8-Creative-design1.- Creative design


Creative design in custom software development is about visual design.


You can choose different fonts and color palettes, among others.


Just like when designing and decorating a home, the more specific and special your design needs, the more expensive it can be.


BluCactus-How-much-does-custom-software-development-cost-9-Integration-with-other-systems2.- Integration with other systems


Integration with external software introduces many unknown variables to the situation. There are many unknown factors, like how well the other system allows information to flow and what obstacles it must go through in the process of integrating the systems.


Sometimes the integrations are easy, but other times it can be extremely difficult. Typical integrations like payment providers like PayPal or Authorize.


Net is extremely easy to integrate. The same goes for Equifax or Experian credit check services. Older or lesser-known systems can pose a challenge and increase the cost of the project.


3.- Migration of existing data


BluCactus-How-much-does-custom-software-development-cost-10-Migration-of-existing-data.If you have data on an existing system that needs to enter your new application, assuming it is more than you can write by hand, you will need a digital migration of the information. Migration is nothing more than custom scripts that extract data from your old system, clean it up, and change its format so that it can fit on your new system.


The process steps are very straightforward. However, you must take many questions and decisions if the two systems will store the data differently.


Companies execute migration efforts multiple times after the software development ends. In this way, we can ensure that everything has been translated correctly and that the new system is using the data as required by the customer.


When you are analyzing the costs of software development and budgeting for your custom software development, these factors should be taken into account.


How much does custom software development cost? Designing the budget


BluCactus-How-much-does-custom-software-development-cost-11-Designing-the-budget.Similar to building a house, companies can design software to fit a budget.


A good software development team can take your ideas and create a design with a target budget in mind.


Once a company completes initial design and cost estimates, it can add or remove certain features to reach its target number.


It pays to put a reasonable number in your target budget when you start a project.


How much does custom software development cost? Breakdown of software development costs by stages


BluCactus-How-much-does-custom-software-development-cost-12-Breakdown-of-software-development-costs-by-stages.The most important thing to remember for now is that custom apps take longer before launching than factory-ready alternatives.


The point is, developers have to make a product from scratch instead of implementing pre-programmed software. Therefore, customers must be ready to wait in order to get the completed software.


The process consists of several stages that start with an initial business investigation and end with ongoing technical support. Each stage has its own expenses that affect the price.


The following four sections represent the most important steps in developing software products. How much does custom software development cost? Get to know them to know how much you should spend.


How much does custom software development cost? The development


BluCactus-How-much-does-custom-software-development-cost-13-The-developmentStarting with analysis, the development stage is the key element of a product. During this process, programmers and analysts cooperate with the customers to define the desired application requirements.


Partners discuss the overall needs with exact modules included, a lead time, more accurate expense budgets and additional services like training or maintenance.


The development itself takes anywhere from a few weeks to years, depending on the complexity of the application. As a result, you get a fully functional product that will further your business and help you reach your goals.


How much does custom software development cost? The implementation


BluCactus-The-implementation.Here, the developer installs the finished app on your server. They can also deploy to the cloud with remote access.


This stage should include a proper test and performance evaluation.


That shows that the software works well and that you won’t lose core data or integrations after switching to it.


During implementation, having control for 24 hours over applications is crucial.


BluCactus-The-training.How much does custom software development cost? The training


Without good training, your employees can’t take full advantage of the new software.


Normally, custom solution developers provide internal or remote lectures and practices with basic application information.


If this option is not included in the final list of services, be sure to request it even if it involves more expenses.


BluCactus--The-maintenanceHow much does custom software development cost? The maintenance


The development life cycle does not end after launch. It continues with further evaluation, updates, support, and technical maintenance.


Similar to training, these options may come as parts of the price or may be available for additional costs.


Again, you want to get them from developers who know how the program works rather than partnering with third-party teams that aren’t as familiarized with your customized software.


How much does custom software development cost? Factors that affect the cost of software


BluCactus-Factors-that-affect-the-cost-of-softwarIn addition to the basic stages that define software pricing, there are also numerous secondary factors. They are definitely worth considering as each point can increase or decrease expenses and respectively help the company avoid exceeding the previously defined budget.


Regardless of the industry for which they are developed, you can find the previously listed factors in the development of all software applications. However, you want to prioritize based on the market sector and specific industry requirements.


For example, complexity and functionality are extremely important to large companies that focus on covering everything at once. Integrations with external programs are crucial for companies working with different partners. Now, let’s take a look at the things that affect the final cost of software customization.


BluCactus-Size-and-scope.Size and scope

First, the cost of each project depends on its complexity and size. For example, a simple list-based mobile app for a small e-store that has only one catalog and one personal account will be really cheap. There is not much to do with this type of software. 


On the other hand, huge ERP platforms for multinational banks or logistics teams that require elaborate CRM, warehouse management, and financial security are expensive and difficult to deliver.


It’s suggested that you define the desired features from the start so that developers can estimate prices.


BluCactus-Budget-and-time.Budget and time

Last but not least, the final price is strongly related to the money you can spend and the time you are ready to wait.


These things are inversely proportional because the most urgent projects have additional costs because the developers have to work harder and faster.


It’s essential to know your funds and time expectations before signing a contract so that both parties can discuss the terms and reach a final decision.


Rates of offshore and nearshore Software Development


How much does custom software development cost?, Eastern Europe: 

Software developers from countries like Belarus, Russia, and Ukraine tend to offer their services at a price between $26 USD and $43 USD/hour. This price range is associated with moderate to high-quality services.



These countries have a large IT workforce, which leads to strong competition. Plus, it also forces developers to offer better value for money.


On the contrary, Latvia and Estonia have a less number of IT specialists so prices are more expensive. However, the quality is also very high. How much does custom software development cost? Software development tends to cost between or above $31 USD and $44 USD/hour in Latvia. While in Estonia, the place where Skype was born, these prices can scroll up to between $41 USD and $50 USD/hour.


Alternatively, software developers of Bulgaria, Czech Republic, Hungary, Poland, Romania, and Slovakia offer great services at a price range between $34 USD and $56 USD/hour. Benefits of hiring software developers in Eastern Europe include: discovering a deep talent pool, getting innovative products, and having a decent time difference with the USA. That way, both the time zone (UTC+2) and the diversified skills of IT specialists are competitive advantages. 



BluCactus-How-much-does-custom-software-development-cost-Rates-of-offshore-and-nearshore-Software-Development-Asia.Offshore software development rates in Asian countries are much cheaper than in Eastern European countries.  Software development services there are good, effective and cheap.


In South Asia, the top outsourcing countries are India, Pakistan, Bangladesh, Sri Lanka, and Nepal. In these countries, the hourly price rates range between $18 USD and $40 USD. However, the biggest player there is India, where the IT industry is solid and dynamic. 


How much does custom software development cost? Regarding East and Southeast Asia, China overpasses Indonesia, Malaysia, the Philippines, and Vietnam in IT services.  Nevertheless, these countries have made efforts to improve the quality of their services. Each one of them provides unique opportunities to develop your software project.   IT professionals of this region provide their services at a rate between $25 USD and $40 USD/hour.   


How much does custom software development cost?, Latin America

BluCactus-How-much-does-custom-software-development-cost-Rates-of-offshore-and-nearshore-Software-Development-Latin-AmericaLatin America is a great place to hire offshore software development services. Here you will get excellent customer service, high-quality results, and the best value. Some of the most popular software development companies in this region are in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama, and Peru.


This is a mixed market with no single dominant player, so any of these countries is a good choice for you. Even though the prices in this region are higher than in Asia, comfortable hour differences with the USA worth it.


Hourly price rates range between $30 USD and $50 USD/hour. However, something to take into account is that Argentina, Chile, and Uruguay have higher price rates, hovering around $50 USD or more.  



BluCactus-How-much-does-custom-software-development-cost-Rates-of-offshore-and-nearshore-Software-Development-Africa.How much does custom software development cost? Africa is an emerging and highly affordable destination to hire IT services.


Here, countries like Egypt, Kenya, Morocco, Nigeria, and South Africa take the lead in software development services.


There is not much competition, so hourly price rates stay stable in a range between $20 USD and $40 USD/hour.


Within this group, you can find cheaper services in Egypt, Morocco, and Kenya. The higher price rates belong to Nigeria and South Africa, ranging from $40 USD to $50 USD/hour. 




So, how much does custom software development cost?


How much does custom software development cost? It depends on a wide variety of factors. In BluCactus we have a personalized software development service. We will tailor our software design to your needs. Contact us today and ask for more information.


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