Discover How Much Does Custom Software Development Cost in 2024 - A Guide For Digital Product Founders In Detail

So, you’re planning to build your own digital product and are wondering what the custom software development cost will be for your project. If this is what your scenario is then this is the right blog for you to get started. The question is self explanatory but the answers may not always be straight forward. If you’ve tried getting quotes from different service providers before you will know that the costs for developing your custom software can vary depending on several factors.

This is why I’ve put together this blog to show you the ins and outs about what it takes to build custom software and what factors decide the costs.

So, without wasting any time let’s see what the custom software development cost looks like and the things you should consider before starting your project.

Let’s Discover Key Factors Shaping Custom Software Development Cost Before Embarking On Your Product Journey

Software is everywhere and you may not realize it in the hustle and bustle of everyday life but it has taken over most of our lives. From social media that brings you the latest dance trends to the humble payment apps you use everyday. Even paying your speeding tickets at the DMV is online today. Guess what? These are all software and they have different custom software development costs to build.

In a nutshell, there are 5 major factors that you should consider when analyzing the cost for custom software development.

• 1. Who will build your software?
• 2. What will it be used for?
• 3. How long will it take to build it?
• 4. What technologies are you using?
• 5. What do the overhead costs look like?

Once you have answers to these questions then you will be able to get a grasp on what the costs for development could look like. Now, let’s get into a bit more detail about these factors and what you may have to tackle when dealing with the custom software development cost. We will explore them in detail in just a couple of minutes.

How Much Does Software Development Cost for a Small business?

When you’re a small business trying to build custom software it is very important to factor in the costs for development because the truth is that building a great product does cost more money than you might expect. Additionally, what’s out there can be very confusing because if you go onto a freelancing platform like Fiverr or Upwork you can see that there are many developers out there who provide their services for cheap prices.

That’s not to see that someone who provides services at a lower custom software development cost is bad at what they do. But chances are that your interactions will be more or less transactional. Again, that’s not always a bad thing because you might be an expert in the industry that you’re building your app for. If you’re an expert and you already have a solid plan for the development of your product then by all means you could say that all you need is developers to just fulfill your requirements.

However, if you’re a small business just wanting to build software to support your business or a founder looking to create a product with your ideas you will need a professional team. Hiring the right team can help you optimize your custom software development cost. When you’re building products for a digital audience you always have to look long term. Because the development alone is not your actual costs you also have to pay for other services like servers/infrastructure, quality assurance, app store fees and much more.

Typically for small businesses, a simple application from a quality provider can cost anywhere between $10,000 and $15,000. Hiring freelancers may bring your costs down but keep an eye on how much they charge and how many freelancers you need. Because a lot of freelancers charge hourly in terms of the custom software development cost and hourly costs can get away from you quite quickly. For people starting off with product development hiring a good agency would be cost effective in the long term.

Custom Software Development types & Costs

Now, it’s time to dig a little deeper into the types of custom software development and the costs associated with each. We’re going to look at this from a broader perspective because it’s not all black and white and it’s always better to know about how costs can change depending on the path you choose.

When it comes to the custom software development cost there are a few considerations and let’s look at them one by one.

1. Who will build your software?

As we spoke about earlier you could go a few routes here and we’ll look at each of them and see how much each might cost and what you should consider. Let’s start with the simplest option that might pop into everyone’s heads first.

Hire A Freelancer

Hiring a freelancer is a viable option for you and there are freelancers out there who can give you good results. And, it’s not just freelancing websites where you can hire them. Firstly, hiring a freelancer can help you reduce your custom software development cost. It just depends on where you find them and what they can do. For example, if you’re looking for a freelancer in a marketplace you’ll see that you will see some low cost options. Which you would expect considering the competition on these platforms. There are thousands of freelancers and they will compete by providing services at a lower cost.

On the other hand, if you go to social media like Twitter you will see that there are plenty of freelancers there too. The difference is that if you found someone on social media then chances are that they have a good personal brand and their custom software development cost will be higher because of that. Hiring a freelancer is not a bad choice as long as you know what you are doing. Because building software is not just about coding you have to put in a lot of effort to maintain quality as well as scalability and it will be on your shoulders to manage that.

Hire An agency

Hiring an agency is also a very viable option for building your custom software. The major positive about hiring an agency is that most of the time they have entire teams for product development. Although this option is comparatively more expensive in terms of the custom software development cost. However, that’s just at first glance and I’ll tell you why.

Agencies like I’ve mentioned before have product teams that are ready to start building immediately and they will also be trained in multiple technologies and project management methods. Hiring an agency is like hiring a complete team for your project but the difference is that it will cost less overall when you compare it to hiring experienced resources individually.

On the other hand, you probably won’t think about hiring resources like a project manager when you’re hiring freelancers. But having that support will help you optimize your custom software development cost when you choose an agency. Expert support is always great to have and they can help you figure out the most efficient way to build and launch your digital product.

Use No-Code

In 2024, there’s probably no one in the tech space that doesn’t know about No-Code. No-Code has sort of turned into a movement with more technical founders coming on board because you can use drag and drop tools to build software that otherwise requires a developer. Yes, some No-Code tools allow you to create complete applications and this lets you reduce your custom software development cost.

The major downside is the scalability of these apps that you build. That is not to say that No-Code applications are useless. In fact, you can build some great products using No-Code. But at some point given that your business takes off you will have to hire people to build the software for you and you will probably have to rebuild everything from scratch. Because most No-Code tools abstract the code away from you and you will have to work within the constraints of the No-Code tool.

The other consideration is that although No-Code allows you to reduce your custom software development cost it will take some time for you to learn how to use these tools especially if you’re a non-technical founder. At a glance, No-Code companies may charge you some $20 or up for using their SaaS tools but it can take you anywhere from 3-6 months to properly learn how to use these tools. When in business, time is money.

2. What will it be used for?

The use case of your app will also decide how much it will cost because if you’re building something like a payment app it will use a lot of third party solutions such as APIs that will pile to the custom software development cost. Additionally, if you take fintech and healthcare as examples you will need to build your solution factoring in multiple regulatory standards like SOC2 and HIPAA. You will need experienced product developers to understand what all these mean and to build the software by adhering to these standards.

Simply put, if a normal MVP for your app costs $20,000 a healthcare or fintech software could cost double that amount of money.

3. How long will it take to build it?

The timeline it will take to create your software will also add to the custom software development cost. This especially true if you’re hiring a freelancer because a lot of freelancers charge by the hour. Realistically, most small applications take around 1-2 months to completely build, test and launch which can give you a rough estimate of what you can expect.

Complex software like ERPs may take much longer and you would be looking at anywhere from 6-8 months to properly build. Here too you will find people who claim to build it quicker and cheaper but when you’re building software to manage different aspects of your business quicker and cheaper does not always equate to better.

Your custom software development cost can get a few multiples higher if you’re building a solution using advanced technologies like AI/ML or blockchain.

4. What technologies are you using?

This is the magic question because the technologies you use to build your application also adds to your costs. Like we spoke about in the previous question, complex technologies tend to carry higher costs for development. For example, if you’re building a web or mobile application using traditional technologies like MEAN, MERN, Android or iOS you can estimate the average at maybe $20,000-$25,000. However, your apps may also need to integrate AI/ML or blockchain which would double the custom software development cost.

While it can be hard to digest or fully understand why costs can vary just because the technology is different, realistically that’s what you will have to face. Because even if you find cheap freelancers to build a product using blockchain technology, how confident are you in launching that platform considering that your users will lock hundreds of thousands or even millions of dollars in crypto inside it?

5. What do the overhead costs look like?

This is an obvious question, right? But don’t be fooled, this is a question that not many founders ask themselves. In fact, even some agencies aren’t that upfront about the role of overhead in custom software development cost. You can build the most amazing software in the world but when it comes to running them you most probably need some kind of cloud solution or server.

While hosting websites can cost you even as little as $5, applications on the other hand can be more expensive. Additionally, a server is not the only cost you pay for in fact you need a host of other products such as load balancers to make sure that your software runs smoothly in all conditions. Most applications today are put on an auto scaling cloud system which means that your infrastructure automatically scales as more users start using your app. This is an addition to the custom software development cost that you will have to factor in.

If that wasn’t enough in case you’re building an app for mobile you will also have to pay app store fees and even commissions if a subscriber pays for your app.

Benefits Of Custom software Development

Now that we have some major aspects out of the way let’s speak a little bit about what the advantages of custom software development are. We are also going to look at some options we have not yet covered in earlier sections of the blog.

The major benefit of custom software development is the flexibility to build whatever you want. The custom software development cost is in most cases expensive because you are building something completely from scratch. Which means that you have to not just build software but also tailor it to the needs of your users and your business. Because after all that’s what you are trying to do with your software.

This might be a bit obvious but custom software development also allows you to create solutions that properly address your customers’ problems. Which results in you being able to attain greater client satisfaction and growth in your business.

Now that we’ve covered some of the benefits of custom software development let’s look at an alternative. Is there a way to reduce your custom software development cost?

The answer is yes you can but it depends on what exactly you are trying to build. You could always get a white label solution and customize it to suit your needs. For example, if you want to build a human resource management software some of the features that you will need are common for all healthcare businesses. Here you can use a white label software with some pre-built features and then customize it to include the specific features that you want. If you’re launching an app for a solution that already exists then it would be easier to find a white label app reducing your custom software development cost.

Explore Custom Software Development Cost Estimation

Now, let’s explore some estimated costs for developing custom apps and see how they compare. Since the costs for developing custom apps is mostly subjective, let's summarize what we’ve talked about. I have created a table to show you cost estimates as well as the scenarios where these costs will apply.

These are just estimates and don't reflect the actual costs for building scalable and secure applications. However, it is also worth noting that the custom software development cost for a freelancer is for a single developer or professional. You will need multiple developers for building custom software. Whereas you usually get a complete product development team when you hire an agency and the rest of the fulfillment is up to them.

Why custom software development is important

The role of custom software development is undeniable in today’s world where technology is at the bleeding edge. Many people don’t realize that every product you see in existence today started out as a small idea that someone built from scratch. This is also why when the conversation comes to the custom software development cost I suggest that if you have a unique idea spending time and money on building a good quality software solution should always be worth the spend.

Discover The Key Features of an Exceptional Custom Software Solution

An excellent custom software solution has various traits and it's not just related to the software itself but also how you build it. For example, a good custom application for banking means that it will be secure and users can trust that their funds will be safe. However, it also means that every user regardless of their device’s capacity should be able to use the solution seamlessly. The custom software development cost for such applications will always be on the higher side because it’s this attention to detail that creates experiences for people.

That takes us to the second trait a custom software solution should have and that is the user experience. Whether It’s an app for banking that you use everyday or a social media app that some people use every minute your user experience has to be great if you want customers to stay. Building a custom app also gives you that control over your user experience because you have the opportunity to curate everything that the customer interacts with.

Summarizing Custom Software Development Cost Before Your Next Project

I hope that by now you have understood the factors that decide custom software development cost and how you can approach them. The opportunities are out there and you have many options to choose from when building your apps. However, now you also know how to the right solution for your business apps and how you can maximize your growth and minimize your costs.

If this blog helped you out then consider sending this to a business owner or founder who may find this insightful.