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Building a software product requires thorough planning, experienced professionals, and an extensive budget. If you are pondering the standard price, there is no single correct answer as the cost of software development depends on several factors including:
- Product Scale
- Product Complexity
- Industry Domain
- Targeted Platforms
- Development Infrastructure
Nonetheless, the average cost of software development can range from $50,000, for a small-sized application, to $350,000 and above for an enterprise-grade product. It is important to point out that when launching a software development project, many organizations thanks to poor planning and lack of research tend to overspend in many areas.
This article will serve as a software development cost guide and cover topics like product requirements, development team composition, and developer salaries to bring you a rough idea of what you can expect to pay for your project needs.
Table of Contents
Developer Salaries and Payment Models
Factors Affecting Software Development Costs
Production-ready software is a mixture of different elements. The inclusion or omission of any of these elements depends on the size of the intended user base and the overall complexity of the application.
Product Scale and Complexity
The scale of a product is defined by how many users it is expected to handle. For instance, as of 2022, Uber reported 122 Million users while Facebook reached 3 Billion active users in January 2023. Dealing with such an extensive user base requires hiring a large team of experts that are well-versed in modern architectural and developmental practices. Furthermore, it also requires a large team of developers to ensure smooth operations across the application.
On the other hand, product complexity defines the functionalities the application offers and the kind of backend processing required. A more complex product will often include hundreds of web pages offering complicated user interactions. Such applications require robust backend architecture, a powerful host environment, and integration with modern tools and Cloud services, all requiring highly paid experts.
UI and UX
The application’s user experience (UX) is imperative for attracting and retaining users. A good UX forms the application’s brand and identity and adds to customer satisfaction, ensuring that users remember your product once they use it. A critical aspect that determines your app’s UX is the user interface (UI). The UI is essentially the layout of the application including color schemes, fonts, icons, and their placement on the screen.
A quick method of creating a UI is by using pre-made templates. These are relatively cheap and can be used by non-specialists. However, a customized application design provides a more personalized feel and can be altered according to client requirements. The catch is that it requires UI/UX specialists, in addition to the fact that it takes longer to build, which ultimately adds to the overall development time and cost.
IT Infrastructure
Software web applications are hosted on servers that need to be bought or rented according to needs, either in-house or from Cloud service providers. In-house servers are bought at a one-time cost but require IT specialists for setup and deployment. They also require any additional security provisions or tools to be manually deployed. While they provide configuration flexibility, they come with an upfront cost and can take some time to get up and running.
In contrast, Cloud servers afford you the choice between a variety of providers such as AWS and Microsoft Azure and which offer several payment models. You can choose to pay on an hourly basis or reserve them for more extended periods at discounted rates. Furthermore. Most cloud services come with an easy setup procedure, integrated security, and monitoring tools, which means they can be up and running within a few minutes. However, for smooth deployments, you will still require experienced CloudOps specialists, which means they can become costly in the longer run.
Target Platforms
Building applications for multiple platforms has become a common practice since mobile platforms have large user bases. Targeting various platforms means you need to build applications for desktops, Android, and iOS devices individually. This means you will have to hire separate developers for each of these platforms and foot their wages. An average Android Developer in the U.S. earns around $114,000 per year while an iOS developer earns about $118,000 per year.
Moreover, building multiple applications for different platforms also multiplies the overall development time and adds to the IT infrastructure cost.
Team Composition and Location
Another major determinant of the software development cost is how big of a team you require and how you choose to employ them. Developer salaries depend on their role and geographic location. Different professionals from different parts of the world come with different average salary expectations.
Team Composition
An enterprise-grade application requires a large team of experts apart from Developers, who may comprise:
- UI/UX developers
- Database Engineers and Administrators
- Scrum Masters and Project Managers
- Q/A Testers
Each of these resources has a key part to play in the software development process and commands a salary unique to their role.
Location
Software Developers’ salaries vary significantly in different parts of the world. Organizations can choose to outsource work to cost-friendly regions to reduce development expenses significantly. The table below shows the average annual salaries of software developers in different countries.
Developer Salaries and Payment Models
Once you have decided what your application should look like and what sort of functionalities it should include, the next step is to hire and pay the Development team. The average salaries for software-related professionals generally remain above $100,000 per year. The table below shows the average salaries for different Development professionals in the U.S.
The exact salary a Developer earns depends on their level of experience and technical expertise. For instance, the pay range for a Backend Developer in the U.S. lies between $100,000 to $230,000. The more experienced people you have on your team, the higher the overall software development cost will be.
However, software-related professions often follow a variety of payment and hiring models, which include;
- Permanent employees with fixed annual pay,
- Contractual employees with an hourly wage, and
- Freelancers (who can have a fixed payment or hourly wage).
Let’s look at these models in detail below:
Monthly vs Fixed-rate vs Hourly Wage
Developers with monthly wages are often hired for long-term, large-scale projects. Their salaries are decided on a per-year basis (as discussed in tables earlier) and are deposited monthly as a fixed amount. A monthly wage is generally a more costly payment model as Developers must be paid the decided amount regardless of the amount of work done, which is why companies only choose this model for long-running projects that require constant maintenance.
Fixed-rate projects have a pre-decided amount that is either paid upfront, in installments, or upon completion of the project. A fixed-rate payment model requires all project requirements to be laid down at the very beginning and offers little flexibility to change the development path. This method is often chosen for small to medium-sized projects that are expected to be completed in a few months. Moreover, you can choose to outsource the entire project to nearshore teams where the prices are lower compared to onshore and save on the overall project costs.
In an hourly wage hiring model, developers are paid for only the number of hours they worked on a project. Companies can choose to hire long-term developers (for development, documentation, and support) or for short-term (contract only lasts till the final deliverables are completed). This payment model is usually more economical as you get the most outcome for your money's worth, but even the hourly rates vary according to experience. You should expect to pay anywhere from $50 to $70 for inexperienced resources and $100+/hour for senior professionals.
The final cost of a software development project is determined by the multiple factors we have discussed. It primarily depends on how large your product is supposed to be and how long it will take to build.
Average Software Development Cost in the US
This table summarizes the average software development cost for small, mid, and enterprise-grade projects in the US.
Disclaimer: The figures provided are generalized since each software development project is unique
Conclusion
Software products are complex to build, and their costs can be challenging to estimate. A software development cost guide like this helps understand the different dynamics of software development and provides good estimates for budget allocation.
Software costs are mostly reliant on the product scale and complexity, with small projects costing around $20,000, while larger and more complex projects take the price well above $100,000. However, other factors like team size, experience, composition, and geographic location also have a significant impact on the overall price and cannot be ignored. It is vital to plan and research market costs to understand your product requirements. Otherwise, you may end up paying more than needed.
You may also be interested in:
Nearshore Software Development Rates: The Complete Guide for 2023
The Ultimate DevOps Hourly Rate Guide for 2023
The Complete React Developer Salary Guide for 2023
AWS ECS vs Kubernetes: A Complete Guide
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