Custom Software Development Cost: Average Cost by Business Type & Size + How to Calculate

Many organizations are now looking at custom software development as a viable option to meet their business requirements.

Custom software development has many advantages, including modifying and upgrading to fit your business needs, better security, and fewer bugs. However, custom software development can also be costly.

This guide will walk you through the average custom software development cost by type and size, the factors influencing the rates, calculating these costs, and where to get custom software development.

Receive proposals from top software development agencies. It’s free.
GET PROPOSALS
Agency description goes here
Agency description goes here
Agency description goes here

Average Custom Software Development Cost by Type

The type of project calculates the cost of custom software development:

Content Management Systems (CMS)

The average cost of software development for a Content Management System (CMS) depends on the features the developer plans to include in the system.

The most common feature is a content management system that manages your website's structure, documents, blog posts, images, menus, pages, colors, products, and more.

Other features of CMS systems include online payments, integration with other systems such as WordPress or Google maps (geocoding), and tracking traffic stats or visitor actions.

The most expensive types of projects are mobile applications since mobile applications are created in multiple programming languages or building an application for Android and iOS.

Building an app for Android or iOS can require nearly twice the time compared to other types of custom software development projects.

Average Cost: $20,000 - $50,000

Customer Relationship Management Systems (CRM Systems)

CRM Systems are software that helps customers quickly contact a company.

CRM systems have a range of features, including enabling customer relationships, improving customer service, order tracking and management, and more.

The cost of a CRM System varies depending on the size or the number of users and the type of app.

Larger companies will usually pay more for an advanced system but can also get higher-end customer service with their investment.

Average Cost: $100,000 - $600,000+

eCommerce Solutions

The cost of eCommerce solutions is higher than website development in general. This category includes software such as shopping carts and eCommerce platform development.

These projects range from $20,000 to $70,000 for custom software development. These costs will increase if the application has more advanced requirements such as SSL or multiple databases.

More complex enterprise-level applications can cost $50,000 or more. This software includes customer relations management systems that integrate with other business systems.

Average Cost: $20,000 - $70,000

Enterprise Resource Planning Systems (ERP Systems)

Enterprise Resource Planning Systems (ERP Systems) is one of the most popular types of projects out there.

With an average project costing $300,000, these projects can take up the vast majority of your budget without any problem.

Luckily, there are ways to get around this. For example, if you work with a programmer who codes locally instead of outsourcing overseas, you can shave a whole month off your project timeline.

Average Cost: $150,000 - $500,000

SaaS Products

SaaS products are, on average, cheaper to develop than other types of projects, such as software or system applications. Other developers also use it because they're typically built from pre-existing open-source code.

There are advantages and disadvantages associated with developing a SaaS product. Still, it's often recommended for people to start their own businesses because you only need two things to get started: a domain name and a website hosting account.

Average Cost: $25,000 - $100,000

Supply Chain Management Solutions

Supply Chain Management Solutions usually come with a very high cost. The reason for this is that there are many different types of software that need to be developed for this type of business.

Some products help the company find the best suppliers, send orders through their distribution channels, and keep track of inventory levels in all locations worldwide.

In addition to these products, there are also pieces of software that help manage the customer relationship side of things.

All these different aspects add up and end up being costly due to needing so much customization and attention paid to it and its expansive nature within an organization.

Average Cost: $100,000 - $300,000+

Average Custom Software Development Cost by Size

Startups

Startups have different needs than big companies. They need to build something that solves their problems and those of their users, but they can't spend too much time or money doing it.

The average cost of software development for a startup is much lower than in other fields because startups have fewer resources and are unwilling or unable to pay more than necessary.

Average Cost: $30,000 to $450,000

SMEs

Small-to-medium enterprises (SMEs) can also benefit from the lower cost of software development, but they often need more features and higher quality than startups.

For example, SMEs may want to build a website that sells their products online or an app for internal use.

The average cost of software development for small-to-medium enterprises is between that of startups and large companies.

Average Cost: $70,000 to $100,000

Large Enterprises

Large enterprises have a lot of resources and are willing to spend more on software development than startups or SMEs. They often need complex solutions that can be customized for their specific needs.

For example, large banks may want to build an app that helps customers manage their finances or analyze data from various sources.

The average cost of software development for large companies is much higher than in other fields because they have more resources and are willing to pay more than required.

Average Cost: $100,000 to $500,000+

Get connected with the right software development agency for your project.
GET STARTED

What Are the Factors That Affect Software Development Costs?

To get a clear picture of what software development costs, you need to take into account the following factors:

Project Complexity

Complex projects have more variables, making them more challenging to estimate and implement.

For example, if your project includes a new feature that has never been done before or requires a custom solution, you may have to build up the team's knowledge base before beginning work on the project. This can slow down your timeline and increase costs.

The more complex the project, the higher your development costs. The more complex an application is, the more time it will take to develop and test it.

Software Size

More extensive projects also take longer to complete than smaller ones. This is partly because there's more work involved in creating large applications than small ones and because larger projects usually involve more stakeholders.

However, there is also an upper limit to how much time it takes for some software systems to be built (for instance: if you want an app built for iOS devices only).

In this case, adding extra features would mean increasing costs without providing additional value for users, who will only expect them because they're used to seeing them from other apps.

System Integrations

Software systems are often built to communicate with other systems and applications. This means that they need to be integrated into the existing infrastructure of an organization or business.

Larger organizations tend to have more complex systems, making them more challenging to integrate.

Many companies use multiple systems to run their operations smoothly & efficiently every day.

However, these tools often need integration with each other to work seamlessly without any hassle on behalf of users or employees.

Innovation

Innovation and creativity are some of the factors that affect software development costs. It’s why startups are usually more expensive than large enterprises because they require more innovation and creativity to develop a product.

Project Timeline

Software development can take from one to nine months and an average of 4.5 months.

If a project has very little time left before its due date, it generally costs more to complete than if there is plenty of wiggle room for the developer.

The closer deadlines get, the less time there is for error correction, testing, debugging, and other activities that may need to be done to ensure everything works properly upon completion.

Database Migrations

Database migrations are a common cause of unexpected costs. As the database schema changes, all the software that accesses it must also be modified.

It can be a time-consuming process, especially when there are many layers of dependencies between different applications and databases.

If you need your custom software to connect with an existing database, you'll need to factor this in before deciding how much it will cost to develop.

Platform Choice

The choice of platform is a critical factor affecting software development costs. Software developers typically use web-based or desktop applications, each with its advantages and disadvantages.

For example, web-based applications are usually cheaper to develop because they don't require additional hardware, such as servers.

However, they may be less secure than desktop applications because users access them online rather than installing them locally on their computers.

How to Calculate the Cost of Custom Software Development

Custom software development involves building a software application from scratch. To get a cost estimate for your project, you'll need to gather information about your business goals and the type of custom software you need.

You'll also want to consider what financing options are available and whether or not you're willing to negotiate on price.

The most straightforward method to estimate the project cost is to multiply the project resource cost and project time.

What Are the Advantages of Custom Software Development?

Custom software development has many advantages over standard software. Here are just a few of them:

  • You can get what you need. Custom-built software can be tailored to fit your business needs and requirements, so there's no need to pay extra for features that don't apply to your business.
  • The process is faster and more efficient than other types of development because it iteratively takes place. After every phase, the custom application is tested, evaluated, and improved based on customer feedback. This means fewer delays in getting the final product into use by customers or employees.
  • It's usually cheaper than buying off-the-shelf solutions or hiring additional staff members who may not have experience creating enterprise applications from scratch. This means lower overhead costs overall for businesses looking at long-term profitability rather than short-term profit margins alone.
  • It's also an excellent option for businesses that don't have the resources to create custom software but want the flexibility and control that comes with it.
  • It’s more secure. This is because custom software is designed specifically for your business and its data, so there's no need to worry about hackers infiltrating the system.
  • It’s easier to maintain. Because it was built specifically for your business needs, custom software should be easier to update and repair than standard software that's made for multiple businesses.
  • It’s scalable. Custom-built software can be built to grow with your business, so it won't become outdated or unusable as the company expands.
  • It’s more user-friendly. Custom software is built specifically for your business, making it easier to use and understand. It can include features that make your job easier, such as automating time-consuming tasks or even integrating with other apps or software you already use.

Where to Get Custom Software Development

When you're looking for a developer to build your custom software, you'll first want to decide whether to make it in-house or hire a company to do it for you.

If you choose to build custom software in-house, you'll need to hire developers capable of producing the software you need.

If you decide to hire a company to build custom software for you, you'll then want to decide if you want to outsource or hire a remote team. According to research, Ukraine is considered the top software development outsourcing country in the world, with over 200,000 programmers.

Remote teams are companies that employ developers around the world. This can be a great option if you can't find developers locally.

Custom Software Development Cost: Takeaways

Custom software development is a complex process that requires careful planning and execution.

It can be costly, so it's essential to know the costs associated with developing your custom application. It's also important to know what factors will affect your price, how long it takes to create a custom application, and the type of developer you should hire.

The good news is that, with due diligence in planning, you can get very close to price and design with estimates, so you know what you're going into before your investment starts.

We’ll find qualified software development agencies for your project, for free.
GET STARTED
"
Need Help Selecting Agency

Need Help
Selecting The Right Agency?

We can help you find verified agencies that fit your budget and other requirements within just a few days and free of charge.

Start receiving proposals now!

Tell Us About Your Project