How much does it really cost to develop a software application for a company?

To the uninitiated, software development is like a magic trick the computer-engineer pulls off. Very few people have much clue about what happens behind the curtains and are totally lost when it comes to assessing the cost of software development.

It is intangible, how do you know how much it is really worth? We hope to demystify software development at least a little by the time you have read through this article.

Software is a very broad term, it could be used to refer to a mobile application, a content management software or pretty much any application which makes doing some tasks easier for a person or a business.
Pricing also varies sharply across software companies. A newer player (not necessarily less skilled) in the field might develop the same software at lesser price than a more experienced player. Also, reputation matters. A company with a reputation of being good at a certain type of software or technology can almost always get away with dictating the price to their clients.  Think of it as making a decision whether to shop from a flea market or a branded store, both the products work, it’s your choice and your budget that matters.
More than the utility of the software, it is the effort and time spent behind it that adds up to the cost. Yes, the human hours spent on estimation, developing, testing and deployment of the software all add up. You also have to take in account all those years the developer spent learning to program and sharpening his skills enabling him to develop that software for you in hundred hours of his billable time. That’s why some people decide to produce the software in-house so they don’t need to hire other company, although is not viable for most company, so they have to see the different ways of outsourcing like outsourcing vs offshoring or other methods.
Most software companies like Techwitty agency do an estimation exercise with their client first to have an idea of the functionalities and features required in the software. Then they split the entire project into milestones and provide the client with an estimated number of hours to finish each of the milestones and consequently the project (which is usually based on their historical performances).
The call has to be made by weighing the cost incurred against the benefits of having the software for you or your business, both short-term and long-term. You should ask yourself the following questions:

  1. Are you comfortable with the hourly billing of your software developer? Can you or your business afford it?

Does the estimated duration (and remember, the number of hours multiplied by the rate per hour) go well with your plans?

If the developer you approach gives you figures for questions 1 and 2 that you are comfortable with, you could go ahead with him or her. Software companies could charge anywhere between 50$ an hour and 200$ an hour. Cheaper options will always be available if you choose to outsource to a company in a developing country. It is always a good idea to check out their previous works and make sure that they are capable of walking the talk! You can also ask for milestones completed reports every week or so to make sure that the project is running on time.

Building software is a lot like building a house, it varies in time and cost immensely depending on the size and intricacies involved. And, a lot of it depends on the skill of the workers involved. The estimates given to you are just ballpark figures which could vary much if you ask an additional feature to be added. Any additional requirements will add to the milestones and thus the hours required. Always remember to have as much clarity as possible about the software that you want to be built before you approach the developer. Adding a feature in at a later time almost always takes more time than it would have if you had listed it earlier.