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Software development cost: 7 factors determining product pricing


Kirill Karahainko




May 14, 2020

Every great product starts with an idea. One day you wake up with an intention to build the next Facebook or WhatsApp, and in a few days, you find yourself writing a business plan to turn it into an MVP, which you’ll later scale to a full-fledged product.

Or, you might have faced a business challenge and are looking for an effective software solution to boost your performance. Especially in times of crisis, when distributed teams have become a new normal, software products might help to keep your business on track.

Whether you are looking to build an enterprise software or want to make a mind-blowing social media app, it all comes down to software development cost in the end. You should make initial estimates, predict risks, and set up a budget that covers research and development expenses.

To make this task easier for you, we prepared a list of the top 7 factors affecting product pricing. 

Factors that influence software development cost

1. Development timelines

Time to Market has a tremendous impact on the success of your project. If you are too early on the market, you might fail to acquire first users.

On the contrary, rolling out an app or software too late might bring you into the red ocean full of your rivals. In this case, you might fail to withstand the competition and get booted out of the market.

Deadlines might profoundly affect your R&D expenses. In case you have an excellent idea for a product that needs to be developed quickly from scratch, you might have to assemble an extended team of senior engineers, who will be able to do everything quickly and efficiently.

An increase in wages and changes to the team composition will inevitably affect the software development price. 

2. Team skills

Skills and knowledge your development team brings to the table directly correlate with software development costs. The more complex your project is, the more qualified team it requires.

In case you need to build a simple product with basic functionality, you don’t need senior developers to complete this task. Perhaps, you might go with a team of middle software engineers, a project manager, and a QA specialist, who will be able to turn your idea into reality

3. The complexity of the product

The software development price is highly dependent on business logic, software architecture, and the number of features you want to launch with the first release.

If you strive to build an MVP, you’ll have to focus on high-priority features and delay the ones you can do without. In this scenario, you can set up a minimal budget, shorten your Time to Market, and test a product with your users.

However, in case you strive to build a multi-featured software product with complex logic, you might have to increase your budget in accordance with your needs. Also, you should keep in mind that not all features have the same cost of implementation.

For instance, integrating a sophisticated AI algorithm into your app will require more resources than building a simple calculator. Thus, we advise making the list of features you want a product to have and prioritize them accordingly. 

4. Prototype & design

Custom design is what makes your product appealing to the target audience. There are nearly 2 million apps in the App Store, and if your mobile app looks dull or it is hard to navigate, there is a high chance users might scroll past it.

Therefore, to make your product stand out, you need the support of professional UX/UI designers, who will help you with the look and layout.

At this stage, research and development expenses depend on your needs and wants. In case you come up with a highly extravagant design that will differ much from the standard features, the process might appear to be resource-consuming. Such a design is not a matter of a single iteration.

Our development team might create several demos for you, choose the one that resonates with your audience and get down to building a prototype. Additionally, high-quality assets can also add up to development costs. 

5. Architecture components

When you reach out to us, we analyze your idea and decide on the best architecture that will make your product easy-to-use, testable, and maintainable. Architecture components help to structure your software most beneficially with less boilerplate code.

For instance, the recommended Android architecture components include UI Controller, ViewModel, Repository, and RoomDatabase.

However, if your application has multiple features and sophisticated logic, other elements might be added, which will also increase the software development costs. 

6. Tools & process, methodology

The development methodology your partner adopts is tightly related to research and development expenses.

A traditional Waterfall approach implies the assessment of the whole project by a single expert, who has enough knowledge and skills to come up with accurate estimates. Nevertheless, the software development price might still vary depending on the changes you make to the project.

In case a software development company you work with applies the Agile methodology to the development process, they take a more iterative and collaborative approach to cost estimation. In contrast to more conventional techniques, cost estimation in Agile is a team-based activity.

Tight collaboration with software engineers, project managers, users, and other stakeholders helps to ensure a complete agreement on the backlog prioritization, and consequently, gain a deeper understanding of the amount of effort required to complete the project. 

7. Third-party integrations

There are a number of third-party integrations out there that can open plenty of opportunities for your business and users.

However, installing them into your app might take additional time from a development team, which will also affect development costs. Furthermore, most of these services require you to pay a fee that adds to the software development price.

The other side of the coin is that third-party integrations can help you to alter the software development cost breakdown. Instead of building unique features from scratch, you can integrate ready-made solutions into your software and cut the man-hours.

In such a way, you save the budget for high-priority features, which will help to create a superior experience for your customers. 

Final words

Now when you’re aware of the factors affecting the software development cost breakdown, you can plan your research and development expenses more efficiently and understand whether your idea is worth the hassle.

Don’t want to fiddle about with figures and numbers? Our development team will do it for you. Contact us to discuss your project, and we will provide you with accurate estimates in the shortest time.

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