10 Non-Obvious Factors That Affect Software Development Cost

Getting the answer to “How much does it cost to develop software?” is an easy task. All it takes is a single Google search. To save your time and effort, we’ll say that all online resources agree on the range between $30,000 and $350,000. Seeing this, most clients believe that 30 grand is just the right sum for their new project — after all, it’s a regular app with a couple of custom features. But when they start building one, it turns out that a ton of extra considerations pop up. As a result, that sum is doubled, at best. So, the client exits cooperation feeling scammed. Is this feeling justified though? — In most cases, ‘No’.

Software development costs do vary, and there are many factors that determine the ultimate amount of expenses. It’s much like building a house, where the cost depends on its size, materials, location, labor, etc. But along with that, the total bill will also contain things like house plans, exterior siding, and appliances integration. Generally, they do not count as default services and come at an extra cost.

You don’t need to be a tech wizard to understand that the cost of developing software is largely dependent on the complexity of the project. This, in turn, dictates the appropriate tech stack, the number of people-hours required, as well as the seniority of the team.

Let’s say you are looking to build a review platform with a minimum set of features like sign-up & log-in, user profile, feedback form, and the like. On average, such a project will be completed within a couple of months. And there’s no need for a large team and a senior level of expertise. On the other hand, a full-featured social platform, for example, is a project of high complexity. It is based on multiple user interfaces, relies on the microservices architecture, and has to be highly resilient to handle traffic loads. Such a project can stretch for 1+ years of iterative development and requires seniors to work on it.

No two projects are the same; that’s why the range of app creation cost is so broad. Therefore, while planning your budget for software development, it’s important to get familiar with the process itself to know exactly what is included in it and what is not.

Businesses resort to building software with the aim to cover their unique needs. So, it is a good idea to discuss every small detail with the team before the actual development starts. These details should be taken into account when estimating the project since they further indicate whether any extra activities are necessary. That way you’ll avoid ending up with an unpleasant surprise in the form of an additional zero in the invoice.

So what are those hidden ‘gems’ that drive the average cost of software development up?

1. Incomplete functional requirements

Imagine that developers are foreigners that do not speak your native language. The only way you can communicate with them is via the language of functional requirements.

Functional requirements are the backbone of any software. They clarify the scope of work, roles & responsibilities, and the required features. In other words, it’s an action plan that developers are following. Ultimately, they’ll build a product based on what is outlined in the functional requirements document — nothing more, nothing less.

There’s no such thing as ‘default’ features. One may think that features like social log-in, for instance, are apparent, but they are not. If it is not documented, it won’t be built. And in case there’s a necessity for such a feature during the process, it will be charged on top of the agreed software development cost.

2. Third-party integrations

The same goes for third-party integrations. E-shops are not born with the ‘default’ PayPal option. Embedding it requires extra effort, and hence, extra cost.

In order to add third-party functionality to your platform, developers use APIs — programming interfaces that allow pulling data from external providers. Basically, that’s a piece of ‘alien’ code that has to be blended into your platform’s code so that they work flawlessly together. This is often a complex error-prone process that requires holistic testing and maintenance.

Another type of third-party integration is syncing with data analytics tools. This option is not included in the software development package too.

3. Deployment environments

No app or software is released from a developer to an end user directly. Even the smallest change has to go through several tiers of testing before the user can interact with it. A basic deployment model is based on 4 tiers — development, testing, pre-production, and production. As a rule, code changes are deployed to each of them in turn to verify whether they work well and don’t spell trouble for the product’s overall functioning before they go live.

The cost of setup depends on the number of deployment environments needed, integrations with the existing environments, and all configurations related to this. Also, the expenses vary for on-site and cloud solutions. In some cases, deployment can eat up to 30% of the entire app cost.

4. Setup of CI/CD processes

CI stands for continuous integration, while CD is short for continuous delivery. It allows the development team to deploy code frequently without sacrificing its quality. The CI/CD’s underlying principle is ongoing automation. With it, code changes are automatically uploaded and bug tested within a shared repository, and then, prepared for the deployment to all servers. It allows working in small increments and detecting errors at the early stages.

Investing in the CI/CD pipeline setup translates into faster time-to-market for your product.

5. Extra design efforts

That’s a typical story among those planning to launch a product for the first time. They come up with an idea and ask a development company for its realization.

Note that no coding can be done before detailing the interface elements. First, UI/UX designers visualize what the product will look and feel like, and only then the actual development starts. Yet, it is not possible to proceed with interface prototyping if there are no brand elements that can be used as a basis. As a result, the design team has to postpone this stage and switch to creating the brand identity instead, which includes a logo, imagery, typography, color palette, etc.

Brand identity design is never part of the product development process, and therefore, is charged as an extra to software development costs.

6. Data migration

Whether you re-design the existing system or set up a data warehouse, you might need to perform data migration from the current solution to a new one. You certainly want to achieve a smooth transition of data and avoid its loss, duplication, or inaccuracy. Although there are lots of automated tools, they rarely meet custom migration requirements. Expert help is a must here because the risk involved is high.

Data migration is regarded as a separate project that comes with its own plan, strategy, toolkit, and test environment. It needs the team’s full attention and shouldn’t be treated as simply a subordinate to another project. So naturally, the cost of data migration is not included in the cost to develop software.

7. User data collection & analysis

Building software also requires insights into users. Otherwise, you’ll end up with a product that doesn’t meet their expectations. User data analytics is beneficial at different stages of product development — requirements gathering (to understand what users want), UI/UX design (to facilitate user interactions), testing (to check user response), and marketing (to pitch to the right audience).

Bigger companies often approach software development with all the data at hand. Whereas, solopreneurs or startups lack it as they don’t have the right team of experts in-house. If this is the case, user data collection and analysis are regarded as an extra service.

8. Extra testing activities

Any piece of software is built with a certain context in mind — i.e. industry, business goals, user segments, etc. This implies that they are tested differently. When creating test scenarios, QA engineers emphasize what is believed to be a priority for the software and put extra effort to verify it. This, of course, will affect the cost of developing software.

Let’s take a healthcare app as an example. It deals with lots of sensitive information — therefore, much effort will be directed to checking its security features. For this, penetration testing can be used as an additional measure. It is a form of ethical hacking that allows engineers to effectively identify exploitable issues within a system.

Also, healthcare apps are often designed for multiple user segments like patients, doctors, insurers, and more. This means such an app may be suffering from high traffic at times. To understand whether it can handle the increased number of user requests, load testing is applied. It allows engineers to spot performance flaws that can easily be overlooked in the basic development and testing environments.

9. Code refactoring

In simple terms, refactoring is a code cleanup, and it is a necessity for projects of any size as it can help avoid the accumulation of technical debt. It doesn’t change software functionality or remove bugs though. Yet, it makes the code perform faster and easier to maintain later on.

It is common for a piece of software to be developed by more than one engineer over time. The result is a codebase compiled in a haphazard way. In further iterations, the development team will be forced to spend extra time understanding and tracking it before introducing any improvements. If not refactored, code inaccuracies will pile up and ultimately result in glitches or malfunctions, which are costly to remove at later stages.

It is strongly recommended to clean up code before the product goes live or before expanding its functionality. So make sure to take refactoring into account when calculating the custom software development cost.

10. Licensing

Note that in order to complete certain projects, the team might need to use additional software that charges license fees or customize the existing infrastructure by renting extra servers or else. As a rule, such a necessity is clarified at the stage of selecting a technology stack.

Say, for the sake of better scalability and performance your solution has to be cloud-based. To make this happen, you’ll need to pay a fee to a cloud service provider like AWS or Azure.

Although the above list looks exhaustive, it actually contains only a small portion of all possible scenarios that may drive the total cost up. There are also lots of software development cost calculators online, but none of them will give you an accurate estimate of your project. So if you don’t want to waste your time playing guessing games, you’d better turn to CXDojo for consultation. We know all the ins and outs of software development and can recommend you on the best path.