How to Estimate Custom Software Development Pricing

Find out how custom software development is priced and why your organization should invest in it.

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by Matias Emiliano Alvarez Duran

03/15/2022

More than ever, companies are relying on custom software to stand out from the competition. Creating and launching custom software can come at the cost of valuable company resources, but it’ll give your organization a much better ROI than an off-the-shelf solution.

As a company leader or product manager, you need a cost-effective custom software solution that doesn’t compromise on quality. Maybe you’re on a time crunch to finish a project or platform, or you have concerns about the integration of new team members. That’s where NaNLABS comes in.

This guide will walk you through the factors affecting the average cost of custom software projects and show you how we calculate our pricing here at NaNLABS.

Here’s what’s inside:

Ready to build your own custom software with a team that cares about you and your processes? We’re not code monkeys, we care about you. Get in touch. We don’t byte.

Why invest in custom software?

Investing in custom software will give you the best ROI and set your organization up for long-term success. Of course, there are other options to consider, such as no-code or low-code development platforms (like Shopify or Squarespace), and other existing SaaS or white label products. 

These options may be cost-effective, but they limit your organization’s control over your platform. You’ll have to rely on an external company for updated features and bug patches. Plus, your ability to customize your platform and truly stand out with a unique user experience will be limited.

Instead, you could hire in-house developers, bring in freelancers, or even try a combination of the two. But hiring is costly and comes with risks. Exceptional talent can be hard to find and retain, and the last thing your organization needs is a rocky team dynamic from clashing freelancers.

At NaNLABs, we recommend bringing in an external software development company to fully integrate with your existing team and achieve your goals. 

NaNLABS can help you build a custom platform designed to meet your business goals. Our skilled and experienced team uses Agile principles to keep your projects on track and deliver bug-free software at a cost-effective rate.

Custom software is the best investment your organization can make to save you money and create a more stable solution with scalability as your company grows.

How much does custom software development cost?

Cost estimates for software development depend on a number of factors, including the project’s scope, budget, timeline, functionality, and location. 

You also need to consider the breadth of the creative design and the skillset of the existing development team. In total, you can expect to pay anywhere from $100,000 to over $1,000,000 depending on these factors, particularly project scope and timeline.

Let’s take a closer look at the primary factors for cost estimation.

Related Post: 8 Agile Software Development Tools We Just Can’t Live Without

What factors determine the cost of custom software development?

The primary factors that determine the cost of custom software development include

  • The scope of the project. How many features will your app have? How many different pages, interactions and integrations with other systems? The greater the scope, the greater the cost.

  • Required timelines or deadlines. Very tight deadlines may require additional team members, but letting your project go on too long could also significantly drain your resources.

For those on tight budgets or timelines, using an Agile structure like we do at NaNLABS is ideal. Our team can release functional software as we go and focus on the most valuable features, components, and modules. 

As soon as a partial piece of software is delivered, you’ll get user feedback to adjust and refine the solution and move the process along. This will save you time and money. If your company isn’t already using an Agile structure, NaNLABS can easily help you apply these time-saving principles and get you on track for success.

Next, let’s take a look at the secondary factors that will impact the cost of your custom software project.

Functionality

Using the right set of tools and software is key to success. This prevents accidental complexity and impacts across the development experience for both your team and the outside help you’re utilizing. 

Some of the solutions available include 

  • MVP

  • Cloud native app

  • Web app

  • Mobile app


Each of these variations has a different cost associated. At NaNLABS, we can build any of the mentioned options, including React Native mobile app development.

This depicts a completed software project on an Android platform.

A NaNLABS completed software project on an Android platform

The app in the image above enables the owner of a small business to utilize special offers and collaborate with other business owners to purchase items in bulk. 

Since the user interface was tailored to the company’s requests, the primary goal of the NaNLABS team was to create a set of new structures that would meet the UI requirements while retaining the original feel of the Android platform.

NaNLABS was able to adapt several features of the app and even create some from scratch to accommodate the client’s requests.

Development team

Are your developers in-house, freelance, or part of a bespoke augmented team? While freelance rates can be lower than the salary costs of your in-house developers, the quality of the final products can be subpar, and they’re often only effective in the short term.

Instead, we recommend augmenting your in-house team with a squad of nearshore developers, handpicked to match your desired skill sets. While most companies use models that only work for short-term projects, the NaNLABS team works to fully integrate with your existing in-house staff and set your organization up for continuous success. 

A typical NaNLABS team augmentation pod includes three developers, one UI/UX designer, one project manager, and one technical leader. NaNLABS chooses to work with clients like this because it ensures quality results for a much more reasonable price.

This chart compares and contrasts the differences between in-house developers, freelancers, and outsourced companies. The categories include cost, quality, and communication.

Creative design

Do you have high-fidelity (implementation-ready) designs? Do you need to create a new design system? What level of customization is required for your software? Will it be 100% custom-made, or do you want to use an existing library that could be personalized to fit your needs? 

The price increase will depend on the specs of your project. But if you need extra guidance, NaNLABS offers consultancy, so don't hesitate to reach out.

Project size

Are you building an MVP for a new startup? Are you building a new product inside your solutions enterprise portfolio? Is it a greenfield or brownfield project? 

The size of your custom software request will greatly impact your price estimate, especially because larger projects are generally much more complex and require additional considerations, such as testing, infrastructure, and advanced security.

Make sure that you consider the future of your organization when deciding on project size. You might be a small startup now, but do you have ambitions for an enterprise-level platform? Make sure that the software is able to grow with your company and won’t hinder any future advancement opportunities.

Location

The price of a custom software project can vary quite a bit depending on where your developers are located. The United States comes in at the most expensive, with hourly rates averaging $350–$850. A few others include Latin America at $25-$80, India at $10-$35, and Eastern Europe at $41-$80.

NaNLABS has put together a list of the top custom software development agencies in Argentina (ourselves included!). However, each one of these agencies differ in their approach, so you might want to take a look to find the one that fits your needs. 

NaNLABS are proud to deliver high-quality and cost-effective software. But, we recommend that you research different company’s approaches in detail before selecting a company that can build a solution that meets your exact needs. And we don’t advise making a decision based on location alone.

How do we charge for custom software development at NaNLABS?

At NaNLABS, we pride ourselves on providing clear, transparent price ranges to potential clients looking for custom software development quotes. Much like other development companies, our pricing is influenced by several factors, including the ones listed above.

Scope is the main factor that most clients have defined before approaching us. From there, we need to figure out which variables are flexible. NaNLABS usually recommends that the scope remains flexible given that the learning process continues while the software is being developed and you talk with users. 

This allows pivoting, adjusting requirements, and shifting priorities based on feedback. If costs are limited, we can then adapt the scope to focus on more value-added work.

After these primary factors are defined along with numerous secondary factors, most organizations can expect to pay an average of $100,000 for an MVP project with a timeline of around three months. 

For startups, that number starts at $400,000 per year with a timeline of 1-2 years, and $600,000 per year with a timeline of several years for enterprise software. Of course, the specific timeline is determined by the scope of each individual project, and these are just rough estimations.

At NaNLABS, we charge a flat, monthly fee per team or per project where you only pay for the time a specific project takes. 

Tiered pricing systems get messy and complicated for both parties. The NaNLABS team believes in keeping things simple. Contact us and we’ll send you our rate sheet with cost estimation, with no obligation.

A few red flags to watch out for when shopping for custom software developers include:

  • Not being upfront about pricing or total costs

  • Lack of timeline transparency

  • Limited experience

  • Lack of ability to align with your existing team

  • No direct communication with developers

  • Lack of understanding on the project you’re trying to build

  • Saying “yes” to all your requests without giving their expert opinion

  • Not providing ideas on how to improve your solution or build it more effectively

These factors and others can quickly drain your resources and cause your project to fall behind.

Pricing your custom software development project 

As you can see, the price of your custom software development project is influenced by several factors. When researching companies to help your organization with the development process, make sure that you have a clear idea of exactly what is needed for the project in each of the categories outlined in this post.

It’s also important to watch out for companies that aren’t transparent about their pricing or estimated timelines and find one that understands both your project needs and budget constraints. At the same time, don’t shop by price only. Cheap, low-quality work will end up costing you a lot more in the long run. 

Find a company that understands your goals and can provide you with a great deliverable at a reasonable price. If you’re looking for a custom software project quote based on your organization’s needs, feel free to reach out to us.

Ready to build your own custom software with a team that cares about you and your processes? We’re not code monkeys, we care about you. Get in touch. We don’t byte.

Frequently asked questions about custom software development pricing

How much does it cost to develop custom software?

Depending on a number of factors, software development services for a custom project costs anywhere from $100,000 to over $1,000,000.

How much does custom software development cost per hour?

Depending on location, you can expect to pay a developer anywhere from $10-$850 per hour. Make sure that you research your organization’s specific needs to determine what rate is expected for the type of work you require.

How do you charge for software development?

At NaNLABS, we charge for custom software development depending on the project’s scope, the development team, the creative design, the project size, and more. Contact us for a personalized quote.

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